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Interview With Maine Senator Angus King; Did Trump Make Millions By Dodging Taxes?; Poison at the Pentagon; Kavanaugh Investigation. Aired 6-7p ET

Aired October 2, 2018 - 18:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


[18:00:04]

WOLF BLITZER, CNN ANCHOR: And poison at the Pentagon. Envelopes addressed to the defense secretary and a top U.S. Navy official have tested positive for the deadly substance ricin. We are following the investigation that's under way this hour.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

ANNOUNCER: This is CNN breaking news.

BLITZER: We're following breaking news on how Donald Trump made the fortune that helped propel him to the presidency.

A major new investigation by "The New York Times" accuses Mr. Trump of participating in shady tax schemes and -- quote -- "outright fraud" that greatly increased the wealth he received from his father's real estate empire.

The report totally contradicts Mr. Trump's claims of being a self-made billionaire.

I will get reaction from the Senate Intelligence Committee member senator Angus King. And our correspondents and analysts are also standing by.

First, let's go to CNN's Kara Scannell.

Kara, tell us more about this bombshell report in "The Times."

KARA SCANNELL, CNN CORRESPONDENT: Well, Wolf, like you said, "The New York Times" is reporting that Donald Trump was involved in dubious tax schemes during the 1990s, including allegations of outright fraud, that "The New York Times" said that they reviewed confidential tax returns, financial statements and spoke with several people who worked with Donald Trump's father as part of their investigation.

They said that they found that Trump and his siblings helped to reduce their taxes by setting up sham corporations to disguise millions of dollars in gifts they received. They say they also found that Trump helped his father take improper tax deductions and helped Trump -- and Trump had helped to formulate a strategy to undervalue his real estate holdings by hundreds of millions of dollars. This all goes to efforts by Donald Trump to help prop up, increase his

wealth, which comes, of course, as Donald Trump has said, you know, he's a self-made man. This "New York Times" investigation shows there were some tax schemes involved in this, Wolf.

BLITZER: And there were other details in this "New York Times" article. It is a very long, 40,000-word article, 45 pages, if you go through it. It takes a long time, but there are a lot of details. Give us a little more about these alleged schemes and the alleged fraud.

SCANNELL: Well, according to "The New York Times," you know, Donald Trump has said that he was a self-made millionaire, that he received a $1 million loan from his father.

But according to "The Times," they spoke with many people who had worked with his father and reviewed a lot of documents, thousands of pages, and they found Trump's father actually lent him $60 million, which in today's world is about $140 million.

"The Times" investigation also found that Trump's father stepped in when Trump was having problems. You know, Trump's casinos ended up in bankruptcy. It was very up and down financially, and they're saying his father was there for him in that.

And of course this was not treated as a normal loan, at least according to the taxes, and that's one of the ways in which "The Times" is finding that they avoided paying taxes here.

BLITZER: Could this be, as "The Times" suggests, one reason why the president during the campaign and since taking office has repeatedly refused the release his tax returns?

SCANNELL: It is a very good assumption, because, you know, once you see this information here, we start to see that beyond even the potential issue here of criminal or civil -- you know, civil fraud taking place, you know, it also would reveal that Donald Trump is just not the self-made millionaire that he says he is.

BLITZER: I know the president's lawyer issued a lengthy statement. Do you want to read it?

SCANNELL: Yes.

So, Charles Harder, President Trump's attorney, has said "The New York Times"' "allegations of fraud and tax evasion are 100 percent false and highly defamatory. There was no fraud or tax evasion by anyone. The facts upon which 'The Times' bases its false allegations are extremely inaccurate."

He goes on to say that "President Trump had virtually no involvement whatsoever with these matters. The affairs were handled by other Trump family members who were not experts themselves and therefore relied entirely upon the aforementioned licensed professionals to ensure full compliance with the law."

BLITZER: All right, Kara, thank you very much, Kara Scannell reporting for us.

I want to bring in our chief legal analyst, Jeffrey Toobin.

Jeff, what do you make of this bombshell report?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Well, you know, to paraphrase Governor Ann Richards, Donald Trump was born on third base and he thinks he hit a triple.

I mean, this is an extraordinary story of inherited wealth, and inherited wealth multiplied corruptly through abuse of the tax laws. It is really an incredible piece of journalism by "The New York Times," which spent a year-and-a-half on this story.

And, you know, it is not involved just on whistle-blowers. It has the actual tax documents. So, I mean, it seems like an absolutely bulletproof story to me.

BLITZER: Do you see any legal liability here for the president or for the Trump Organization?

[18:05:03]

TOOBIN: It is very hard to say. Probably not, because a lot of this really goes back to things that went on in the 1990s. And the statute of limitations, even for taxes, which tends to be long, like 10 years, has probably expired.

But there's a real political dimension to this, too. If the Democrats retake the House of Representatives, as seems more than possible at the moment, these tax returns, the current tax returns, could be subpoenaed, and this story certainly gives a justification to the Judiciary Committee or the Appropriations Committee or whichever committees, Ways and Means, decides to investigate the president's taxes.

Certainly, this would be a basis for a Democratic majority to issue subpoenas to the IRS for the current tax returns, which, of course, we have never seen.

BLITZER: Jeffrey, I want you to stand by. Kara, stand by.

Joining us on the phone is David Barstow, one of "The New York Times" reporters who spent many, many months investigating the president's tax and financial history, reviewing, according to the article, David, more than 100,000 pages of documents.

Thanks very much for joining us.

You report that in today's dollars President Trump actually received more than $400 million from his father over the course of his life. How did they accomplish that extraordinary transfer of wealth?

DAVID BARSTOW, "THE NEW YORK TIMES": Through a very -- I mean, Fred Trump was, if nothing else, on top of being a brilliant real estate developer, he was also endlessly creative in finding new ways to funnel money to his children in general and to Donald Trump in particular.

