Paul Manafort to be arraigned this week. TRANSCRIPT: 02/27/2018. The Rachel Maddow Show

Shane Harris

Date: February 27, 2018
Guest: Shane Harris

CHRIS HAYES, MSNBC HOST, “ALL IN”: That is “ALL IN” for this evening.

THE RACHEL MADDOW SHOW starts right now. Good evening, Rachel.

RACHEL MADDOW, MSNBC HOST: Good evening, Chris. Thanks, man. Appreciate

HAYES: You bet.

MADDOW: And thanks to you at home for joining us this hour.

Where do you want to start tonight?

This is like you`re used to having like an entree and two sides for your
dinner – no, tonight is pu pu platter. Tonight, you can choose from
everything we have to offer.

This is just – this has been – this has been another one of those days
with one breaking news story after another, each one of them a big enough
deal that in any other administration, it would be the focus of months of
attention and scandal in congressional investigation. But in this
administration, it`s all you can do to even finish reading one of the huge
scoops that broke this afternoon and this evening before another one comes
flying down the barrel right behind it.

I mean just – just a no particular order today – today, the head of the
National Security Agency said he has not been authorized to disrupt Russian
cyberattacks targeting our elections. Head of the NSA said in Congress
today that we`re absolutely not doing enough. Russia is surely encouraged
to do more by the success of their efforts thus far, but his hands are
basically tied because the president hasn`t given him or his agency the
day-to-day authority to actually disrupt Russia`s ongoing cyberattacks
against us. That`s a big story.

Also today, the president announced his reelection campaign which is
strange enough since he`s only been in office for about a year, but then he
also chose to name his campaign manager for his reelection effort in 2020.
I can`t use the old campaign chairman obviously. He`s got 23 felony counts
pending against him. So, no, not him, the new campaign chief instead will
be the guy who served as Trump`s digital media guru from 2016, Brad
Parscale, as we await word from the special counsel about whether there
will be further indictments in the Russia investigation related to the
digital media and data side of the presidential election in 2016, Donald
Trump has just named his digital media guru from 2016 as the chief of his
whole 2020 effort.

That seems like a big story. Oh but wait, as soon as that was announced,
“The Associated Press” promptly reported that just a few months ago, Brad
Parscale, the Trump digital media guy just named campaign manager for 2020,
just a few months ago parse cal signed a $10 million business deal with a
super shady penny-stock company that has recently been investigated for
pumping its stock price online. This is a company that`s famous for one of
its top executives offering to pay a million dollar bribe to some hedge
fund investors, supposed hedge fund investors in order to get them to
illegally pump up the company`s penny-stock price. Those supposed hedge
fund investors were actually FBI agents and it was a sting that executive
ended up pleading guilty to a conspiracy to commit securities fraud, he
flipped and became a cooperating witness for prosecutors.

And now, Brad Parscale just joined the board of that company and did a $10
million deal with them while he`s also just been announced as the Trump
campaign manager for 2020, all the while Trump`s deputy campaign sheriff
from his last campaign just pled guilty to two felonies and became a
cooperating witness and his aforementioned campaign chairman from his last
campaign is due to be arraigned in federal court tomorrow and then he`ll be
arraigned again in a different federal court two days later, in both cases
on multiple felonies. That seems like a big story too.

I can also tell you that there`s some beautiful historical symmetry in the
fact that the president announced his re-election campaign today on the
same day that the Russia legal defense fund for Trump 2016 campaign
staffers was formally incorporated into law. We`ll have more on that
coming up a little later on this hour.

“The Atlantic Magazine” tonight also released direct messages between Trump
campaign associate Roger Stone and WikiLeaks. These are direct messages
between Stone and WikiLeaks from during the campaign, from before the
election, even though Roger Stone has previously denied that he had direct
contact with WikiLeaks. This means that Roger Stone now admits being in
direct contact during the campaign with Guccifer 2.0, a Russian cutout that
released Democratic emails that had been stolen by the Russian government
and he now belatedly admits to also being in direct contact with WikiLeaks,
too, while they too we`re releasing Democratic emails stolen by the Russian

Those admissions now in addition to the direct contact during the campaign
between WikiLeaks and Donald Trump Jr., which the campaign first denied but
now they`ve been forced to admit as well. All of these news stories
breaking in the same afternoon, oh this is all one day of news, let`s keep

Today, the White House communications director was called to testify under
oath to the House Intelligence Committee about the Russian attack on our
election, and it`s connection if any to the Trump campaign. White House
communications director Hope Hicks refused to testify to the committee
about anything that happened during the presidential transition or since
Trump has been in office. Nobody`s asserting executive privilege here.
She`s just refusing to testify about anything after the election.

