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DOJ Allowed to Resume Review of Seized Documents; New Lawsuit against Donald Trump for Business Fraud; Russian Military Divided over Ukraine; Crackdown on Anti-War Protesters in Russia; Stock Futures Rebound Slightly. Aired 9-9:30a ET

Aired September 22, 2022 - 09:00   ET



JIM SCIUTTO, CNN ANCHOR: A very good Thursday morning to you. I'm Jim Sciutto.

POPPY HARLOW, CNN ANCHOR: And I'm Poppy Harlow. We're glad you're with us.

And the top story this morning, former President Trump now responding after a pair of significant legal blows in the last 24 hours, one with potential criminal consequences. The other, targeting the business wealth on which Trump built his brand. In a civil suit right here in New York, Trump and his three oldest children and the Trump Organization are now accused of deceiving lenders, insurers and tax officials for more than a decade. Now the New York attorney general wants the business dissolved.

SCIUTTO: Trump is also running out of options into the ongoing investigation of classified documents seized from his Mar-a-Lago estate. A federal appeals court ruled the DOJ can resume looking over those classified records. It no longer needs to submit the classified materials at least to the special master, rejecting across the board the arguments from Trump's legal team. To be noted, two of those judges on that panel were appoint by Trump.

Let's begin with CNN's senior crime and justice reporter Katelyn Polantz, following this story.

Katelyn, it's a big win for the DOJ. What does this mean specifically for their ongoing investigation of those classified documents, how they were held, why they were held and any criminal consequences?

KATELYN POLANTZ, CNN SENIOR CRIME AND JUSTICE REPORTER: Well, Jim and Poppy, the Justice Department now gets to do exactly what they wanted to be doing all along, which is reviewing those 100 or so records that were taken out of Mar-a-Lago that have classified markings on them. And the federal appeals court that ruled last night, the major thing that they did, the major finding that they had is that no matter what Donald Trump was arguing about those particular records, that they are just not his at this point in time. They are - they are marked as classified. They should be treated as such. They should be treated as national security secrets. Potentially very significant things that need to be delicately handled by the federal government, looked at by the executive branch.

And what the appeals court wrote int his ruling is, they wrote, for our part, we cannot discern why the plaintiff, that's Donald Trump, would have an individual interest or need for any of the 100 documents with classified markings. They went on then to say that, these sorts of documents should be handled with a need-to-know basis. Only people who really need to see them should be able to. And that includes former presidents. They even said that that includes former presidents unless the current administration wants someone to have access to them.

So that's a pretty big finding. Still, Donald Trump was out there, even after this ruling, on Fox News talking to Sean Hannity, downplaying the situation, trying to sow confusion and doubt around what exactly happened to those particular 100 records. Here he is last night on television.


DONALD TRUMP, FORMER U.S. PRESIDENT: If you're the president of the United States, you can declassify just by saying, it's declassified, even by thinking about it, because you're sending it to Mar-a-Lago or to wherever you're sending it. And there doesn't have to be a process. There can be a process, but there doesn't have to be. You're the president. You make that decision. So, when you send it, it's declassified. We -- I declassified everything.


POLANTZ: Now, Jim and Poppy, with this appeals court allowing the Justice Department to get back in there, look at these documents, there are critical questions that the Justice Department, intelligence community are going to have to answer, like, was there anything missing still that hasn't been taken out of Mar-a-Lago or gotten back in the hands, and who exactly accessed these or saw them.

SCIUTTO: Yes. We should note there, the remarkable nature of the former president claiming just by thinking about it, his words, he could declassify documents. I'm not aware of any basis for that statement.

Katelyn Polantz, thanks very much.

HARLOW: All right, that is not the only legal blow to the former president in the last 24 hours. Yesterday, New York Attorney General Letitia James announced a civil fraud lawsuit against the former president and his three oldest children, as well as the Trump Organization.

Our correspondent, Kara Scannell, has been following this for a very long time.

You were there when the announcement came. Can you walk us through the focus of this lawsuit in terms of what she's alleging here, not just against the former president, but against his kids and the whole company. KARA SCANNELL, CNN CORRESPONDENT: Yes, I mean it's a sweeping lawsuit

across all the top rank executives at that company. And the heart of it is, she's saying that they had misvalued, inflated the value of a number of their assets. Those assets were used on their financial statements that they then used to get loans, insurance and tax benefits.


And that all, according to this lawsuit, was to enrich former President Trump by billions of dollars, his net worth. That's what they allege.

Now, they point to more than 200 examples over a decade in these financial statements where these assets were inflated.


