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Mueller Interviews 'Manhattan Madam'; Prosecutors Focus on Manafort's Bank Fraud Charges; Russians Call Warnings of Election Meddling 'Hysteria'; Interview with Rep. Eric Swalwell; Trump Slams "Russian Hoax" After Intel Chief Warn Of "Real Threat"; Justice Department Can't Back Up Trump Claim About Terror Attacks; North Korea Keeping Promises. Aired 5-6p ET

Aired August 3, 2018 - 17:00   ET


ERICA HILL, CNN ANCHOR: Rene, I've got the leave there it. I'm sorry. Appreciate it. Thank you both.

[17:00:06] Tune in Sunday morning to "STATE OF THE UNION" with Jake Tapper where he'll talk exclusively with Congressman Ed Royce and former Massachusetts governor Deval Patrick. That's all Sunday morning, 9 a.m., 12 p.m. Eastern.

Our coverage continues with Wolf Blitzer in THE SITUATION ROOM.

WOLF BLITZER, CNN ANCHOR: Happening now, breaking news. Mueller and the madam. Robert Mueller's team interviews the woman who earned notoriety as the Manhattan Madam. The special counsel apparently wants to know about her ties to Roger Stone. Is Mueller building a case against the long-time Trump ally?

Russian "hysteria." After the U.S. intelligence chiefs paint a grim picture of continuing Russian interference in U.S. elections, Moscow responds with ridicule, calling it a case of hysteria.

Cooking the books. Prosecutors say Paul Manafort lied about stashing money offshore. Accountants say the former Trump campaign chairman was cooking the books, and the government's star witness still hasn't taken the stand.

And Pompeo versus the president. Even as President Trump lavishes praise on Kim Jong-un, secretary of state Mike Pompeo now says the North Korean leader is not living up to his commitment to denuclearize. Are they on the same page?

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

ANNOUNCER: This is CNN breaking news.

BLITZER: Breaking news, Special Counsel Robert Mueller's team met this week with a woman named Kristin Davis, better known as the Manhattan Madam following a notorious New York prostitution scandal. Davis is a friend of Roger Stone, a long-time Donald Trump confidante, and sources say investigators are interested in having her go before a grand jury, which adds to the growing likelihood that Mueller is building a case against Stone. I'll speak with Congressman Eric Swalwell of the Intelligence and

Judiciary Committees. And our correspondents and specialists are standing by with full coverage.

Let's begin with the breaking news on the Russia investigation. Our CNN political correspondent Sara Murray is working the story for us. Sara, what are you learning?

SARA MURRAY, CNN POLITICAL CORRESPONDENT: Well, Wolf, Special Counsel Robert Mueller's team did speak to Kristin Davis. They also want her to appear before the grand jury. And they seem to be interested in her relationship with Roger Stone, which spans about a decade.

They have been friends. At times they have worked together, and she, as you noted, has an interesting back story all her own. She's known as the Manhattan Madam. She ran a high-end prostitution ring and for a time, she actually went to jail in the scandal surrounding former New York governor Eliot Spitzer.

Now Roger Stone put out a statement today, basically saying he doesn't have any idea what Mueller wants with Kristin either. I says, "Kristin Davis is a long-time friend and associate of mine. I am the godfather to her 2-year-old son. She knows nothing about Russian collusion, WikiLeaks collaboration or any other impropriety related to the 2016 election, which I thought was the subject of this probe. I understand she appeared voluntarily. I am highly confident she will testify truthfully if called upon to do so."

BLITZER: So it certainly appears as if the Mueller investigation into Roger Stone is maybe not only continuing, but escalating.

MURRAY: Well, it does seem like they're certainly circling in around him. You know, Andrew Miller, who is another former associate of Roger Stone, is also being called to testify in front of the grand jury. He tried to fight that back, but a judge says he has to testify.

And look, if you look into Roger Stone's back story, there's a reason that they might be interested in talking to him. He has at times bragged about being associated with WikiLeaks. I think we even have a sound bite of him beginning to walk that back.


ROGER STONE, FORMER TRUMP CAMPAIGN ADVISOR: I certainly acknowledge that I was in touch with Trump campaign officials, and I have testified under oath to the House Intelligence Committee that I certainly had a 24-word exchange with the persona, Guccifer 2.0, over Twitter direct messages.