OK, conveniently, that means Hope Hicks is refusing to testify about her
alleged role in drafting a false and misleading statement last summer that
was apparently designed to cover up the true nature of a Trump Tower
meeting during the campaign that involved Donald Trump Jr., Paul Manafort,
Jared Kushner and a whole bunch of Russians who set up that meeting by
claiming they had dirt on Hillary Clinton that had been collected by the
Russian government that they wanted to deliver to the Trump campaign.

Also today, another White House official who was reportedly involved in the
preparation of that false statement about the Trump Tower meeting, a man
named Josh Raffel, he quit the White House today. Josh Raffel has kind of
a strange job. He was technically deputy communications director at the
White House, although that title was never formally announced before he
quit today. OK.

In real life, what his job actually was, was that he was the spokesman for
the president`s children, for the president`s children who had been given
senior White House jobs. It`s a strange thing to have the president`s
children and senior White House job. It`s also a strange thing that we the
taxpayers will paying the salary for the president`s daughter and her
husband to have their own dedicated communication specialist on tap in the
White House. But today, that communications guy announced that he is

Now, we contacted the White House and Josh Raffel himself today to ask if
he`s been interviewed by special counsel Robert Mueller. We also asked
about whether he`s been questioned about his alleged role in crafting the
Trump Tower meeting statement or anything else. We asked if Mr. Raffel has
secured legal representation for himself in the Russia scandal. We got a
polite declined to comment on both matters.

But that – all those things I just listed there all of those things happen
today before the big news broke at “The Washington Post”. We`re going to
have reporter Shane Harris who is the lead reporter on `The Washington
Post” scoop tonight. We`re going to have Shane Harris here just a moment
to go through this, but basically, here`s the scoop.

Last month, in what was then the biggest story of the year, “The New Yorker
Magazine” reported that senior law enforcement officials had come to the
White House in December and given them given senior officials at the White
House a stark warning that a member of the president`s family was being
targeted by a Chinese influence operation. In that same article, Evan
Osnos and Adam Entous for “The New Yorker” reported that senior White House
adviser Jared Kushner had basically been blowing off national security
protocols in taking foreign meetings specifically with the Chinese
government, including him meeting alone on at least one occasion with the
Chinese ambassador.

Entous and Osnos further reported on U.S. intelligence intercepts that
turned up some worrying discussions about Kushner`s dealings with the
Chinese. Quote: U.S. intelligence agencies aggressively target Chinese
government communications, including their ambassador`s reports to Beijing
about his meetings in the U.S.

According to current and former officials briefed on U.S. intelligence
about Chinese communications, Chinese officials said that in meetings to
prepare for the Chinese president`s summit at Mar-a-Lago this past April,
the Chinese ambassador and Jared Kushner discussed Jared Kushner`s business
interests, along with U.S. government policy.

Jared Kushner is bringing up his own personal business interests alongside
government policy while talking with the Chinese government. That`s a
serious national security breach and what just broke tonight in “The
Washington Post” tells us a little more detail about why that is and we`re
going to go through that with Shane Harris in just a second.

But that “New Yorker” report from last month, that was also the first time
that we learned that Jared Kushner was given access to the president`s
daily brief to the highly classified intelligence summary that`s prepared
for the president every day. What was unprecedented and frankly strange
about that revelation is that Jared Kushner was given access to the PDB
despite the fact that he doesn`t have a full security clearance and hasn`t
been able to get one for the whole year that he`s been in the White House.

So, that “New Yorker” report was last month. Since then, as you know, the
whole issue of security clearances has blown up into a full-scale disaster
for the Trump White House following revelations about Rob Porter, the White
House staff secretary who lost that job following news reports about
serious domestic violence allegations against him from both of his ex-
wives. Those news reports about those domestic violence allegations, those
were revelations to all of us in the public but it turned out that the
White House had known about those allegations for a long time.

The ex-wives had been interviewed by the FBI as part of Rob Porter`s
background check process for him trying to get a security clearance. The
FBI wouldn`t clear him to get a full security clearance because of those
allegations against him which they described to the White House chief of
staff and the White House counsel.

Despite that, White House Chief of Staff John Kelly kept Rob Porter in that
job. He even recommended Rob Porter for big promotions and he kept giving
him access to the most highly classified materials that crossed the
president`s desk despite Rob Porter not being able to get the clearance.
So, the furor over Rob Porter and the White House handling of those
allegations against him, the White House`s inexplicable lack of concern
over his security clearance problems, that led to sustained controversy for
a White House that otherwise sheds controversy like water off a duck. It
also led to a policy change at the White House.

As of this past Friday, White House Chief of Staff John Kelly announced
with this memo that the White House would no longer allow access to highly
classified material for staffers who couldn`t get a full security
clearance, and once we got that policy announced, we did see a few people
start peeling off out of White House jobs. White House speechwriter who
couldn`t get a full clearance. Four appointees in the Commerce Department
as reported tonight in “The Washington Post” by Carol Leonnig.

