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Intel Chief: Russians Trying to Interfere in Elections; Mueller Want to Interview Russian Pop Star; U.S. Official: Russian Spy Worked at Moscow Embassy for a Decade. Aired 5-6p ET

Aired August 2, 2018 - 17:00   ET


JAKE TAPPER, CNN ANCHOR: Our coverage continues now with one Mr. Wolf Blitzer in THE SITUATION ROOM. Thanks for watching.

[17:00:11] WOLF BLITZER, CNN ANCHOR: Happening now, still under attack. Top U.S. intelligence and national security officials warn Russia is still targeting U.S. elections with an eye toward dividing the country before the upcoming midterms. Does the president still think Russia's interference is a hoax?

Questioning the pop star. CNN learns that Special Counsel Robert Mueller is pushing to interview the Russian oligarch and his pop star son who encouraged Donald Trump Jr. to meet with a Russian lawyer promising dirt on Hillary Clinton.

Flat broke. Prosecutors reveal former Trump campaign chairman Paul Manafort spent millions and millions of dollars on home electronics and landscaping, even as his book keeper now reveals his firm had no money to pay bills.

And sloppy spy? She was aggressively flirtatious and, sources say, boasted of ties to Russian intelligence when she drank too much. Despite her sloppy trade craft, was this alleged Russian spy still a valuable asset for Moscow?

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

ANNOUNCER: This is CNN breaking news.

BLITZER: Breaking news, the White House brings out its intel and national security chiefs in a bid to show it means business about Russia's attacks on American democracy.

The director of national intelligence says what the president won't say: that Moscow is right now trying to interfere in the election process, aiming to weaken and divide the United States ahead of the midterm elections.

I'll speak with Congressman Ruben Gallego of the Armed Services Committee and our correspondents and specialists are also standing by with full coverage.

But first, let's go straight to our chief White House correspondent, Jim Acosta. Jim, given the president's dismissive rhetoric for a long time about Russia's election attacks, what's behind this latest White House display?

JIM ACOSTA, CNN CHIEF WHITE HOUSE CORRESPONDENT: Wolf, the White House tried to show the world today that it's serious about stopping Russian interference in U.S. elections.

But the top administration officials, who insisted they are on the case, had to grapple with one key question that kept coming up over and over again: whether the president takes the threat to American democracy seriously.


SARAH SANDERS, WHITE HOUSE PRESS SECRETARY: The president has made it it clear that --

ACOSTA (voice-over): It was a show of force as the White House and now top administration officials from the director of national intelligence to the national security adviser to the FBI director to assure the American people they are determined to combat Russian interference in U.S. elections.

DAN COATS, DIRECTOR OF NATIONAL INTELLIGENCE: We continue to see a pervasive messaging campaign by Russia to try to weaken and divide the United States.

ACOSTA: Director of national intelligence Dan Coats insisted the order is coming from the top.

COATS: The president has specifically directed us to make the matter of the election meddling and securing our election process a top priority.

ACOSTA: Homeland Security Secretary Kirstjen Nielsen described a grave threat.

NIELSEN: Our democracy itself is in the cross hairs. Free and clear elections are the cornerstone of our democracy, and it has become clear that are the target of our adversaries, who seek, as the DNI just said, to sow discord and undermine our way of life.

ACOSTA: But all of the talk stood in stark contrast with the president's own past statements, most notably his summit with Vladimir Putin in Finland, where Mr. Trump declined to confront the Russian president over Moscow's meddling.

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: I hold both countries responsible. And I think we're all to blame.

ACOSTA: The president has often diminished the Russian threat, repeatedly saying other unnamed countries could be interfering, as well.

TRUMP: I accept our intelligence community's conclusion that Russia is meddling in the 2016 election took place. It could be other people also.

ACOSTA: The officials gathered in the briefing room were asked about the disconnect.

COATS: I'm not in a position to either understand fully or talk about what happened in Helsinki.

ACOSTA: Then there are the president's tweets, accusing top FBI officials of being part of a witch hunt, a charge echoed by press secretary Sarah Sanders.

SARAH SANDERS, WHITE HOUSE PRESS SECRETARY: He's certainly expressing the frustration that he has with the level of corruption that we've seen from people like Jim Comey, Peter Strzok, Andrew McCabe. There's a reason that the president's angry.

