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Source: Trump Was in Room When Cohen Discussed Hush-Money Payments with AMI Chief; Trump Inauguration Spending Under Investigation. Aired 5-6 ET

Aired December 13, 2018 - 17:00   ET

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


JAKE TAPPER, CNN ANCHOR: You can tweet the show, @TheLeadCNN. Our coverage on CNN continues right now.

[17:00:12] WOLF BLITZER, CNN ANCHOR: Happening now, breaking news. Room where it happened. CNN has confirmed that then-candidate Donald Trump was in the room when his former lawyer, Michael Cohen, discussed illegal hush-money payments with the publisher of "The National Enquirer."

Embarrassed. The president falsely claims that the campaign finance violations in which he's implicated are not criminal charges, and he accuses federal prosecutors of adding them to the Cohen case just to embarrass him.

Russian agent. Accused spy Maria Butina pleads guilty to being an illegal foreign agent trying to influence U.S. politics. Now she's cooperating with federal prosecutors. What espionage secrets will she reveal?

And Melania meltdown. The first lady's poll numbers plummet with her favorable rating falling by double digits, and in a new interview, she calls the hardest part of her part opportunists who use her name, including journalists.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

ANNOUNCER: This is CNN breaking news.

BLITZER: We're following breaking news. A source now telling CNN that Donald Trump was at a meeting referred to by federal prosecutors when his former fixer and lawyer, Michael Cohen, discussed illegal hush-money payments with the publisher of the "National Enquirer," David Pecker. That would mean then-candidate Trump was aware that Pecker offered to assist his campaign by buying the silence of women who said they had affairs with Mr. Trump, payments that violated campaign finance laws.

Also breaking moments ago, a major "Wall Street Journal" report saying the president's inauguration spending is now under criminal investigation.

I'll talk about all of that with Senator Jack Reed of the Armed Services and Intelligence Committees. And our correspondents, analysts and specialists are also standing by. First, let's got to our senior White House correspondent, Pamela

Brown, and our chief legal analyst, Jeffrey Toobin.

Pamela, we're going to get to the new reporting from "The Wall Street Journal" in a moment, but first, let's start with the new information about the hush-money payment. What are you learning?

PAMELA BROWN, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, Wolf, tonight, just as Donald Trump tries to distance himself from the hush payments to these two women during the campaign, in an interview with FOX News, we are learning more about central role he played in the hush money, a source telling CNN tonight that Donald Trump was part of the August 2015 meeting with David Pecker, the CEO of AMI, who paid off one of the women to suppress her story.

Trump's attendance was first reported by "The Wall Street Journal" in November, but this has added significance now, in light of the recently-disclosed non-prosecution agreement between federal prosecutors and AMI. It was just disclosed yesterday.

The company admitted making a $150,000 payment in concert with the campaign. It goes on to say that Pecker, Cohen and at least one other member of the campaign met in August 2015 to identify negative stories about Trump that they could then purchase and then not publish.

And according to the source, the other member in that room was Donald Trump. And so this certainly is significant also in the wake of Michael Cohen, his former attorney, pleading guilty to violating finance laws by paying off these two women. And prosecutors have said that the president directed and coordinated those payments with Cohen. And now we know Cohen was sentenced to 36 months in prison, not just for that issue; also for personal bank fraud, tax fraud issues.

But certainly, this just highlights the central role, Wolf, that the president played in these hush-money payments.

BLITZER: Certainly seems, Jeffrey, like a big deal.

JEFFREY TOOBIN, CNN CHIEF LEGAL ANALYST: It is a big deal. Because you know, if -- and first of all, let's just keep in mind that both the new inauguration investigation and this hush-money investigation are being conducted by the Southern District of New York, career prosecutors, not Robert Mueller's office.

And what makes this significant, that is, if Donald Trump and David Pecker and Michael Cohen got together and said, "Look, 'The National Enquirer' is going to write editorials and cover you and do great things for your campaign," that would be totally appropriate. That's protected by the First Amendment.

What makes this potentially criminal is that they all apparently agreed that Pecker, the American Media, "The National Enquirer," would go out and spend money on behalf of the campaign to keep women quiet. That, according to prosecutors, is a contribution to the campaign, and that's unlawful if it's done that way. It's not reported; and that's what Michael Cohen pled guilty to and it is what Donald Trump is clearly implicated in.

BLITZER: The notion of catch and kill, which "The National Enquirer" was accused of doing, which basically they acknowledged doing as part of this agreement for immunity for David Pecker, as part of his cooperation.

Does this, though, bring the prosecutors closer to calling the president of the United States an unindicted co-conspirator?

TOOBIN: Absolutely. I mean, this is criminal behavior, if it's true, that Donald Trump said, "Go spend money on my behalf for the campaign, and don't report it as a campaign contribution." I mean, that is not legal.