So, we actually traced -- the beginning of this wealth transfer to when Donald Trump was 3 years old, a toddler, and he was making the equivalent of $200,000 a year at age 3. He was a millionaire by age 8. He was being given ownership in one of Fred Trump's apartment buildings at the age of 17.

And Fred Trump found all of these different ways to basically pay his son not just when he was sort of getting started, but through his life. So he didn't just put him on his payroll, but he also made him his consultant, he made him his banker, he made him his landlord, he made him his property manager, his purchasing agent, on and on and on.

And that's what we were able to piece together, especially through tens of thousands of pages of previously confidential financial records that really describe the inner workings of Fred Trump's real estate empire.

BLITZER: It really is amazing reporting that you and your team did. So was this legal?

BARSTOW: So, you know, there are parts of it, right, that are perfectly legal, like putting Donald Trump on his payroll, right, and paying him a salary.

But what we also described in this story is that the amount of money that Fred Trump passed on to Donald Trump through gifts and inheritance was really significantly inflated by a series of tax schemes that some of the leading gift and estate tax experts that we spoke to and presented our findings to said, this really crosses the line into illegality.

You know, I think Jeff Toobin is correct, the statute of limitations has long since passed, and so there's probably no criminal liability that could attach, you know, at this point.

There is, however, a potential for civil fraud, civil fines, for civil tax fraud. And so what the story -- and I would encourage people to take a look at this, because we tried very hard to show -- basically to show people our math and to show people the documents that describe how these various tax schemes work.

You can look for yourself at the padded invoices that were used by the Trumps to siphon money out of Fred Trump's real estate empire.

BLITZER: As you correctly point out, there's no time limit on civil fines for tax fraud, and the New York State Tax Department is now reviewing your reporting, "The New York Times" reporting, and in a statement, they said they're vigorously pursuing all appropriate avenues of investigation.

[18:10:05]

So what are the potential consequences for the president?

BARSTOW: Well, I mean, I think part of is, we -- it is very difficult to know how some -- first of all, just to step back for a moment, you know, we document in our year-and-a-half of reporting 295 different revenue streams that Fred Trump created to benefit Donald Trump.

And he is really -- Donald Trump is quite embedded in a web of trusts and partnerships, family companies, and it is hard to know until we see Donald's -- we're able to obtain Donald Trump's personal tax returns, to see how that -- how that money ultimately got reported in Donald Trump's personal tax returns.

And that's something that this story doesn't do, because we didn't get Donald Trump's personal tax returns. What we did get is, we got over 200 tax returns that are pertaining to Fred Trump's business empire and to various Trump family partnerships and trusts.

And those tax returns for the first time actually give us a window into precisely how much money flowed from Fred Trump to Donald and his siblings.

BLITZER: The president, as you know, he always portrays himself as a self-made man. How does your reporting contradict that image? And how involved was the president's father, Fred Trump, in crafting that image?

BARSTOW: He was -- they were a kind of partnership through all of this.

I mean, they were an extraordinarily close -- they were extraordinarily close with each other, and in the way they fed off of each other, the way they intersected in their business dealings with each other. And it was an extremely interest relationship, father/son relationship, and Fred Trump was every bit a supporting player in building the kind of ethos of Donald Trump as self-made billionaire.

You know, he really -- you know, even though he knew, he absolutely knew that Donald Trump, especially in the early years, was simply appropriating all of Fred Trump's wealth as if it were his own, Fred Trump didn't stand up and say, oh, that's not correct, that's not true.

He actually -- he did what he could to cement that image in various interviews and various, you know, public platforms.

BLITZER: Yes.

A couple of sentences jumped out at me in your article. "By age 3," you guys write, "Mr. Trump was earning $200,000 a year in today's dollars from his father's empire. He was a millionaire by the age 8. By the time he was 17, his father had given him part ownership of a 52-unit apartment building."

How do you justify giving someone a salary of $200,000 a year at the age of 3?

BARSTOW: Well, I think that Fred Trump was very interested in trying to pass on every penny of wealth that he could to his siblings in ways that would avoid or evade the 55 percent tax rate on gifts and on inheritances.

And so he was constantly looking for ways to give money to his kids and transfer that wealth outside of the tax system. So, if you go -- one you know, one good example of this is even when Donald Trump was, you know, proclaiming himself a multibillionaire, like clockwork, Fred Trump would be giving him $10,000 Christmas checks, because it was a way to avoid IRS taxes on gifts.

And so what we see throughout the, you know, very long period of time, starting when Donald Trump was 3, and really continuing to this day actually in some of the -- some of the deals that Fred Trump made that are still generating money, you know, you see a very sustained campaign to shift wealth, large amounts of wealth, we see over a billion dollars of wealth, to the Trump children, and to do so in ways that avoided and evaded hundreds of millions of dollars in gift and estate taxes.

[18:15:00]

BLITZER: Yes, it's pretty amazing.

And very quickly, David, your report is the result of your team, three reporters, working a year-and-a-half to report all of this out, and the report is incredibly comprehensive, incredibly detailed.

How many documents did you sift through? How many sources did you have? You know the president is going to go after you and blame what he always calls the failing "New York Times."

BARSTOW: Yes, we certainly -- we were well over 100,000 pages of documents that we gathered and analyzed over this period of time, and certainly many, many sources, people who were -- who worked for a long time inside the Trump Organization under Fred Trump and then under Donald Trump.

And so, I mean, one of the things I think, you know, we tried quite deliberately to do in our presentation of this story, again, is to make available to readers, you know, the actual documents, so that if people are wondering whether this is somehow all made up, well, they can just look at the documents for themselves.

BLITZER: David Barstow, writing together with Susanne Craig and Russ Buettner, this very lengthy article in "The New York Times."