ACOSTA: Asked about that, FBI director Chris Wray pushed back with Sanders in the room.

CHRISTOPHER WRAY, FBI DIRECTOR: I ensure the American people that the men and women of the FBI, starting from the director all the way on down, are going to follow our oaths and do our job.

ACOSTA: The White House was also asked about its continued attacks on the press, after the president's daughter, Ivanka Trump, told Axios members of the media are not the enemy of the people --

D. TRUMP: They are fake!

ACOSTA: -- as her father often says.

IVANKA TRUMP, DAUGHTER OF DONALD TRUMP: I have certainly received my fair share of reporting on me personally that I know not to be fully accurate. But no, I do not feel that the media is the enemy of the people.

[17:05:11] ACOSTA: Given multiple opportunities to back Ivanka and not President Trump, Sanders refused to say the press is not the enemy.

(on camera): His own daughter acknowledges that, and all I'm asking you to do, Sarah, is to acknowledge that right now and right here.

SANDERS: I appreciate your passion. I share it. I've addressed this question. I've addressed my personal feelings. I'm here to speak on behalf of the president. He's made his comments clear.


ACOSTA: Now each of the top officials at the White House today laid out various task forces and initiatives that have been launched to defend against Russian attacks in the upcoming midterm elections. The big question, of course, is whether any of those efforts will ultimately be successful. Wolf, we may not get that answer until well after the November elections are over -- Wolf.

BLITZER: All right. Jim Acosta at the White House. Thank you very much. Let's bring in our crime and justice reporter, Shimon Prokupecz.

Shimon, what are you learning about how the FBI is now trying to investigate this Russian threat?

SHIMON PROKUPECZ, CNN CRIME AND JUSTICE CORRESPONDENT: I think the FBI director took a much more serious -- went further today than he has before in talking about this threat. I think it's also important to understand for him to go before the White House to stand on that podium and to answer questions is certainly significant, as well.

Look, for the FBI this is a top priority. The concern is that there are Russians in this country that they are tracking that are in our institutions, are in our banks, are working at different companies, think tanks all working to gather intelligence, gather information, much like we saw with the woman who was recently arrested here in Washington, D.C., Mariia Butina, for working for the Russians.

This is a major concern that has been ongoing for the FBI for quite some time. But certainly, people inside the FBI feel, given what happened in 2016, there is a certain escalation that is almost touching, or perhaps touching, every FBI office in this country. The FBI director explaining today how each of these offices is handling these investigations.

BLITZER: But you know there's a whole school of thought at the FBI and elsewhere in the U.S. government that says the only thing the Russians are going to understand, if they're doing this to the United States, the United States is going to have to do something to Russia. Leak, for example, a lot of e-mails, Russian e-mails involving Putin's money, for example. That's something they might understand.

PROKUPECZ: Of course. That is something. You talk to people, there is concern that they're in our grid systems. So then you talk to some people that say that we are in their systems. Right? Certainly, that's -- we've heard the president sort of hint at this, that we do this to other people, as well.

That is an action, certainly, that the intelligence community, for all we know, may have taken. It's not something that they will ever talk about publicly, certainly what the CIA does.

But look, I think the concern by the FBI is certainly much more serious. They are taking it much more seriously. They've always taken it seriously. But I think the fact that they're talking about it sends a different message.

And the other thing that I want to point out, Wolf, is that for the first time, we've done some reporting on this, is that the FBI director today said that they are also investigating illegal campaign financing that may have come from foreign nationals, right? And that has to do with some of the reporting that we've done about Russian oligarchs who may have been using cut-outs here in the U.S. to surreptitiously donate money to campaigns. Certainly, this has come up with the whole NRA stuff. So that is something new.

So we have two significant pieces of information from the FBI here today that this is touching every field office, and there's also money now they're looking at that may have gone to campaigns.

BLITZER: And tell our viewers who may not be familiar with the word what you mean by cut-outs?

PROKUPECZ: So that their -- some of these oligarchs, which we've done stories on, that oligarchs were giving money to U.S. citizens, people who would be allowed to donate. It could be relatives. It could be people they're associated with that were giving money to those people and then they, in turn, were then donating it to various campaigns.

BLITZER: Yes, but if they find out the money was originating from Russian oligarchs, and they were the cut-outs, that is a crime.