Obviously, all we have are news reports about it, and we have Cohen's guilty plea. But if Donald Trump is implicated in this way, it is criminal. He is either a principal in violating the law or a co- conspirator in violating the law.

BLITZER: It makes it harder, Pamela, for the president to deny any knowledge about this scheme.

BROWN: That's right. And what's interesting is you see the change in his language today saying, "Look, I never directed my personal attorney, then Michael Cohen, to do anything wrong," because part of statute is the president would have to willingly, knowingly violate campaign finance law.

But to Jeff's point, it's hard to imagine the president wasn't privy to these payments being made. Now we have this reporting he was in this meeting with David Pecker and Michael Cohen. And even the way in which Trump was paid back by the Trump Organization through the LLC, clearly, Trump was aware of this. He's not someone that would easily part with his money.

And if it was -- if it's something that they believe was lawful it certainly raises the question why they wouldn't just cut a check to pay back Michael Cohen, why they would have to go through these lengths to pay him back. So it certainly doesn't add up.

TOOBIN: The other point is that one defense if these payments has always been that, well, it wasn't about the campaign. It was to spare Donald Trump's family embarrassment. Well, if this meeting took place the way it's been described here, that explanation is out the window, because it is quite clear that Pecker -- according to these reports, that Pecker, Trump and Cohen are talking about spending money to help his campaign.

BLITZER: From a legal perspective, Jeffry, does it make any difference if the president didn't reimburse "The National Enquirer" the $150,000 for that hush-money payment?

TOOBIN: It makes no difference.

BLITZER: Why? TOOBIN: Because the money is spent on behalf of the campaign. And

that's -- that's what the campaign laws are designed to enforce. Money spent on behalf the campaign. If money later came in, that might be a separate crime, but if you authorize, encourage, support an illegal campaign contribution, you are guilty, as well.

BLITZER: I want both of you to stick around. Don't go too far away, because there's another big story that's unfolding right now. "The Wall Street Journal" reporting that the Manhattan U.S. Attorney's Office is in the middle of a criminal probe examining the Trump team's inauguration spending.

I want to bring in "The Wall Street Journal"'s reporter Rebecca Ballhaus.

Rebecca, first of all, this investigation, tell us what you and your colleagues are learning. How did it start? This is a criminal investigation.

REBECCA BALLHAUS, REPORTER, "WALL STREET JOURNAL" (via phone): So what we understand is that this investigation came out of federal prosecutors in Manhattan's investigation of Michael Cohen.

We understand that, in their raid of Cohen's hotel room and office and home earlier this year. In April, they seized, among other things, a recording of a conversation that he had with Stephanie Winston Wolkoff, who was an adviser to the inaugural fund and informal adviser to Melania Trump until earlier this year. And we understand that in that call, she raised questions about how the inaugural fund was spending its money.

BLITZER: So -- Rebecca, are some of the funds simply unaccounted for or just not publicly identified?

BALLHAUS: They're not publicly identified. So by law, the fund is required to disclose top five vendors, and those top five vendors accounted for much $61 million of the $103 million that the fund says it spent. So it's not required to disclose that other $50 million, but there have been a lot of questions raised about where that money went.

BLITZER: Because you report that the federal prosecutors are looking at whether top donors were essentially paying for access to the new administration, to the incoming administration. Tell us about that.

BALLHAUS: Right. So we understand that the investigation basically has two prongs. One seems to be examining the spending side of the funds, and the other is on the donor side of the funds.

It's not -- it's uncommon in Washington to have a situation where you have donors who then get some sort of preferential treatment. But what it appears to be that investigators are looking at is whether donors got real access to the incoming Trump administration or administration positions or things like that.

And among the donors that they are talking about is a Tennessee developer, Frank Haney, who hired Michael Cohen earlier this year, seemingly for help getting insight into the administration, and also donated $1 million to the inaugural.

[17:10:09] BLITZER: And just to be precise, some of the information that federal prosecutors are looking at are these secretly-recorded phone conversations that Michael Cohen had with various individuals. They went and seized all those phone conversations, those taped phone conversations; and presumably, that's providing some of the information.

BALLHAUS: That's right, yes. We know that there was at least one conversation in which concern was expressed about how the spending was going down. And the person expressing that concern, Stephanie Winston Wolkoff, saw her (ph) firm paid more than $25 million by the inaugural fund, and this was a firm that was formed just 45 days before the inauguration.

BLITZER: What about the prospect of foreign funds involved in this investigation?

BALLHAUS: So that seems to be a separate issue, and I think we're not totally clear yet on how they intertwined. We know that Mueller has looked at whether any foreign money came into the inaugural fund. He referred a matter to the U.S. Attorney's Office in Washington earlier this year, entertained a guilty plea for a consultant who said that he was a straw purchaser so that a Ukrainian oligarch could attend the inauguration. But as far as we know, that's not right now part of Manhattan investigation.

