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New Video Shows Chinese Military Vehicles Near Hong Kong Border; Hong Kong Protests Force Flight Cancellations for a Second Day; U.S. Budget Deficit Soars 27 Percent Through July. Aired 9-9:30a ET

Aired August 13, 2019 - 09:00   ET

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

[09:00:14] POPPY HARLOW, CNN ANCHOR: All right, good morning, everyone. I'm Poppy Harlow. Glad you're with me. Jim Sciutto has a well-deserved week off.

And the more we learn this morning the more it seems clear, one of the most secure facilities in the country failed to protect Jeffrey Epstein from himself. A source briefed on the investigation says that Epstein apparently hadn't been checked on in hours when he's believed to have committed suicide and that one of the guards who was supposed to be doing those 30-minute checks wasn't even a regular guard but a fill-in.

Meanwhile, as we're learning more about what the attorney general calls serious irregularities, the FBI has raided Epstein's Caribbean island, proof the investigation into his network of enablers is very much continuing.

Kara Scannell joins me this morning from Washington.

So we'll get to that and the FBI on this private island in just a moment. But what else can you tell us about the developments, clearly a failure here by the justice system at MCC.

KARA SCANNELL, CNN WHITE HOUSE CORRESPONDENT: Yes. Good morning, Poppy. We are learning these new developments. It seems, you know, one of the most significant ones is that one of the two guards that was -- that were in charge of Epstein and overseeing him from that Friday night to Saturday morning when he was found in his cell was not a full time guard but a fill-in as you said, and, you know, a representative of the president of the union told our colleague Mark Morales that, you know, one of the reasons why this is happening is because there is, you know, understaffing.

There's been a hiring freeze across the law enforcement since the beginning of the Trump administration. That was lifted in April, but it has taken its toll, employees tell CNN. Now there are other breaches from protocol that we've learned about. The cellmate supposed to be in Epstein's cell was moved out on Friday. And the guards were supposed to look at Epstein, monitor him every 30 minutes because he was in a special housing unit. We're learning that in fact the guards hadn't checked in on Epstein for hours. So that left this window of opportunity for Epstein to ultimately take his life -- Poppy.

HARLOW: OK. And Kara, before we go, those images that we were just seeing, so Jeffrey Epstein obviously incredibly wealthy, had this home in the Caribbean, now the feds are there. What are they looking for?

SCANNELL: Yes, Poppy. So of course people wondered what would happen when Jeffrey Epstein was found dead to this investigation. The prosecutors have been very clear in saying that they are still continuing an investigation into his conduct and that involves some of the employees and associates who had worked with him and helped him pull off this sex trafficking operation. Now one of the places where this allegedly took place was on that private island, St. James -- Little St. James Island in the Caribbean that Epstein owned. Agents from the FBI's New York field office were on site yesterday. They're looking for evidence to help them continue this investigation -- Poppy.

HARLOW: OK, Kara Scannell, thank you for the reporting. Please keep us posted as you learn more.

Let's talk about this with someone who has been to the Metropolitan Correctional Center. That is the facility where Jeffrey Epstein was being held in Manhattan. CNN law enforcement analyst, James Gagliano, also retired FBI supervisory special agent.

Good morning. Let's just begin with your experience here. You've been to MCC. You were talking to witnesses who were cooperating against another very high-profile person and that is John Gotti. So this is supposed to be the kind of place that has no problem handling high-profile inmates like this.

Does it sound like something has changed to you since you were there?

JAMES GAGLIANO, CNN LAW ENFORCEMENT ANALYST: So, Poppy, I go back to 1991, my first year as an FBI agent assigned to the New York office. And as you pointed out visiting cooperating witnesses in the Eastern District in New York's case against John Gotti. And across 25 years in the FBI visited many times, dropping off prisoners for intake, interviewing prisoners as well as conducting proffers with the Southern District of New York and the Eastern District of New York.

HARLOW: Right.

GAGLIANO: This is mind-boggling. Now look, the MCC was built in 1975. It was built with the capacity of 456 inmates. They are now just under 800 inmates. So I understand the short staff issue here, but, Poppy, this raises so many questions about why all these failures happened. It almost a cascading set of failures to cause something unthinkable like this to happen.

HARLOW: Right. So -- so it sounds like you're saying, look, because of this cascading series of events, understaffing, you know, teachers, cook being used in these positions that clearly perhaps they weren't ready to be doing or trained for, that a high-profile death or a death like this was inevitable. GAGLIANO: Right. So three things that we look at in the criminal

justice system, the first part is enforcement which I'm infinitely familiar with.

HARLOW: Yes.

GAGLIANO: Then the prosecution part and then the corrections part.

Poppy, any time we cut budgets, any time we short strip one of those three-tiered legs of the stool it's corrections. Understand there are .2 million people incarcerated in this country, 7.3 million under the supervision of the correctional agencies.