SCANNELL: And we can take a look at some of them. I mean there's Mar- a-Lago, where he lives. They say that he said that it was worth $739 million. In reality, according to the lawsuit, really closer valued at $75 million.


SCANNELL: Trump Tower, that's where Trump has a penthouse, he listed it at three times the square footage of what it is. And James said yesterday there's no apartment in New York that is even that big. I mean you can just go down the list. It really is an expansive look at so many of his properties, both the commercial buildings, the golf courses and these hotels.

You know, we are starting now to get a sense of what the former president's defense will be in a more formal way. He was on Fox last night, and he was saying that he - you know, in these financial statements, sure, they were given to people, but there were a lot of disclaimers.

Let's take a listen to what he said.


DONALD TRUMP, FORMER U.S. PRESIDENT: We have a disclaimer right on the front, and it basically says, you know, get your own people, you're at your own risk, this was done by management, it wasn't done by - it was done by management. So, don't rely on the statement that you're getting.


SCANNELL: So there you hear Trump saying that there were all these disclaimers.

I mean the other thing, another point that we're going to hear from his team is that, you know, these were sophisticated lenders. They did their own due diligence. They looked at the valuations themselves and came to their own decisions. You know, that ultimately is going to be a question for the judge, possibly a jury. But, you know, from James' perspective, she's saying, this was not just one valuation that was off, this was a pattern and practice that continued for a decade.


HARLOW: Right. Civil and then referrals if there were to be any criminal element to SDNY and IRS, et cetera, right? It's civil for now.

SCANNELL: Right, and there's - it's civil for now. And there still is the Manhattan district attorney's criminal investigation, which is parallel to this.

HARLOW: Yes, that's right.

SCANNELL: There is a different standard of evidence required to bring a criminal case.

HARLOW: Right.

SCANNELL: And that's why we see at this point this -- it's disjointed.

HARLOW: Got it. Thank you very, very much. And good reporting on the breaking news yesterday.

All right, joining us now to talk about all these headlines, Russ Beuttner, who was part of "The New York Times" investigative team of journalists that obtained Trump's tax information going back more than two decades, and CNN legal analyst and former New York prosecutor, Paul Callan.

Great to have you, Paul. Let's just start where we left off with Kara.

You have said that Latisha James here in New York is, quote, seeking what corporate lawyers call the corporate death penalty. What do you mean?

PAUL CALLAN, CNN LEGAL ANALYST: Yes. Well, what they're trying to do essentially through this civil lawsuit -- nobody goes to jail as a result of this lawsuit -- but the court ultimately will have the ability to close down the Trump Organization in New York and to issue an order preventing members of the Trump family, including the former president himself, from being involved in any business in New York for at least five years, and maybe even longer than that depending upon how the case turns out.


CALLAN: It's really capital punishment for the Trump Organization if Letitia James wins this lawsuit.

SCIUTTO: Paul, I have to ask you just a legal question here. Trump exaggerated the value of his Mar-a-Lago property by a factor of ten. If you or I or Poppy or Russ did that in attempt to get, I don't know, a home equity loan or a mortgage, if we exaggerated our assets by a factor of ten, that wouldn't just be embarrassing, am I right, that would be deception. Would we face legal consequences if we did so?

CALLAN: Well, you certainly could, Jim. And I'll tell you something with respect even to how the FBI handles such things when they're trying to turn somebody or question somebody. Sometimes they pull out a piece of paper, like a loan application, and they say, you estimated your income at x amount. In fact, we checked it, and it's this amount, and then they threaten you with filing, you know, a false document. So, this is really a very, very similar kind of thing.

Now, of course, Trump responds by saying, hey, they're banks, they're sophisticated people and they run their own appraisal, and we have a disclaimer that we give to all of the banks when we're seeking loans saying you better investigate this with your own appraisers and legal counsel.


CALLAN: So, that's his defense, everybody does it and he does it.

HARLOW: Russ, you -- I'm so glad you're with us as well because you know what it's like to pore over financial documents pertaining to the former president and businesses. So I just wonder, given all the reporting you did the past few years on the Trump tax documents that you guys obtained, what did you think when you read this 220 page filing? What does it indicate to you? And would it -- what do you make of the defense that Paul just laid out here?

RUSS BUETTNER, INVESTIGATIVE REPORTER, "THE NEW YORK TIMES": Yes, I think it all looked sort of familiar. It was also interesting to me in that what the tax documents show is that a lot of his businesses lose an awful lot of money.



BEUTTNER: He's had to constantly infusion money from -- he made as a celebrity, and money inherited from his father, into some of these businesses to keep them afloat. And then you see how the mechanisms he used from that starting point to inflate the value of these things to make them look like they were worth something, all that adding up to presenting a $2.5 billion valuation to his largest lender, Deutsche Bank, and to get loans at the lowest possible interest rate.