BLITZER: What's the relationship between this investigation -- I take it it's the U.S. attorney for the Southern District of New York in Manhattan -- and the special counsel, Robert Mueller's, investigation?

BALLHAUS: That's another question that I think we're still trying to answer. We know that Mueller and SDNY have worked closely together in the past, including on the Cohen matter. Prosecutors from both offices were there yesterday for his sentencing, but I think we're not clear exactly how the exchange of information is working on this probe.

BLITZER: How is the inaugural committee -- and you correctly point out they raised a record $107 million through donations and various other ways. How is the inaugural committee responding to your report, Rebecca, in the "Wall Street Journal," and has there been any response from the White House?

BALLHAUS: So we understand that the inaugural committee has not been approached by investigators and asked to turn over records. Tom Barrack, who headed the committee, similarly has not been approached by investigators since he spoke to Mueller last year. And we know that in that meeting with Mueller, that he was asked a couple of questions about the inaugural fund, but it wasn't the focus.

So the inaugural fund so far seems unaware of any real investigation into them. As for the White House, they have not responded to our questions about this matter, and it's not clear that they would know about it either.

BLITZER: And you correctly point out in the third paragraph of your article, "Giving money in exchange for political favors could run afoul of federal corruption laws. Diverting funds from the organization, which was registered as a nonprofit, could also violate federal law."

Rebecca, thanks so much for your excellent reporting. We appreciate it very much.

BALLHAUS: Thank you.

BLITZER: All right. So Jeff and Pamela, let's discuss this. What does it say to you, Jeff, that this criminal investigation, as reported by "The Wall Street Journal," resulted from the raid on Michael Cohen's apartment, his hotel room, his office?

TOOBIN: Well, think about how much has come from Michael Cohen already. First, we have all these investigations related to the hush money to Stormy Daniels and Karen McDougal. We have his guilty plea about his involvement in Trump Moscow, which is, of course, extremely important.

And now we have an entirely new range of investigations here coming out of the inauguration.

Michael Cohen, as he claimed, was the fixer. He dealt with all the uncomfortable areas that Donald Trump was involved in. And it would -- certainly would not surprise me that -- that there are more still to come.

BLITZER: And as "The Wall Street Journal," Pamela, is reporting, the investigation, this new criminal investigation that we're just learning about, courtesy of "The Wall Street Journal," represents, in their words, another potential legal threat to people who are or were in Mr. Trump's orbit.

BROWN: Right, because now we're learning about yet another investigation relating to President Trump. While he is not directly implicated in this, you have now the Mueller Russia investigation. You have the SDNY investigation into Michael Cohen and the payments to the women. And now this other SDNY investigation we're learning about that's in its early stages relating to the president's inaugural committee. This is certainly not good news for the president and will be -- continue to be a distraction for him.

I was just texting with someone who used to the work in the White House, and basically, they just said, "Look, this is not good." We know the president is already upset, preoccupied by the Russia investigation, and now his inaugural committee is under scrutiny for the way that the funds were spent.

BLITZER: And there's also an intriguing element in this "Wall Street Journal" story. And I'll read it to you, Jeffrey. I want your response. "Federal prosecutors have asked Richard Gates" -- Rick Gates -- "a former campaign aide who served as the inaugural committee's deputy chairman, about the fund's spending and its donors. According to people familiar with the matter, Mr. Gates has met with prosecutors from Manhattan's -- from the Manhattan U.S. Attorney's Office and the special counsel's office."

[17:15:13] So he's clearly cooperating as well.

TOOBIN: Well, this is why it's so dangerous to have people close to you cooperating with investigations, because they know stuff and they have access.

You know, Rick Gates, he pled guilty to crimes relating to something entirely different, his dealings with Ukraine.

BLITZER: He was Paul Manafort's deputy during the campaign, deputy campaign chairman.

TOOBIN: Right. But the same people recur, and he is later a -- the deputy chairman of the inauguration, presumably has significant insight to how the money was spent or misspent. He's going to cooperate. Michael Cohen, same story.

BLITZER: When you get Rick Gates, Pamela, cooperating, Michael Cohen cooperating.

BROWN: Right.

BLITZER: Others presumably cooperating as well. So there at least is material for the U.S. attorney in New York to go after this particular issue.

BROWN: That's right. What's unclear is we know that Michael Cohen has been cooperating to a degree with federal prosecutors, although they said in their recent filing he hasn't been fully cooperative. So it's unclear how helpful his testimony to federal prosecutors has been on this particular investigation.

But clearly, the raid on his apartment and office was -- provided a critical piece of evidence used to launch this investigation.

BLITZER: Yes. And I suspect they have a lot more information that we don't even know about.

MURRAY: Yes.

BLITZER: I assume that's the case.

TOOBIN: We didn't know about this until today.

