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House Ways and means files formal request. TRANSCRIPT: 4/3/19, The 11th Hour w/ Brian Williams.

Guests: Rebecca Davis O`Brien

LAWRENCE O`DONNELL, MSNBC ANCHOR:  On Sunday Bernie Sanders added something about President Trump after he said that he would -- that Bernie Sanders said that he would be releasing his tax returns after dotting the Is and crossing the Ts.


SEN. BERNIE SANDER (I), VERMONT:  And by the way, let me challenge President Trump to do the same. T rust me we do not have investments in Russia or Saudi Arabia or anyplace else.  Yes, we will be releasing them.


O`DONNELL:  But no Democratic candidate for President can challenge President Trump about releasing his tax returns until that candidate has released 10 years of his own tax returns.  The time for excuses for this is over.  In fact t was over a long time ago.  That`s tonight`s LAST WORD.  "THE 11TH HOUR" with Brian Williams starts right now.

NICOLLE WALLACE, MSNABC ANCHOR:  Breaking tonight in "The New York Times," some on Mueller`s team see their findings as more damaging for Trump than Barr revealed.  One of the reporters on that byline is standing by with details of "Times" big Mueller scoop.

Plus Democrats ask the IRS for six years of the President`s tax returns with a deadline of next Wednesday, setting up battle over some of Donald Trump`s deepest secrets.  And it doesn`t stop there, House Intel wants to interview a former confident of Melania Trump about the Trump inauguration.  All off this as THE 11TH HOUR gets underway on a busy Wednesday night.

Good evening once again from our NBC News head quarters here in New York.  I`m Nicolle Wallace in for Brian Williams.  Day 804 of the Trump administration and there`s breaking news tonight from the "New York Times."  The stunning report, the first window into how some of Mueller`s investigators feel about Attorney General Barr`s description of their 22- month endeavor says some of Special Counsel Robert Mueller`s investigators are frustrated and claim their results are more damaging to the President than what`s been revealed this far.

One of the authors of tonight`s piece, Mike Schmidt, joins us in a minute.  He and his colleagues, Nick Fandos, Mark Mazzetti report some of the investigators, "have told associates that Attorney General William Barr failed to adequately portray their findings of their inquiry and that they were more troubling for President Trump than Mr. Barr indicated, that`s according to government officials and others familiar with their simmering frustrations.  The Special Counsel`s investigators had already written multiple summaries of the report, and some team members believe that Mr. Barr should have included more of their material in the four-page letter he wrote March 24th."

The "Times" continues, "The officials and others interviewed declined to flush out why some of the Special Counsel`s investigators view their findings as potentially more damaging for the President than Mr. Barr explained, although the report is believed to examine Mr. Trump`s efforts to thwart the investigation.  Mr. Barr and his advisors have expressed their own frustrations about Mr. Mueller and his team.  Mr. Barr and other Justice Department officials believe the Special Counsel`s investigators fell short of their task by declining to decide whether Mr. Trump illegally obstructed the inquiry."

Hours before this "Times" report, the House Judiciary Committee voted along party lines to authorize the subpoena to obtain the full, unedited Mueller report as well as all the underlying documents.  Attorney General Barr has said he intends to release a redacted version of the Mueller report later this month.

Let`s bring in our leadoff panel for a Wednesday night on the phone, one of the "New York Times" reporters who broke this story, Mike Schmidt, Pulitzer Prize-winning Washington Correspondent for the "New York Times."  Frank Figliuzzi, former FBI Assistant Director for Counterintelligence, former U.S. and Joyce Vance, and Jeremy Bash, former Chief of Staff at the CIA and Pentagon.

Mike Schmidt, we`ll start with you, take us through what you and your colleagues are reporting tonight.

MICHAEL SCHMIDT, THE NEW YORK TIMES WASHINGTON CORRESPONDENT (via telephone):  Well, we`re reporting about how there is some dissatisfaction amongst the Mueller team about the fact that Barr got a chance to really cast the dye on how the narrative was going to be formed about their investigation.  They felt that when the results were going to be out there, when there was a pronouncement from the Justice Department like Barr did right after they got the report 48 hours, that there would have been some description of what they found.