PROKUPECZ: That is a crime, and oligarchs time and time again, we have seen, they are part of this Russian influence investigation. We know that oligarchs have been stopped who have traveled to this country, who have been stopped and questioned by the FBI and have not returned since.

This is a significant development, I think, the fact that the FBI has admitted that they are now looking at this.

BLITZER: Yes, good point. Shimon, excellent reporting, as usual. Thank you.

There's more breaking news. CNN has learned that the special counsel, Robert Mueller, is pushing for an interview with the Russian billionaire and his pop star son who encouraged Donald Trump Jr. to meet with a Russian lawyer promising dirt on Hillary Clinton.

CNN's Kara Scannell has been digging into this story for us.

Kara, what are you learning?

KARA SCANNELL, CNN CORRESPONDENT: Wolf, that's right. So we've learned that the Special Counsel, Robert Mueller's, team is still pressing to interview Emin Agalarov. He is the pop star son of Aras Agalarov. They are a Russian family of Azerbaijani descent who had worked with the Trumps to put on the Ms. Universe pageant in Moscow in 2013.

[17:10:08] So what we've learned today is that Mueller's team is still trying to interview both Emin and Aras Agalarov. We spoke to his lawyer today. And here is what he's told us about these discussions.

The attorney, Scott Belzer (ph), said that "We have been having conversations with the special counsel for a potential interview for nearly a year. Those conversations are not new. They are ongoing. We haven't reached an agreement yet on any terms of such an interview, and I can't predict whether we will reach agreement or not."

Now, the Agalarovs' relationship with the Trumps are not -- it wasn't just a chance encounter around this June 2016 meeting at Trump Tower, which Emin Agalarov, the son, had instigated through Donald Trump Jr. Aras Agalarov as mentioned, worked with the Trumps to put on the Ms. Universe pageant there, and his son Emin is a pop star who has recently released a new video that some have taken to be mocking the special counsel's investigation by poking fun at the elements of this investigation, potential Russian meddling in the election.

So what this tells us now, that Mueller is still trying to set up this interview and they're still having these negotiations, is that the special counsel's team is very much interested in the contours of that Trump Tower meeting and perhaps other connections and relationships between Donald Trump and Russian oligarchs and Russian investments -- Wolf.

BLITZER: And Kara, there are, as you know, a lot of questions about whether then-candidate Donald Trump knew about that meeting with the Russians at Trump Tower in New York. What are you hearing?

SCANNELL: Well, Wolf, last week we reported that sources had told us that Michael Cohen was saying -- he is Trump's former personal attorney -- that Michael Cohen was saying that he had knowledge or information that Trump may have known about the meeting with the Russians before it occurred.

Now we asked Scott Belzer (ph), the Agalarovs' attorney, about that; and he told us that "The Agalarovs were not aware and had no reason to believe that president knew the Trump Tower meeting was happened or that it happened before it was publicly disclosed."

So now, of course, Cohen is claiming that he had some knowledge of that, according to our sources, but at least the Agalarovs are saying through their attorney that they have no information to shed on whether Trump knew about the meeting beforehand, Wolf.

BLITZER: And it's interesting. We're showing our viewers this video, Kara. It's interesting that the president, Agalarovs, obviously, Michael Cohen, they're all featured in this video. There you see Michael Cohen in the back of that clip right over there.

So it's -- it's all so, so intriguing. Kara Scannell, thanks very much for that report.

Joining us now Democratic Congressman Ruben Gallego of Arizona. He's a member of the House Armed Services Committee.

Thanks for joining us. But let's get right to your reaction to the news that the FBI director, Christopher Wray, according to Christopher Wray, the FBI's Foreign Influence Task Force is now working across all 56 FBI field offices around the United States. How significant is this development in the overall Russia probe?

REP. RUBEN GALLEGO (D), ARIZONA: It's a great -- it's really a great development. I mean, first of all, it's a great development for democracy. We need to make sure that the American public understands that their vote is sacred; it will be counted, and it's not going to have a foreign influence.

I think it needs to be backed up, though, by actions by the Republican House and Senate by actually putting money in election integrity bills and funding actual programs, which we have not seen happen. BLITZER: Is it possible, Congressman, for the national security

apparatus in the federal government to counter this threat while the president himself continues to undermine that effort with his own rhetoric?