We also incidentally asked Jared and Ivanka`s communications director Josh
Raffel if maybe him leaving tonight had something to do with the security
clearance issue having to do with him. No answer from him on that either.

But there`s been this very fraught question looming over this whole
security – security clearance controversy, and that`s because the most
high-profile people in the White House who we know haven`t been able to get
full security clearances are these two, the president`s daughter Ivanka and
her husband Jared Kushner. They`re each titled as senior White House
advisors. Jared`s in charge of Middle East peace and China and Mexico and
all trade policy. Ivanka just got back from briefing the president of
South Korea on the new North Korea sanctions.

How on earth can they do these senior jobs if this new policy from Chief of
Staff John Kelly means that the two of them are no longer going to be
allowed to see classified materials? Tough question, right? first to report tonight that this new John Kelly policy about
the security clearances, the new policy is in effect. It did go into
effect on Friday, a few days ago. first to report that this
means Jared Kushner, at least, he no longer has access to highly classified
information. He has lost his access to the highest level of classified
material including the president`s daily brief.

We also assume that these changes will restrict access to information for
the president`s daughter, but who knows? We`re in brand-new nepotistic
ground there, so we sort of await further word on Ivanka`s fate, her job,
her access to materials. So, all of that has been unfolding.

And then meanwhile, tonight, “The Washington Post” just dropped the hammer
when it comes to Jared Kushner specifically. Headline here is, quote:
Kushner`s overseas contacts raise concerns as foreign officials seek
leverage. This story tonight in “The Washington Post” takes the kinds of
national security concerns about Jared Kushner that were first reported in
the “New Yorker” last month and it turns them up to 11.

Citing current and former U.S. officials familiar with intelligence reports
on the matter, Shane Harris and his colleagues at “The Washington Post”
report tonight, quote: Officials in at least four countries United Arab
Emirates, China, Israel and Mexico have privately discussed ways they can
manipulate Jared Kushner by taking advantage of his complex business
arrangements, his financial difficulties and his lack of foreign policy

National security adviser H.R. McMaster learned that Jared Kushner has had
contacts with foreign officials that he did not coordinate through the
National Security Council and he did not officially report them. The issue
of foreign officials talking about their meetings with Kushner and their
perceptions of his vulnerabilities was a subject raised in McMaster`s daily
intelligence briefings. Officials in the White House were concerned that
Jared Kushner was naive and being tricked in conversations with foreign
officials, some of whom said, meaning some foreign officials said they
wanted to deal only with Jared Kushner directly and not with more
experienced personnel.

So, this is operating at a couple of levels, right? The personal drama
here is that it`s not just that Jared Kushner can`t pass his background
check to get a full clearance. You know, there`s some hang up at the FBI
in terms of clearing them through, right? That`s no longer the story. The
personal drama here is that with this tour breaking news tonight in “The
Washington Post”, this means that the problem is inside the House, right?

This is the president`s national security advisor and White House officials
more generally who have these concerns about Jared Kushner and that`s why
he won`t get a full clearance. Quote: Kushner`s contacts with certain
foreign government officials have raised concerns inside the White House
and are a reason he has been unable to obtain a permanent security

So, again, this is – this is not the White House fighting with the FBI
over whether or not it`s OK to clear Jared. This is the White House itself
not being OK to clear Jared, which is one thing if Jared were a normal
employee, right?

If you`re just going to end up firing a Rob Porter or even a Mike Flynn,
that`s one thing. But what happens when the guy in question, the guy about
whom there are serious national security concerns is the president son-in-
law? What happens when the president`s own top-level staff takes a stand
against his family? Who wins that fight with the president who gives his
family top-level White House jobs?

And then there`s the legal and the scandal issues here too. Quote: Special
counsel Robert Mueller has asked people about the protocols Kushner used
when he set up conversations with foreign leaders.

Now, it has previously been reported that Robert Mueller`s team of
prosecutors had expanded their interest in Jared Kushner to include his
efforts to secure financing for his company from foreign investors during
the presidential transition. Well, tonight, “The Washington Post” put some
meat on those bones, again citing U.S. intelligence intercepts. Quote:
Officials from the UAE, United Arab Emirates, identified Kushner as early
as the spring of 2017 as particularly manipulable because of his family`s
search for investors in their real estate company.

Quote: Questions have also been raised about whether Kushner discussed
financing with a Russian banker. He met in December 2016 with Sergey
Gorkov, the top executive of a Russian state-run bank called VEB, which is
subject to U.S. sanctions. The bank has said that they talked about
promising business lines and sectors with Jared Kushner at that meeting
while Kushner himself told Congress that that meeting didn`t involve any
discussions about his family`s company.