And as to like the defense, there's a couple of things in the complaint that really speak to that clearly. One is that Deutsche Bank said that they did do their own review, his largest lender again, in looking at it, that there was some discounting or we know from our own reporting that they were -- cast sort of a skeptical eye to the financial statements. But what they didn't account for was the potential for fraud and misrepresentations. And that's throughout this thing. You see that they -- in some cases they added a 30 percent brand value to the valuation of properties. That's a figure they just made up.

And then they said that they hadn't done that when they made their representation to the banks. It's those sorts of things that I think gets you in big trouble. And the banks were injured in this. Yes, they're sophisticated, yes, the loans did perform and they were paid off, but the banks, based on his representations of his net worth, gave him extraordinarily low interest rates. And that's money that the banks sacrificed based on what he told them.

SCIUTTO: The banks and their shareholders, we should note. These are publicly held companies.

Russ, let me ask you this. The president claims that a sort of disclaimer he put into those declarations in effect inoculates himself at having exaggerated greatly the value of his property, saying, you know, we had -- he said to Hannity last night, we had some language in there that said, you know, due your own due diligence on that. Based on general legal practices and your reporting, does any other company do that?

BUETTNER: I think -- most of these financial statements that you see, they follow generally accepted accounting principles. Trump says out front that they don't do that. That is a giant red flag. It does seem to be somewhat unique. They've said in some of these statements it comes out of the mind of the proprietor. Those are things that should warn a bank or a lender or a partner that these things should be looked at skeptically.


BUETTNER: But, again, he's not saying, look out, we may be lying to you about the underlying components of this thing. We may be outright deceiving you about how we arrived at these numbers. And that's kind of a different level. And it's very difficult to get at that without, as the AG had subpoena power, and banks don't typically have that. They might try to reconcile it with his tax returns in some cases. But I can tell you, the tax returns can be - you know, he might have 400 tax returns he files in a given year. Trying to untangle all of that and get to the deceptions that he used to get these loans is a heavy lift.

SCIUTTO: Goodness. Well, you did a lot of that lifting, Russ Beuttner, thanks so much.

Paul Callan, good to have you, as always. Thanks so much.

CALLAN: Thank you.

SCIUTTO: Coming up next, mass arrests in Russia as people bravely protest Vladimir Putin's plan to increase the size of his army. We have new CNN reporting that there are internal arguments among Russian military officials about the next phase of the war.

HARLOW: Also ahead, the Federal Reserve Chair Jerome Powell warning the job market will get worse before inflation gets better. That one is reliant on the other. What does this latest interest rate hike actually mean for all of you at home? We'll tell you.


HARLOW: New CNN reporting reveals that Russia's military is increasingly divided over how to overcome Ukraine's recent and very successful counteroffensive. This is according to multiple sources familiar with that U.S. intelligence, Jim.

SCIUTTO: Sources also telling CNN that Vladimir Putin himself is giving directions to his generals in the field, highly unusual for a modern military such as Russia.

CNN's Katie Bo Lillis joins us now live with the latest.

Katie Bo, this is your reporting. And it's remarkable because in the lead-up to the war, U.S. intelligence proved it had pretty decent access inside Russia with their knowledge of plans and mobilization, et cetera. So, this is pretty remarkable to hear about divisions at the highest levels.

KATIE BO LILLIS, CNN REPORTER: I -- it's divisions across the - across the board, Jim. You know, what - what we have seen, obviously, over the past two weeks is Ukraine has had this kind of unprecedented, or unexpected, I should say, success in their counteroffensive. They've really put Russia on the defensive in both the north and the south. And there just hasn't been a whole lot that Russia has been able to do about it up until now. And part of the reason for that, my sources tell me, is that the Russian military is really divided about what the right strategy is to try to push back these Ukrainian advances, where they should send troops to reinforce flagging front lines, for example. We've even - we've even been told that intelligence intercepts have captured Russian officers on the front lines kind of bickering amongst themselves and even complaining to friends and relatives back in Russia about the decision making that's coming out of Moscow.

But what's even more unusual, Jim, as you mentioned, is that we now know that Russian President Vladimir Putin is speaking to Russian generals on the front himself directly. Hugely unusual level of micromanaging of a conflict in a modern military and I think really speaks to this kind of dysfunctional command structure that we're seeing here.

So, you take all this together, Jim and Poppy, and I think what it tells you is that the Russian military is still really struggling, not just with planning and strategy, but with basic military command and control.


HARLOW: And given that reporting, do you believe that Putin's mobilization order will have or has had - I mean just in the past few days, impact on those divisions, right?


