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Paul Manafort Trial Resumes for Second Day; Judge Blocks Release of Blueprints for 3-D Printed Guns. Aired 6-6:30a ET

Aired August 01, 2018 - 06:00   ET

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

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: This is the first trial. This is a very important step.

[05:49:32] UNIDENTIFIED FEMALE: The defense team saying that Rick Gates was all to blame.

KELLYANNE CONWAY, COUNSELOR TO DONALD TRUMP: This trial centers on matters that have nothing to do with the campaign.

REP. ADAM SCHIFF (D-CA), RANKING MEMBER, INTELLIGENCE COMMITTEE: He's going to go all in for a pardon. He's going to be the last man defending Donald Trump.

SEN. RICHARD BLUMENTHAL (D), CONNECTICUT: There have been no plans to reunite these children. It amounts to child abuse.

UNIDENTIFIED MALE: The best way to describe them is to be more like a summer camp.

UNIDENTIFIED FEMALE: You know what the difference is between summer camp and this? You go home to your parents after summer camp.

(END VIDEOTAPE)

ANNOUNCER: This is NEW DAY with Alisyn Camerota and John Berman.

ALISYN CAMEROTA, CNN ANCHOR: We want to welcome our viewers in the United States and around the world. This is NEW DAY. It is Wednesday, August 1, 6 a.m. here in New York. John Berman is off. David Gregory joins me.

Welcome to August.

DAVID GREGORY, CNN ANCHOR/POLITICAL ANALYST: It's August 1. It seems like it's a slow time, but here we have the fruits of the Mueller investigation being tested in court. This is active stuff.

CAMEROTA: Yes. No dog days of summer for us. So here's our starting line this morning.

Prosecutors lay out their case against President Trump's former campaign chairman, charging that Paul Manafort orchestrated a conspiracy to avoid paying taxes on millions of dollars of profit that he made working as a strategist for a political party in Ukraine and then lied to banks to get loans.

Manafort's defense team insists that the real liar is Rick Gates, his former deputy, who is now the government's star witness. CNN has learned that President Trump is closely watching the Manafort trial. The president was glued to the TV as he traveled to Florida last night.

And the president's allies are trying to distance themselves and the president from Manafort, the man who ran the campaign for three pivotal months through the Republican convention.

GREGORY: And breaking overnight, a federal judge has stopped a Texas- based company from hosting online blueprints to make untraceable 3-D plastic guns. We talked a lot about that on the program yesterday. The move comes after President Trump questioned whether his administration should have agreed to make it legal to make the instructions available for download.

Meantime, on Capitol Hill, senators grilled top U.S. immigration officials over the Trump administration's family separation policy. A top health official says he warned of the, quote, "traumatic psychological injury" that separating children from their parents would have on this children. The federal government now says 500 kids remain in custody without their parents.

Let's begin our coverage this morning with CNN's Joe Johns. He's live outside the courthouse in Alexandria, Virginia, with the latest on the Manafort trial.

Joe, good morning.

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Good morning, David.

This court in the Eastern District of Virginia once again living up to its reputation for fast-moving justice in this very first case. This very first test, featuring a face-off between a top political insider from the Trump campaign, and the special counsel, whose job it is to look into that campaign.

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JOHNS (voice-over): President Trump's former campaign chairman, Paul Manafort, facing day two of his trial for alleged financial fraud after both sides laid the groundwork for what's likely to be a dramatic showdown between Manafort and his long-time deputy and the government's key witness, Rick Gates.

If convicted, Manafort is facing a maximum sentence of over 300 years on 18 charges, including filing false tax returns, failing to report foreign bank accounts and defrauding several banks. Prosecutors portrayed Manafort as a, quote, "shrewd liar" who opened 30 bank accounts in three foreign countries to avoid paying taxes on $60 million of income from his work in Ukraine, including helping former Ukrainian president and Putin ally Viktor Yanukovych.

Prosecutors arguing that the money went towards supporting Manafort's lavish lifestyle, including multiple homes, expensive cars and watches, even a $15,000 ostrich jacket.

The defense pointing the finger at Gates, arguing he was the mastermind behind the scheme, who swindled Manafort. Gates is cooperating with the special counsel after pleading guilty to conspiring to defraud the United States and lying to the FBI, a fact the defense plans to use to discredit his testimony.

Gates also worked for the Trump campaign, but neither the president nor the investigation into potential Russia collusion are likely to be addressed in this case.

CONWAY: This trial obviously centers on matters that have nothing to do with the campaign.