GALLEGO: Well, the best way to actually counter any type of threat is to actually create a deterrent. And the problem we have right now is we have a president that's not part of our deterrent package. You have, you know, our apparatus, when it comes to the National Security Council and everybody else, that are, you know, pushing hard against Russia and Russian interference.

But the president comes out all the time and basically undermines that. And that is where we're going to find ourselves in trouble. Because right now what we -- what I believe is Russia is going to take in calculations and start figuring out that, "You know what? We can probably still get away with it, because they're going to have President Trump at least for two more years to make sure that the -- you know, the blowback is not as harsh."

BLITZER: You know, It's interesting that the National Security Agency director seemed to suggest today that he's been authorized to strike back against foreign influencers with offensive cyber operations.

Is that possible that the president is taking this threat more seriously behind the scenes, even if his public rhetoric clearly doesn't match?

GALLEGO: Well, if it's possible, yes, it's possible. I hope, actually, that is what is actually occurring. I would love nothing more than Donald Trump to start standing up to Russia, to Putin and to their interference here. I think that would be a great thing for this country.

But it -- he needs to match his actions publicly, too. The Russians are -- have always been -- whether they're Soviet Union, whether they're czars, whether they're now what are kind of oligarchy Russia -- Russians that they are now, they only understand power. And power projected by the person at the head of government.

[17:20:15] So Trump needs to actually follow up with actual words and rhetoric and try not to undermine Congress, especially when we try to pass sanctions against them.

BLITZER: Offensive cyber operations, what does that say to you? What does that mean?

GALLEGO: Well, I don't want to go into details. But from at least the briefings that we've had on the Armed Services Committee, there are tons of ways that we could basically create deterrents for them to actually be -- Russians to actually stop them.

Now, you know, nothing that I'm going to say is a secret like that. But there has been conversations about what's called doxing, where we actually release, you know, how much the oligarchs and Putin have stolen from the Russian people, which is, you know, upward of billions of dollars. That kind of threat usually is a good deterrent for many of these, you know, nefarious actors, especially oligarchs and big government officials.

BLITZER: And you think the U.S. government should specifically tell the Russians, "If you continue to interfere in the U.S. democratic process, this is what's going to happen to you"?

GALLEGO: Yes. I've actually always been extremely forthright about that. The only way you stop Russians is you need to basically show them that you're willing to go to the mat and fight. Russians don't understand anything else. So we really need to show that there is going to be an offensive capability that will strike at them if they, again, strike at our critical infrastructure and our democracy.

BLITZER: It was interesting today at that briefing, the director of national intelligence, Dan Coats said he's not in a position, in his words, to either understand fully or talk about President Trump's meeting about 2 1/2 weeks ago with Vladimir Putin in Helsinki. Do you think the president is deliberately leaving his director of national intelligence in the dark?

GALLEGO: What we've seen so far, yes. We -- not just, you know, DNI Coats. We've seen this many times with other portions of the apparatus of his national security apparatus, whether it's James Mattis, whether it's sometimes the secretary of state, making announcements without -- and policies without actually talking to the relevant department heads.

He is -- unfortunately, he runs wild. He still thinks that he is a 42-year-old CEO of a, you know -- of a company that builds buildings when instead, he's running this country. He needs to do it in an appropriate and mature manner.

BLITZER: Let's turn to the other breaking news we're following. CNN has learned that the special counsel, Robert Mueller, wants to interview Aras Agalarov and his son Emin Agalarov. He's the Russian pop star who encouraged that 2016 Trump Tower meeting with a Russian lawyer promising dirt on Hillary Clinton.

Could they be key witnesses in this overall probe?

GALLEGO: It can be. You know, it's so hard to tell where this probe is going right now. I think -- I respect Mueller. I respect what he's doing. And I just can't peer into what he's trying to build out.

But clearly, there is something that happened here. The fact is the story around that meeting has changed multiple times. First of all, that the meeting didn't occur, next that the meeting did occur, but it wasn't that big of a deal. It wasn't about the elections, about adoption.

And now we know that, No. 1, there was eight people there. One of them was a former KGB spy. And then there was a phone call after this meeting. And we don't know who Donald Trump Jr. called, because the Republican parties had stopped us from subpoenaing -- getting the records from the phone company. So there is something that is there. And we do need to follow it all

the way through. Whether the pop star is going to actually be relevant to this, I don't know. But the fact that there were so many lies created by the president himself tells me that something occurred that's really important.

