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CNN NEWSROOM

NYT: Trump Siblings Set Up Sham Corp to Disguise Millions in Gifts; First Lady Promotes Positive Message during Africa Trip; Soon: Secretary Pompeo to Speak Ahead of Trip to North Korea. Aired 10:30- 11a ET

Aired October 3, 2018 - 10:30   ET

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


[10:30:30]

POPPY HARLOW, CNN ANCHOR: A new stunning report in "The New York Times" this morning. It is literally all over the front page if you haven't seen it yet. That President Trump and his family were involved in outright fraud, "The Times" words. It is a product of an 18-month investigation. It uncovered President Trump helped his parents dodge taxes - a lot of them -- in the 90's while allowing himself to a mass of fortune from his father's real estate empire. The journalist literally locked in a room day in day out reporting this, found that the president received at least $413 million in today's dollars as a result of his father. That completely flies in the face of the president's story repeated often that he is a self-made man and only got a $1 million loan from his father.

JIM SCIUTTO, CNN ANCHOR: And he's repeated that $1 million line many, many times. Reporters of "The Times" poured over tens of thousands of documents going back decades to learn that the future president and his siblings received more than a billion dollars from their parents. In the process helping to hide the family fortune from the IRS.

Just the last hour, President Trump hit back at "The New York Times" calling it, quote, "A very old, boring and often told hit piece." He did not - in that tweet - if you've noticed -

HARLOW: Right.

SCIUTTO: -- dispute the facts of that story.

Joining us now is one of the reporters who broke it, Susanne Craig of "The New York Times." Thanks so much. You did a lot of hard work on this and it shows in the reporting. Tell us why you were confident to conclude that this was outright fraud by this president?

SUSANNE CRAIG, GOVERNMENT AND POLITICS REPORTER, "THE NEW YORK TIMES": We had so many underlying documents including financial statements from Fred Trump's empire, bank statements. And we had more than 200 tax returns produced both from his entities and from entities that Donald Trump himself was a shareholder in. We were able to go both through all that and piece together as well public information that we were able to get and through interviews to come to the conclusion. It was a huge jigsaw puzzle that we ultimately were able to put the pieces together. HARLOW: Did you uncover any tax dodges by the president and his family that were illegal -- that were directly illegal?

CRAIG: Directly illegal. We did. There are a few in the story that we write about. The one that is sort of the most overt fraud -

HARLOW: Right.

CRAIG: -- is a company called All County Building Supply. This is incredible story about, you know, Fred Trump is in his 80s. He's aging. And he didn't believe in debt. And he is sitting on his company's - were sitting on mountains of cash.

The Trump children were looking at a situation where he could die and they're going to be paid -- estate tax at that time was 55 percent. And they were facing this, you know, coming up at some point in the near future.

HARLOW: Which the president ran on eliminating.

(CROSSTLAK)

CRAIG: Eliminating the estate tax. Yes.

SCIUTTO: While repeatedly -

CRAIG: He found his own way to reduce it in 1992, 1993 where they set up this company. In Fred Trump's buildings, you know for years, he would buy stuff for the buildings, boilers, plumbing supplies, and he would just go and buy them from vendors. So in 1992 the kids set up a company. They started purchasing it and would pay the vendors whatever the price $300 for an air conditioner. They would then send a separate receipt up to their dad's companies. They would charge $100 more and they would pocket that.

HARLOW: Yes.

SCIUTTO: So, I mean, that sounds to me like the way money laundering works.

CRAIG: A bit of kind of a gangster thing.

SCIUTTO: Sort of internal money laundering of your own assets.

CRAIG: One day you are paying him and now you're paying me and that's 20 percent or 50 percent more.

SCIUTTO: Did you calculate the dollar value of taxes dodged here? Because I think that is important for folks at home to realize. Because that is money that does not go to schools, roads, bridges, et cetera.

CRAIG: We did. The purview we had -- we had certain years and the scope of it is hundreds of millions of dollars.