It`s UAE, it`s Russia, China, too. Quote: Before Trump took office, during
the transition, Kushner met with an executive of a Chinese-run insurance
company Anbang, to discuss options for financing a troubled Kushner
company`s investment in a New York office building at 666 Fifth Avenue. I
should tell you that company incidentally, Anbang, they were just taken
over this weekend by the Chinese government. That`s what Kushner was
negotiating with during the transition for like a $400 million investment
in his companies – in his family`s company building.

So, this in “The Washington Post” tonight, this is a bombshell for a couple
of reasons. One, there is the unprecedented and bizarre personal drama
where we can`t predict the outcome because we`ve never had anything like
this before. This bizarre personal drama that derives from nepotism, which
is why there are anti-nepotism roles. We`ve got this bizarre drama of the
White House, including the national security adviser and apparently the
White House chief of staff drawing a line and saying no to the president
over his son-in-law, saying that on national security grounds, how does
that resolve?

And two, there are apparently very serious national security concerns about
the behavior of a White House senior advisor and his contacts with multiple
foreign countries, serious enough concerns that they would rank among the
biggest scandals in any modern presidency, even if there weren`t all these
bizarre and personally complicated nepotism concerns layered in the middle
of this same scandal.

Joining us now is Shane Harris of “The Washington Post”, one of four
reporters who broke this big story tonight.

Mr. Harris, congratulations on this very big story. Thanks for joining us


MADDOW: So, let me ask you about H.R. McMaster. There`s a lot of
discussion about White House officials having concerns, White House
officials being broadly described. But then there`s a lot of specificity
in your reporting about H.R. McMaster, learning through his daily
intelligence briefings about Kushner`s worrying contacts with foreign
officials which he didn`t officially report. He didn`t coordinate through
the National Security Council.

Why is McMaster the person in line to be monitoring this sort of behavior
by a White House official? What are the daily intelligence briefings that
he`s receiving where he was getting reports about these concerns?

HARRIS: Well, H.R. McMaster remember came in to replace Michael Flynn
after he was forced out of the White House with his own Russia-related
issues is really sort of the –sits at the center of all national security
policy-making that goes on in the White House and it`s also his job to make
sure that the State Department, a Defense Department and the intelligence
community that their views are all represented and that all of that
information is brought in so that the White House has a coherent foreign
policy and that he can present options to the president. When he came into
his job, he discovered it was quite taken aback to find out that Jared
Kushner was having his own policy discussions essentially with foreign
officials and not reporting that through the normal channels of people in
the White House.

From McMaster`s position, that was a problem, because Jared Kushner is a
senior adviser to the president, with a lot of foreign policy issues in his
portfolio and if he`s not reporting in those conversations that he`s
having, that means the White House doesn`t know what was said in those
conversations, the White House also doesn`t have the chance to brief
Kushner ahead of time to say, OK, you`re going to be talking to the foreign
minister of China, here are all the things that we know about what`s on
China`s mind right now, here are the things that he might try to tell you,
don`t believe him, this is what the truth is.

Those kind of pre-briefings and then debriefings after the fact, they`re
standard and they`re done really to make sure that the people in those
discussions have the full benefit of information that the government has
and that the White House has a coherent policy. So, McMaster surprised to
find out that Jared was doing this took steps to make sure that McMaster
was notified in the future when Jared would be having those discussions.
In terms of Mr. Kushner and his security clearance off at least –
obviously, there`s a question as to whether or not he can stay in the kind
of job that he`s had with limited access to sensitive and classified
material. But there`s also the question about what is holding up his

I feel like one of the really big advances in your reporting tonight is
that we had previously been told that the FBI was having problems with
Jared Kushner`s background check for a security clearance application, that
as of February 9th, I believe the Deputy Attorney General Rod Rosenstein
had contacted the White House and said there were serious remaining
concerns about Mr. Kushner in terms of his background check.

But what you`re describing tonight is that a separate and apart from what
was it – whatever`s going on at DOJ and FBI with the question of his
background check for this clearance, there are concerns within the White
House itself about his behavior as a White House official that themselves
might be enough to block him from getting a clearance. That`s how I`m
reading it.

Is that a fair reading of what you what you`ve reported?

HARRIS: Yes, it is. I think that you`re right to zero in on this. I
mean, we haven`t really precisely known up until now, well, what was it
that the FBI was fine or what was it about his background check that was
causing the problem, it had gone on for more than a year. He hadn`t been
fully forthcoming in on his standard forms that he has to fill out about
his foreign contacts, that could have been a problem.

What we`re learning now is that these foreign – these contacts with
foreign officials that he was having these conversations that I`m
describing the ones that McMaster doesn`t know about, there is something in
that set of conversations and in those actions that becomes a major
impediment to him getting a clearance, and what has become clear in all of
this is that he is not going to get a top secret security clearance, at
least not through the normal channels. It would take the president I think
intervening to give him that clearance.