BLITZER: Congressman Gallego, thanks so much for joining us.

GALLEGO: Pleasure.

BLITZER: We have urgent breaking news coming into THE SITUATION ROOM right now. A senior administration official is confirming that a Russian spy worked at the U.S. embassy in Moscow for a decade. We have details. We'll share those details with you right after this quick break.


[17:23:34] BLITZER: There's some important breaking news just coming into THE SITUATION ROOM. We're learning now that a Russian spy worked at the United States embassy in Moscow for a decade before being discovered.

Our global affairs correspondent, Elise Labott, working the story for us. She's got details. Elise, what are you learning?

ELISE LABOTT, CNN GLOBAL AFFAIRS CORRESPONDENT: Wolf, this is a Russian woman who's been working at the U.S. embassy for almost a decade.

She was hired by the State Department, as all these so-called foreign service nationals are. But she worked for the Secret Service, had access to a lot of information going on at the embassy. And you know, officials at the embassy, regional security officers, they're called, they started to realize that all of these foreign service nationals have some relationships with Russian government agencies. But they seemed to find that a lot of information was going to the FSB, the main Russian security apparatus. And they realized that they were getting a lot more information than they should have.

The regional security officer found this about in 2016, reported it up the chain and seven months plate later, she was found; she was caught red-handed and dismissed.

BLITZER: So she was a foreign national. She was a Russian citizen working at the U.S. embassy.

LABOTT: That's right.

BLITZER: Not a U.S. foreign service officer, which is a career diplomat.

LABOTT: That's right.

BLITZER: There's a huge difference.

LABOTT: A Russian citizen.

BLITZER: She's a Russian citizen. So how exactly was she caught?

LABOTT: Well, she was caught -- basically, they did a sting on her. They started giving her information, and she ended up giving it to the FSB. And once they caught her red-handed, she was quietly dismissed. They didn't make a big case of it. They weren't able to arrest her, because she was a Russian citizen. But certainly, the Russian government wasn't very happy about it.

[17:25:14] BLITZER: And so when she was suspected of being a spy, presumably, they gave her some information to see if she would distribute it to the Russian intelligence community. And they quickly discovered she was.

LABOTT: That's right. They gave -- originally she was giving, you know -- it wasn't a lot of information here and there. It was just in drib s and drabs. And then they realized that the FSB was getting a lot more information than they should. This woman had access to the intranet of the U.S. Secret Service, the president's schedule, the vice president's schedule, the e-mail system.

We asked the Secret Service whether any national security information was compromised. One official told me that this woman didn't have access to classified information.

The Secret Service laid out a statement that said "The duties are limited to translation, interpretation, cultural guidance, liaison and administrative support. At no time in any Secret Service office had foreign nationals provided or placed in a position to obtain national security information."

But Wolf, again, she had access to the intranet, the information that all Secret Service employees that aren't on a specific detail have access to, as well as the e-mail system.

BLITZER: Yes, she's worked at the U.S. Embassy in Moscow for nearly a decade.

LABOTT: That's right.

BLITZER: We're going to continue to monitor this story and see the latest information. Elise, thanks very much for that reporting.

Coming up, there's more breaking news. The White House brings out top intelligence and national security officials in a dramatic show of force, warning that Russian attacks on U.S. democracy continue right now, posing a direct threat to the upcoming midterm elections. Is the president on board?

And she was aggressively flirtatious and, sources say, boasted of ties to Russian intelligence when she drank too much. Now there's new information on the alleged Russian agent arrested in Washington.

Stay with us. You're in THE SITUATION ROOM.



[17:31:50] WOLF BLITZER, CNN HOST: We're following multiple breaking stories right now including top U.S. intelligence officials' unprecedented appearance in the White House briefing room earlier this afternoon, warning about Russia's continued attempts to weaken and divide the United States ahead of the upcoming midterm elections. Our political and legal experts are here to discuss and assess. Jeffrey Toobin, what do you make of this show of force at the White House earlier today?