BLITZER: Obviously --

TOOBIN: That's just, you know, that's just how it goes.

BLITZER: I suspect it's only just beginning. Let's see what happens.

I want to go to our chief White House correspondent, Jim Acosta. Jim, is the White House commenting at all on either of these major stories tonight?

JIM ACOSTA, CNN CHIEF WHITE HOUSE CORRESPONDENT: No, Wolf. They're still trying to get their story straight on the Michael Cohen case.

And as you saw earlier today, President Trump tried to dance around taking any responsibility in the case against his former attorney, Michael Cohen, who is now headed to prison.

The president is putting all of the blame on his former fixer, just as he is making the claim that Cohen's crimes aren't related to him. But as is often the case, the president's facts were outnumbered by falsehoods.

(BEGIN VIDEOTAPE)

ACOSTA (voice-over): President Trump, who once bragged he only hires the best people is now admitting, in the case of his former attorney, Michael Cohen, sometimes mistakes are made.

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: I liked him, and he was a lawyer; and because of that, I did it. And you know what? In retrospect I made had a mistake.

ACOSTA: In an interview with FOX, the president claimed federal prosecutors in New York were out to embarrass him by forcing Cohen to admit he paid hush money to a porn star and a "Playboy" Playmate to cover up Mr. Trump's affairs just before the 2016 election.

TRUMP: Because what he did was all unrelated to me except for the two campaign finance charges that aren't criminal and shouldn't have been on there. They put that on to embarrass me. They put those two charges on to embarrass me. They're not criminal charges.

ACOSTA: But that's not true, as the payments Cohen said Mr. Trump directed him to make were found to be crimes. Even the parent company of "The National Enquirer" admitted in the case that it was also part of the hush-money scheme.

The president seemed to have an answer for all that, as well, insisting it was Cohen's job not to break the law.

TRUMP: Let me tell you, I never directed him to do anything wrong. Whatever he did, he did on his own. He's a lawyer. A lawyer who represents a client is supposed to do the right thing. That's why you pay them a lot of money.

ACOSTA: Yet, even as the president said he relied on Cohen to stay out of hot water, he mocked his former fixer's legal skills.

UNIDENTIFIED FEMALE: Title of fixer.

TRUMP: Low-level work.

UNIDENTIFIED FEMALE: Why did you need him?

TRUMP: He did more public relations than he did law. But he did -- if you'd seen him on television, he was OK on television.

ACOSTA: The president tends to downplay the roles of his former aides who find themselves in legal jeopardy. Consider what he tweeted about his now-convicted foreign policy adviser, George Papadopoulos. "Few people knew the young, low-level volunteer named George, who has already proven to be a liar."

And don't forget how the president referred to his former campaign chairman, Paul Manafort, now a convicted felon.

TRUMP: You know, Paul Manafort worked for me for a very short period of time.

ACOSTA: But the president is defending his former national security advisor, Michael Flynn, who's asking for no prison time in his legal saga.

TRUMP: They took a general that they said didn't lie and they convinced him he did lie and he made some kind of a deal. And now they're recommending no time.

ACOSTA: But that's not exactly true. Flynn pleaded guilty to lying to federal investigators about his contacts with the Russians during the transition period in late 2016; yet, the president repeated that claim later that day.

TRUMP: Well, the FBI said Michael Flynn, a general and a great person, they said he didn't lie. And Mueller said, "Well, maybe he did," and now they're all having a big dispute.

ACOSTA: The president was spreading other falsehoods away from the Russia investigation, claiming once again that Mexico will somehow pay for a border law, tweeting, "I often stated one way or another, Mexico is going to pay for the wall. This has never changed. Our new deal with Mexico and Canada is so much better than the old very costly and anti-USA NAFTA deal that just by the money we save, Mexico is paying for the wall."

Democrats are saying hold on.

[17:20:06] REP. NANCY PELOSI (D-CA), MINORITY LEADER: What money is he talking about that's going to go pay for the wall? It just isn't -- just doesn't measure up.

(END VIDEOTAPE)

ACOSTA: The president also claimed today that he's making progress in his search for a new chief of staff over here at the White House, telling reporters that he's down to five candidates. A source close to the White House telling CNN that the outgoing chief of staff, John Kelly, is confiding to friends that he's relieved to be leaving that post -- Wolf.

BLITZER: I suspect that's true. All right. Jim Acosta, thank you very much. Let's get some more on all the breaking news. Democratic Senator Jack

Reed of Rhode Island is joining us. He's the ranking member of the Armed Services Committee, also serves on the Intelligence Committee.

Senator, thanks so much for joining us.

SEN. JACK REED (D), RHODE ISLAND: Thank you, Wolf.

BLITZER: Let me get your reaction, first of all, to this new report in "The Wall Street Journal." Federal prosecutors in New York City are now investigating whether the president's 2017 inaugural committee, which raised a record $107 million, whether some of that money was received illegally or used illegally. There's apparently a criminal investigation now underway.