HARLOW: Hundreds -- in taxes not paid. CRAIG: In taxes not paid.

HARLOW: The -- I know from reading this you reached out a number of times to the White House or the president, to his private counsel over a number of days. This wasn't like yesterday, you said by the way comment, right?

CRAIG: No. We took weeks. We really wanted to engage them. We went to them and said we'd like to sit down and talk about our findings.

HARLOW: And nothing.

CRAIG: Nothing.

HARLOW: But now the White House says this. Let me read you a part of Sarah Sander's statement. Quote, "Perhaps another apology from "The New York Times" like the one they had to issue after they got the 2016 election so embarrassingly wrong is in order."

Putting aside for the moment that I don't know what she is talking about about apologizing for getting the election wrong. She is saying --

CRAIG: We didn't apologize.

HARLOW: Right. But you and your colleagues on this story should apologize --

CRAIG: I'm not sure for what.

HARLOW: How did you get the tax returns?

CRAIG: It's an incredible story and I hope one day it is told. We can't talk about it. You know we've got sources that we have to protect. I wish more than anything I could share it with you because it has been an exciting journey but we can't.

[10:35:09] SCIUTTO: So we understand the New York State Tax Office, they are investigating this. They say they'll look at this. We also know that the statute of limitations at least for criminal prosecution for avoiding taxes, three years can be extended to six years. Does the president face legal consequences or fines in a civil case here? Can the IRS come back to them and say by the way you owe us these hundreds of millions of dollars in taxes and we demand that you pay them today?

CRAIG: I think there is a lot the IRS can do. The challenge is he oversees the IRS. I think one of the richer veins is going to be New York State in addition to what I described to you with All County and what they did. They turned around and they used those patent receipts to justify rent increases on their tenants. And we have depositions where Robert Trump, Donald Trump's brother, admits to submitting the receipts to get rent.

SCIUTTO: It is fraud on top of fraud.

CRAIG: And mail fraud another thing actually. HARLOW: The reason that the IRS exists is to catch - bigger reason - is to catch things like this. Why did the IRS apparently miss so much?

CRAIG: I think they looked at -- our conclusion is hard to say because we weren't there. But they looked at a lot of component pieces of things. Did they see the totality of it? Were they able to connect this and that? And I think there is also a little bit of catch me if you can with the IRS and they are under staffed. I mean it is hard to say because we weren't there. And to go back, we were able to sort of look at a broader picture and see a lot of pieces and how they fit together that the IRS maybe didn't see.

SCIUTTO: Yes.

CRAIG: It is - I mean the taxpayers are the victim here really.

HARLOW: It's an important point.

SCIUTTO: Fantastic story. Folks, read the story. No one reads it anymore.

HARLOW: It's worth every minute.

SCIUTTO: But it is great reporting. And make your own judgments. But it's a pretty comprehensive set of facts that they have put together.

HARLOW: And maybe your book will be the book on how you got the tax returns. We'll be watching.

CRAIG: Thank you.

HARLOW: Thank you Susanne and to your colleagues, the other two who worked on this. Thank you.

First Lady Melania Trump is overseas. She is continuing that trip in Africa. We're going to bring you the latest on that live.

(COMMERCIAL BREAK)

[10:41:45] SCIUTTO: The First Lady Melania Trump is on the second day now of her tour on Africa. She is in Ghana promoting her "Be Best" campaign as well as women and children's health issues. Some say the message is at odds with her husband's policies in the region which in part has cut funding for health-related charities that provide or promote abortion.

HARLOW: Joining us on the phone from Ghana is CNN White House Reporter, Kate Bennett. And Kate, you know to Jim's point, the first lady has never shied away from going wherever or saying whatever she thinks even if it is at odds with some of the policies of her husband. What are you seeing as you are on the road with her there?