JEFFREY TOOBIN, CNN CHIEF LEGAL ANALYST: Well, it was most noticeable by who wasn't there, which is the -- who is the President of the United States who doesn't seem to believe this is a problem at all. And you know, the Senate Republicans, too, just voted down $250 million for security for the election. So, I mean, there does seem to be a very substantial divide within the Republican Party about whether this is a problem at all. Certainly, those of us who care about the integrity of our elections were encouraged by the show of force, but there's something about it that rings pretty hollow when the President who is the boss of all of these people has said repeatedly, especially in Helsinki that he just doesn't think this is a problem.

BLITZER: Dan Coats, Chris Cillizza, the Director of National Intelligence, was asked why the President's rhetoric on this very sensitive issue doesn't necessarily match their own rhetoric, the rhetoric we heard from Coats and the others today. Listen to coats.


UNIDENTIFIED MALE: How do you explain the disconnect between what you are saying, his advisers, and what the President has said about this issue?

DAN COATS, DIRECTOR, NATIONAL INTELLIGENCE: I'm not in a position to either understand fully or talk about what happened at Helsinki.


BLITZER: That was a pretty shocking statement from Dan Coats 2-1/2 weeks after Helsinki and the summit between President Trump, President Putin. He says, he's not in a position to either understand fully or talk about what happened in Helsinki.

CHRIS CILLIZZA, CNN POLITICS EDITOR-AT-LARGE: Right. It opens up the possibility -- he's at least told me of the possibility, Wolf, that Donald Trump knows something that we don't know about Russians' interference in the election because of his conversation with Donald -- with Vladimir Putin. I mean, I think that's extremely unlikely. I think the truth of the matter is Dan Coats has asked a question, a great question that is fundamentally unanswerable given what Jeff Toobin rightly said, which is the U.S. Intelligence Community, Mike Pompeo, Chris Wray, Dan Coats, anyone that you can name not named Donald John Trump will say, yes, the Russians interfered in this election to help Donald Trump to hurt Hillary Clinton, except Donald Trump. That's the problem. Dan Coats can't answer that question which is why is Donald Trump the one not (INAUDIBLE) not reading off the same song book?

BLITZER: Because it look, Laura, like the President is keeping his Director of National Intelligence in the dark?

LAURA COATES, CNN LEGAL ANALYST: Yes. I mean, that's the understatement of the year. It's shocking that this person, the director of National Intelligence is not in the position to understand an intelligence matter related to somebody who has been a geopolitical rival since the 1950s and probably before that. It's astounding. And really, you can almost hear his own voice saying to Andrea Mitchell, yet again, when someone ask the question, we'll say, what now? Because that's what everyone is thinking about this.

[17:35:00] And really, the fact that the intelligence community has this high burden of proof they've never had before to continuously convince the American public through these mediums and especially the President of the United States that there is credibility and voracity in the findings of these major agencies is shocking. And we are less than 100 days away from the midterm election when everyone has promised everyone that there is continued interference. How can it be that we don't have a plan and that the people who were in charge of this are in the dark?

BLITZER: Why don't we hear the same narrative, very tough language coming from these intelligence national security officials earlier this afternoon? We don't hear that from the President.

REBECCA BERG, CNN POLITICAL REPORTER: Right. That's the million- dollar question, Wolf, why? It's obvious that the President is not engaged at the level that you would expect of a President. We wouldn't have needed to have this show of force today if President Trump hadn't cast so much doubt on what he believe, why he has these reservations about the conclusion that was reached by pretty much everyone in the intelligence community that Russia meddled and did it to help him. And so, if the President cared about this issue, you would expect to have seen him there today, you would have expect that at least he would have tweeted something about it today. But his silence has been deafening on this issue. Why? We don't totally know the answer to that.

CILLIZZA: That's -- I think that's a super important point Rebecca made, which is the reason that you have a show of force is because the President of the United States, three weeks ago was in Helsinki and said, well, both sides are to blame for this, and was asked directly the next day in a cleanup effort and said, I believe the findings of our intelligence community, pause, could have been someone else. There's a lot of people out to get us. Well, then you don't believe the assessment of the intelligence community. He -- the reason he keeps saying this, Wolf, is because he doesn't believe it. Because for whatever reason whether it's conflated with his election victory, how he thinks it's being demeaned, he doesn't believe it. It doesn't matter how many times Dan Coats, Chris Wray, Mike Pompeo, fill in the blank -- it doesn't matter how many times those people say it, he can't wrap his mind around it. Is it just conflated with the election, is it something more nefarious? Don't know. But we know that for a fact he cannot do it.