REED: Well, I think what you're seeing is professional prosecutors who have evidence suggesting that there may be crimes, and they're following that evidence. And, again, it's another shoe that has dropped. It seems like every day there's another revelation of at least alleged improprieties by the Trump administration or -- or his campaign. And -- and all of this can't be just sort of made up. There seems to be a consistent finding of impropriety associated with the administration.

BLITZER: And remember, these are the U.S. Attorney's Office for the Southern District of New York. This is not part of the Mueller problem, the special counsel's probe.

REED: Right.

BLITZER: We also learned today, CNN confirmed, that President Trump, then-candidate Trump, back in 2015, was in the room when his then- personal lawyer and fixer Michael Cohen and the -- and the head of American Media, the publisher of the "National Enquirer," David Pecker, were -- they were all together in a room where they were discussing ways to kill any negative stories that might emerge about Donald Trump's affairs with various women. How much of a nightmare, potentially, could this be for the president?

REED: I think it's a significant development, because you know, one of his lines of attack against Cohen was that he was sort of a rogue lawyer. He didn't do anything. He was lying, essentially.

Now you have the American Media and Mr. Pecker apparently confirming many of the things that Cohen has stated, in fact pleaded to, of making illegal payments, et cetera. So the corroboration of Cohen by American media and others lends further credence and weight to his testimony.

BLITZER: So David Pecker was once a very close friend of Donald Trump's.

REED: Right.

BLITZER: He's cooperating. He's received immunity from any prosecution. Of course, Michael Cohen was his lawyer; he's cooperating as well.

Does it make any difference that the president says he never reimbursed American Media for that $150,000 payoff to Karen McDougal?

REED: Well, so much turns on what was said at that meeting. If there was a representation that he would pay, and later there was a decision not to pay, the simple fact of, at some point -- and my legal training is a little bit out of date -- that if you make that representation as part of the agreement, that that has great -- that has an element of an offense.

BLITZER: The president argues, he did in a tweet this morning, that he never directed, his words, Michael Cohen to break the law. He said Cohen was a lawyer. He should have known what the laws were. That's why he hired Cohen, why he paid him a lot of money. What do you make of that defense?

REED: It's not particularly compelling. I think, first of all, there's an obligation to -- on everyone to follow the law, not just to say, "Well, my lawyer decided to break the law." That's not a very good defense in my view.

And then, again, there's -- as all these details emerge of how much he was involved in discussions, apparently, with American Media, that the whole purpose was to take the story to -- so it didn't become an election issue, that shows knowledge that is something you can't just dismiss as saying, "I was not involved. I didn't know anything about this."

BLITZER: Yesterday a Democratic congressman Adam Schiff, who's going to be the chairman of the House Intelligence Committee, told me -- told me that the Justice Department, he believes, should reexamine its long-standing policy that you can't indict a sitting president. Do you agree with Schiff?

REED: Well, I think, again, the department should look at what their options are across the board. There is a strong sense that the proper action with respect to a president is not an indictment while he's a sitting president, but the impeachment process. But again, I think it's completely legitimate to look at what the legal options are.

[17:25:01] BLITZER: I want to get your thoughts on a very different issue right now: Saudi Arabia and the crown prince. Today the -- you and your colleagues in the Senate passed two resolutions to punish Saudi Arabia, specifically the crown prince, who you claim was involved in the murder of Jamal Khashoggi, "The Washington Post" contributor.

According to a new CNN poll that's just out, 58 percent of Americans say the U.S. response to Khashoggi's murder was not tough enough, so what else do you want the U.S. to do?

REED: Well, there were sanctions against 17 individuals, but they were not directed at the crown prince, and the evidence that has been mailed public and verified by many of my colleagues, my Republican colleagues, is that -- and I sense the same thing, that he was directly involved, and so that we should consider sanctions directed against the crown prince.

I think also, too, we should use all of our efforts to try to stop the fighting in Yemen. That was the other resolution, and apparently, I think our efforts have at least provided momentum for talks in Sweden that could lead to at least a ceasefire. So we have to do more.

BLITZER: Let's hope there is a ceasefire.

REED: Indeed.

BLITZER: Because the slaughter has been so, so brutal.

Thanks very much, Senator, for coming in. Jack Reed of Rhode Island.

There's more breaking news just ahead. Two major stories that could place the president in legal jeopardy. CNN has learned that Donald Trump was in the room as illegal hush-money payments were discussed with this former attorney and the publisher of the "National Enquirer." And "The Wall Street Journal" is reporting that President Trump's inaugural fund is under criminal investigation right now.

Plus, the accused Russian spy Maria Butina now cooperating with prosecutors after pleading guilty to being an illegal foreign agent. What information will she reveal?