MURRAY: Now this is him trying to explain an interaction not with WikiLeaks, which he bragged having a back channel with, but instead with Guccifer 2.0, who we now know was essentially a Russian intelligence persona. Roger Stone there admitting that he did have some private messages that he exchanged with Guccifer 2.0 but essentially saying they were innocuous.

The reason, though, that Mueller's team seems to be particularly interested in Stone when it comes to dealing with these various channels for Russian intelligence to relay hacked information is that there were times during the campaign where it almost seemed like Roger Stone knew what was coming.

He would tweet things like he did in October of 2016, saying, "Wednesday Hillary Clinton is done. #WikiLeaks."

Now since all of this, Roger Stone has insisted he doesn't know anything about Russian collusion. He didn't participate. And so far, he still has not been called in to to meet with Mueller, Wolf.

BLITZER: We'll see what, if anything, Mueller comes up with. Clearly an important story. Thank you very much, Sara, for that report.

Meanwhile, prosecutors have laid out the lavish lifestyle of former Trump campaign chairman Paul Manafort. Now on day four of his trial, they're digging into details of his alleged tax and bank fraud.

[17:05:10] Our justice correspondent Evan Perez is over at the federal court in Alexandria, Virginia.

Evan, what's the latest?

EVAN PEREZ, CNN JUSTICE CORRESPONDENT: Well, Wolf, we got some of the most important testimony that we've had so far in this trial. We heard from two of Paul Manafort's accountants, and both testified that he did not disclose to them that he owned these foreign bank accounts that the government says were simply money that he stashed away, $60 million that he got paid over the years from Ukrainian oligarchs and Ukrainian government people that he was working for.

They both testified that Paul Manafort and Rick Gates hid the fact that they had these bank accounts, and in fact, that they thought these -- that the money was coming in were simply payments from clients.

We also heard for the first time from one of the witnesses that has been offered immunity by the government to testify against Paul Manafort. Cindy Laporta is one of the accountants, and she described how her firm, people working for her, with her, essentially fudged some of the numbers on behalf of Paul Manafort in order to reduce his taxes.

She said, quote, "I very much regret it." It appears the reason why she says that she did this, fudging the numbers on behalf of Paul Manafort, was because Paul Manafort was a very important client to her firm, Wolf.

BLITZER: And what about the prosecutors, Evan? What are they saying about how Manafort actually used the real estate? It was quite sensitive, the real estate he owned.

PEREZ: Right. This goes to the heart of the prosecution's case against Paul Manafort, that basically, he was lying on his tax returns, lying to the IRS in order to reduce the amount of taxes that he was paying.

And so one of the things, according to the witness -- the witness testimony we heard today, was that Paul Manafort was reporting that he was using at least a couple of the homes that he owned in New York. He was using them as personal residences instead of rental property. What this did, Wolf, it essentially lowered his taxes when he reported this to the IRS.

One of the accountants who was on the stand today described exactly how this was done, to deceive some of the banks that Paul Manafort was doing business with.

Again, part of what he is facing here are charges of bank fraud. So, again, this is central to that case. And of course, now that we've heard from one of the accountants who is saying that they participated in what the government says was a conspiracy, we're beginning to see, really, what the government is trying to do here, which is that these people were helping Paul Manafort hide money from the government, lying to the banks in the process, Wolf.

BLITZER: It was intriguing. Some of those residence -- residences were in Trump Tower in New York City. And I suspect that's something that they're looking at, as well.

What do we expect to hear from Rick Gates, who was the long-time deputy to Paul Manafort, deputy Trump campaign chairman, when he eventually testifies? He is cooperating with Mueller.

PEREZ: Right, exactly. He was given a deal with the special counsel prosecutors, Wolf, and we expect that he is going to say that he was in on this, that he helped Paul Manafort change some of these numbers, fake invoices and lie, essentially, not only to his bookkeeper, but also to the banks, as well as to the IRS.

And of course, we expect that he's going to be perhaps the most important witness to take the stand here in this courthouse. We now expect that that's going to happen on Monday at the earliest, Wolf.

And of course, we're expecting that Paul Manafort's lawyers are going to immediately try to attack the credibility of Rick Gates.

Rick Gates, obviously, was his closest deputy. He's been described often in this courtroom as his right-hand man. And we expect that they're going to point out that he lied to the FBI. He pleaded guilty to lying to the government. So that's going to be, of course, we expect, some very fiery testimony when that happens here next week.

