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Ex-Trump Adviser Steve Bannon Arrested for Allegedly Defrauding Hundreds of Thousands of People in Build The Wall Scheme; U.S. Official Warns to Keep Guard Up as Cases Decline Across U.S.; Joe Biden to Accept Nomination for President Tonight. Aired 10-10:30a ET

Aired August 20, 2020 - 10:00   ET

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

[10:00:00]

JIM SCIUTTO, CNN NEWSROOM: The pattern here is concerning. Matthew Chance, we know you'll stay on top of the story and we'll give you the latest as we have it. We wish Navalny a recovery from this as well.

Breaking news this hour, the former chief strategist to the president has been arrested. Federal prosecutors in the Southern District of New York have indicted Steve Bannon for what they say is his role in defrauding hundreds of thousands of Americans in connection with an online crowd-funding campaign known as the We Build The Wall. Some described this as a massive case of embezzlement.

POPPY HARLOW, CNN NEWSROOM: So, Steve Bannon is currently in custody. He will make his first court appearance later today.

Let's bring in our Legal Analyst, Elie Honig. Elie, walk everyone through what the SDNY is alleging here.

ELIE HONIG, CNN LEGAL ANALYST: Yes. So this is really a massive fraud case. The allegation essentially is that Steve Bannon and the three other defendants who were charged and indicted with him today marketed this scheme, This Build The Wall scheme, collected donations from hundreds of thousands of donors under the false pretense that this money is going to go to build a southern border wall.

Instead, what Steve Bannon and the other defendants allegedly did was pocket that money, use it to pay for lavish lifestyles, essentially, really, in some ways if you take out the big names, it is a standard, a big one, a big one very easily provable fraud.

SCIUTTO: A standard and somewhat simplistic, is it not, Elie Honig, looking at the details here, say, taking this money, say you're going to use it to build a wall, promise in the description of the website that you're not going to take a salary, that you're all volunteers. I imagine prosecutors would have a paper trail then of where the money actually went if they were able to indict.

HONIG: Exactly, Jim. Look, in a lot of ways this is Fraud 101 blown up because the massive amounts we're talking about here. This should be very provable. One of the things I noticed looking through the indictment, which just came down, I was asking myself how strong is the evidence because you can pick up clues from the indictment.

And in the indictment, the SDNY talks about how they have fake invoices and sham vendor arrangements. That tells me the SDNY has those documents, fake invoices, that's about as lay down your hand proof as you can have.

So it looks to me like this is a paper case, this is provable on the documents themselves. Steve Bannon is in a lot of trouble given the fraud amount here, $25 million, he could be going to jail for many, many years if he is convicted.

HARLOW: Wow.

SCIUTTO: Wow.

HARLOW: Okay. Let's bring in Kara Scannell. Kara, at the end of the SDNY's press release on it, here's a line that was striking to us. While Bannon, through a non-profit organization under his control, received over $1 million from We Build The Wall, at least some of which he used to cover hundreds of thousands had of dollars in personal expenses, just speaking to Elie's point about a major paper trail they apparently have here.

KARA SCANNELL, CNN REPORTER: Exactly. I mean, prosecutors would not make that allegation unless they had the evidence to back it up. And so you can imagine that they do have a lot of evidence that shows, you know, following the money, where did Bannon use the funds. You know, there was a non-profit, as they said, that was set up to route some of this money, so they're able to follow that and to see how Bannon was using some of the money that was intended to go toward construction.

That's what they told the donors in this crowd-funding fundraiser that they were going to use the money that they raised for construction. But, instead, the prosecutors are saying that they used hundreds of thousands of dollars of it to pay for personal expenses.

You know, there are -- I'm still getting through the document so I don't know if there is a lot of detail yet on what exactly Bannon spent it on. But the allegation here is that he spent money that people had given him with the expectation that it would go towards this construction project and then used it to pay hundreds of thousands of dollars worth of personal expenses. Poppy?

SCIUTTO: John Harwood is at the White House. And, John, this is not the first member of this administration that's been charged with a crime, some convicted, Paul Manafort among them. Tell us, has there been any reaction from the White House yet?

JOHN HARWOOD, CNN WHITE HOUSE CORRESPONDENT: I haven't seen reaction from the White House yet, haven't seen a tweet from President Trump. But the irony is, of course, that last night, as he was get begun attacked at the Democratic National Convention, the president tweeted criticism of President Barack Obama and what he called Crooked Hillary.

Consider the astonishing level of criminality that has surrounded this president. His chairman, his former deputy campaign chairman, his foreign policy adviser during the campaign, all charged and convicted or found guilty of federal felonies, his national security adviser found guilty of a federal felony and now his campaign strategist and White House Senior Adviser Steve Bannon charged with a federal felony here.