COATES: And by the way, there's a bigger show of force as well than just today, there's been indictments through the Department of Justice that Rod Rosenstein, himself, has (INAUDIBLE) American people well over 100 charges, talking about the fact that the intelligence community is able to have a proof in some way or at least can try to (INAUDIBLE) the jury here, that's a huge show of force also being ignored.

BLITZER: Jeffrey Toobin, button this up for us, your bottom line.

TOOBIN: What does -- what does Vladimir Putin have on Donald Trump? And what went on in that meeting? No one knows. Apparently, the director of national intelligence doesn't know. The core of this whole issue is what is the relationship between Donald Trump and the Russian government? And we seem to know less and less about that all of the time, not just us in the news media, but apparently, the Director of National Intelligence, too.

BLITZER: Good point. All right. Everybody, stick around. There's more news we're following including some new details we're getting about the alleged Russian spy arrested as she was about to leave Washington. Sources now say some of her tactics were so alarming that people reported her to law enforcement. Also, today's surprising testimony in the trial of former Trump campaign chairman Paul Manafort. We'll have details.


BLITZER: There's more breaking news, prosecutors are making their case against the former Trump campaign chairman Paul Manafort charged with tax and backing crimes. They're laying out Manafort's record of luxury expenses revealing he spent millions of dollars on home electronics and landscaping. Our Justice Correspondent Evan Perez is over at the federal courthouse in Alexandria, Virginia. Evan, what are you learning, first of all, about how Manafort was financing this truly lavish lifestyle?

EVAN PEREZ, CNN JUSTICE CORRESPONDENT: Well, Wolf, we're getting a clearer picture now from his -- from his bookkeeper, from his tax preparer about the greater financial picture that Paul Manafort had beginning in 2011, 2012 when he was swimming in money, making over a million dollars from his Ukrainian clients to 2016, early 2016 where apparently he was nearly broke, almost being without health insurance because he couldn't afford it. That's the picture we learned today from the bookkeeper and the accountant. We also learned from them they spent pretty much all afternoon on the stand, and they described not knowing of over more than a dozen bank accounts that Paul Manafort had in Cyprus. These are -- there are secret bank accounts according to the government, that he never declared on his taxes, never told the IRS about, and these were the accounts that they say were being used to fund this lavish lifestyle. We learned a little bit about his taste in custom-tailored suits. We

also saw a photograph of a jacket and a vest made from ostrich skin, python vest, landscaping on a pond. Apparently one of the biggest in the Hamptons for his home in Bridgehampton, New York. We heard from his landscaper who described how he spent more than $400,000 a year on maintenance of this -- of this landscaping at his home. And really, what this is all building to, Wolf, is the big witness that we expect the government to present which is Rick Gates -- Rick Gates is going to be testifying that he helped Paul Manafort move some of this money from overseas, hiding it from the IRS, hiding it from his accountant and his bookkeeper.

[17:45:04] And this is all part of the strategy here to show that he lied on these bank loan applications. And again, he's -- as you said, he's facing charges of tax evasion as well as bank fraud, Wolf.

BLITZER: Day four continues tomorrow. Thanks very much, Evan Perez for that.

Coming up, a new information on the alleged Russian agent arrested here in Washington. Sources say when she drank too much, she boasted about her ties to Russian intelligence. Also, more details emerging now about the Russian pop star and his wealthy father connected to the notorious meeting between Russians and top officials of the Trump campaign. Will they speak with the Special Counsel Robert Mueller's team?


[17:50:28] BLITZER: Breaking tonight, new details emerging about the Russian woman accused of acting as an agent for Moscow while she attended a university here in Washington and attempted to get close to influential people inside and close to the U.S. government. Our political correspondent Sara Murray has been working this story for us. What's the latest? Sara, what are you learning?

SARA MURRAY, CNN POLITICAL CORRESPONDENT: Well, Wolf, this alleged Russian spy seemed to be a little bit sloppy when it came to her trade craft, so sloppy that in at least two occasions, classmates actually reported her to law enforcement. But experts I spoke to said that probably doesn't mean she was any less valuable to Moscow.