BLITZER: We will, of course, cover that closely. Evan, thank you very much.

Joining us now, Democratic Congressman Eric Swalwell of California. He's a member of both the Intelligence and the Judiciary Committees.

Congressman, thanks so much for joining us. I quickly want to begin with the breaking news. The special counsel Robert Mueller's team meeting with the so-called Manhattan Madam, known for her ties to Trump confidant Roger Stone.

Do you see Roger Stone as a key witness in the Mueller probe?

REP. ERIC SWALWELL (D), CALIFORNIA: I do, Wolf. And that's because Roger Stone will tell you that he himself is a dirty trickster.

We learned in our House intelligence investigation that he and Donald Trump talked regularly, not just the years before the campaign, when they had talked about him running as president in prior years, but throughout the pendency of the 2016 election.

Roger Stone foreshadowed that these attacks were coming. And of course, he has changed his testimony a number of times to the House Intelligence Committee. They have all the reason to want to know what he knew and whether he passed on his knowledge to candidate Trump.

[17:10:12] BLITZER: And so as part of the interview he granted to your committee, the House Intelligence Committee, do you think he was telling the whole truth looking back? I know you've gone through the testimony.

SWALWELL: No. I don't, Wolf. And we had an opportunity to test his story by subpoenaing his cell phone records, his bank records, his travel records, and the Republicans on the committee were completely unwilling to do that.

You know, this was a "take them at their word" investigation. Come on, in take a seat, answer our questions, and we had no interest from the Republicans in testing those stories.

And now we're left with this, that our only chance of finding out the truth is Bob Mueller's investigation, which the president e day seeks to shut down. I think it highlights all the more reason we need to protect that investigation.

BLITZER: Was he under oath before your committee? If he lied, was that perjury?

SWALWELL: He was under oath, yes.

BLITZER: So do you expect an indictment by Robert Mueller's team against Roger Stone?

SWALWELL: It wouldn't surprise me at all, Wolf, just again, because of the way that he has acted and the way he's bragged about working in the past and the dirty tricks he's used on campaigns.

But again, the bigger picture that I see here with Roger Stone is Donald Trump was willing, as a candidate, to bring onto his team so many people who either use dirty tricks, were close to the Russians, or demonstrated zero judgment in who they were willing to do business with. And so at the very best light for Donald Trump, he had extremely poor judgment. But the evidence suggests that there's is not really innocent

explanations here. It's that those qualifications actually helped them get the job rather than disqualified.

Let's turn to the trial of Paul Manafort, the former Trump campaign chairman. How important is this trial will is ongoing right now in Alexandria, Virginia to Robert Mueller's overall Russia probe?

SWALWELL: Well, it shows the seriousness of the probe. It's a senior campaign official, the former chairman to the president. And again, it shows that Donald Trump was willing to bring on his team somebody who had prior business relationships with pro-Russian Ukrainians. Again, that would disqualify most people who wanted to work on a presidential campaign. I think with this president, that was actually something that inflated the resume and helped him.

So if there is a guilty plea here, Wolf, I believe that it's going to build a momentum, and the American people are going to start to understand the seriousness of just how close this president has drawn us to the Russians.

BLITZER: Well, based on what you've seen so far, Congressman, how strong is the government's case against Manafort?

SWALWELL: I don't want to, you know, make that decision. That's the jury's decision, and unlike the president, I'm not going to try and tamper with the jury.

But I think they've at least met the standards to go forward and put it in front of jury. And I have faith as a former prosecutor that this jury is not going to listen to the outside noise, and they're going to do the right thing; and justice will be served.

BLITZER: Yesterday, the director of national intelligence, Dan Coats, said he wasn't in a position to, quote, "understand fully" what happened between President Trump and President Vladimir Putin during their summit last month in Helsinki.

It's been clearly three weeks. Shouldn't the top U.S. official here in the United States know that information by now?

SWALWELL: Yes. And I'm not convinced that anyone in the president's cabinet knows what was said, because as we've had opportunities to ask them, they seem to not understand.

Ranking member Adam Schiff and I on the Intelligence Committee tried to subpoena the translator so that we could have some sense of whether national security secrets have been jeopardized.

But what really concerns me, Wolf, and I thought that press conference yesterday was great. It's sad that they had to do it when the president was outside of the building.