[09:05:09] But still for this to happen, the special housing unit, a man that had been on suicide watch for a week, it is simply unconscionable.

HARLOW: So the FBI, you worked for the FBI. They've got a whole bunch of agents now down on Little St. James. That's in the U.S. Virgin Islands. That's where we saw his elaborate home. What are they doing there? What are they looking for him? And why now that the criminal case against him is no longer because he's dead?

GAGLIANO: Because of co-conspirators. So yes, nobody can go after Jeffrey Epstein anymore. Now his estate can be gone after in the civil sense or even in the civil forfeiture sense from a prosecution angle. But they're going to be looking to see who else was involved in this trafficking of underage minors. So, number one, they'll be looking at digital exhaust, anything that they can pull up on laptops or iPads or cellphones.

They're also be looking for physical evidence and they'll be looking to interview people with intimate knowledge of Jeffrey Epstein, as well as that little -- that cadre of folks that helped him in this most perverse endeavor. So those are the two things they'll be focusing on on that island.

HARLOW: OK. James Gagliano, always good to have your mind on this stuff. Thank you, sir.

Let me turn now to a dramatic daytime shootout. This is near Los Angeles. It happened yesterday and it has left one police officer dead and two other officers wounded.

You can see police ducking behind their patrol cars as they exchanged gunfire with the suspect. The street fight began after a traffic stop.

Stephanie Elam joins me now from Los Angeles.

Good morning, Steph. Do we know why the suspect started shooting?

STEPHANIE ELAM, CNN CORRESPONDENT: So unclear at this point, Poppy, for the shootout that started at 5:37, a traffic stop yesterday evening in Riverside off the 515 freeway there. What we understand is that it was a California Highway Patrol motorcycle officer who pulled over this GMC white truck and was in the process of impounding the vehicle when the suspect allegedly went back into the vehicle, pulled out a rifle and began shooting.

The first officer there, he was hit, and he was still able to call for backup. And that's when other officers showed up and there was an extensive gun battle. In fact, Riverside Police Department, the chief, Sergio Diaz, called it, quote, "a long and horrific gun battle" that took place between these officers that showed up.

They're also saying that they did have multiple different police stations, the sheriff's department also responding as well California Highway Patrol to this. The suspect was shot and died at the scene. But that first officer that stopped -- that made this first traffic stop initially, he died. 34-year-old Andre Moye died. He's survived by his parents, his wife and his siblings. They're saying he's been working in this unit since 2017 when he graduated. He was assigned to Riverside.

There's one other officer that has major injuries, as in critical condition, and another officer that was also hit that has minor injuries but at this point, Poppy, it's not clear why the suspect went back into his unit, got in his car and got his rifle and began shooting, unclear. But it's an extensive scene that they're still processing and looking at here. But thinking about this happening right at rush hour time is just very, very scary and very tragic today.

HARLOW: And a 34-year-old's life gone.

ELAM: Yes. Yes.

HARLOW: A reminder of how these officers put their life on the line truly every single day even in traffic stops.

Stephanie, thank you for that reporting.

Now to some other very sad news involving a police officer. This is just into CNN. We've learned this morning that an eighth officer with the New York City Police Department has died by suicide this year.

Brynn Gingras joins me with more. Tragic.

BRYNN GINGRAS, CNN CORRESPONDENT: It really is. And I can tell you this unfortunately ties a sad record. This is now the most suicides that are occurred in a year, it's tied with the most suicides in a year at the NYPD. This officer was temporarily assigned to detail outside of Yankee Stadium. He was not on duty at the time that he took his own life according to our sources. 35 years old, with the department for seven years. He left behind a note, although we don't know what the details of that note were.

But I can tell you, you know, Poppy, I talked to the commissioner, James O'Neill, weeks ago about this when the seventh one happened and actually when we sat down he had just gotten back from consoling the family of the man who took his own life then. And he was in tears talking to me then so I can't even imagine what he's going through right this minute.

HARLOW: So this is something he's clearly been very worried about and now they've got this record.

GINGRAS: They've got this record. They're working on it.

HARLOW: Yes.

GINGRAS: He honestly said this was a big fear of his, that another one would happen. But this is something that they are working on.

HARLOW: Our thoughts are with his family.

Brynn, thank you very much for the update.

Still to come hundreds of protesters block security gates again this morning.

[09:10:04] Look to that. That is inside of the eighth busiest airport in the world, Hong Kong International. It has grounded all flights in and out of there. And now new video of Chinese federal police deploying their resources on the border of China and Hong Kong. We are live there next.

Plus, a CNN exclusive. We will take you inside Russian president Vladimir Putin's private army. This is remarkable reporting by our Clarissa Ward. You won't want to miss it.