David, thank you so much for joining us.

BARSTOW: My pleasure.

BLITZER: All right, let's get some White House reaction to the breaking news.

Our senior White House correspondent, Jeff Zeleny, is joining us now. He's in Southaven, Mississippi, where the president is getting ready for another political rally later tonight.

So, Jeff, what are you hearing? JEFF ZELENY, CNN SENIOR WASHINGTON CORRESPONDENT: Wolf, good evening.

President Trump has landed in nearby Memphis just a short time ago, and according to pool reporters on Air Force One, the president or his advisers did not come back and discuss any of this.

Of course, the president knew this story was coming. "The New York Times" gave him weeks, if not longer, to respond to it. This evening, the White House is not commenting, referring all comments to the president's lawyer, who said that there was no tax fraud or evasion of any kind.

It is an open question, though, if the president will address it tonight here at this rally. Of course, he is campaigning for the midterm elections, pushing Republican candidates in the midterm elections. So we do not know if he will bring this up or not.

I talked to one senior White House official who said it is up to the president, of course, if he talks about it this evening. But we do know one thing on the president's mind is the nomination fight back in Washington of Judge Brett Kavanaugh. The president talked about that extensively as he left the White House again today, expressing optimism and showing frustration.

(BEGIN VIDEOTAPE)

SEN. CHARLES GRASSLEY (R), IOWA: Nothing but the truth, so help you good?

BRETT KAVANAUGH, SUPREME COURT JUSTICE NOMINEE: I do.

ZELENY (voice-over): President Trump standing squarely behind embattled Supreme Court nominee Brett Kavanaugh tonight, but bluntly spelling out what would be a deal-breaker.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I don't think you should lie to Congress, and there have been a lot of people over the last year that have lied to Congress. And to me that would not be acceptable.

ZELENY: The president expressing optimism about Kavanaugh's confirmation, but also making clear he is leaving his options open until the FBI finishes its investigation.

TRUMP: I have to say that I really think that Judge Kavanaugh is going to be accepted and voted on and positively voted on, but we're going to have to see what the FBI says. They will come back with a report.

ZELENY: With just 35 days to go before the midterm elections, the president visiting Philadelphia today on his way to the second campaign rally of the week, this time in Mississippi, on the heels of a stop last night in Tennessee.

TRUMP: We're just five weeks from one of the most important congressional elections of our lifetime. ZELENY: The Supreme Court fight is now a central issue in the battle

for control of Congress, which Republicans say is bringing their party together, a rare sign of unity against tough political headwinds leading into November.

TRUMP: They are so in favor of Judge Kavanaugh, you have never seen anything like it. I actually think it is like a rallying cry for the Republicans. They are so in favor of Judge Kavanaugh.

KAVANAUGH: I demanded a hearing.

ZELENY: As Democrats and some Republicans increasingly question the tone and demeanor Kavanaugh displayed last week at the Senate Judiciary Committee.

SEN. JEFF FLAKE (R), ARIZONA: The interaction with the members was sharp and partisan, and that concerns me, and I tell myself, you give a little leeway because of what he's been through. But, on the other hand, we can't have this on the court. We simply can't.

ZELENY: The president today defended the judge's defiance.

TRUMP: He is fighting very hard for his reputation for his family. I thought what happened was really tough. It was tough stuff. He has never gone through anything like this. I think he did very well.

ZELENY: But, privately, CNN has learned the president's view of Kavanaugh has been complicated by stories of excessive drinking.

KAVANAUGH: I liked beer. I still like beer.

ZELENY: The president, whose brother died of complications from alcoholism, insisted today it didn't change his support of Kavanaugh.

TRUMP: Well, I don't drink. I have never had a drink. I don't drink beer. I have never had a beer. And I'm not saying good or bad. Some people like it. I just chose not to do that for a lot of reasons, so I don't see anything wrong.

[18:20:12]

ZELENY: The president again today had nothing to say about women who have come forward with stories of their own sexual assaults. Instead, he had this message for young men:

TRUMP: It is a very scary time for young men in America when you can be guilty of something that you may not be guilty of. This is a very, very -- this is a very difficult time.

(END VIDEOTAPE)

ZELENY: Now, White House officials say the president is standing by Judge Kavanaugh, and he does still believe he will be confirmed.

However, there is concern from the White House at Senate Majority Leader Mitch McConnell for allowing this process to happen. There's also some agitation privately, we're told, with the president at Judge Kavanaugh himself. He certainly has learned a lot about him this week, as all of America has, but there's no question the White House and other Republicans believe this entire Supreme Court fight is rallying and unifying Republicans.

But, Wolf, the open question is, what is it doing for those key independent voters in the middle, and could this actually change the balance of the fight for the Senate, now just five weeks away, Wolf?

BLITZER: Excellent point. Jeff Zeleny in Mississippi for us, thank you.

Right now, we have breaking news on the FBI investigation of Brett Kavanaugh.

Quickly, we want to go to our congressional correspondent, Phil Mattingly.

What are you hearing tonight from Kavanaugh's accuser, Professor Christine Blasey Ford?

PHIL MATTINGLY, CNN CORRESPONDENT: Well, Wolf, it has been five days since the FBI launched its supplemental background investigation, and we are learning tonight that Christine Blasey Ford, the initial accuser of sexual assault allegations of Brett Kavanaugh, has still not been contacted by the FBI.

We're learning that through a letter to FBI Director Christopher Wray that was obtained by CNN a short while ago. Blasey Ford's lawyers laying out in detail that they have repeatedly contacted the FBI in letters and in e-mails. They have offered up witnesses and specific evidence they believe would actually help the FBI's look back into Brett Kavanaugh's background.