But it doesn't matter if Dan Coats and FBI Director Wray and others are doing all they can to try and counter Russian meddling. If the person who is behind the wheel, who's steering the direction of the country, if that person doesn't accept that the Russians are doing this, then we're still helpless, and we're still vulnerable.

And so we need the president to understand it. And we need him to issue the directives. Otherwise, I'm afraid that the Russians are going to keep doing it.

And to say that the president does understand it, if he did, the Russians wouldn't be doing it. The reason they keep hacking and the reason they keep doing these social misinformation campaigns is because they believe he's given them a green light.

BLITZER: And why do you think he -- if he has, why do you think he has?

SWALWELL: Because they helped him, and he likes them. And he likes people who like him.

BLITZER: Congressman Eric Swalwell, thanks for joining us.

SWALWELL: My pleasure.

BLITZER: Up next, after the nation's intelligence and national security teams warn that Russia is continuing to attack U.S. elections, President Trump undercuts them once again, calling Russia's actions a hoax.

And Russia adds insult to injury, ridiculing the latest U.S. intelligence warnings as nothing more than, quote, "hysteria."


[17:19:24] BLITZER: Breaking news. A new twist in the Mueller investigation as the special counsel's team interviews a woman known as the Manhattan Madam. She's a friend of Roger Stone, who's a long- time ally of President Trump.

The president is on vacation right now. He's at a getaway, but it's not easy for him to get away from all of his problems.

Our chief White House correspondent Jim Acosta is covering the president in New Jersey for us. So what's the latest, Jim?

JIM ACOSTA, CNN CHIEF WHITE HOUSE CORRESPONDENT: Wolf, President Trump is taking some time off at his country club in New Jersey. But the storm clouds hanging over his administration, they have also made the trip from Washington.

One key question for the president that he's likely to work on during this trip up to New Jersey is whether to finally talk to the special counsel, Robert Mueller.


ACOSTA (voice-over): President Trump arrived for a summer vacation at his New Jersey golf club facing a potential hazard that's nowhere near the putting green: the prospect of sitting down for an interview in the Russia investigation. The president is receiving no shortage of advice as political strategists warn it's a trap.

COREY LEWANDOWSKI, FORMER TRUMP CAMPAIGN MANAGER: I'm not an attorney, but my political advice to the president would be not to sit down with Bob Mueller. The opportunity to make a misstatement, potentially, or to potentially get caught up in the word "is" is too great of a -- of something that could happen there.

ACOSTA: While the president's legal team is keeping the door open.

RUDY GIULIANI, ATTORNEY FOR DONALD TRUMP: I'm not going give you a lot of hope it's going to happen, but we're still negotiating. We haven't stopped negotiating.

ACOSTA: At a campaign rally in Pennsylvania, the president hardly sounded like he's warming up to the Russia probe.

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: Now, we're being hindered by the Russian hoax. It's a hoax, OK?

ACOSTA: Mr. Trump is still bending the truth when it comes to his relationship with the Russians, telling his supporters he's no friend of the Kremlin.

TRUMP: I'll tell you what, Russia is very unhappy that Trump won. That I can tell you.

ACOSTA: Despite the fact that Vladimir Putin just revealed at their joint summit he wanted a Trump victory.

VLADIMIR PUTIN, RUSSIAN PRESIDENT (through translator): Yes, I did. Yes, I did. Because he talked about bringing the U.S./Russia relationship back to normal.

ACOSTA: Democrats accuse the president of being at odds with his own national security team, who warned the world Russia is still trying to interfere in U.S. elections.

SEN. BEN CARDIN (D), MARYLAND: The president was missing, as you said. He was not only missing from that event, the next day he calls it a hoax. And what President Trump did in Helsinki and what he did yesterday in calling the Russian probe a hoax, it gives a green light to Mr. Putin to continue his activities here in the United States.

Acosta: And as one of the president's top intelligence officials conceded, it's not fully known what Mr. Trump told Putin behind closed doors.

DAN COATS, DIRECTOR OF NATIONAL INTELLIGENCE: I'm not in a position to either understand fully or talk about what happened at Helsinki. I'll throw it over to the national security director here to address that question.

ACOSTA: The president is still nursing his grudges with the media, disputing any news reports that he kept the queen waiting during his visit to Britain last month. TRUMP: I'm waiting. So I was about 15 minutes early, and I'm waiting

with my wife, and that's fine. Hey, it's the queen, right? We can wait. But I'm a little early.