KATE BENNETT, CNN WHITE HOUSE REPORTER (VIA TELEPHONE): You are exactly right. This is a first lady who is not necessarily in lock step with the left wing. You have seen her say things during the LeBron James scandal for instance and some of the other areas taking up cyber bullying when her husband uses Twitter the way he does, et cetera. So, clearly, I think this trip to Africa is a good will tour.

This morning we were in a small village on the Cape Coast where she did a ceremonial requesting of permission to the local chief for being able to visit his legion. It was very interesting. We think about Melania Trump in a lot of ways. She is a former model. She is an immigrant. She is from Slovenia. Here she is participating in these very ceremonial protocol heavy events.

And then very emotional ones, we went to Cape Coast Castle which of course is one of the few slave trade outposts remaining here on the Coast of Ghana. She took a very solemn tour. She was clearly affected by it. She spent about five minutes even down at the dungeon touring and really getting sense of it. This trip to me feels like when we see Melania Trump on the global stage she tends to be more independent, she smiles more, she seems more herself, so to speak.

But you're right the funding is an interesting situation. She has partnered with USAID for this trip. That is one of the agencies affected by her husband's budget cuts. Her office will say they still give billions and billions to Africa to support health care needs. However, we can't avoid that elephant in the room.

And also, speaking of -- I would imagine as we move through the countries there might be animal conservation or other things on the schedule, perhaps in one of the countries we visit later. You know it's like the step sons Eric Trump and Donald Trump, Jr. who have done big game and trophy hunting. And you know there is the strange juxtaposition between the first lady and the rest of the administration. She is very much charting her own course. I think this Africa trip will be a reflection of that. It has been already.

HARLOW: Yes.

SCIUTTO: Juxtaposition contradiction. Kate Bennett, traveling with the first lady, thanks very much.

Secretary of State Mike Pompeo is set to speak before he leaves for North Korea for another round of nuclear talks, this time face-to-face with Kim Jong-un. We're going to bring you that live.

(COMMERCIAL BREAK)

[10:49:16] HARLOW: All right. Secretary of State Mike Pompeo will speak in just minutes at the State Department. You'll see it live here. This is ahead of his trip to North Korea to continue those nuclear talks. He will meet with Supreme Leader Kim Jong-un this weekend.

SCIUTTO: This will be Secretary Pompeo's fourth visit to the country and he is expected to lay the groundwork for a second summit between Kim and President Trump himself.

Joining us now is John Park. He's director of the Korea Working Group at Harvard Kennedy School. John Park thanks for taking the time. A big issue, obvious one since the first summit is no verifiable irreversible steps towards denuclearization by North Korea, the talks reaching something of an impasse here, what is the minimum concession that Pompeo must leave Pyongyang with to get the talks back on track?

[10:50:04] JOHN PARK, DIRECTOR, KOREA WORKING GROUP AT HARVARD KENNEDY SCHOOL: Jim, there's a lot of focus on that particular technical aspect but one thing to keep in mind is this is a political process. So, while there has been a stalling in the denuclearization talks themselves, there was the planned visit not too long ago by Secretary Pompeo. But that was called off in the White House meeting there.

Right now the focus is on this summit. And I think when we look at the U.S./North Korea summits they happen right after usually an inter- Korean summit between President Moon of South Korea and Chairman Kim. But on that denuclearization issue right now, there is a sense of urgency that is coupled with the summit in the sense that there is something of a time table of about two years. And that's something that Secretary Pompeo has talked about as well. What is different is going to be the unveiling in this meeting in North Korea of new special representative for North Korea policy, Steve Biegun. And so I think that is another aspect that we are going to be watching very closely.

SCIUTTO: But at what point if it is two years and you are six months into discussions and North Korea has made no step as required, you know, as defined by the Trump administration, they said complete, verifiable, irreversible denuclearization, if that is the timeline why should folks have confidence that this is going to move forward in a positive way?

PARK: I think it is an aspect of a political process. And when you look at the definition of these principles and some of the understandings of denuclearization there is a technical interpretation and there's a political interpretation. I think this idea of putting it in what's called a denuclearization mechanism, the idea that it would take time, there would be the up and down aspect to it is a critical element of the summits.