[17:30:00] WOLF BLITZER, CNN NEWS HOST: The breaking news this hour, CNN has confirmed that Donald Trump was in the room when his former lawyer and fixer, Michael Cohen discussed illegal hush money payments with the publisher of the National Enquirer, David Pecker.

Plus, another major story, we're following The Wall Street Journal now reporting that the President's inauguration spending is under criminal investigation by the U.S. attorney for the southern district of New York right now. Let's get some more with our correspondents and our analysts.

Gloria, first to you on this AMI story that the President was in the room with Michael Cohen and David Pecker how significant of a development potentially is this?

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Wolf, it's a far cry from I didn't know anything about it. Now, you are placing the President, in the room, with David Pecker and Michael Cohen, coming up with some kind of a scheme to pay off these women.

And we know that the President has said he didn't know about it. His story has shifted, dramatically, over all the days and weeks. But now, this puts him right in the middle of something he said he knew nothing about, significantly.

BLITZER: Yes, and he told FOX News earlier today, in the interview that he doesn't know whether they reimbursed the tabloid, his words, the tabloid. It makes it more difficult for him to say I knew nothing about this all along. DANA BASH, CNN CHIEF POLITICAL CORRESPONDENT: Absolutely. And, you know, remember, when he was questioned -- well, first of all, this isn't directly related to the Special Counsel, excuse me, but when he was questioned about the Special Counsel, so far, the only thing that he's directly been questioned on by anybody other than a reporter, not that we're not important, but, you know, doesn't --

If he lies to us, it's not criminal, is about stuff that happened during the campaign. And so, this opens a whole other avenue because the other issue that the Trump legal team was fighting was obstruction. This is -- this is different.

And so, the question is whether or not they're going to come back to him and ask more questions about this, because if he actually did know about it, and if he was the campaign operative who was involved, who happened to be the candidate, what kind of potential legal problem is he in?

And also, it speaks to more evidence or more -- it gives us more information about why we were talking when we got all of those filings to -- or last Friday -- losing track of time -- whether or not the President could be indicted after he leaves office because it was so significant what they found.

BLITZER: Legally speaking, Laura, does it make any difference whether AMI, American Media Inc., the National Enquirer, whether they were reimbursed by the President or the then-candidate, or associates of the then-candidate?

LAURA JARRETT, CNN JUSTICE REPORTER: Not one iota. It doesn't matter at all. And I think to raise that is really a distraction. It's probably a useful political point to try to deflect from the reality of the situation, is that his former lawyer.

And now, AMI, have both admitted to a federal court, that the purpose of this whole deal, the purpose of the payments, the purpose of the structure was to keep embarrassing stories from coming out and affecting the election.

If that's the primary purpose of the payment, that's the core of the violation of federal law, and that's all that matters.

BLITZER: And both Michael Cohen and David Pecker, AMI, they both say they knew at the time they were arranging these kinds of payments to these women, they knew it was illegal.

CHRIS CILLIZZA, CNN POLITICS EDITOR-AT-LARGE: Right. I mean, let's take a step back of what we know, according to federal prosecutors. We now know that American Media, National Enquirer, made this payment for the express purpose and in coordination with the Trump campaign, right, which we believe is Michael Cohen, at least.

BASH: And the President.

CILLIZZA: And did so, to Laura's point. This is the important thing as it relates to the law and Donald Trump trying to say it's a civil -- it's a civil private transaction, it's not, when it is meant to influence the election. And that is -- in the AMI settlement, Southern District from New York announced yesterday, it's very clear on that.

[17:35:12] AMI said they did it because they thought it would be bad if this came out under the election for Donald Trump. That gets into an in-kind contribution that's obviously well above the federal limit and that's enough. But they also sought to totally 100 percent hide all of this through a complicated scheme, Michael Cohen setting up a Shell company.

BLITZER: And CNN has now confirmed The Wall Street Journal story, Gloria, that there's a criminal investigation of the Trump inaugural campaign which raised more than $100 million, a criminal investigation that's now being conducted by the U.S. attorney for the Southern District.

BORGER: Right. I mean, we -- there is a preliminary investigation, I believe we're told, and you know, there's a question of whether some top donors were giving money for access to people inside the -- inside the administration, and what we do know is that the inaugural committee has not yet been asked for records or been contacted by prosecutors.

The inaugural committee says they are not aware of any investigation, but what this does show, Wolf, is that Michael Cohen is a big deal right now.

BLITZER: Yes, yes.

BORGER: Because the tentacles are everywhere, and this comes, according to The Wall Street Journal, from some of his recordings that were seized from his office. And, you know, Michael Cohen has been singing and will continue to sing until he goes to jail on March 6th. Maybe he can get his sentence reduced, who knows, but this is something the President needs to be worried about because -- go ahead. Yes.