[10:05:05]

Now, it's notable that a couple of weeks ago, about a month ago, I don't know if the president had any inkling of this coming, but he distanced himself from this group when there was evidence of erosion in a small part of the wall that the group was putting up. And he said that they had made a mistake, he didn't like what they were doing.

On the other hand, in an interview recently, he praised Steve Bannon saying he liked having him on the outside of the White House because he was praising the president, you know? One consistent pattern with the president is that he likes people who say good things about him. Steve Bannon was doing that, and he praised him.

The other thing to note when we talk about this level of criminality is the president's -- the Trump organization itself is under criminal investigation by prosecutors in New York who are seeking his financial records, and we expect, based on a Supreme Court ruling, that it's likely that they are going to get them.

SCIUTTO: Notable, for sure. Listen, thanks to all of you. It's a story we're going to stay on top of. As we said, the president's former chief strategist, Steve Bannon, indicted on fraud and now in federal custody.

Also this morning, news we're following, coronavirus testing czar for the administration, Admiral Brett Giroir, warns Americans not to let up. There's some good news out there. Look, the states in this country that are seeing declining rather than a rise in cases. Giroir's message, essentially, that the mitigation that is happening now is working and stay on top of it.

HARLOW: Also, one night after V.P. now candidate, Kamala Harris made history becoming the first black and South Asian woman ever on a major party ticket, tonight, it is Joe Biden's night to make his case, why he thinks he should be the president of the United States. He'll take the virtual stage and officially accept the nomination. More on that later.

Let's go to Dianne Gallagher now for more on this warning by Admiral Giroir not to ease up on measures, like wearing a mask and social distancing.

DIANNE GALLAGHER, CNN NATIONAL CORRESPONDENT: Yes, that's right, Poppy. And, look, there's some cautious optimism seeing the number of cases go down. But health experts also point to the fact that we're seeing the number of people who are being tested across the country decline as well. And so maybe we're not getting the best picture of the infection rate in the United States, especially in states like here in Georgia, in Florida and Texas, where we do see a high intention rate.

Now, to give you an example, yesterday, there were 681,000 or so tests reported. The seven-day moving average, which is sort of an indicator we use, is just about 745,000 tests a day. Believe it or not, that's down, about 25 percent from the testing high that we saw back in July.

Now, when we look at the average over time here of the number of tests that have been done, it's about 820,000. So we are seeing the steep decline here. Roughly 75 million tests have been done, but experts say that's way too low. A lot of health experts would like to see up to 30 million testing done every week. So these numbers sliding, that's the wrong direction.

Now, they are not really sure why people aren't getting tested. There could be many reasons, including the fact that, well, for a long time, it was hard to get a test. And then when you were getting tested, it was taking so long to get the results, they were useless. So it's kind of COVID fatigue, if you will. But the good news is we are seeing a slight decline in cases, even with those testing going down.

Now, Admiral Giroir did point out that even though that's positive, we cannot let up and have to maintain the protective measures that people are taking.

SCIUTTO: Yes, because those protective measures work. Dianne Gallagher, thanks very much.

Dr. William Schaffner, Infectious Disease Expert, joins us now. He's Professor of Infectious Diseases at Vanderbilt University Medical Center. Doctor, thanks so much for joining us.

So we look now, at least 20 states seeing a downward trend in new cases here. What is working in those states?

DR. WILLIAM SCHAFFNER, INFECTIOUS DISEASE EXPERT: Well, Jim, what we think is working is wearing masks, social distancing and avoiding large gatherings. You know, the population seems to have divided itself into two groups. There's the safe group, the very careful group that are adhering to that, and then there's the other group that are more carefree rather than careful. And we're still concerned that there are too many carefree people out there.

As Admiral Giroir said, we have to maintain this for a long period of time. It's not a sprint. It's a marathon, and the virus is not just going to disappear. So we have to maintain these mitigation efforts if we want to keep controlling this virus.

HARLOW: Doctor, what do you make of the guidance? We just had the president of the American Association of Pediatrics on last hour, and their guidance is pushing really hard for schools to reopen but she acknowledged there are places where they should not open, which have a high positivity rate.

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But we see protests even here in New York with a very low positivity rate of 0.24 percent, some teachers still want, you know, a delay of opening, not on September 10th. Detroit, we're seeing a similar thing, even with 1 percent positivity. I don't know. Is there a level where it is across the board safe for schools to open in person, or is it just going to have to be up to each individual district?

SCHAFFNER: Poppy, this is the most turbulent issue facing us at the moment regarding COVID. And we have such a heterogeneity of approaches across the country. I'm afraid that there isn't one bright line that we can either be on one side of or the other. I think every local area is going to try to be doing their best. But the general theme is the more careful you are, the more likely you are to be successful.