What does it do to them? Does it exacerbate them? LILLIS: Yes, well, look, certainly, Poppy, the idea here is to help

fix some of Russia's pretty significant manpower problems on the front lines, right?

HARLOW: Right.

LILLIS: And so, obviously, the idea would be, at least theoretically, to make some of this decision making about where to send troops, where to send reinforcements easier on the Russian military. But, look, talking to U.S. officials who are tracking this pretty closely, they say that even though they have seen some small numbers of Russian troops move back towards the east, troops that had fled in the face of that sort of initial Ukrainian push, officials don't anticipate that Russia is in any position to mount any kind of serious military operation right now.

SCIUTTO: Yes. Well, to be able to know the Russian president communicating with those units is pretty remarkable access there for U.S. intelligence.

Katie Bo Lillis, thanks so much.

LILLIS: Thank you.

SCIUTTO: Russia's escalation, call to arms, also triggering dissent within its own borders. And, by the way, this is a very courageous thing to do in Russia. More than 1,300 people have reportedly been detained in crackdowns now on anti-war protests.


SCIUTTO: I'll tell you, people who do that are risking an enormous amount. Here's some proof. A local monitoring group reports that some detainees were then directly conscripted right into the Russian military.

HARLOW: Our CNN senior international correspondent Matthew Chance joins us with the latest.

Also, Matthew, reporting that there's a rise in flights out of Moscow. Is that -- I'm assuming direct response from some to this?

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, absolutely. And just, you know, hearing what Jim was saying there, I mean it's really harsh, isn't it, that you'd be going to a protest, protesting against the draft that had been introduced in Russia and against the war and they're being carted off, like we saw that man, and put straight into the Russian military. It's hard line even by the hard line standards than you've come to expect of the Russian authorities.

But, you're right, I mean what we're seeing here are the Russian people coming face-to-face with the reality of what the Kremlin calls its special military operations still. It was OK or acceptable when it was just playing out on the television screens, not really affecting their daily lives. But now that people who did not want to go and fight in the military and go to the front line are being forced to, essentially, by being conscripted into the ranks to fill its - fill, you know, fill the gaps. People who have been killed or injured, by the way, in the battles.

It's really been brought home to people. It was - it's a deeply unpopular move. And you're seeing an expression of that despite the risks on the streets of Moscow. And, of course, you're seeing these reports in the border checkpoints around the country of, you know, thousands of people trying to get out of the country. Finland, to the west, is reporting 4,000 Russians in a single day trying to get out of the country. Other border checkpoints the same. The cost of flights has rocketed out of Moscow and other cities as people trying to book seats to get out of there. And, frankly, you know, it's understandable.


HARLOW: Gosh, Matthew, it is just so stunning to see that, to see that play out, to see all those flights, to see when this rips apart families in their own homes and really comes home to all of them. What will that mean for any support for this war on the Russian side?

SCIUTTO: No question. And to -

HARLOW: Yes, Jim.

SCIUTTO: And to this day, you know, the war has been disproportionately put on the shoulders of people from the countryside, you know, who don't have the ability, right, to leave the country, which is remarkable.

HARLOW: That's a great point.

SCIUTTO: Matthew Chance, always good to have you on.

HARLOW: Matthew, thanks.

CHANCE: Thanks.

HARLOW: So, the Federal Reserve hiking interest rates yesterday, as you saw, to the highest level in 14 years. Will this latest boost actually work to try to get a handle on this inflation, get the economy back on track? And, also, what is the price we pay for it?

SCIUTTO: Yes, they certainly said it's going to last some time in those statements yesterday.

We are moments away from the opening bell on Wall Street.

CNN business correspondent Alison Kosik live at the New York Stock Exchange.

What's happening there?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Good morning, Jim and Poppy. About that interest rate hike of three quarters of a percent, stocks

went into a bit of a frenzy yesterday following the Fed's decision, though stocks look like they're in for a slight bounce at the opening bell. The Federal Reserve surprised the market when it signaled additional large increases specifically in November.

Stay with CNN.



HARLOW: The U.S. stock market set to open in just about a minute. The Federal Reserve showing it certainly is sticking to its guns when it means raising rates to try to tackle this inflation. Yesterday, the Fed approved another aggressive seventy-five basis point interest rate increase for the third time in a row. Fed Chair Jerome Powell says things may have to get worse before they get better.


JEROME POWELL, FEDERAL RESERVE CHAIRMAN: If we want to set ourselves up, really -- really light the way to another period of a very strong labor market, we have got to get inflation behind us.


I wish there were a painless way to do that. There isn't.