And that by allowing Barr -- by Barr going first and laying this out t it has sort of cemented the way that public may look at what they found and that they really want as much of it out there as possible because they think that Barr has made it appear better than what it really is.  Remember, when Barr comes out and says -- essentially clears the President of any wrong doing, there is not a lot of detail in there about what the investigators found.

WALLACE:  Mike Schmidt, what I want to ask is what was Barr thinking?  But you detail some of what the view is from the Attorney General`s viewpoint.  Take us through that.

SCHMIDT:  Well, there`s frustration within the Justice Department with Mueller.  There`s a feeling that Mueller was there to do two things.  Investigate whether crimes happened and provide a confidential report to the Attorney General.  That`s it.  That is all that the regulations called for in the minds of the Justice Department and what the regulations say.

But on the question of obstruction, Mueller did not do that.  He did not come to a determination and that is really perplexing, obviously to the public that doesn`t yet understand why Mueller didn`t get there.

But also to Barr because which -- because this has left Barr out there alone to make the call about whether the President broke the law.  And he doesn`t have the top cover of the investigator, the Special Counsel who was supposed to be there to follow the facts in a politics free way.  That person has taken a path on making a decision about whether on criminality happen and then it puts in the hands of Barr who is a Presidential appointee and was put there just a few months ago by the President.  So, there`s a frustration in a sense that maybe it the system here did not work as it was supposed to.

WALLACE:  The boom that`s been lowered on Washington tonight in your report is that Mueller`s investigators who have been mute for 22 months.  There has been little known of how they view anything were either incited or exasperated or something by what they saw.  Let me show you what the President has said.  He said something to say about the Barr everyday, starting on March 24th.  Let me play that.


DONALD TRUMP, (R) PRESIDENT OF THE UNITED STATES:  It was complete exoneration.  No collusion.  No obstruction.

The Mueller report was great.  It could not have been better.

I will say this, our new attorney general, Bill Barr, is a great gentleman.

Beautiful conclusion.  I haven`t seen the report.  Beautiful conclusion.

After three years of lies and smears and slander, the Russia hoax is finally dead.

It`s totally finished.  No collusion, no obstruction.


WALLACE:  I`m guessing that the Mueller investigators don`t live in caves and they saw some of that.  Any sense it was the President`s exoneration victory lap that got to them?

SCHMIDT:  No sense of what actually incited them to do this besides Barr`s letter which they felt was too meager and too much of putting his hand down on what he thought was important without showing what they did.  But you cannot understand where Mueller`s folks maybe coming from if they see the President out there saying things like that, talking about the beautiful Mueller report and such and saying well, maybe it`s not as great as the public is making it out to be.  Maybe there are things there that are problematic that the public should know about and the Congress should know about.

I`m not saying that that, you know, the Justice Department would say, well, that`s not really falling under regulations here because they are just supposed to look at whether crimes happened.  And we have determined no crimes happened.

At the end of day, I think there`s only one real answer which is we need to see the report.  We need to see how big the delta is between what Barr said publicly, the impression that the public had and what Mueller`s findings actually are.

WALLACE:  Frank Figliuzzi, you said on the 4:00 o`clock today that the Mueller team at the end of an investigation, because at the end of any investigation like this, the summaries are created.  That there`s something existed, that would have allowed Attorney General Barr to include more than sentence fragments.

And at this moment, as we gather tonight 11:09, there is still all that we have seen from the Mueller report are sentence fragments.  I can imagine how those investigators who kept their mouth shut for 22 months while the investigation was ongoing have simmered over the last week or so.

FRANK FIGLIUZZI, FMR. FBI ASSIST. DIRECTOR FOR COUNTERINTELLIGENCE:  Imagine this large team from analysts to forensic accountants, cyber specialist, prosecutors, FBI agents all remaining silent for two years.  Not so much as a raised eyebrow implying anything one way or another.

WALLACE:  Well, Trump attack them.

FIGLIUZZI:  While they were being undermined, attacked personally and professionally.  And now we see for the first time dismay over how this narrative is being allowed to happen and play out and it clearly conflicts with what they know.