It also says this, Wolf. "It is inconceivable that the FBI could conduct a thorough investigation of Dr. Ford's allegations without interviewing her, Judge Kavanaugh or the witnesses we have identified in our letters to you."

Here is kind of the reality, at least as far as it's been discussed with me. The FBI, in its current state is, both, A, wrapping up the investigation or towards the tail end of it and were not planning to interview Dr. Ford or Brett Kavanaugh.

The reason why, sources say, is they believe their testimony, the hours of testimony was sufficient. That is something that Christine Blasey Ford's lawyers reject entirely. They're essentially imploring the FBI to reach out in any way, shape or form. Our understanding is at this point that is very unlikely.

But, Wolf, it just gets to kind of the center of this issue, which is there is still a lot of tension about how this investigation is being run, the scope of this investigation, and for a nomination that might get a final Senate vote as soon as this weekend, there are clearly still a lot more questions than answers. BLITZER: Well, walk us through that timeline, because Mitch

McConnell, as you know and as you have reported, the Senate majority leader, the Republican leader, he says there will, there will be a final vote on confirmation this week.

So they have procedural votes they have to go through first, so walk us through what the majority leader is planning on doing.

MATTINGLY: So what we know right now, obviously, receiving the FBI background investigation, or supplemental background investigation, is crucial to being able to move forward. That's the key to three undecided senators at this point.

That being said, the expectation right now, which could shift, is that the majority leader would start the procedural clock essentially tomorrow, setting up a procedural vote, Wolf, as soon as Friday and a final vote on confirmation as soon as Saturday.

Now, again, these things are fluid. The expectation has been that the FBI supplemental background investigation could come back up to the Hill at some point within the next 24 hours.

What we know at this point, it's kind of a process, which we talked about last night, Wolf, but I think is really important here. When the FBI finishes, they will send it to the White House, who will then send it to the Hill. Then all 100 senators will have an opportunity to read that document.

What they won't be able to do is release it publicly. Only a small number of staffers would have access as well. One of the key debates right now is what actually happens with the information.

Take a listen to what the majority leader had to say, Wolf.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R-KY), MAJORITY LEADER: We will get an FBI report soon. It will be made available to each senator, and only senators will be allowed to look at it.

We will be voting this week, so the FBI report will be finished and we will be voting this week on the Kavanaugh nomination.

(END VIDEO CLIP)

MATTINGLY: So there's the timeline and the reality.

I think one of the interesting elements that I have picked up and I think my colleagues have picked up over the course of the last couple of hours is, Wolf, Republican senators know that people are going to want to see some version or some semblance of the information that they receive from the FBI.

Now, this information cannot be released publicly. It is against the law. So, there are conversations ongoing, I'm told, between Republicans, staffers and the White House in terms of, is there a way they can release some kind of summary? Is there a way they could release something that they find, particularly if they believe it exonerates Brett Kavanaugh?

[18:25:10]

At this point, no decisions have been made. And, as I said, when that information comes to Capitol Hill, it will not be for public consumption. It will only be for senators and a small number of staff, Wolf.

BLITZER: All right, Phil, thank you. We will stand by for that.

There's other breaking news unfolding right now. Look at this. The FBI is investigating three suspicious envelopes sent to the president of the United States, as well as to the Pentagon. Two of the letters have initially already been tested and they are positive for the deadly poison ricin.

And the letter to the president is suspected of containing ricin as well.

Let's go to our Pentagon correspondent, Barbara Starr.

What do you mow about these letters?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Good evening, Wolf.

Well, the Secret Service is confirming that a suspicious envelope was received addressed to President Trump. There are indications, they suspect, suspect only at this point, it may have contained ricin. Additional testing will have to be completed, the Secret Service being very close about the details, not saying exactly where that letter was received.

Not believed, however, to be received at the Pentagon. All three came yesterday, yesterday, two letters received here at the Pentagon, one addressed to Defense Secretary James Mattis, one addressed to the chief of Naval operations, Admiral John Richardson, the head of the U.S. Navy.

Both of those letters also initially testing positive for what they believe might be ricin. The FBI taking possession of all of the evidence, and tonight conducting additional testing, more sophisticated testing that is needed to try and confirm that it absolutely was ricin.

We are awaiting the results from the FBI on all three matters, the two envelopes that were received here at the Pentagon, the one envelope the Secret Service said was received at an undisclosed location addressed to President Trump, not knowing when the FBI will come to a conclusion about the testing, not known if they will make it public.

In the case of the Pentagon, it is important to say both of those letters were screened at a remote mail facility. They did not come into the building. There was no threat to the 20,000 people that work here. Similarly, the Secret Service saying no threat to White House personnel.

Across Washington, as you know, Wolf, almost all mail, if not all of it, mail, envelopes and packages to the federal government screened at remote facilities before it comes into a building where there may be thousands of federal workers. In this day and age, everybody wants to make sure everybody can be kept safe -- Wolf.

BLITZER: Yes, it's critically important. Do the letters appear to be connected, Barbara?

STARR: Well, some people are saying that they are concerned, some federal officials are saying they are concerned that there is a connection. They will be looking for that.

What the key will be is if these letters test positive for ricin, absolutely, and we don't know that yet. The FBI, which is in the lead investigation position will be looking at the forensics, where could the letters have come from, how did they move through the mail, who was in contact with them, any indications of existing threats.

Sadly, federal officials do get threats, not on a routine basis, but it is not unknown, and any president of the United States, a defense secretary. A little bit odd that Admiral John Richardson, the head of the U.S. Navy, not a widely known public figure outside of military circles.

So it is not really clear why a letter might have been addressed to him, Wolf.

BLITZER: All right, Barbara, I want you to stay on top of this, as I know you will. We are going to come back to you as soon as you get more information, very disturbing developments indeed.