Honestly, folks, it was such a beautiful, beautiful visit and afternoon. But they can make anything bad, because they are the fake, fake, disgusting news.

ACOSTA: Mr. Trump again turned to the issue of immigration, this time trying to defend his past comment that Mexican immigrants are rapists and criminals.

TRUMP: Coming down the escalator, and you remember what I said? Do you remember that? They're sending -- do you remember that? They're sending. And I mentioned words -- I won't even mention them tonight, because there's a lot of young people here. But I mentioned words. And everybody thought it was wonderful.

But then about two days later, they said, "Did he say this? Did he say that?" Guess what? What I said is peanuts compared to what turns out to be the truth. It's peanuts.


ACOSTA: Now a source familiar with discussions inside the president's legal team says deliberations over whether Mr. Trump should sit down with Robert Mueller have been going on for months. The president is fully aware of all the risks, we're told.

And the source said the president has been advised that talking to the special prosecutor would be a good thing for the institution of the presidency.

Wolf, it is widely expected Rudy Giuliani will make the trip to Bedminster to talk with the president about all of this. It is getting to be crunch time for making this critical decision -- Wolf.

BLITZER: Good point. Jim Acosta, thanks very much.

Also breaking tonight, Russia is responding to that extraordinary warning from all the top U.S. national security and intelligence chiefs about Moscow's efforts to interfere in the upcoming midterm elections here in the United States.

Our senior international correspondent, Matthew Chance, is working the story from Moscow for us.

So Matthew, what are the Russians saying?

MATTHEW, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, as you might expect, Wolf, the Russians are pouring scorn on this idea that they had anything to do with manipulating the political environment inside the United States, particularly through social media, saying that they are expressing regret that this allegation has even been made by U.S. officials. Maria Zakharova, who's the foreign ministry spokeswoman here in

Moscow, issuing a statement saying this: "The two-year hysteria around the alleged Russian interference in U.S. elections, which did not happen, not only undermines bilateral relations but also mocks the whole political system of the United States, representing democracy there as a house of cards."

And so some of that language, you know, very reminiscent of the kind of language we heard just a few moments ago coming from the president of the United States. Whether that's intentional or not, it's not clear.

[17:25:03] But what we do know is this is just the latest installment in a whole, you know, series, long-running series of denials by the Russian government that they had anything to do with election manipulation or manipulating the political atmosphere inside the United States.

It comes, remember, as well, as it's emerged that there's been a Russian spy at the heart of the U.S. embassy here in Moscow, the Russian capital. Russian officials had been asked about this today. She worked at the embassy for ten years. She was fired, apparently, after being discovered a year ago. They were asked about it today. They said, "We've got no idea who or what is being talked about, but if the Americans have got any data they'd like to share with us, we'd be very happy to discussing it with them," you know, kind of almost with a wink and a nudge, saying, "Look, let's take a look at what sources you've got. Let's take a look at how you've gathered your intelligence," knowing full well the U.S. diplomats here and the U.S. intelligence services are going to do nothing of the sort, Wolf.

BLITZER: Good point, as well. Matthew Chance in Moscow, thank you.

There's more breaking news. The special counsel's team questions the woman known as the Manhattan Madam, a friend of long-time Trump confidante Roger Stone. What does this mean for the Mueller investigation?

And prosecutors focusing in on Paul Manafort's alleged financial crimes as witnesses testify the former Trump campaign chairman was cooking the books.

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


[17:30:00] WOLF BLITZER, CNN HOST: We're following multiple breaking stories right now, including sources confirming that the Special Counsel Robert Mueller's investigators have questioned a woman once known as the Manhattan Madam. She's a close friend of Trump confidante Roger Stone. Let's bring in our political legal and national security experts to assess. Susan Hennessey, how does this fit in, this Manhattan Madam development into the broader Russia investigation?

SUSAN HENNESSEY, CNN NATIONAL SECURITY AND LEGAL ANALYST: So, this woman Kristen Davis has a long-standing relationship with Roger Stone. He actually was even her campaign strategist in the 2010 race for the New York Governor, and she worked for him in 2016. But from the outside, we actually have no idea how this individual might be connected to the Russia story. What that tells us is there are a lot of things that Robert Mueller knows that we don't know. So, in special counsel filings, they've said there are multiple nonpublic lines of inquiry. That's their way of saying there's not just facts you don't know, there's actually entire matters being investigated that the public doesn't know about.