For the technical issues themselves, there is an interesting carrot that was offered in the inter-Korean summit not too long ago. President Moon conveyed this to President Trump. This was the idea from the North Korean side that they are willing to disable, dismantle their nuclear complex if the United States takes the appropriate measures. And this is the opening I think of Secretary Pompeo's meetings in Pyongyang that will be very shortly.

HARLOW: I do think the comments that we heard from North Korea's foreign minister who does not mince his words I should note. On the sidelines of the UNG over the weekend were telling, right? Let me quote part of the - "The perception that sanctions can bring us on our knees is a pipe-dream of those who are ignorant about us."

What should that tell Secretary Pompeo as he goes to meet with Kim Jong-un?

PARK: These are going to be tough negotiations. This is no walk in the park. Every single one of these meetings there is a great deal of this pushback, the idea of the North Koreans being firm in what they are looking for in these talks. But the aspect that is unique is the actual individual state of this.

Ri Yong-ho is the Foreign Ministry of North Korea. He is a trained and experienced negotiator. If we see in the upcoming meetings in Pyongyang a greater interaction with Ri Yong-ho versus Kim Yong Choi the very powerful adviser to Chairman Kim, I think that could be interpreted as a shift that we're going into negotiation track. And this is where Special Representative Biegun's role would rise as a counter party with one of the senior foreign ministry officials.

HARLOW: John Park, we appreciate the expertise. Thanks for being here. Again, we'll hear from Secretary Pompeo in just a few minutes. And also, just a few minutes, Senator Lindsey Graham will speak live at the Atlantic Festival. What is he going to say about the president's comments about Prof. Ford last night? Will he echo Susan Collins and Jeff Flake? We are watching.

(COMMERCIAL BREAK)

[10:57:50] HARLOW: All right. Welcome back. So the number of female CEOs leading Fortune 500 companies has fallen 25 percent in just the past year. On top of that, they have all been replaced by men. In our latest episode of "Boss Files" this week, I sit down with the woman just named to lead Land O'Lakes. Not only is she the first female CEO of the company. She is also the first openly gay woman to run a Fortune 500 company. Here is part of our conversation.

(BEGIN VIDEO TAPE)

HARLOW: Your mom may view a key piece of advice that you talked about a lot and that is she said to you Beth, if you want something, ask for it.

BETH FORD, PRESIDENT AND CEO, LAND O'LAKES: That's right.

HARLOW: So, did you ask to be CEO?

FORD: I certainly made it well known that I wanted that role. Yes.

HARLOW: There is a school of thought to head down and do your work and these things will come to you.

FORD: I don't think it's an either or, right? Certainly, I have to be driving performance -

HARLOW: Right.

FORD: -- to be in a position to get that role. But I think if you add that last comment where you say, and then it will come to you, I think that that is part in my own experience part of the challenge for women in general. That would be my view you know that you expect you're going to be recognized because you have done the hard work. And that isn't actually how it always happens.

HARLOW: So do we as women with high career aspirations need to -- would you advise us to raise our hands more and make it very clear we want this? FORD: Yes. I think it is healthy and productive to have the right conversation with your leader, with your manager to say what do I need to do to be in position to be considered for that?

(END VIDEOTAPE)

HARLOW: That's really interesting. I have known her for years. It's a Minnesota company. And she is the first woman to lead it at a time when 25 percent of the Fortune 500 female CEOs that were in the place last year are now gone and all of them have been replaced by men.

SCIUTTO: Backwards -- back tracking.

HARLOW: In a sense, in a sense. All right, you're going to hear that full conversation with Beth Ford. Just subscribe for our podcast "Boss Files" on iTunes or tune in.

SCIUTTO: Thanks so much for joining us this Wednesday. I'm Jim Sciutto.

HARLOW: I'm Poppy Harlow in New York. We'll see you here tomorrow. "AT THIS HOUR" Kate Bolduan is next.