We still don`t know precisely everything that was said in those
conversations but the fact that that was singled out to us by our sources
as a hurdle as something that was keeping him from getting that clearance
that is very significant.

MADDOW: “Washington Post” reporter Shane Harris, one of four reporters on
this scoop tonight from “The Washington Post” – Shane, thank you very much
for joining us tonight. I really appreciate it.

HARRIS: Thanks, Rachel.

MADDOW: Congratulations again.

HARRIS: Thanks. Thanks.

MADDOW: I will say, based on this reporting, it is – I know that
everything`s unprecedented out this administration. It is impossible to
imagine that White House senior adviser Jared Kushner keeps his job and
national security adviser H.R. McMaster keeps his job and White House Chief
of Staff John Kelly keeps his job altogether now given what has been
reported about the serious conflicts among them and the suspicions of the
White House those White House officials toward the president`s son-in-law,
including stripping his clearance.

I can`t imagine this sustains. Can it?

Hold that thought.


MADDOW: As we continue to cover this breaking news tonight about the
national security adviser H.R. McMaster and apparently other White House
officials airing serious national concern security concerns about Jared
Kushner, the president`s son-in-law, who was just stripped of his access to
highly classified information we`re joined now by somebody who understands
these things if anyone does because she`s been there.

Nicolle Wallace, former White House communications director for President
George W. Bush. She now hosts “DEADLINE: WHITE HOUSE” right here on MSNBC,
which is the single smartest show on cable news right now.

Hi, Nicolle. How are you?

now, you threw me. I forgot everything I just learned.

MADDOW: OK, let me ask you a couple of White House protocol questions.


MADDOW: So in “The Washington Post” tonight, Shane Harris is the lead
story – is the lead reporter, this strikes me as a big scoop among big


MADDOW: One of the things he says is that McMaster was taken aback to
learn that Jared Kushner was taking meetings with foreign officials without
coordinating them through the National Security Council and without
officially reporting that he was taking those meetings. Now, is there – I
mean, that`s having worked in the White House, that`s weird, right?

WALLACE: It`s beyond weird. I mean and we`ll find out through the Mueller
probe if crimes were committed through that conduct. It`s also been on the
radar of the intelligence community since the earliest days of the
transition. I mean, before there was a transition, I think “The Times” and
“The Post” broke the story about the back-channel he tried to set up with

So, he`s been having interactions with foreign governments that at best
were inappropriate and unprecedented and at worst may have involved
criminal actions.

MADDOW: Now we`ve got in last month from the New Yorker, Evan Osnos and
Adam Entous had that incredible press about China, right, where the thing
that left out of that piece was that people familiar with U.S. intelligence
intercepts said that Chinese officials discussed meetings that happened
between Jared Kushner and the Chinese ambassador at which Jared Kushner
reportedly brought up his own personal business interests alongside U.S.
policy interest. Now, Kushner has denied this, but that`s a serious

We`ve now got other U.S. intelligence intercepts described in “The
Washington Post” tonight were four different countries are describing what
makes Jared Kushner vulnerable to manipulation, including his financial
personal financial difficulties, his business interests and his pursuit of
foreign investors for his family`s business interests, while he`s been
associated with the Trump campaign and the administration.

Here`s my question, why is it so dangerous for a senior U.S. official to be
mixing his own personal business interest and financial needs with
government policy?

WALLACE: So, it`s not about what you think it was about. The FBI
background check isn`t about the FBI looking at your answers on a form,
going into the field to bet them out and deciding if you have the
sufficient character or leadership skills to be a White House aide. That`s
to the White House staff to decide.

They go out with a single purpose. The reason for your FBI field
investigation, the reason that they go out and check the answers you give
on the SF-86, which is the initial form of it or this or the more advanced
one is to see if you are a potential target for blackmail. Jared Kushner
as of today has not proven that he is not a potential target for blackmail.

MADDOW: And you`re a target for blackmail if you`ve done anything that you
would take greats – that you would take great measures to assure didn`t
become public or wasn`t made known to your home government, or to law

Anything that you`ve done that you`re either embarrassed by are would get
in trouble about that you are that you`re concealing is potentially
something that would make you vulnerable to blackmail manipulation by a
foreign government.

WALLACE: That`s right. And as with the Russian investigation, we talked
about these things so they`re all in the past and we`re in the process of
now unpacking it. There`s no evidence that Jared Kushner`s actions that
that prevented him from getting a clearance and you have to keep in mind,
we only know that you couldn`t get it clearance. I mean, NBC News broke
this story, but we only got access to this information about the myriad of
people with interim clearances because of the Rob Porter scandal.