BLITZER: What does it say they're interviewing her before they've question Roger Stone?

HENNESSEY: So, it's not uncommon in these types of investigations to start at the edges and then essentially work your way into the bulls- eye. So, if Roger Stone really is the target of this investigation, what we could expect to see over time is individuals who are increasingly close to him being interviewed. That's a way for Robert Mueller's team to ensure that they have the full story, a full understanding of what occurred before they finally sit down with Stone.

BLITZER: David Chalian, Stone request a long-time confidante of President Trump's. Could he have valuable information in this overall Russia investigation?

DAVID CHALIAN, CNN POLITICAL DIRECTOR: Yes, Susan was talking and saying, you know, you work out at the edges and you work in to people who have very close relationships with Roger Stone. That's President Trump. He has been working with Roger Stone for the better part of two decades in politics and has used him as a strategist. So, I do think this should probably be alarming in some sense for the Trump team that Mueller may be interested in somebody who has such a close relationship with Stone. I don't think, if Stone is a target, he may not be the only target in this investigation. And so, until we know more about this line of inquiry, I don't know that we can surmise very much.

BLITZER: Yes, I'm sure the president always hates when they get closer and closer to people who have known and worked with him for such a long time, like Michael Cohen, Allen Weisenberg, the Chief Financial Officer for decades at the Trump organizations. Now, Roger Stone.

CHALIAN: And we'll see if he wants to talk to his children or son-in- law?

BLITZER: Those are important developments. Could Stone be a key witness in all of this?

REBECCA BERG, CNN POLITICAL REPORTER: It's possible. I mean, it depends on the question that investigators are trying to answer, Wolf. And of course, there is a lot we don't know about the direction or the directions they might be going. But Roger Stone does, of course, have a great deal of information, unique information about President Trump. Having worked with him very closely in the early stages of the campaign and before that, as an informal adviser to Trump, he essentially helped him launch his career.

And then they spoke throughout the campaign. So, Stone would have a lot of information about Trump specifically. But he wasn't a part of the formal campaign infrastructure. He wasn't talking frequently with some of the other senior campaign staff. So, it would be specifically information related to the president in this case, that he could potentially offer.

BLITZER: And I assume they're trying to figure out if Stone actually conspired or cooperated, colluded, whatever word you want the use with the Russians as part of this whole investigation. You know, Shawn Turner, what does it tell you that the Mueller team itself is questioning this Manhattan Madam, this friend of Roger Stone instead of detailing it out to the U.S. attorney in the Southern District of New York as they've done with others or what's going on in the Eastern District of Virginia right now.

SHAWN TURNER, CNN NATIONAL SECURITY ANALYST: Yes, well, I think it speaks to what we all know about Robert Mueller, which is that he is a seasoned investigator who knows how to do this. He understands that it's often the case that people around the target of investigation who are the most unlikely witnesses are people who have the most valuable information. He also knows that he has to get this right. Robert Mueller is the kind of person that asks questions that he already knows the answer to.

And so, I think that would -- that by doing this himself and making sure his own team does it, what that tells us -- tells me is that he has a sense of the picture that's coming together, and he knows what those various pieces are, and he's talking to her himself because he absolutely knows he has to ask the right questions in the right way to get to the information that he probably already knows exists.

[17:35:28] HENNESSEY: One thing we do know is that Robert Mueller doesn't do anything without a reason.


BLITZER: As you were going to say?

CHALIAN: I was just going say that the other relationship, of course, is one between Roger Stone and Paul Manafort. They have had relations going back too, obviously, the current Paul Manafort case is not we know tied directly to the notion of Russian collusion. But it is another nexus of relations that exists in that circle.

BLITZER: What has jumped out in these first few days of the Paul Manafort trial he uses?

HENNESSEY: I think the remarkable thing is just the strength of the case against Manafort, that degree of witness, documentation that we've seen. I think it shows the degree to which going to trial is a hail Mary here. And so, you really have to ask yourself, maybe Paul Manafort actually thinks he's going to be acquitted. Maybe he really believes he's innocent. You have to ask the question whether or not his play here essentially is to hold the line and hope that President Trump ultimately pardons him?

BLITZER: You think that's what he is hoping for?

BERG: Potentially. But Donald Trump in public in statements about Paul Manafort has suggested that he wasn't an important player in the campaign. Certainly, hasn't suggested that he maintains any feeling of loyalty toward Paul Manafort. So, it does seem like a bit of a hail Mary that Paul Manafort would believe that the president could potentially pardon him. But if he has this menu of bad choices in front of him, maybe that's the least bad among them.