JOHNS: The Trump administration continuing to distance itself from Manafort.

RUDY GIULIANI, ATTORNEY FOR DONALD TRUMP: Paul Manafort does not know anything. Nor could it be possible he did. He was with him for four months.

TRUMP: Manafort has nothing to do with our campaign.

JOHNS: Despite praising his work during the three months he led the president's campaign.

TRUMP: Paul Manafort just came on. He's great.

COREY LEWANDOWSKI, FORMER TRUMP CAMPAIGN MANAGER: Bringing on a professional like Paul helped us grow the campaign.

JOHNS: Sources tell CNN that publicly the White House strategy is to downplay the proceedings. But behind the scenes, the president is keeping a close eye on the trial, watching TV coverage and asking his legal team for updates.

President Trump has repeatedly said that his former campaign chairman is being treated unfairly, sparking speculation that Manafort may be holding out for a possible pardon.

SCHIFF: He's going to be the last man defending Donald Trump and bet it all on a pardon. And that may be where, at least, he's making his appeal.

JOHNS: Manafort's lawyers expressing confidence after day one of the trial.

[06:05:04] THOMAS ZEHLNE, ATTORNEY FOR PAUL MANAFORT: Feeling good.

UNIDENTIFIED FEMALE: Any chance that he may decide to flip and cooperate?

ZEHLNE: No chance.

(END VIDEOTAPE) JOHNS: Today, prosecutors plan to call to the stand an FBI agent along with Democratic strategist Dan Rabin, who worked on Ukrainian campaigns.

Yesterday, another Democratic consultant, very well-known person in Washington, Tad Divine, also testified about the extraordinary efforts of Paul Manafort to help the Ukrainian president. Tad Devine was a chief political strategist for Democratic presidential candidate Bernie Sanders.

Back to you.

CAMEROTA: Thanks, Joe. Thank you very much.

Let's bring in, to talk about all of this, we have CNN senior political analyst John Avlon; CNN legal analyst and former federal prosecutor Laura Coates; and CNN legal analyst and Robert Mueller's former special assistant at the Justice Department, Michael Zeldin. Great to have all of you walk us through what we're seeing today.

OK, I just want to start with the examples of Manafort's lifestyle. I don't know if this means he's guilty or not, but I like looking at these, OK? This is -- he allegedly evaded taxes on $60 million worth of his profits.

He had 30-plus bank accounts in three countries; multiple homes; multiple expensive cars. He had a $21,000 watch. Here's my favorite. He had a $15,000 jacket made of ostrich.

JOHN AVLON, CNN POLITICAL ANALYST: Who among us?

CAMEROTA: Yes. Who doesn't want that?

AVLON: Yes.

CAMEROTA: I, for one.

Laura, when the jury hears about the ostrich coat, are they like, "I don't know what he's guilty of, but he's guilty of something.

LAURA COATES, CNN LEGAL ANALYST: First of all, made from an ostrich is just making sure you realize this is a really odd fabric of materials to actually have. And you should think, "He's not like one of us."

But the judge actually cautioned them and said, "Hold on. Spending all this money does not make somebody guilty of a crime." And he tried to remind the jury of that. Now, whether that made their eyebrow go back down and not give the side eye, it's another story.

They're trying to point out that all of this lavish lifestyle, this frivolous spending means you don't actually think your money is ever going to stop, if you have money in that way. So this cash spigot from what they call the golden goose of Yanukovych is what they were trying to focus on, and the ostrich is the way to do it.

AVLON: A fashion crime is not literally a crime.

GREGORY: Right. So Michael Zeldin, Yanukovych is key here, because this is not directly related to the question of meddling in the 2016 election. But it is -- this is the fruit of the Mueller investigation. This is the first case out of the box they're prosecuting.

And Yanukovych was a Ukrainian politician, supported by Moscow, by the Putin regime, and this is a pile of money that Manafort allegedly amassed, didn't pay taxes on and hid.

So try to put all of this in context for us in terms of what Mueller is doing and why it matters.

MICHAEL ZELDIN, CNN LEGAL ANALYST: Well, it matters to Paul Manafort, quite obviously. He's charged with false tax returns and failing to file foreign bank account reports for bank accounts held overseas. And bank fraud.

So what they are trying to do here is to show that he did this knowingly. The defense is trying to say that they relied on Gates and that they are the innocent victim of Rick Gates's, you know, bad acts.