I want to talk about all of the breaking news right now with Senator Angus King. He's an independent who serves on the Intelligence and Armed Services Committees.

Senator, thanks very much for joining us.

SEN. ANGUS KING (I), MAINE: Sure, Wolf.

BLITZER: What is your reaction, first of all, to these three letters? They may contain -- two of them at least in the initial investigations, contain this poison ricin, which is deadly.

KING: I think the bad news is, this is terrible. The good news is, it was caught. And I think that's important to realize.

But why someone would do something like this is just beyond me. But it sounds like the Secret Service is on top of it. The question that you asked, I think, was a good one, and that is, are they connected, the White House and the Pentagon?

Why the chief admiral of the Navy was included is sort of strange as well. So, clearly, we're at the very beginning of that story, but I'm just happy that it appears that the checks and the security provisions have worked.

BLITZER: Yes. It is a very disturbing development indeed. We will get some more information. I know you are on the Intelligence Committee, the Armed Services Committee. I'm sure you and your staff will be working on this as well.

Let's get to this "New York Times" story that just came out a couple of hours or so ago that basically debunks the entire Donald Trump myth that he created all of this wealth, self -- that he was doing it all by himself, got a million-dollar loan from his dad, repaid it.

But this "New York Times" story, it's a bombshell, saying, basically, he got about $400 million in today's money from his father.

[18:30:19] SEN. ANGUS KING (I), MAINE: Well, the first thing I'm going to say is I haven't had a chance to read the whole thing. As you know, it's very lengthy. Very --

BLITZER: It's 40,000 words, at least here about 45, 50 pages.

KING: I have read the first few paragraphs. I've read the White House reaction or actually the president's lawyer's reaction.

I think it's important, there's nothing wrong with inheriting money from your family. The question is how did it get there and was it done in such a way as to avoid tax laws in an illegal way? Avoidance of taxes, again, is legal. But the article raises serious questions about the methodology of how the money was transferred.

And you know, I think we're back to, eventually, this story is going to be something like Howard Baker's famous question: "What did the president know and when did he know it?" Clearly, he didn't know when he was three years old that he was getting a $200,000-a-year salary, but at some point was he aware of these various machinations that appear -- and it's important to emphasize appear, because this, as I say, this story just came out today -- that appear to be end runs around the tax laws in order to convey a very large sum of money to the family. Not only to Donald Trump, but to his siblings.

BLITZER: Yes, I want to get to the Kavanaugh nomination, but very quickly if the Democrats are the majority in the Senate and the House, is there a role, some investigatory role for the Democrats to pursue these allegations in "The New York Times"?

KING: Well, I think there may be. I suspect one of the oversight committees will want to look into this, probably in the House first.

But I think, clearly, what "The New York Times" has done is a very substantial piece of reporting, just by the sheer bulk of it, and it really leads to the authorities and perhaps even the IRS to review their records to see if laws were broken and what the consequences may be.

As I think Jeff Toobin pointed out, ,there's unlikely to be criminal consequences, because the statute of limitations has long since run, but there may be some civil consequences. But we're a ways from that now.

I think everybody is just absorbing this story right now. And, of course, one of the problems, Wolf, is the president has created an atmosphere where any attack on him from "The New York Times" or any other news media is immediately sort of a validation of him as the victim of the elites. I suspect those people in Mississippi today are going to cheer him mightily and shrug off this story. The question is, where does it go from here?

BLITZER: I'm sure they'll call it fake news, failing "New York Times" and all of that.

Let's get to the Kavanaugh nomination. The Republican majority leader, Mitch McConnell, says there will be a final vote this week. The FBI will complete its supplemental investigation. There will be a vote. Are you OK with that?

KING: Well, I think it depends on whether this investigation is a real investigation. And as you heard we're -- individual senators are going to be able to review the report.

There were disturbing reports over the weekend that they were only going to interview four people; they weren't going to follow up. They weren't going to look at documents: the calendar, for example.

My impression is that Jeff Flake, Susan Collins and Lisa Murkowski intervened and said, "No, this has to be a real investigation to satisfy our concerns," and so right now we don't really know. We don't know the extent of the investigation, but that's going to be, I think, a key development.

It's -- this is -- the progress of this, I came out against Judge Kavanaugh before any of the allegations of sexual assault, because I didn't think he was the right guy to be on the court. Also, because they refused to release 90 percent of his records as a White House official. I had other concerns about his views of presidential power and personal liberty, some of those kinds of issues.

So -- but all of that was forgotten when the sexual assault allegation came up, so the subject, in effect, was changed. Her testimony -- Dr. Ford's testimony was very compelling, very strong, and certainly, came across as credible. I sat and watched it.

And then a couple of hours later, the subject was changed again to his deportment and demeanor and temperament, because of the way he presented himself at that hearing, and also questions of whether he was being fully forthcoming in his answer to the question.

So I think this FBI report is going to be very important. And really, Wolf, we're talking about a small group of undecided senators who are going to ultimately decide this. And I think they're going to -- I think they're going to be very focused on the results of the FBI.

BLITZER: Basically, these three Republican senators, because there's 51 Republicans, 49 Democrats, and they will make this decision. The lawyer representing Professor Ford says the FBI has not contacted

her about an investigation or questions separately. It doesn't look like Judge Kavanaugh is being questioned by the FBI. I guess their argument is they were both questioned by the Senate Judiciary Committee, and they know their stories. Is that good enough?

[18:35:15] KING: Well, I think -- I would think there would be follow-up interviews. The implication of that is they said everything that needs saying, and an FBI agent wouldn't have any further questions. I would think there would be some threads that the FBI would want to pull in terms of, "Give me more detail about seeing Mark Judge in the Safeway," and then we need to go and look at employment records to see when he was there and does that narrow the date down? Talk to Judge Kavanaugh about his calendar and what that notation on -- I think it was July 1 -- meant.