So, because of the audacity of the White House to leave an accused wife
beater, in a position where he was handling incredibly sensitive classified
information, he would have been the person where the president read it or
not putting the PDB on his desk, that`s how we learn of the numbers of
people that were on interim status.


WALLACE: But in the case of Jared Kushner, all the reporting tonight bears
out that that not only had it been something that he couldn`t achieve, it
might have been something that he would never achieve. So, what I heard
tonight from sources is that that Jared`s sort of deliberations about, do I
stay or do I go? And I agree with your list of three people. It is not
sustainable for H.R. McMaster, John Kelly and Jared Kushner –

MADDOW: To all work in the same place together now.

WALLACE: It is not a stretch to describe it as a snake pit. That`s what
it is. But that this move today was a consolidation of power by John
Kelly, he has reached out to Corey Lewandowski, a powerful and influential
outside advisor, he`s done some consolidating of power and influence that
the –

MADDOW: To get Lewandowski on his side –

WALLACE: To get Lewandowski to have his back, because Lewandowski remains
very close to Jared and Ivanka this was an undeniably senior administration
official out tonight to say Jared`s a good boy, he does lots of work. I`m
sure you heard the president say over and over again, he doesn`t make any
money here, not a good talking point.

MADDOW: Right.

WALLACE: We know how that`s worked out for others that didn`t make any
money on the campaign. But, you know, the problem that Jared has now is
that is that his wife is who`s got a portfolio that she enjoys. There`s no
natural graceful exit. I don`t know – I share your theory that that H.R.
McMaster may not be where he is for a while, but this is a very public
power struggle, made public by their own hubris and their own incompetence.

But now, we all know thanks to the incredible reporting in “The Post” and
“The Times” that not only was he operating without a clearance but that he
probably never would have gotten one.

MADDOW: Yes, and this is McMaster and Kelly taking a stand and basically
saying we`re drawing a line. There`s a national security reason why that
kids got to go.

WALLACE: Well, it`s McMaster and Kelly saying there`s a national security
reason why he can`t have – where he has to take this downgrading


WALLACE: I don`t – I don`t – I have not heard that they said he had to
leave the White House. But I think having been publicly embarrassed in
this regard –

MADDOW: Getting your clearance stripped and your access information strip.

WALLACE: I mean, there were the reporting in the – in “The New Yorker” is
not an anomaly. I mean, he flew over and met with the Saudi leaders and
that wasn`t on the list. I mean, it is a known unknown, the kinds of ways
that he`s mixed foreign policy discussions with his own sort of just –
people could just say you know and they`re experienced at doing this, he`s
not – how`s your family business, tell us about your family`s industry?

You know, I mean, it`s as easy as that to mix the work of a policy adviser
and the work of someone –

MADDOW: And then you`ve got something you can use it against him and then
say, OK, show us some of this classified information you got –

WALLACE: Right, and because those conversations are ongoing how do you
ever clear them, how do you ever stamp cleared?

MADDOW: Nicolle Wallace, White House communications director for President
George W. Bush and person who has been transformed by the experience of
covering the Trump administration. Thank you, my friend.

WALLACE: Transformed. People like you missed my old boss.


MADDOW: And there you`re wrong.

WALLACE: What was normal, it was normal lines of debates.

MADDOW: We`re going to fight about this over a drink.


MADDOW: All right. We have a little mini scoop tonight still coming up.
A scoop-let, a scoop mini, that`s coming up in just a second. Stay with


MADDOW: Happy birthday, happy birthday, Trump world Russia legal defense

We were first to report earlier this month on plans for a new legal defense
fund to help people associated with president Trump pay for the lawyers
they need to deal with the Russia investigation. According to the draft
papers, the fund would be called the Patriot Legal Expense Fund Trust LLC.
There was no public announcement that this legal defense fund was coming
into being but we found signs that it would soon be incorporated as a non-
profit in the state of Delaware.

Ever since then, we`ve been waiting and watching and clicking and reloading
the Website where the government of Delaware puts information about
corporations that get born in that corporate friendly state. But now, we
need pace and worry no more, behold today, it was born, the Patriot Legal
Expense Fund Trust LLC officially incorporated in good standing as of 3:32
p.m. Delaware Time.

Now, we still don`t know who`s going to get to donate to this Russia legal
defense fund or who gets help from it, or who will decide who gets help
from it and who gets left out. An attorney for the fund declined our
request for more information about it tonight, but this thing really is
officially now happening. This still mysterious legally unusual defense
fund for people in Trump world who are dealing with the Russia scandal.
The defense fund exists today, the same day Trump announced he`s running
for re-election.

As we learn more, we let you know.