And she made an emotional plea for her father during last week's ICE raids in Mississippi. What happened to her father and did he really have any criminal charges against him? We're setting the record straight. Ahead.

(COMMERCIAL BREAK)

HARLOW: All right, so we are seeing signs the Chinese authorities may be preparing to crack down even more on those demonstrations that have really crippled Hong Kong for weeks now. For a second straight day operations are grounded at Hong Kong's international airport, the eighth busiest airport in the world.

[09:15:00] Protesters used luggage carts to block entrances to the airport and came face-to-face with police and foreign travelers. The demonstrations cap off ten weeks of unrests that the city's chief executive says has pushed the territory to the brink of no return.

Let's go to Paula Hancocks, she joins me now live from Hong Kong. Paula, we're having a little -- there we go, a little bit of trouble with your signal, well, we have you now. So, Paula, video has surfaced showing Chinese military vehicles gathering near the Hong Kong border. I mean, that's an ominous sign. What does it portend?

PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: Well, Poppy, this is Chinese media that's broadcasting this. Now, the video as you say does show military vehicles driving along the highway just across the border from Hong Kong. It is heavily edited, it is set to music, so simply, it is a fairly slick piece of material and Chinese media are putting it out there.

So, it's really the third time that we have seen over the past ten weeks that the Chinese military is trying to show what it could do, and to remind protesters here, really, that it is still very close. Now, they have said that they can if asked by the Hong Kong government, come across the border and try to keep peace, if they believe also that there are terrorist activities.

We did hear from a Beijing top official yesterday that they believed that some of these protesters have elements of terrorism within them. So, certainly, we are hearing a certain message from China, but of course this is a message that Beijing wants these protesters to hear. And these protesters aren't going anywhere.

This momentum is continuing, Poppy, there are thousands still here at the Hong Kong International Airport, the fifth day they've been here, the second day they have grounded operations. And just an idea of the frustration and the anger against the police, they're also trying to see if there are undercover policemen that effectively taking them to one side and trial by protesters really showing the anger against the police.

HARLOW: Paula, thank you for being there. It is an extraordinary site and it does not look like it is letting up any time soon. I appreciate that. Meantime, the president today will take a break from his vacation. He is going to spotlight one of the key highlights of the Trump economy. He is going to the battleground state of Pennsylvania.

He will visit a plant being built just outside of Pittsburgh, currently, one of the largest projects under construction in the country. His plan is to tout manufacturing growth and job creation there. And it comes amid concerns, major concerns over the growing budget deficit and the escalating trade war with China.

Mark Zandi, he's with me, chief economist at Moody's. So, let's start where the president's going today. He's going to this f-ing cracker plant in western Pennsylvania. Manufacturing jobs have been good for him, right? Job growth for manufacturing sector is up 4.1 percent under this president, better and more than double what Obama saw in the last 30 months of his term.

But this is in the midst of a potential downturn, which you call the risks of a recession uncomfortably high. Is he highlighting one good thing while heading towards a trade war that could push us into a recession?

MARK ZANDI, CHIEF ECONOMIST, MOODY'S ANALYTICS: Well, yes, I think if you look forward, the economy's growth is going to be much slower. The trade war is doing a lot of economic damage, particularly the manufacturing, so the manufacturing industries are now pretty close to recession, right on the precipice, and it goes right back to that trade war.

So, yes, manufacturing has done pretty well up until now, but looking forward, the prospects aren't nearly as good. HARLOW: When you look at the budget deficit, overnight, we learned

that the budget deficit has widened to $867 billion just for the first 10 months of this year. That means according to OMB, it will exceed a trillion for this fiscal year. Do you remember when the president said that he would eliminate the national debt over eight years? And it has just increased under this president. Talk about what that means for every day Americans.

ZANDI: Yes, I know, it was a promise. I mean, I thought it was something he could not achieve, but I didn't think we'd get larger budget deficits in debt. And you know, it's a trillion dollars for that percentage of GDP, now with a 3.7 percent unemployment rate, you know, what does that mean going forward as the economy begins to weaken, doesn't perform nearly as well.

And I think we should expect lots of red ink going forward. I mean, a trillion dollars is going to be the best we're going to do for many years. And you know, it's one of these things, it's corrosive on the economy, it doesn't mean a whole lot in a given day, week, month, even year. But as you look out, it's going to be a problem --

HARLOW: Yes --

ZANDI: For economic growth. You know, it's kind of like climate change, right? We know like a change in climate is a big deal, if we don't do something about it, it's going to cataclysmic, but --

HARLOW: Right --

ZANDI: Because we can't connect the dots today, we're not doing anything about it, this is the same with the deficit.