And so what we`re being set up for here is either a very political Attorney General decision and or a fundamental disagreement between the Attorney General and Mueller on what Mueller`s mission was.  So we`re hearing though this reporting that the Attorney General is saying, what were allegedly is dismayed that Mueller didn`t make the call, right?

But if we`re going to find out, perhaps, the testimony on the Hill that Mueller`s intention all along was to let Congress make the call then we`ve had a team playing by the rules, the Mueller, and boy, they are law and order rule followers, right?  And assuming that the Attorney General would play by those same rules and he`s got a different set of rules.

WALLACE:  Joyce Vance, you along with many other veterans at the Justice Department have cautioned us to give Attorney General Barr the benefit of the doubt to see what he releases.  It would seem that the Mueller investigators who express these frustrations in this report at least couldn`t do that for any longer. What`s your sense now on the dye being cast, not just the findings but William Barr`s leadership at the Justice Department at this incredibly fraught moment?

JOYCE VANCE, FORMER U.S. ATTORNEY:  It`s a really difficult point.  And, you know, Nicolle, I was maybe the out liar on this because during the conformation proceedings, I actually wrote a piece for slate and made the point that because Barr had come in under cloud of this memo that he wrote where he seemed to prejudge the issue of obstruction saying the President couldn`t commit obstruction, that it would be very difficult for the public to have confidence in decisions that he made down the road.

And now we`re seeing the problem come home to Roos (ph).  We don`t know if he`s making principled decisions here.  We don`t know if he is in fact acting as a wing man for the President, but because he seemed to have prejudged the issues in an effort to get the job in the first place it will be difficult for the American people to have any appreciation for what`s really going on here unless the Mueller report lay bear and we`re given the opportunity to judge it for ourselves.

WALLACE:  Jeremy Bash, take us through -- we`ve been talking around and about the Mueller report.  What is the obstruction report likely to look like?  That is where -- and I suppose in a Russian section as well.  What kind of damaging information are we likely to see even if it came short off in the conspiracy case being something you could charge in a criminal way.  And on the obstruction case, being serious enough that they wrote in do not exonerate.  What might it look like?

JEREMY BASH, FMR. CIA CHIEF OF STAFF:  Well, I think on the conspiracy side, Nicolle, the predicate is all the activity launched by the Russian federation to attack our election.  All the effort that they made to reach out to the Trump campaign and to not offer their insistence and to engage the Trump campaign but just to notify the Trump campaign that Russian federation was interfering the election and then to discuss, of course, what they would get in return, what reward they would reap in terms of relief Magnistky Act sanctions relief and other things that we saw the Trump administration reward them with.

And with regards to obstruction, Nicolle, I think it`s not only what we`ve seen in public by the President, but potentially other things, remember the White House counsel, Don McGahn sat for tens of hours with the special counsel`s office detailing what the White House, what the President did to try undermine the Mueller investigation and his team.

And so I think we`re going to see a heap of evidence that is really damning about the President`s conduct.  It`s going to appear shameful, unpatriotic, potentially unethical.  Whether it crosses the line of illegality, I think that`s going to be obviously in the eye of the beholder.  Mueller said no.

But again, I think Bill Barr`s -- his summary here yielded this inevitable result where you`re going see a lot of descent and a lot of concern about whether or not he accurately reflected the holdings of the Mueller findings.

WALLACE:  Mike Schmidt, there`s recording in your piece that draws some lines to the Comey handling at the end of the Hillary Clinton e-mail investigation and there was some concern about a repeat of that where a crime wasn`t charged but Jim Comey went out and detailed conduct that was so damaging to Hillary Clinton`s candidacy that a lot of Democrats feel that that ultimately contributed to her defeat.  Do you think that the people around Donald Trump underestimated the fact that simply not being charged with a crime was worthy of a victory tour and a victory rally and an exoneration celebration?

SCHMIDT:  No.  And every time I think the President has gone out there the way that he has and said these things about the report and sort of spikes the ball, I can sort of feel his lawyers sort of cringing.  Because there is more -- there is this sort of issue to drop here.  It may not be that damaging to the President.