GREGORY: And this is -- this is Manafort's deputy, who has flipped on him, who is working with the government, testifying against him. And now the defense strategy is to blame it all on his --

CAMEROTA: That rings a bell. We're seeing some -- a lot of that playing out lately.

GREGORY: Yes.

ZELDIN: But -- yes. And the reason that they start with some of the extravagant living, in tax cases such as this, they do what they call a net worth analysis. Which is to say that he is living above his reported income. And therefore, he had knowledge that he had another source of money beyond that which he filed taxes with respect to. So that undermines this notion of innocent reliance and shows criminal intent.

GREGORY: And just shows unfairness, right?

CAMEROTA: Now, John, one of the interesting things, I think, is that -- how this all relates to President Trump, right? So this isn't about the Russia investigation, but it is about President Trump, then- candidate Trump's judgment, and why he chose Paul Manafort as the chairman of his campaign.

All of this was out there. There was already reporting that knew that Paul Manafort was connected to some shady dealing. I mean, here's just one example. Maggie Haberman reported in 2014, "In 1989, Manafort was hauled in front of a congressional panel for allegedly working to steer funds from the Department of Housing and Urban Development into a slum-like New Jersey real-estate development. Manafort caused a stir then on the Hill with a tart defense of his profession. 'You might call it influence peddling,' he said. 'I call it lobbying'."

AVLON: I mean, that's a pretty tight line, but that's far from the, you know, sum total of his alleged sins as a lobbyist. He ran a group which included Roger Stone -- Roger Stone, which was known as the torturers lobby in the late '80s and early 1990s.

CAMEROTA: What does that mean?

AVLON: They represented dictators around the world with consistently horrific human rights records. That was their niche. That was their value add.

[06:10:07] So he may have been brought on because he's friends with Stone and he was allegedly the best vote counter in the convention the Trump campaign could possibly get, but he rose very quickly to the position of chairman. And while the Trump Co. were trying to say that he was only there for four months, four months at the height of a presidential campaign is like four years. This guy had a shady reputation. This is a quantification of that.

And among other things, it's a cautionary tale, not just about ostrich jackets, but the -- being -- working for politicians who are in debt to Vladimir Putin. That's where the money comes from. That's one of the reasons this (UNINTELLIGIBLE).

GREGORY: The big -- here's the thing. I mean, guilt by association, unsavory characters being in your employ that you're relying on as advisors, can all earn the president criticism or worse. But as a legal matter, it's critically important that, for all of the ties that Manafort had to Russia, to Putin, two oligarchs, there is nothing that we're going to see in the evidence that would suggest he had any ties to foreign agents that were, in any way, trying to influence 2016 nor that President Trump did.

And what's notable here, and Judge Ellis has pointed it out. If they wanted to squeeze Manafort to get something on -- Trump, either he doesn't know or he's not saying. Either way, legally, you look back and say, "This doesn't have a lot to do with Trump." Legally, in terms of what they're looking at.

COATES: Well, you should not expect in this trial to have the smoking gun of collusion or that final nail in the coffin, or even the first nail in the coffin, for that point. That is true.

But there is an underlying Russia theme here. Remember, everyone's used that phrase, "Follow the money." Well, the real question here is why would Russia, if they were trying to tamper with the election or trying to use the campaign of Donald Trump, why would they think they had an access for a port of entry.

And the idea that Paul Manafort had all these pro-Russia ties in the Ukraine, would give some inking about that port of entry to say there may be a sensitive or receptive ear here for you.

On the other side of it, the reason they are not going to hear evidence is because the judge already said, you cannot actually get any of that evidence. The only person who even whispered it was the defense counsel to say, "Listen, as far as special counsel goes, you can't trust Rick Gates, because he has signed on a deal with them, and therefore, if you trust Robert Mueller, if you trust Rick Gates, it's all tainted." They're trying to get in the back door here.

CAMEROTA: Michael Zeldin, what should regular people be watching for this week as this trial unfolds?

ZELDIN: How the story line plays out with respect to was Paul Manafort unfairly, you know, treated by Rick Gates. That is, did Rick Gates lie and receive him in a way that has led him to be the innocent victim of a bad charge by the prosecutor, or whether or not Manafort was really in charge, Gates was doing his bidding, and that Manafort is, as the prosecutor called him, a serial liar.

So it's going to be a test of the theme of reliance versus liar. And we'll just have to see how the evidence comes in about that to see whose story line prevails.

The hard part here for Manafort is he's going to say, "Gates made me do this." But the likelihood that Manafort is going to testify in his own defense, to me, seems small. Because I don't think he wants to expose himself to cross-examination.