[09:20:00] HARLOW: The question becomes how much do you care about what we're leaving our kids? And by the way, it's not just the president's policies and the -- you know, tax cuts, it's also the spending bill passed by Democrats too --

ZANDI: Yes --

HARLOW: Democrats and Republicans. September 1st, people are going to come back from Summer vacation, and boom, more tariffs on China, things like iPhones, et cetera. Bank of America just came out and said that they see a real risk here, one in three chance of a recession before election day.

You've called the risks a recession --

ZANDI: I saw that --

HARLOW: Uncomfortably high, I mean, if this thing happens on September 1st, do we fall under recession?

ZANDI: You know, I think odds are pretty high. I mean, I think BOA, Bank of America is actually optimistic. I would put -- if the president follows through on his threats and slaps tariffs on more Chinese goods, I think the -- HARLOW: Yes --

ZANDI: Odds of recession are probably greater than either -- now, he could pull this back, you know, with a tweet. You know, he could say, oh, you know, I just struck a deal with Xi and we're going to wind this thing down. And I do think if he did that relatively soon, then the economy would get its groove back and we'd be -- we'd be growing again --

HARLOW: Yes --

ZANDI: But he's got to do that pretty soon, if he doesn't do it pretty soon, he's going to undermine -- sentiments is going to be undermined and we're going to be in recession.

HARLOW: Yes, I wouldn't hold your breath for that, you know, there's no political --

ZANDI: Yes --

HARLOW: Impetus for China to make an abrupt deal, but we'll see. Mark Zandi, I appreciate your time this morning, thank you so much. All right, take a look at --

ZANDI: Thank you --

HARLOW: Wall Street, we're moments away from the opening bell. Stocks searching for direction this morning. The trade war, of course, as we just talked about on the minds of investors as they pour money into gold and secure government bonds.

[09:25:00] (COMMERCIAL BREAK)

HARLOW: All right, welcome back. This morning, extraordinary exclusive reporting about Vladimir Putin's private army. After months of investigating, CNN has discovered hundreds of mercenaries fighting for the Russian president on three different continents. But according to the Kremlin, they don't exist.

We've also learned that the man leading the secret fighting force is a key Putin ally, not only that, the Kremlin is falsely accusing our chief international correspondent Clarissa Ward of being a spy. Clarissa Ward, not a Russian asset joins me now from London, we'll get to that in a moment because that is just remarkable. But let's get to your reporting, you spoke to a former fighter. Why was he willing to talk to you?

CLARISSA WARD, CNN INTERNATIONAL CORRESPONDENT: Well, it did take some time, and we had to go through some connections before he essentially began to trust us and agreed to talk to us. We had to go through great pains to disguise his identity as well because officially the Kremlin says that it has nothing to do with these mercenary forces that are being used more and more in unstable countries across the world, Poppy.

They're there to try to boost Russian influence, but also to try to out-maneuver geopolitical rivals like the U.S. Take a look.

(BEGIN VIDEOTAPE)

WARD (voice-over): This is Oleg. For years, he says he worked as a hired gun in Syria for a shadowy Russian mercenary group called Wagner that has become a valuable tool for the Kremlin.

UNIDENTIFIED MALE (through translator): Wagner is Putin's instrument for resolving issues by force, when action has to be taken immediately, urgently and in the most concealed way possible. I cannot say it's an army in the proper sense of that word. It's just a fighting unit that will do anything that Putin says.

WARD: This is the first time a former Wagner employee has agreed to speak on camera, and Oleg asked us to disguise his identity. Private military contractors are illegal in Russia, officially Wagner doesn't exist, but CNN has discovered that the group now has hundreds of fighters operating on three different continents, and this is the man believed to be behind that expansion.

Dubbed Putin's chef because of lucrative catering contracts with the Kremlin, Yevgeny Prigozhin is also sanctioned by the U.S. for funding the internet research agency accused of meddling in the 2016 election.

UNIDENTIFIED MALE (through translator): I'm a mercenary and 90 percent of participants of the company were like me, and they were motivated by money.

WARD: What sort of training was it? Where did it take place?

UNIDENTIFIED MALE (through translator): You know, I didn't have any training as such, not then anyway. I spent six days in the training camp in Molkino, I went to a firing range twice and shot a machine gun once. That was it.

WARD: CNN traveled to the remote Russian village of Molkino to try to get to Wagner's training camp, and found out that the group has a surprisingly close relationship with the Russian military.

(on camera): The only way to get into the Wagner barracks is to get through that checkpoint which is manned by the Russian military because this actually belongs to a Russian special forces unit.

(voice-over): Not far from Molkino, there's a monument to fallen Wagner fighters. Visitors are not welcome, so we approached with a hidden camera.

(on camera): It looks less like a memorial than a fortress. Good afternoon, sir.

(voice-over): A guard soon comes up to us, is the church only for Wagner? I asked, I don't know for whom he says. For the people who were.

[09:30:00]