But look, Mueller spent a lot of time on obstruction and whatever he found was so difficult for him that he couldn`t make a decision on it.  He couldn`t come to a determination.  So there`s got to be something there that could be problematic for the President.

Tonight we`re learning that whatever is in this report is worse for Trump than as it`s currently been stated.  So the President on one hand out there sort of praising Mueller and praising this report may have to be able to quickly pivot politically and go after Mueller and say, "Look, these were the true angry Democrats, I said they were all along."

Look, no one in politics seems to be more able to do that pivot without really caring what he has said before than the President.  So I`m not sure that any of this really boxes him in.  But, maybe if you`re on the fence and you`re watching as you`re saying, "Well, Trump really embraces at first."  And if there`s a different posture, let`s say in a few weeks from now after the report, then you know, look, at the end of the day whatever happens, coming out of what Mueller found will be based on public opinion.

The legal process has said what it will.  The President has been cleared there.  It will all come down to whether the public is really that bothered by it.  And that pushes Congress, bottom line, full stop (ph).

WALLACE:  And -- but the polls do show, Frank, that only people who really bought the exoneration story were already members of Donald Trump`s base.  These numbers haven`t gone up.  He was exonerated in their eyes only.  Everyone else is at least eager to see the results of the report, to see what Robert Mueller was doing, to see what this obstruction report says the President did.

FIGLIUZZI:  Well, the American people have spoken.  They want to see the report.

You know, if the Attorney General were a corporate CEO, he`d be in full blown crisis mode right now.  He`d be calling in the damage control team, the P.R. team.  And I care deeply about the institution of the Justice Department.

And if he wants to salvage that credibly in the American people`s eyes, he needs release as much of that report as fast as he can before the American public even further turns on the Justice Department and this administration.

WALLACE:  Joyce, I want to ask if you agree with that assessment.  I also want to ask you if you think we`ll ever learn what was so grave in the report on obstruction that Robert Mueller, while he didn`t charge the President insisted that do not exonerate.  Those words were in there.

So, as I understand it`s called a declination letter.  Robert Mueller didn`t go so far as to do that.  He stop before he issued any verdict on Donald Trump`s criminality in the obstruction case.  Will we ever know, will we ever find out what happened from the time the football was handed incomplete to Barr and Barr exonerated him?

VANCE:  I suspect that we`ll get a window into this at some point and the way you lay it out is just right.  As a prosecutor your fundamental job is to make a decision.  Do I indict this case or do I decline this case?

And if you decline a case, there are a number of reasons that you might check.  Weaker insufficient evidence or no federal offense evident would be some of the major reasons.  And that`s not what Mueller did.  Instead he did what people have characterized as punting.

But what I suspect is far closer to a practical recognition of the fact that he did not have the power to indict a President because of existing DOJ policy and so he left the decision in this case up to the only body with decision-making power, Congress.  And that reflects, you know, this important truth that the President seems to ignore which is that he is the only person in the system who is arguably above the reach of average prosecutors and who is only accountable through Congress.

That`s what makes him different.  That`s what makes it very likely that we will see all of the assessment on this issue regarding obstruction.  Mueller laze it out on both sides and says "Congress, now it`s up to you to do your job."  I think Congress will have an interest in letting the American people find out exactly what that calculous included.

WALLACE:  Jeremy, just weigh in on the President`s -- as a criminal.  He`s individual number one in SDNY, again shielded by Justice Department policy that you can`t indict a sitting President if he is indeed found to have committed what he is alleged to have done in the hush money scheme.  And now in this case, conduct so grave that Robert S. Mueller, even with the knowledge that he has to live by DOJ policy that you can`t indict a sitting President refuses to come to the conclusion not to.

BASH:  Well, I think also, in addition to your characterization, the bigger issue is he`s a risk because obviously the Russian federation has leverage over him because based on the long setting financial ties between the Russian federation and the Trump organization and based on the political leverage they have over somebody.  You know, today, we`re celebrating NATO, the anniversary of NATO.  And what better example do we need and the requirement to celebrate NATO and the kind of factual what we have in the White House of someone who`s been doing Vladimir Putin`s bidding.  He didn`t just wake up one morning, our President decide I`m going to be pro- Russian.  This is after a long serious of efforts by the Russian federation to compromise our American foreign policy.