You know, as the virus continues to spread in many communities, those school districts are going to have the harder time.

SCIUTTO: New York was the epicenter just a few weeks, months ago, I mean, really, not just in the country, in the world. It's now got its cases down at a 0.24 percent positivity, I mean, just a fraction of where it was but below other states as well. Tell us what we can learn from New York's reaction to this, from swinging from such a big outbreak to down to where it is right now.

SCHAFFNER: Well, Jim, you all in New York have done it right. You've had clear, local and statewide direction. People have adhered to the masking, social distancing, avoiding large groups, and you've done it despite the fact that you're the most dense metropolitan area. You've shown that it can work. You're a model for the rest of the country, and I wish the entire country would follow your lead.

SCIUTTO: Dr. Schaffner, let's hope folks are listening. Those results prove those methods work. Thanks very much.

Well, still to come, they are racist, misogynistic and a potential terror threat. And for the first time, President Trump is publicly embracing followers of the conspiracy group QAnon in its whackadoodle. So, why now? Let's talk more about it.

HARLOW: Also, a crucial night tonight for Joe Biden as he prepares to offer a message of unity. Can he win over voters though in Trump country? We'll speak with a Democratic congressman from Pennsylvania who did just that, ahead.

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HARLOW: All right, a big night ahead for Joe Biden. The former vice president will take his turn at the Democratic National Convention podium, where he will accept officially his nomination for president. At the same time, President Trump is going to hold a rally of sorts just miles from Biden's childhood home.

We're joined now by one of Tuesday night's convention participants and Biden surrogate, Pennsylvania Congressman Conor Lamb, who represents the 17th district and also served as a major in the Marine Corps. Good morning. Thank you for being here, and thank you for your service to this country.

REP. CONOR LAMB (D-PA): Good morning, and thank you for having me.

HARLOW: So, let's talk about how to do this, right? You won in a district that not only did the president win but he won by some 20 points. So a lot has been made of whether your path to Congress is the path for Joe Biden to the White House. If that is the path, I wonder if you think, so far, the speakers at the convention have been too focused on anti-Trump and not focus the on here is what Joe Biden will do for America?

LAMB: I do sometimes think that's the case, not specifically tied to this convention, but I think a lot of people in our party do tend to focus overly much on the president. And I found, at least when I was campaigning that first time and since then, nobody ever wanted to talk about the president when I knocked on their doors or ran into them, you know, in a legion hall or something like that.

They would always kind of look at me and say, well, what are you going to do? They wanted to know what you're bringing to the table. They understand Congress is a different branch of government, and a lot of people are very tired of negative campaigning on both sides.

And so I won't stay in that lane. And you should know, and people are always surprised when I tell them this, but we do a lot of town halls in my district. People come, they are allowed to ask and say whatever they want.

And at the height of the impeachment process in November, December, January, we would have town halls and nobody would ask any questions about impeachment. I mean, they would ask what was happening in the local healthcare situation or talking about prescription drugs or whatever. But it just doesn't really reach people in the gut the same way I think that a lot of people from big cities or in the media might think.

And so I think Vice President Biden is our best shot to really reconnect with people on the things that they actually care about and that are actually affecting them.

HARLOW: So, then tonight, it sounds like, at least from our Jeff Zeleny's reporting, he's going to heed that advice. I mean, our reporting is that he does not intend to make the speech tonight about the president, like we saw from former President Obama last night. That's not at all going to be his strategy. What do you want to hear him say tonight?

LAMB: I just want to hear him continue to expand upon that message of uniting the country, because that's what people want. That's what people have said to me for the last almost three years, is there any way we can get past these divisions?

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I feel like I don't even recognize the country anymore. What can we do to be more united? And so their advice was always, look, work with the other side if you can. We don't want to hear you talking about them like they are a different tribe or your enemy.

And Vice President Biden, I think, feels that same way, but he's going to have to do it a lot because people have not been exposed to that for the last four years or maybe even longer. And he has to remind people that that's a real thing. Unity is possible in this country. It won't be perfect, but we can be much better than we have been.

HARLOW: So, in terms of strengths, you've laid out some of his strengths that you think he should capitalize on. What do you think Vice President Biden's greatest weakness and vulnerability is?

LAMB: You know, I think in a part of the country like mine, there has been a 30 or 40-year period long before President Trump came along, where we lost heavy industry, we lost jobs in coal, we lost jobs in steel, a ton of manufacturing has gone overseas to Mexico and China.

And so I think anybody who was serving in public office during that period is going to have a challenge to come to a place like Western Pennsylvania and say we can get this back on track. We can create new jobs. They will pay better. We will secure your retirement but deal with the history of all of that. I'm new so, you know, nobody really held me accountable for that, but Vice President Biden has been around longer.

Now, he does this extremely well.