So when you say, "Somebody else made me do it," but you don't take a stand in your own defense, I think it's a difficult case for the jury to be sympathetic to Manafort for.

GREGORY: I think it -- to me, what's interesting is that, under normal political circumstances, your campaign manager facing criminal trial and going to prison for the rest of his life --

CAMEROTA: Would be attention grabbing.

GREGORY: Would not only be attention grabbing but would look -- make you look bad as the person who brought him on. I think Trump is a different kind of figure. Now we're analyzing it differently. It's just the different nature of it.

All right. We'll take a break here. A federal judge blocks the blueprints for 3-D printable guns from being posted online, but the legal fight is not over. What the White House is saying now about this issue, coming up next with our panel.

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[06:17:50] GREGORY: So a federal judge has blocked the release of blueprints to make guns using 3-D printers. But only after those plans have been downloaded a thousand times. The president tweeted yesterday morning that releasing those instructions, quote, doesn't seem to make much sense. But last night his administration said this.

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HOGAN GIDLEY, DEPUTY WHITE HOUSE PRESS SECRETARY (via phone): The president is committed to the safety and security of all Americans. He considers this his highest responsibility. In the United States, it's currently illegal to own or make a homemade plastic gun of any kind including those made on a 3-D printer. The administration support the nearly three decade-old law and will continue to look at all options available to us to do what is necessary to protect Americans, while also supporting the First and Second Amendments.

(END VIDEO CLIP)

GREGORY: A lot there to unpack. So we're back with John Avlon. Also with us, CNN political commentator Errol Louis; CNN White House correspondent Abby Phillip.

John, I want to start with you, because I thought what was important there of what Hogan Gidley was saying from the White House is there is an existing law that says these guns are illegal.

But one of the --one of the developments is that people have been able to download the technology. So what is the appropriate remedy here that doesn't run afoul of the First Amendment, which is to allow people to post things online and download instructions, even if we're opposed to it?

AVLON: So the sound you heard under Hogan's official statement is the administration hugging the NRA again. The president got out in front of this new law, the new settlement, which was going to allow the dissemination of these plans.

The reason why that 1988 Reagan-era law doesn't apply, and one way you can tell, is that the NRA fought efforts to explicitly modernize the bill when it was reauthorized to account for innovations like 3-D printing.

And when the settlement was made, the people disseminating these plans announced that a new era. So this is different because technology has advanced since the 1980s. There's always an impulse to say existing laws cover this, but they don't. They don't because our -- they can't have anticipated certain technologies, let along the implications for background checks.

[06:20:00] So they're trying to square the circle at the NRA, but still back up the president's statement that the plan didn't make sense.

GREGORY: All right. But it's no more -- the gun is no more illegal now than it was in '88. So what's changed?

CAMEROTA: Now we can make it.

AVLON: They didn't have 3-D printing in 1988. People with mental illness couldn't go home and print an AR-15. They could possess one illegally. They could maybe get a plastic gun. But, you know, the issue is, is the total end-run of background checks and the refusal to require things like a metal piece to be embedded in the plastic gun that would make it more difficult to bring undetected onto, say, an airplane. CAMEROTA: Errol, this is the most head-slapping thing that we have

heard in a long time. At home, you can make a homemade fun that is untraceable. You don't have to register it. It is not detected at airports or stadiums, because it's plastic and it's not metal. And they printed the blueprints for at least 48 hours, so 1,000 people downloaded it before a judge issued this injunction.

ERROL LOUIS, CNN POLITICAL COMMENTATOR: It's extraordinarily dangerous. We all discovered on 9/11 what you can do if you have malevolent intent and some -- you know, some small knives, right?

So in this case, you've got something that's extraordinarily dangerous. You've got a real First Amendment question here about, you know, prior restraint. We're all journalists, right, so you hear about the idea that a judge says I'm going to tell you in advance you can never publish this, and you know, you freeze up a little bit. Because what else can they apply that to?

But here they are. This is where technology has brought us. This is where the world has brought us. What doesn't work is to just kind of sit back and let somebody -- in this case, the plaintiff seems to be an anarchist who simply wants to watch the world burn, who wants to sort of, like, get the stuff out here and let people do whatever they will with it. That's never going to fly. And so I think we're going to end up someplace where everybody can be at least a little bit cut off.

GREGORY: Abby, it seems to me that the obvious fix here is to update the prohibition against these kinds of guns in a way that gets areas of agreement around background checks and around detection.