WALLACE:  Our thanks to Mike Schmidt, Frank Figliuzzi, Joyce Vance, and Jeremy Vance.  Congrats on the scoop to Mike in the "Times."

Coming up, House Democrats make it official.  They want to look at the Trump`s tax returns from the past several years and they want them next week.

And later, the Feds are investigating whether China is targeting Mar-a-Lago as the President calls the recent security breach a "fluke."  THE 11TH HOUR just getting started on a Wednesday night.


WALLACE:  House Democrats are opening up a new front on their investigations into the President, Donald Trump`s tax returns.  A request to the IRS today came from Democratic Congressman Richard Neal, Chairman of the House, Ways and Means Committee.  He`s asking for the President`s personal tax returns as well as for some of his business entities from 2013 to 2018.  And he wants it all by April 10.  That`s one week from today.

He writes, "Consistent with its authority the Committee is considering legislative proposals in conducting oversight related to our Federal tax laws, including, but not limited to the extent to which the IRS audits and enforces the Federal tax laws against a President."

The President learned of the request earlier this evening.


TRUMP:  Is that all?


TRUYMP:  Usually it`s 10.  So I guess they`re giving up.  Now, we`re under audit despite what people said.  And we`re working that out as I`m always under audit it seems.  But I`ve been under audit for many years because the numbers are big and I guess when you have a name, you`re audited.  But until such time as I`m not under audit I would not be inclined to do that.  Thank you.


WLLACE:  Maybe it`s because you`re shady.  During the 2016 campaign, candidate Trump refused to release his taxes, something other presidential candidates have routinely done.  He used that same excuse back then.


TRUMP:  I pay hundreds of millions of dollars in taxes.  But, but, as soon as my routine audit`s finishes, I`ll release my returns.  I`ll be proud to.

Until such time is the audit is finished by the IRS which is a routine audit, I think, but until it`s finished, I won`t be going and releasing because obviously that wouldn`t be a very good thing to do.

(INAUDIBLE) I`ll release them when the audit`s completed.


WALLACE:  With us tonight, two of our friends from the "Washington Post," Phil Rucker, Pulitzer Prize-winning White House Bureau Chief and National Political Reporter, Robert Costa who also moderates Washington Week on PBS.

It`s hard to watch those clips now without laughing because during the campaign you thought, "Oh, well, maybe he will release them."  But clearly he will not.  And this seems like a new and different move to try to get something that Donald Trump has described as existing beyond his red line, Phil Rucker.

PHILIP RUCKER, WASHINGTON POST WHITE HOUSE BUREAU CHIEF:  Yes, I think that`s right, Nicolle.  It`s the never ending audit.  And it`s important to point out, by the way, that the President, he keeps saying that his tax returns are under audit but who`s not provided any evidence of the audit.  The IRS of course wouldn`t comment on any individual cases.  So we`re left to sort of guess what might be going on there.

But the move today by House Democrat is a big deal.  And it sets up what could potentially be a court fight that could take even years.  The expectation among Democrats is that the President and his administration will resist this request will not provide those tax returns and it would then compel the Democrats to pursue a court challenge, a legal challenge to really try to win this fight.  And that`s why that letter was so carefully worded.

WALLACE:  Robert Costa, I have so many questions for you.  But I want to start with some testimony from Michael Cohen on this very question.  Why is the President refused to release his tax returns?


REP. JIMMY GOMEZ, (D) CALIFORNIA OVERSIGHT COMMITTEE:  What -- the real reason is that the President has refused to release his tax returns?

MICHAEL COHEN, TRUMP`S FORMER LAWYER:  The statements that he has said to me is that what he didn`t want was to have an entire group of think tanks that are tax experts run through his tax return and start ripping it to pieces and then he`ll end up in an audit and he`ll ultimately have taxable consequences, penalties and so on.


WALLACE:  So, Robert Costa, I`m not a tax attorney.  But I think you only have something ripped to pieces in an audit with taxable consequences and penalties if you`ve broken tax laws, no?