HARLOW: You're saying things like NAFTA, et cetera?

LAMB: Right. And I think he has a credible explanation of people of where he stood on all those issues and all the ways he has tried to help to bring those jobs back and make them pay better. But that is a natural barrier in people's minds. It just is.

HARLOW: Yes. So, you know, we've heard the president say, he said it when he was campaigning and said it ever since despite a lot of facts that do not prove it and that is I'm going to bring back all the steel jobs, I'm going to reopen these coal mines, et cetera. I mean, I spent a lot of time in Beattyville, Kentucky, for example, multiple trips there reporting where he won 80 percent of the vote.

And I wonder if in your district, the belief is the same there as well. Do they still believe the president when he says, I'm going to bring all those steel jobs back, I'm going to reopen all these coal mines, et cetera, on a mass scale? And it hasn't happened on a mass scale. There have been pockets. But do they still believe it?

LAMB: I really don't think so. You know, people are smarter than that and we've actually continued to lose some coal jobs here as a couple of mines have closed. Steel is sort of a mixed bag. The biggest source of jobs in my district at least was a construction project that came along before President Trump was ever in office.

And so I think people know that he made promises he hasn't kept. The big thing he's not done is lift a finger to help our infrastructure needs, which are really important in this part of the country. It's hilly. There's a ton of water, a million bridges. I mean, all of our stuff is old and breaking down.

And you hear Vice President Biden talking about building back better for a reason. He's talking about actually fixing these things, putting people to work on job sites at a good wage right away and I don't think he'll give up on it.

President Trump just gave up on that. He didn't want to get it done for whatever reason. So we need to make a change.

HARLOW: Congressman Conor Lamb, it's good to have you. Thanks so much.

LAMB: Thanks for having me.

HARLOW: Of course.

Well, tonight, as we were say, it is the final night of the Democratic National Convention, and the big moment is here, right, for the ticket, Joe Biden accepting the nomination for president of the United States. Our special coverage of the DNC begins tonight at 7:00 Eastern.

SCIUTTO: More breaking news this hour. A federal judge has dismissed a lawsuit from President Donald Trump aimed to block a subpoena by New York prosecutors for his financial records. That judge saying, quote, justice requires an end to this controversy.

Shimon Prokupecz joins us now. Shimon, this follows a landmark Supreme Court decision this spring, which allowed prosecutors access here. This is another loss for the administration. Tell us what happened here and what happens next.

SHIMON PROKUPECZ, CNN CRIME AND JUSTICE CORRESPONDENT: Yes. Really, personally, for the president, Donald Trump, another loss here in New York, in Manhattan federal court, not only for him personally but for his organization, the Trump organization, which is under investigation by the Manhattan District Attorney's Office.

This now moves this one step closer certainly for the Manhattan D.A. to finally get the tax documents and information that they have been seeking from his accountants, from the president's accountants. This ruling by the judge -- this judge is moving quickly here. There was a lot of speculation that this could possibly take some time. But the judge has been saying that he wants to move this along.

You said -- you read what he said in this decision. And for the Manhattan D.A.'s Office, certainly, they need these documents sooner rather than later. They are hoping to get these sooner now that we have this decision.

[10:25:04]

One thing to note, Jim, is that the president and his team can't appeal this decision, but, certainly, people inside the Manhattan D.A.'s office expect this to move sooner, quicker than they would normally move in certain cases. So that is a thing here.

Big thing here is that the Manhattan D.A.'s office is one step closer in getting the tax documents and tax information belonging to the president and his organization.

SCIUTTO: Understood. So the president likely to appeal this, but you're saying prosecutors there expect the Supreme Court to move quickly on this as well. Would that mean prosecutors could receive access to these documents before the election? I mean, we should note it's a grand jury investigation so those would not be public, but do they expect to receive them in that kind of timeframe?

PROKUPECZ: Certainly the prosecutors -- the folks investigating the organization and the president, they anticipate getting this before Election Day. They want it before Election Day.

The thing is, a lot of the arguments here, Jim, that the president's lawyers have been making have already been made before this judge who dismissed the case today. And his feeling, these are the same arguments that the president has been making all along, so really what's left? The question is will the appeals court take it up? Will the Supreme Court take it up?

Most inside the Manhattan D.A.'s office expect that not to happen. They feel given what the Supreme Court already did, that was a huge victory for them. They now anticipate this moving a lot quicker and hopefully that maybe within the month, within the next several weeks, they will be able to get some of these documents.

SCIUTTO: Wheels of justice, Shimon Prokupecz, thanks very much.

Well, Russia says it is open to shipping its claimed coronavirus vaccine to any country around the world, this despite the fact that Russia bypassed timeframe normal protocol for approving such a vaccine. We're going to have more, coming up.

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