MADDOW: January 2016, then-candidate Donald Trump made a big show of
skipping a Republican primary debate and instead he held a rally that he
billed as a fundraiser for veterans. He said he was given it all the way
to veterans groups, including a million dollars of his own money. But when
a reporter at “The Washington Post” named David Fahrenthold dug into that,
he discovered that a majority of the money from that fundraiser had not
been given away and there was no evidence Trump himself had donated any of
his own money anywhere.

That story, that veterans money story launched David Fahrenthold on a beat
that would last for the rest of the campaign, a beat that eventually
produced scoop after scoop about how Trump ran his charitable foundation in
his business. David Fahrenthold`s dogged shoe-leather reporting revealed
Donald Trump to be a man who promised millions of dollars in donations to
charity but never delivered, who made charitable donations with other
people`s money and passed it off as his own, who broke tax law by using his
charitable foundation to settle legal disputes to make political donations
and even to buy big portraits of himself, a man who crashed a ribbon-
cutting ceremony for a charity opening a nursery school for children with
AIDS stole a seat – stole a seat on stage that was reserved for a big
contributor and then left without personally giving one red cent.

Oh, also, the “Access Hollywood” tape, the most read story of all time on
“The Washington Post” Website, that was David Fahrenthold scoop as well.
David Fahrenthold won a Pulitzer Prize for all of that remarkable reporting
on candidate Donald Trump.

Do you know what he`s working on now? That`s next.


MADDOW: This is the Trump International Hotel and Tower in Panama City,
Panama. This Donald Trump`s only hotel in Latin America. He doesn`t own
it but his company is paid to run it. You might remember this Trump hotel
in Panama from a special report a few months ago by NBC`s Richard Engel.

Well, Richard turned up evidence that that hotel was built at least partly
as a pretty brazen vehicle for Russian mafia money-laundering. Well,
here`s what`s going on at the Trump Hotel and Tower in Panama City today.
This is from “The Washington Post`s” David Fahrenthold and his colleague
Joshua Partlow.

Quote: Panamanian police on Tuesday handcuffed a security guard working for
President Trump`s hotel here in the midst of a dispute in which the hotel`s
majority owner has tried to fire the Trump Organization and Trump employees
are refusing to leave. Quote, there were physical altercations between
rival groups of security guards. A visit by police officers and a
triumphant piano performance by the majority owner. Huh?

Today`s conflict took place in a room that contains surveillance monitors
and servers that control the building`s fire alarms fiber-optic
communications and water pumps. Witnesses say the Trump Organization
posted guards at that room and barred everyone else from entering for days.
At one point, staff who work for the owner cut the power to that room.

This video obtained by “The Washington Post” shows what happened this
morning when several of the owner staffers managed to finally enter that
room, quote, a chaotic scene of shoving and shouting ensued as Trump guards
tried to evict them. The building staff member told “The Washington Post”,
quote, someone grabbed me by the neck and wrestled me down. At least five
Panamanian police officers arrived at the hotel and broke up the fight
between the rival groups which is all – I mean, I think that I think the
technical business legal term here is this is nuts.

But here`s the kicker. Quote: The Panamanian labor ministry is now
investigating whether there were violations of the national labor code at
the hotel. The public prosecutor is examining whether Trump employees have
disregarded lawful orders from their employer, which means if you boil it
down, that means the president`s private company is now under investigation
by a foreign government in foreign prosecutors.

And David Fahrenthold continues to write sentences that no one ever thought
would be written about a serving American president, such as, quote, the
White House didn`t respond when asked whether the president had been
briefed on this fight at one of his company`s 12 luxury hotels.

Joining us now is David Fahrenthold, Pulitzer Prize-winning “Washington
Post” reporter and as of today, yay, MSNBC political analyst.

Mr. Fahrenthold, congratulations on this – this new reporting and thank
you for joining us here at MSNBC. We`re so glad to have you here.


MADDOW: Great.

Tell me about this Panamanian dispute. What are they fighting about?

FAHRENTHOLD: Basically, there`s a guy who owns the hotel. The hotel was
not – as you said – not owned by Trump, it`s run by Trump. The owner of
the hotel has decided it`s losing too much money and he blames
mismanagement by the Trump Organization and also blames the Trump brand
when she says as toxic of Latin America for the fact that the rooms are
mostly empty.

So, he`s trying to basically fire the Trump Organization even though the
contract as far as I can tell doesn`t really allow him to fire them. And
so, he`s trying to do this sort of by showing up, going to Panama, handing
out letters of termination and now hoping the Panamanian government will
help him.

MADDOW: And what about these investigations by the Panamanian government?
You describe interest by a prosecutor, interest by the labor ministry. Are
these serious investigations? Are these – is this petty harassment of the
Trump organization on behalf of a competing business interest or is this –
is this serious stuff from that government?