So I think there are reasons that they would want to talk to them.

And plus, as I say, when you start an investigation like this, you don't know where it's going to lead. And the important thing for me is that the FBI was given the opportunity to follow the evidence wherever it leads and then can report back to the Senate.

If it -- if this is a bobtail, rushed, non-conclusive investigation -- and I'm not suggesting that there is a yes or no answer. But if it raises more doubts than it settles, then we are right back where we started and it is -- the other issue is, rush -- rush. Is, Wolf, why we are in this rush. The Merrick Garland seat or Gorsuch, however you want to characterize it, that seat was held open by 14 months by the very people who are now saying we've got to do it this weekend.

And I've never understood, even before this process went on, why the break-neck pace of trying to get this done while there are outstanding issues.

If I were Judge Kavanaugh and he's as innocent, I'm as innocent as he says he is, I would want the most thorough FBI investigation in the history of the world in order to exonerate me. And I don't understand the resistance. It took Jeff Flake and Chris Coons' intervention to get this investigation done at all. And I would think that the White House and Judge Kavanaugh would want this investigation to be thorough, even if it takes a couple of extra days.

BLITZER: They said it was going to be a week or less, and by Friday it will be a week. We will see what happens. Senator, thanks so much for coming in.

KING: Thank you, Wolf.

BLITZER: Angus King of Maine.

Just ahead, we're going to have more on the new reporting on the president's tax history as "The New York Times" finds evidence that he resorted to outright fraud back in the 1990s. Will Americans ever get answers by seeing Mr. Trump's tax returns?

(COMMERCIAL BREAK)

[18:42:10] BLITZER: We're back with the breaking news on a "New York Times" investigation of how President Trump made his fortune.

"The Times" reporting that confidential returns and financial records reveal that Mr. Trump participated in what are described as dubious tax schemes back in the 1990s, including instances of, quote, "outright fraud."

According to "The Times," Mr. Trump vastly increased the riches he received from his father's real-estate empire, receiving the equivalent of at least $413 million in today's dollars.

Let's bring in our analysts. And Gloria, let me play a clip. This is what the president often said during the campaign, this in 2015.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: It has not been easy for me. And you know, I started off in Brooklyn. My father gave me a small loan of a million dollars. I came into Manhattan and I had to pay him back, and I had to pay him back with interest.

(END VIDEO CLIP)

BLITZER: All right. So that was one million, and "The New York Times" says it was really more than $400 million.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Right, and there wasn't any paying back with interest, as we know from reading this.

I mean, look, I think this not only does damage to the president's own narrative of his success story and how he turned from riches into mega riches, but what it does is it explains in incredible detail, with over 100,000 documents, the fact that -- of the fraud, the fraud -- that there were fraudulent appraisals, sham companies.

This isn't somebody who's wealthy exploiting legal loopholes. This is somebody who is wealthy who was dodging taxes. His father was quite inventive, apparently, in reading the -- in reading this piece, in about how he managed to avoid paying the IRS what he should have been paying the IRS. And the piece makes it very clear that this tax avoidance was something that Donald Trump -- now president of the United States -- was part and parcel of.

BLITZER: Yes. What did you think when you read the piece, especially from the legal perspective, Jeffrey?

JEFFREY TOOBIN, CNN CHIEF LEGAL ANALYST: Well, as for a legal matter, I think the criminal issues are gone. The statute of limitations has run. Certainly, the IRS could continue to go back and -- could go back and try to get money.

But, you know, this is related to a long-term strategy on behalf of the Republican Party to neuter the IRS. The IRS has had its budget cut year after year. They don't have the resources. And there really is sort of two tax systems in the United States. And

this story really illustrates it. If you get a salary and you get a W-2 at the end of the year, there really is not much you can do to cheat on your taxes. It just isn't possible.

However, if you own businesses, as the Trump family did, you have essentially carte blanche to cheat the IRS, and the IRS is never going to come back to you.

[18:45:04] The one risk that the Trumps run as a result of this story is that if Congress, particularly the House of Representatives, goes to the Democrats and the Democrats have oversight possibilities, they could subpoena the IRS to get all of these tax returns and expose what really went on here. Although "The New York Times" seems to have done a magnificent job from a journalistic perspective, but subpoena power is something not even "The New York Times" has.

WOLF BLITZER, CNN HOST: Yes, amazing reporting.

Let's turn to the Kavanaugh confirmation process, David Swerdlick. I'm going to play some clips from the first confirmation hearing that Judge Kavanaugh had and then the one that followed Professor Ford's testimony. And we are talking about his temperament.

Listen to this.

(BEGIN VIDEO CLIP)

JUDGE BRETT KAVANAUGH, SUPREME COURT JUSTICE NOMINEE: Over the past eight weeks I have witnessed firsthand the Senate's deep appreciation for the vital role of the American judiciary.

You have replaced advice and consent with search and destroy.

A good judge must be an umpire, a neutral and impartial arbiter who favors no litigant or policy.

The behavior of several of the Democratic members of this committee in my hearing a few weeks ago was an embarrassment.

The Supreme Court must never, never be viewed as a partisan institution.

This whole two-week effort has been a calculated and orchestrated political hit, fuelled with apparent pent-up anger about President Trump and the 2016 election, revenge on behalf of the Clintons, and millions of dollars and money from outside left wing opposition groups.

I am an optimist. I live on the sunrise side of the mountain, not the sunset side of the mountain. I see the day that is coming, not the day that is gone. I am optimistic about the future of America.

I am an optimistic guy. I always try to be on the sunrise side of the mountain, to be optimistic about the day that is coming, but today I have to say that I fear for the future. (END VIDEO CLIP)

BLITZER: Quite a contrast in temperament between those two appearances. How much of a problem is that for him and for his confirmation?