BASH: I'm sorry to interrupt. I didn't mean -- no, but I was just going to say he needs to be worried about it also because he campaigned on draining the swamp. This is the man who was poised to finally be the president.

And now, there is an active investigation, our (INAUDIBLE) has confirmed that this is being investigated out of the U.S. attorney's office in New York about whether or not there was pay for play or, you know, however you want to put it, which is as swampy as it gets even before he's actually raised his hand.

BLITZER: Yes.

BASH: And that is something people will understand.

BLITZER: All right, guys, stick around. There's more news, if you can believe it. Lots of news that's unfolding right now --

BORGER: We can believe it.

BLITZER: -- after pleading guilty to acting as an illegal foreign agent. The accused Russian spy, Maria Butina, is cooperating with federal prosecutors. Is she already spilling secrets about Russia interference in the American political system? Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

[17:40:00] BLITZER: The alleged Russian spy, Maria Butina, is facing up to five years in prison after pleading guilty to conspiracy to act as an illegal foreign agent in the United States. Our Justice Correspondent Jessica Schneider is with us with details. Jessica, Putin admits she tried to influence Conservatives and the Republicans to promote Russian interest.

JESSICA SCHNEIDER, CNN JUSTICE CORRESPONDENT: That's exactly right, Wolf, and her efforts to infiltrate these Republican political circles, they were extensive. Prosecutors detailed how she wrote out an entire proposal and how she coordinated her efforts with Russian official Alexander Torshin.

But now, Maria Butina is cooperating with the government. She's agreed to turn over any evidence of crime she's aware of and she'll sit down for interviews with law enforcement to tell them what she might know about Russia's interference efforts.

(BEGIN VIDEOTAPE)

SCHNEIDER: Tonight, alleged Russian spy, Maria Butina, admits she conspired to act as an illegal foreign agent, saying she was under the direction of Russian official Alexander Torshin, who recently resigned from the Central Bank of Russia. Butina was succinct, guilty, she told the judge, while she stood at the court room podium wearing her green jumpsuit, with her signature long red hair, braided down her back.

A.J. KRAMER, PUBLIC DEFENDER OF BUTINA: She was satisfied with her lawyers who made the decision voluntarily.

SCHNEIDER: The 30-year-old once portrayed herself as simply a graduate student in Washington D.C., who had founded a gun rights group in Russia.

MARIA BUTINA, ALLEGED RUSSIAN SPY: My story is simple. My father is a hunter. I was born in Siberia.

SCNEIDER: Prosecutors say Butina's conspiracy kicked off in 2015 when she drafted a proposal for Torshin and others, titled, Description of the Diplomacy Project. It detailed Butina's plot to infiltrate the Republican Party, specifically through the National Rifle Association, which she viewed as having influence over the GOP.

The plea agreement reveals that Butina, allegedly, worked more extensively than previously known, with American Conservative Activist Paul Erickson, whom she describes as her boyfriend. PAUL ERICKSON, ACTIVIST AND LAWYER: Neither one prepared, beauty and the beast.

SCHNEIDER: The two, looking lovingly at each other in this video, released by Erickson's attorney. But prosecutors say Erickson allegedly gave Butina information about prominent U.S. political figures and insight into the 2016 presidential election.

As part of her ploy, Butina proposed getting $125,000 from a Russian billionaire to fund the meetings and conferences she attended, where she hobnobbed with Republican political figures. At one event, Butina even asked then-candidate Donald Trump, a question, in 2015.

BUTINA: If you would be elected as the president, what would be your foreign politics, especially, in the relationships with my country?

DONALD TRUMP, THEN-PRESIDENTIAL CANDIDATE: I believe I would get along very nicely with Putin, OK?

SCHNEIDER: In April 2015, Butina attended the National Rifle Association convention, where she met with current Wisconsin governor, Scott Walker, who shortly, thereafter, announced his short lived presidential run. Butina also invited NRA members to Moscow, where they met with high-level Russian officials in December 2015.

And after the trip, told Torshin, we should let them express their gratitude now. We will put pressure on them, quietly, later.

[17:45:16] And as recently as 2017, Butina works with Torshin to get a Russian delegation together to attend the National Prayer Breakfast in Washington. She shared the list of attendees with Erickson and told him the group was coming to establish a back channel of communication.

(END VIDEOTAPE)

SCHNEIDER: And the Russian foreign ministry now says Butina only pleaded guilty to survive, but in court, Maria Butina said her mind was absolutely clear, despite Russian government claims that she was tortured.

And while her lawyers previously said that her solitary confinement was having negative effects on her, psychologically, they now say that Maria Butina's mental state has improved since she's been allowed to leave her cell at night for activities like church and meeting with a Russian orthodox minister.

But, Wolf, she will remain in that jail cell until her sentencing that's scheduled for February 12th, and at that point, she does face up to five years in prison and she could be deported after her sentence.