FAHRENTHOLD: It seems to be serious. It`s actually moving quite fast.
So, the majority owner has basically asked the government`s help in getting
into the hotel, delivering these letters of termination and basically
getting these Trump organization employees out of the hotel. So far, it
seems like the government is actually sort of taking his side and making
efforts to follow through on that. We won`t know for a couple of days how
far it goes, but it seems like he has sort of the advantage so far from the

MADDOW: Are there any additional complications that are going to arise
internationally if those investigations do proceed to be – to the point
where they`re a serious problem for the Trump Organization while the
president still maintains his active interest as far as we can tell in the
Trump Organization as a business?

FAHRENTHOLD: Well, as you said, so the Trump – President Trump has said
he`s given up day-to-day management of this – of his business, but he
still owns it he still gets money out of it the money that that Panama
hotel makes is his money. So far, we`ve seen that both the U.S. State
Department and the government of – the Panamanian foreign ministry say
look this isn`t a diplomatic matter. The White House as you read has not
actually commented at all. We don`t really know what the president`s level
of knowledge is about this case.

So, so far, there hasn`t been some sort of international incident coming
out of this. But you are right to raise the potential. What if this goes
farther along and the government actually does eject Trump from this
property where he`s making money? The government does arrest more of his
employees. You could see the potential for more friction.

MADDOW: What do you think is going to happen next here? What do you what
are you watching for next in this story?

Obviously, it`s interesting in its own terms. It`s interesting as an
artifact of a president having a current private business, but there`s also
this prospect that this could become an unprecedented international
complication for this government.

FAHRENTHOLD: That`s right. I`m looking at two fronts. One, if in this
particular case in Panama, does the owner of the hotel continue to have
success using the Panamanian government to kick out Trump? And if that
works, you know, how long does it take, what are the what are the
consequences for Trump`s employees and does Trump try to do anything in the
Panamanian legal system to block it?

Trump has tried all these things in the U.S. legal system but hasn`t really
done anything successfully in Panama. So, does the Trump Organization make
some sort of appeals to Panama`s legal system? And then beyond that, say
this does work and the Trump name does come off that hotel, where does it
come off next? We`ve already seen it come off two hotels in Toronto and in
New York`s SoHo neighborhood, where`s the next place where Trump isn`t
popular and the owner of a hotel that he runs tries to kick him out?

MADDOW: Right, and then how do we expect the president to react, as he
sees consequences for his business from his new political life?

David Fahrenthold, “Washington Post” reporter, Pulitzer Prize winner and as
of tonight, an MSNBC contributor, and I have to tell you we are all super,
super excited to have you here, David. Thank you.


MADDOW: Thanks.

All right. There are some late-breaking news tonight about the Democrats
making some surprising election pickups tonight in places you wouldn`t
expect. That`s next.


MADDOW: Some breaking election news for you from tonight. Democrats
tonight flipped two more seats in special elections around the country. In
New Hampshire, Democrats flipped a seat in the statehouse. Democrat in
that race appears to have won by eight points. This is a district Trump
won by 13 points.

So, this isn`t just a Democratic pickup in New Hampshire tonight. It`s a
21-point swing in the Democrats direction. This is the fifth seat that New
Hampshire Democrats have flipped from red to blue since the presidential
election in 2016. There was also another flip tonight in Connecticut.

Democrats clawed back a seat held by Republicans in a district that Hillary
Clinton had actually won in 2016. Phil Young won tonight in the House
District 120 in Connecticut. He`ll be the first Democrat to represent that
district in Connecticut in 44 years. So, there were three special
elections tonight.

Democratic pickup in New Hampshire, Democratic pickup in Connecticut that I
think makes total Democratic flips from red seats to blue seats since
December 2016. But check out the result tonight in the third special
election tonight that happened in Kentucky. Now, in this one as you can
see, the Democrat lost. This is a Kentucky special election for a House
seat. But frankly, it`s news here that the Democrats even tried to contest
this seat.

This seat, House District 89 in Kentucky is a district that Donald Trump
won by a margin of 62 points. The Democrat lost there tonight, but she
stuffs won the district almost 30 points in the Democrats favor compared to
2016. So, again, tonight, there were three special elections, Democrats
flipped two seats tonight in those two seats out of three from Republican
to Democrat in New Hampshire and Connecticut and in the third one in
Kentucky, they pulled off a 28-point swing.

This has basically been the story of special elections that we`ve seen
across the country in red states and blue states since the November 2016
presidential election. Democrats look at those special election, results
across the country and they see stars in their eyes in terms of what`s
going to happen in November 2018.

Every election is its own local story. You can`t predict what`s going to
happen eight months out from an election that`s going to happen at the end
of this year but you look at these special election results night after
night after night, Tuesday after Tuesday after Tuesday, throughout these
off-year special elections and you can see why Democrats feel like they`ve
got the momentum.

That does it for us tonight. We will see you again tomorrow.


Good evening, Lawrence.



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