BLITZER: He did suggest the other day, the president, that Manafort was being treated worse than Al Capone.

CHALIAN: Right. So, he's bit player in the campaign, nothing to do with this, it has nothing to do with Russia, but I can't stop watching coverage of the Manafort trial. I compare it to Al Capone and say he's been treated unfairly. The president has been a little inconsistent when talking about Manafort. We know he's completely consumed by the coverage of this trial. And you know, I can't think of another explanation other than Paul Manafort is waiting for a pardon because imagine the maximum pressure that's on him right now, and he has been remaining steadfast thus far.

BLITZER: So far. We'll see what happens. Stick around. There's more we're watching. We'll take a quick break. We'll be right back.


[17:41:58] BLITZER: We're back with our political and national security experts. Rebecca Berg, there've been a big deal over the White House yesterday. All the top national security intelligence officials, they were there. They spoke about what Russia did in 2016, what they're doing right now looking ahead to the midterm elections. It was a powerful statement, very coordinated. Then a couple hours later, the president spoke at a big political rally for more than an hour in Pennsylvania and said this:


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Now, we're being hindered by the Russian hoax. It's a hoax, OK? I'll tell you what. Russia's very unhappy that Trump won.


BLITZER: Even though Putin said that they wanted Trump to win. It was a very, very totally different attack that the leadership of the national intelligence community gave than what the president said. He didn't even refer to what they said earlier in the day.

BERG: Right. This must've been the rare occasion when President Trump wasn't tuned into television, because that briefing was on every channel streaming live for the American people, but the president didn't get the message. It's kind of amazing to think about. And at the same time, that briefing couldn't have happened without the president's endorsement in some way.

They couldn't have just gone out there and given the message that they did and the way that they did without some level of buy-in from the president. And so, on the one hand, he wanted people to hear that from his intelligence chiefs. But on the other hand, he goes out and then completely contradicts the message in addition to not supporting the message himself either in person or on Twitter or some of the other vehicles he has to communicate with people.

CHALIAN: And the expression that said the buck stops with the national security team. Because he clearly is hoping that by putting out that show of force, that that's going to give him cover that he's dealing with the issue, but that he can go off and still say that the investigation into exactly the kind of activity that the national security officials are trying to prevent is a hoax. You can't have it both ways and the president is trying to do so.

TURNER: And what the real concern here is the fact that the president and his national security team are sending two completely diametrically opposed messages to the American public. And the question is, who do you believe? You know, some of the president's supporters tell us, you know, don't look listen to what the president says; look hat the president does. And so, that leads us to think should we actually listen to the president's team who are actually telling us something that's completely opposite from what the president does. They really need to work on getting this message coordinated because it's unfair to the American people.

BLITZER: They seem to be talking to the American public, the leadership with the national security team here in Washington. And the president still seems to be talking to Putin.

HENNESSEY: Well, exactly. And you to think about what message Vladimir Putin might be receiving. He got tremendous payoff from his last round of election interference. We now have reports that they're at it again. And whenever you're talking about deterrents, changing the calculation of your adversaries. If you were Vladimir Putin who by all accounts is a rational actor, would you be saying this is the commander in chief who's going to take strong punitive action if I engage in this behavior again or would you think he has given me a wink, and I can get away with pretty much whatever I want to.

BLITZER: I want to play a clip for you Susan. This is the president in a speech early on shortly after inauguration before a joint session of Congress. Listen to what he said.


TRUMP: According to data provided by the Department of Justice, the vast majority of individuals convicted of terrorism and terrorism- related offenses since 9/11 came here from outside of our country.


BLITZER: But your colleague Benjamin witnesses over at law fair, he did some research. He filed a freedom of information request with the Justice Department for information to back up that assertion, that claim by the president. He said he received a response that said no responsive records were located. Tell us why this is significant.

HENNESSEY: It's significant because this is evidence that the president of the United States stood in front of Congress and lied about an important national security issue, and that is the Department of Justice saying -- essentially confirming that, right? The president said that he had been provided data to back up this assertion. Now, anyone who works in this field understood that that wasn't true, understood the public record from the beginning.