BLITZER: Yes. It was a very dramatic stuff, indeed. All right, thank you very much, Jessica, for that report. There's more breaking news we're following. Bomb threats e-mailed to dozens of institutions and businesses across the United States and Canada. Let's got to our Crime and Justice Reporter, Shimon Prokupecz, he's working the story for us. Shimon, both the FBI and the ATF, I understand, are now helping in this investigation.

SHIMON PROKUPECZ, CNN CRIME AND JUSTICE REPORTER: Yes, certainly, the FBI having a big role here, because this is, as you said, nationwide. Probably, more than 100 e-mails now have been sent all across the country, and even as you said, Canada, the west coast receiving several dozen. New York City here, receiving close to 30.

There's really no specific target, police say. These e-mails are going at random to different companies, some schools, and really what this e-mail says is that there's a bomb that was placed in whatever building or whatever company was receiving this e-mail.

And that if the owners or the occupants of the building wanted to know where this bomb was placed, the person is saying send me $20,000 in Bitcoins, and I'll tell you where the bomb is, otherwise, I'm not going to tell you, and it's going to explode.

The important thing here, Wolf, right now, is that police say this is not a credible threat. Unfortunately, it has caused some people to worry. There have been evacuations across the country, but right now, nothing has been found, and police are just treating this, right now, as not a credible threat.

This is not something that they're overly concerned about, but certainly, they're investigating because it is causing some panic across the country.

BLITZER: That's a good point. All right, Shimon, thanks very much. We'll stay in close touch with you.

Coming up, the First Lady, Melania Trump's favorability rating has now dropped double digits, in just two months. We'll have details from an exclusive new CNN poll.

(COMMERCIAL BREAK)

[17:50:00] BLITZER: Tonight, First Lady Melania Trump's favorability rating has taken a nose dive, from 54 percent in October, down to just 43 percent today, that according to an exclusive new CNN poll. Our White House Reporter Kate Bennett is all over the story for us. So, what's behind the drop, Kate?

KATE BENNETT, CNN WHITE HOUSE REPORTER: To be honest, Wolf, I think it's people are hearing more from her. We -- for many months, almost a year, Melania Trump didn't really say that much, and people sort of wrote their own story, if you will, their own narrative about what she was like, and perhaps, is she throwing signals, is she trolling him, is she, you know, trapped in the White House, unhappy?

And it kind of made for more sympathy among Democrats and women. Now, we've seen in this poll today that those are the exact people who have dropped off significantly. Melania Trump, in recent weeks, has spoken more about her alliance with the President, her support of him, her defense of him, how are her policies aligned with his?

And in that sense, I think she's very much become more aligned with the administration, and therefore, we're seeing these poll numbers dip off, significantly. Now, she's just three points ahead of the President himself. She did talk, last night, a little bit, shared some more opening up, if you will, and she did talk about what she didn't like about being in the White House.

(BEGIN VIDEO CLIP)

MELANIA TRUMP, FIRST LADY OF THE UNITED STATES: I would say the opportunists who are using my name or my family name to advance themselves, from comedians to journalists, to performers, book writers.

SEAN HANNITY, FOX NEWS HOST: Does it hurt?

TRUMP: It doesn't hurt. The problem is they're writing the history, and it's not correct.

(END VIDEO CLIP)

BENNETT: Now, of course, that comes with the turf, you know, if you're First Lady, if you're the first family, she sounds a little bit also like her husband there, feeling a little bit sensitive about the media and the attention and focus on her. But again, she's First Lady, she's talking more, and as that comes, so does the criticism. And I think we're just seeing this play out as she moves into her second year, as First Lady.

BLITZER: Yes. She did that interview with ABC and now, an interview with FOX, and let's see if she continues doing more interviews.

BENNETT: And what happens to her poll numbers if she does.

BLITZER: If she does. All right, Kate, thanks very much.

BENNETT: Thank you.

BLITZER: Because when she does an interview, she's got to defend her husband. That comes with the territory.

BENNETT: Exactly.

BLITZER: Appreciate it.

There's breaking news coming up, a new potential legal trouble for President Trump as CNN confirms he was in the room for talks about illegal hush money payments. Also tonight, we've confirmed that his inaugural committee is under federal investigation.

(COMMERCIAL BREAK)

17:55:00] BLITZER: Happening now, breaking news, in the room, CNN confirms that President Trump personally took part in a 2015 discussion about illegal hush money payoffs to women. We're going to tell you how it figures into the immunity deal given to a tabloid publisher and how it contradicts Mr. Trump's denials.

Criminal probe, new reporting tonight, that spending by the Trump inauguration is under investigation by federal prosecutors. Did top donors give money in exchange for access to the new president?

Passing the buck, Mr. Trump is desperately trying to distance himself from Michael Cohen after being implicated in some of his former fixer's crimes.