DAVID SWERDLICK, CNN POLITICAL COMMENTATOR: Yes, Wolf. So I do think it is a problem. In some of those lines that you played in that overall clip, you did see Judge Kavanaugh display what could not be described as a level, even-handed judicial temperament. And for those of us, like so many millions of people who watched the entire hearings, he really got ramped up at certain points of that, in a way that I think members of the Senate on both sides of the aisle would be forced to say was not normally what you want to see out of a Supreme Court justice.

That being said, Wolf, I'm not sure that that's his biggest problem. If he believes and if he is, in fact, innocent of what he is accused of, you could almost imagine him going forward with that kind of indignant attitude, particularly because when he tried to be meek in his Fox News interview, it didn't work. The problem I think for him, as has been discussed a lot in the last few days, is his portrayal of his college and high school time where he described himself sort of as this goody two-shoes guy, when, in fact, you had several law school -- excuse me, college and high school classmates say he was a partier.

BLITZER: How do you see it, Rebecca?

REBECCA BERG, CNN POLITCAL REPORTER: Well, David brings up a great point which is this credibility issue. How does that start to chip away at how people view Brett Kavanaugh, his standing in the public?

Because, remember, as Republicans over the next week or so continue to weigh this nomination, we have some key Republicans still on the fence, they're looking to the public for guidance here. That's how politics works. So if the public begins to believe that Brett Kavanaugh is not credible, that he white washed his past as some of his classmates are suggesting, that could have an impact on his confirmation.

BLITZER: You know, Jeffrey, it is a problem though. We are talking about his temperament and a lot of people are going to say, you know what? Maybe he's not best suited to be an associate justice of the Supreme Court.

TOOBIN: There has never been a judicial confirmation hearing anything like the testimony that Judge Kavanaugh gave. Even Clarence Thomas when he was responding indignantly to the accusations of Anita Hill 27 years ago, he didn't attack the entire Democratic Party. He didn't attack the Clintons or other Democratic politicians in the way that Judge Kavanaugh did.

And, you know, I have to say the one thing that really sticks in my craw about what he said there is this idea that the left wing has spent millions of dollars. Well, you know who has spent even more millions of dollars is the Judicial Crisis Network. We see their spokesman on CNN all the time. They have spent millions of dollars supporting Brett Kavanaugh, and we don't know where that money came from.

[18:50:05] They don't have to they don't have to disclose it because of Citizens United and related decisions. So, you know, there are people putting him on the Supreme Court because he will advance their interests, including their financial interests, and that's, in part, what this story is about, independent of the issues of misbehavior that have been raised in the last couple weeks.

BLITZER: Those sound bytes from then and the more recent confirmation hearing, that's pretty dramatic stuff.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Well, which Brett Kavanaugh is it? Who is the real Brett Kavanaugh? What is his temperament? I agree with Jeffrey.

I mean, his display of partisanship, I think, is also an issue, and Laurence Tribe, whom I bet Jeffrey knows well wrote a piece for "The Times" saying because he was so partisan, he might have to recuse himself because he was writing about the -- I mean, he was, you know, saying this was a set-up by the Clintons and the Democrats, et cetera, et cetera, partisan issues come up before the court all the time. And whether it's a case like Citizens United and campaign finance or whatever, Tribe was making the case, and maybe you disagree, that because of what he said in his confirmation, he may have to recuse himself.

BERG: And you know, Republicans were so critical -- sorry to cut in, Jeffrey -- but I just wanted to note that Republicans were so critical of Ruth Bader Ginsburg when during the presidential election in 2016 she said some very harsh things about Donald Trump. So, now that the shoe is on the other foot, is that an OK thing for someone like Brett Kavanaugh to act in a partisan manner and speak in a partisan manner?

TOOBIN: Well, I thought -- what Ruth Bader Ginsburg said during the campaign was entirely inappropriate and wrong.

BERG: Yes, and she apologized.

TOOBIN: And she was -- it was a terrible mistake on her part.

But what Judge Kavanaugh is doing -- I'm remembering it's not just campaign contributions. It's redistricting, which is a huge subject before the Supreme Court, voting rights. You know, Democrats and Republicans have entirely different views about these issues, and they all file briefs in these cases.

You know, what are they -- will a Democrat get a fair shake from this judge?

BLITZER: We're getting another story that's just posted in "The New York Times" about a letter that Brett Kavanaugh wrote back in 1983 offering some advice for high school students about a beach front property in that some of the classmates were looking for in Ocean City, Maryland. In the letter which was reviewed by "The New York Times," the young Judge Kavanaugh warned his friends of the danger of eviction from this Ocean City, Maryland, condo in a neatly written postscript, he wrote this: whoever arrived first at the condo should warn the neighbors that we're loud, obnoxious drunks with prolific pukers among us. Advise them to go about 30 miles.

That's what he suggested. That's pretty awful.

BORGER: He's clearly organizing his beach week, his, you know, in high school, and I hope they're stopping beach weeks.

BERG: I guess it was nice to warn the neighbors.

BORGER: It would seem to be a good idea. And look, it seems to me that he was somebody who considers himself sort of a leader of the pack here, you know? And that's what, you know, that's what he was doing, and I guess he thought this was really cute in high school.

SWERDLICK: Yes. None of this information that's come out like this and some of the other comments by his classmates about his partying suggests that he was a sexual assaulter, but some of it does suggest that he has not been forthcoming with senators throughout the last couple of hearings and throughout some of his public comments, including on his TV interview.

BORGER: Certainly not with Fox News.

TOOBIN: It's also related to the issue of sexual assault, though. All three of the alleged sexual assaults were alleged to be committed by Brett Kavanaugh while under the influence of alcohol, so the fact that he's talking constantly about being a drunk in here, it's not proof of anything, but it is certainly relevant to our consideration.