You know, but there is this temptation with Donald Trump to just move on from the lies, right? He says it. It gets a little bit of coverage, and then sort of doing the spade work of proving it, of getting the Department of Justice to actually admit that it couldn't have shared the data with him because the data didn't exist in the first place, takes a lot of time and resources, but it still is important to develop that factual record to show that the president is lying.

[17:46:33] BLITZER: Stand by, everybody. There is more news we're following. Is Kim Jong-un living up to the agreements he made with Trump? Very, very differing views that are emerging within the Trump administration. The president saying one thing, the secretary of state saying something very different.


[17:51:29] BLITZER: Tonight, Secretary of State Mike Pompeo is turning up the pressure on North Korea. On his way to a meeting of Southeast Asian officials, Pompeo complained Kim Jong-un is not acting consistently with his commitment to denuclearize. Let's go to our Pentagon Correspondent, Barbara Starr. Barbara, secretary's tough talk comes as very differing views on North Korea are emerging within the Trump administration.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Good evening, Wolf. That's exactly right. I don't think anyone is surprised that President Trump is still speaking glowingly about making a deal with Kim. But one of his closest advisers now warning, it may not be that easy.


STARR: Secretary of State Mike Pompeo, who leads the North Korean negotiations, is now expressing caution over Kim Jong-un's commitment to give up nuclear weapons, just one day after President Trump praised the North Korean leader. Pompeo telling reporters, Chairman Kim made a commitment to denuclearize. To the extent they are behaving in a manner inconsistent with that, we can see we still have ways to go to achieve the ultimate outcome we're looking for. President Trump insisting it's all going well with Kim.

TRUMP: What I did with North Korea was great. I got along great with Chairman Kim. I got along great. That's a good thing, not a bad thing, by the way. STARR: but there is still no denuclearization agreement and Pompeo

revealing days ago, Kim is holding on to his vital weapons capabilities.

MIKE POMPEO, U.S. SECRETARY OF STATE: Yes, they continue to produce fissile material.

STARR: What Kim is doing so far is not seen as significant by U.S. intelligence. Test tunnels were blown up, but the U.S. believes the explosions were superficial and the tunnels could be rebuilt. Some destruction of facilities seen in commercial satellite imagery is at a largely out of date launch station. The worry: Kim is using the nearly two months since Singapore to keep building warheads and missiles capable of attacking the U.S., and the concern is Kim will never declare the full scope of it all.

Now, eavesdropping and intercepting Kim's communications may be the only way to learn the truth, some officials say: Trump has applauded the return of 55 boxes of remains presumed to be Americans killed in the war, tweeting, "Thank you to Chairman Kim Jong-un for keeping your word." And Vice President Mike Pence used the return of remains as a key marker.

MIKE PENCE, VICE PRESIDENT OF THE UNITED STATES: We see today as tangible progress in our efforts to achieve peace on the Korean Peninsula.

STARR: But it may take years to identify all of the remains returned and momentum towards denuclearization could be slowing.

BRUCE KLINGNER, FORMER CIA DEPUTY DIVISION CHIEF FOR KOREA: One of North Korea's game plans has always been to stretch out the game, hoping for the clock to run out. In this case, the longer the negotiations drag on, the less resolve the U.S. may have.


STARR: It's been just about one year since President Trump's famous fire and fury remarks. Now, U.S. troops might be headed back to North Korea to help search for more U.S. war remains. And if they go, their security will be provided by North Korean troops. Wolf?

BLITZER: Let's not forget, Barbara, that on June 13th, right after the summit in Singapore with Kim Jong-un, the president tweeted this. And let me put it up there. He said, just landed a long trip, but everyone can now feel much safer than the day I took office. There is no longer a nuclear threat from North Korea. So, what he said then clearly in contrast to what Pompeo and others are saying right now. Still a nuclear threat from North Korea. Barbara Starr, thank you very much.

[17:55:15] Coming up, the breaking news. Robert Mueller's team interviews the woman who earned notoriety as the so-called Manhattan Madam. The special counsel apparently wants to know about her ties to Roger Stone. Is Mueller building a case against the longtime Trump ally? (COMMERCIAL BREAK)

BLITZER: Happening now, breaking news. Closing in on Stone. Tonight, a new sign that Robert Mueller is building a case against the longtime Trump ally, Roger Stone. Mueller's team questioning a woman with ties to Stone, who's best known as the infamous Manhattan Madam.

[18:00:10] Moscow fires back. After a new warning by U.S. intel chiefs about Russian --