MARIA BUTINA, ALLEGED RUSSIAN SPY: I would like to present Russia --

MURRAY: For an alleged Russian spy, Maria Butina's skills weren't particularly impressive. She like to communicate via widely-available platforms like Twitter and WhatsApp. Her overly flirtatious approach left men wondering what she was really after. And sources say she bragged about her ties to Russian intelligence when she was intoxicated. Two of her classmates found her comment so alarming, they reported her to law enforcement. Sources tell CNN, Butina pleaded not guilty to charges of conspiracy and acting as a foreign agent in the U.S. after her July arrest. Her lawyer insists she's not a spy and says she won't cut a deal with prosecutors if it means saying she is one.

ROBERT DRISCOLL, MARIA BUTINA'S ATTORNEY: I mean, that's always the problem, people (INAUDIBLE) cutting a deal, but if you're not an agent for a foreign government, you can't lie and say you are in order to get rid of this.

MURRAY: Intelligence experts see Butina's far from subtle approach to allegedly trying to infiltrate GOP political circles as just one of the tools in Moscow's arsenal as Russian President Vladimir Putin tries to meddle in American democracy, an ongoing effort.

COATS: We continue to see a pervasive messaging campaign by Russia to try to weaken and divide the United States.

MURRAY: Past Russian spies have adopted fake identities, used invisible ink, communicated with coded messages over radio transmitters, but the under-the-radar approach didn't seem to suit Butina.

BUTINA: We promote gun rights.

MURRAY: She touted her gun rights group and racy Russian G.Q. photoshoot in 2014. In 2015, she questioned then-candidate Donald Trump about sanctions against Russia at a Nevada political event.

BUTINA: I'm visiting from Russia so my question --

MURRAY: As an American university student, Butina defended Putin and even claimed in class to be a liaison between the Trump campaign and the Russians, a source says. People who met her through school and political events say she was a little too friendly. She was quick to start playing footsie under the table and boldly saddled up to older men at political events and asked them to be Facebook friends. Her lawyer admits her activities and contacts caught the attention of the FSB, one of Russia's security services.

DRISCOLL: I think that anyone who is Russian has to meet with the FSB when they go back and forth, and frequently is asked at the airport what they're doing in America, if they had any information to FSB.

MURRAY: And experts say she was probably a valuable asset for Russia.

STEVEN HALL, CNN NATIONAL SECURITY ANALYST: I think Maria Butina would have been very valuable to the Russian government, despite the fact that she wasn't a classic -- you know, classically trained intelligence officer like perhaps someone like Anna Chapman, so I would expect to see other versions of Maria Butina.

MURRAY: When investigators searched the home of Butina and her political operative boyfriend who has not been accused of wrongdoing, they found a note in his handwriting, how to respond to FSB offer of employment. It's unclear which of them it was for.


MURRAY: Now, Butina's lawyer has also said that sexism as well as skepticism about Russia and its motives and its political climate are tarnishing the case against his client. We will see what happens when she is back in court, Wolf, in September.

BLITZER: I know you're working your sources, U.S. officials are telling you they don't necessarily believe this is an isolated incident. They suspect there's plenty of others out there.

MURRAY: No. And we saw so many administration officials out there today talking about Russian election meddling. But when I was talking to experts about this, they said there could be hundreds of Maria Butinas walking around the United States. Those people who are, you know, more under the radar than her methods, but also people who are operating a little bit more above the radar, a little bit more out in the open who are trying to execute on these influence operations. And they said that Russia isn't just interested in defense secrets anymore, they want to create a propaganda operation, and that's going to require more and more people here in the U.S. and more witting or unwitting Americans to help them.

BLITZER: And they want to sow a lot of dissent. That's one of their major, major goals. Good reporting, Sara Murray, thank you very much.

Coming up, there's breaking news, top intelligence officials now warning that Russia is still targeting the U.S. elections with an eye toward dividing the country before the upcoming midterms.

[17:55:04] Does the President still think Russia's interference, though, is simply a hoax? And a senior official confirms a Russian spy worked at the United States Embassy in Moscow for a decade. How much damage could she have done?


BLITZER: Happening now, breaking news, broad and deep, the FBI Director joins top intelligence and national security officials over at the White House warning of a broad and deep foreign influence threat to American democracy. Does President Trump agree?

Doesn't fully understand, the Director of National Intelligence admits he still doesn't have details about what President Trump discussed with Russian President Vladimir Putin in their one-on-one meeting in Helsinki.