ABBY PHILLIP, CNN WHITE HOUSE CORRESPONDENT: Yes, it is. But as you can see from what the president did as he started the day yesterday, he basically said, "I'm checking with the NRA to see how to approach this issue."

And the NRA's solution to this is apply the existing law. Don't do much else beyond that. And I think that's what you're seeing the White House say. They're giving some lip service to this idea of doing whatever it takes, but the real -- the conclusion that they have come to is that the NRA is right, the existing law is sufficient, we don't need to do any more about this.

I think we basically saw the White House doing the same thing on a slew of other gun control issues. This is a president who wants to make it seem as if he is negotiating with the NRA, but what he's really doing is clearing with the NRA what he does before he does it.

And beyond that, I think this -- this is a Trump administration who really doesn't think that these issues are long-standing problems for them. They deal with it in the moment, and they move on, it's onto the next controversy. I think they are anticipating this will go essentially the same way as bump stocks and a slew of other gun- related issues that they've had to deal with over the last year or so.

CAMEROTA: Abby, that's such good context. We know that the president was alarmed. You know, it happened during NEW DAY. We reported on the story. It was not widely reported. A few minutes later, the president tweeted. He had obviously seen it, and he said that he wasn't comfortable. It didn't make a lot of sense. But thank you for all the context.

He said, "I'm looking at a 3-D plastic guns being sold. That doesn't seem to make a lot of sense." But then by the end of the day, you've spelled out where we are.

Let's talk about another really important issue. And that is how these 500-plus kids are ever going to be reunited with their parents who have been deported. And some of these parents don't know where their kids are and vice versa.

There is an official from a U.S. public health service commissioner who tried -- says now that he tried to warn the administration that this zero tolerance policy was going to have all sorts of negative ramifications. Here he is.

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JONATHAN D. WHITE, COMMANDER, U.S. PUBLIC HEALTH SERVICE COMMISSIONED CORPS: During the deliberative process over the previous year, we raised a number of concerns in the ORR (ph) program about any policy that would result in family separation due to concerns we had about the best interests of the child as well about whether that would be operationally supportable with the bed capacity we had. There's no question that separation of children from parents entails significant potential for traumatic psychological injury to the child.

(END VIDEO CLIP)

CAMEROTA: So John, this is where we are today.

AVLON: Significant traumatic psychological injury to a child. This gentleman saying he raised that danger, and that's the reason why the departure of previous policy that the administration pursued has resulted in this catastrophic situation they're now trying to desperately clean up.

But we know that there are already around 500 kids that aren't going to be reunited with their parents. Their parents are out of the country. Whether those efforts would --

[06:25:00] GREGORY: And what's worth underlying, Errol, is that the intent here was to separate families as a deterrent.

LOUIS: Yes.

GREGORY: To deter people from crossing illegally. And to use families in that experiment, which did not work. And now they're playing catch up. And the incompetence is what is so striking.

But where are we? There are positive steps being taken; there are families being reunited. But it's happening incredibly slowly. LOUIS: That's right. It's going to be much harder to put the

families back together than to it was to separate them. I believe, frankly, from everything we've seen, including a lot of the testimony from the administration, is that they wanted there to be chaos. This was not an accident.

I think it was really what they wanted. As a deterrent factor, they're going to say, "You're going to be coming into utter chaos, and we will cause that chaos, or at least stand by and allow it to happen."

GREGORY: Or you're going to cause injury to your family and to your children.

LOUIS: I mean, and of course, you know, factually, it just never made any sense. For somebody to walk, you know, 1,600 miles put themselves through all kids of danger, the notion that this one last hurdle is going to be what turns you all the way back and puts your life at risk, it never made any sense.

CAMEROTA: Abby, I just have to underscore something that the former director of ICE told us last week about these 500-plus kids who were separated from their parents. He said there's a very high likelihood that a lot of these parents are never going to see their kids again.

PHILLIPS: That's right. And I think we knew that at the beginning, because it had become very clear that the administration had already started deporting parents without regard for where their children were. And just to underscore what Errol was saying, this is something the administration was aware was likely to happen.

They floated this idea a year ago and then decided to hold off on it, because they didn't think that the political risks were worth it. But this spring they decided that the political risks were worth it, because the president was agitated about the border. He wanted to do something before the midterms. This is the consequence. And the White House and this administration knew that it was going to be.

CAMEROTA: Errol, Abby, John, thank you all very much.

Now to this story, Facebook is shutting down a network of suspected Russian-linked accounts. A stark warning from the head of Homeland Security, next.

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