SWERDLICK: I agree with you, Jeffrey. It's not exculpatory, but it's not proof either. But it is sort of strongly suggesting if not proof that he has not told -- been straight with senators about who he was at that age.

BLITZER: In this letter that the "New York Times" has, Rebecca, he signs the letter, Bart. B-A-R-T, not Brett. He signs, FFF, Bart, and then the P.S., it would probably be a good idea on Saturday the 18th to warn the neighbors that we're loud, obnoxious drunks with prolific pukers among us, advise them to go about 30 miles away.

BERG: Right. And so, you'll recall, Wolf, Bart was the nickname or sort of the nickname, I guess, that Mark Judge gave to a character in his book that seemed a lot like Brett Kavanaugh.

BLITZER: That character was called Bart O'Kavanaugh.

BORGER: What?

[18:55:01] BERG: Exactly. So, he was depicted as very drunk, kind of Mark Judge's partner in crime in all of his misadventures, drunken misadventures, and so this raises the question, should we go back now Mark Judge's book and take a look at some of these things that Bart O'Kavanaugh was said to have done. TOOBIN: And if I could just add one thing. The FFF that's signed,

that's also appears in his yearbook.

BORGER: Exactly.

TOOBIN: And that appears -- the meaning of that, I think, is somewhat in dispute. Judge Kavanaugh's very earnest and innocent explanations of these yearbook entries are contradicted by Urban Dictionary, which is certainly my go-to source on pop culture slang that I'm too clueless to understand.

BORGER: You know, this is -- this is embarrassing and juvenile and you know, written by this guy who thought he was cool in high school, and clearly thought drinking was a big part of it, beach week is a big deal I guess. You know, does it tell you anything we don't already know about his behavior?

BLITZER: They're loud, obnoxious drunks with prolific pukers.

BORGER: Did we know that? I felt we may have known that already. I'm not sure.

TOOBIN: No, he denied.

BORGER: Well, but he said he liked beer, and the president --

TOOBIN: He said he liked beer.

BORGER: And then the president came out and said, well, he's acknowledged he had some difficulty, which, of course, he hadn't. But, yes, it puts a little more meat on the bones here, but you know, it's just obnoxious and juvenile.

BLITZER: All right. There's more breaking news we're following, as if that's not enough. We're following up on this "New York Time" blockbuster report that President Trump made millions and millions of dollars by helping his parents evade taxes back in the 1990s, including instances of, quote, outright fraud. Right now, there's new information about Mr. Trump's personal involvement, also at the same time, in attempts to silence Stormy Daniels about their alleged affair.

Let's bring in our national correspondent Sara Sidner.

So, Sara, what are you learning on that front?

SARA SIDNER, NATIONAL CORRESPONDENT: Hey, Wolf, after all the denials from the president, from the White House, from his attorneys, a source telling CNN that the president did try to silence Stormy Daniels himself, as well as another member of the Trump family.

(BEGIN VIDEOTAPE)

SIDNER (voice-over): Tonight, a source telling CNN the president and his son Eric Trump were directly involved in efforts to stop porn star Stormy Daniels from telling her story about the sexual tryst she says she had with Donald Trump in 2006.

ANDERSON COOPER, CNN HOST: Did you want to have sex with him?

STORMY DANIELS, PORN STAR: No, but I didn't say no. I'm not a victim. I'm not --

COOPER: It was entirely consensual.

DANIELS: Oh, yes. Yes.

SIDNER: In February, the month before Daniels agreed to this interview with "60 Minutes", a source with direct knowledge tells CNN that President Trump personally directed his then lawyer Michael Cohen in a phone call to stop Daniels from publicly speaking about an alleged affair with him by seeking a restraining order.

The source says Trump directed Cohen to coordinate the effort involving his son Eric and an outside lawyer Jill Martin. "The Wall Street Journal" first reported the details of these efforts.

MICHAEL AVENATTI, ATTORNEY FOR STORMY DANIELS: I mean, this is consistent with what we've been saying all along that Donald Trump knew about this payment, knew about the agreement, and conspired with Michael Cohen and others to cover it up.

SIDNER: Martin eventually filed a restraining order against Daniels whose legal name is Stephanie Clifford. President Trump denied he ever had a sexual encounter with Stormy Daniels. He has also said in April, he knew nothing of the $130,000 hush money payment paid by Cohen.

REPORTER: Mr. President, did you know about the $130,000 payment to Stormy Daniels?

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: No, no. What else?

REPORTER: Then why -- why did Michael Cohen make this, if there was no truth to her allegations?

TRUMP: Well, you have to ask Michael Cohen. Michael is my attorney and you'll have to ask Michael Cohen.

SIDNER: Michael Cohen pled guilty in August to eight criminal charges, including two stemming from the payments to Daniels and former Playboy model Karen McDougal, who also alleged an affair with Donald Trump, which he denies.

(END VIDEOTAPE)

SIDNER: Of course, Stormy Daniels was not kept silent. Instead, she sued Donald Trump and after that, she did an interview with "60 Minutes", with Jimmy Kimmel, and "The View". And by the way, she wrote a book after all of that, and that book goes on sale in bookstores today -- Wolf.

BLITZER: Lots of news today, Sara. This story is clearly not going away. But no, as you pointed out, no official reaction from either Michael Cohen or the White House to these latest allegations?

SIDNER: No answer, and as we have said before, we contact them every time and the White House usually denies any of the allegations made by Stormy Daniels, though we have not heard much from Donald Trump on that.

BLITZER: All right, Sara. Sara Sidner reporting for us, we'll stay on top of that story for sure. Thank you.

I'm Wolf Blitzer in THE SITUATION ROOM.

"ERIN BURNETT OUTFRONT" starts right now.