ROBERT COSTA, THE WASHINGTON POST NATIONAL POLITICAL REPORTER:  Looking back at President Trump`s campaign to 2015, I remember as a reporter, he and Mr. Cohen provided the "Washington Post" at the time with a one-page document a financial summary of his assets.  And we asked them at the time, would they be providing a tax return or any more information.  And if you look at that statement we published it.  It talks about his worth, his net worth as something very much also involving his brand value, as well as his properties.  A tax return would offer much more detail than that one-page summary he offered to the "Washington Post" and other media outlets at the time.

And that`s something Mr. Cohen and Mr. Trump at that period did not want to do to share the full extent of that financial empire that he has in real estate and his different holdings.  You do see, though, inside the White House tonight a sense -- so this actually a welcome development for them, they would like the run against the Democrats in the House as over stepping on issues of personal finance.  And you could see them actually rally behind this tax issue in the coming days against Chairman Neal from Massachusetts.

It`s different than the other aspects of Oversight from House Democrats on issues like security clearances which does alarm many White House officials privately because it raises questions about the President`s conduct.

WALLACE:  Robert Costa, is there any concern though that with questions still looming about conflicts of interest, about Jared Kushner`s background check as you just mentioned, that knowing where the President`s money is coming from and the size of his wealth, which is something very near and dear to him, that those questions may be viewed as central to his presidency?

COSTA:  And it`s central for our country to learn more about how our elected leaders have assembled their wealth, because it gives context to how people make decisions in public office.  If someone takes multiple meetings with a certain ambassador or representatives from a company as a major industry in a certain country, we would like to know as reporters.  But I also hear this from voters we talk to on the campaign trail, whether it`s Democrat or Republican.  What is it the financial status of a politician with regard to that country or that company.  It`s always better to have more information, not less and we`ve been operating in the dark for so long with President Trump`s finances on many fronts.

WALLACE:  Phil Rucker, you gave the perfect summation of how long the specific battle is likely to take of the get courts get involved.  But on it the political side, are they prepared to defend, to continue to defend President Trump`s refusal to release his taxes.  We know a lot more extensive reporting in your paper and in "The New York Times" and "The Wall Street Journal" about how much deceit has gone into his wealth, hi family`s wealth, where his money came from.  Is there any worry about the politic dynamics, the politic shifting underneath them?

RUCKER:  Well I think Bob hit an important point when he said this could be a welcome fight for the president because he has been looking to try to cast House Democrats as overreaching, as digging into things, trying to obstruct his agenda and look for scandals.

That being said, I mean, this president`s financial architecture is incredibly complex, not like any of his immediate predecessors that we`ve experienced here in this country and there are a lot of dark holes, a lot of question marks and this is a subject of intense interest among the public and among the Democrats, you know, hoping to run against him who would like to make an issue out of this.

And so I don`t think it`s going to go away and it`s something the White House is going to have to grapple with.  And one of the first big decision is going to come to Treasury Secretary Mnuchin about how he, you know, in the IRS below him respond to this request from Democrats.  What legal argument do they marshal to try to -- to keep the president`s tax returns in that lock box and how they proceed here politically.

WALLACE:  Robert Costa, I have to ask you about the other big story tonight because you and I have had many conversations day after day about concerns within the president`s inner circle and legal circles about that obstruction report. News tonight in The New York Times that some of Mueller`s investigators not happy with how Barr has described the final conclusions from Robert Mueller.

COSTA:  It`s an important story reflects a lot of the different discussions happening behind the scenes not only within the White House but within had the legal community here in Washington, that legal community, people inside the justice department and close to it wondering about that summary from Mr. Mueller.  What was in there about obstruction that Mr. Barr chose or chose not to include in his letter to Congress?  You have the Mueller team understanding their role. Their subordinate to the attorney a general.

But we could be hearing more in the coming days especially as Congress continues to press about what did the Mueller team feel was not expressed by the attorney general while still respecting his position and his ability to make decisions on what is ultimately shared.

WALLACE:  Phil Rucker, does this strengthen the Democrat`s hands knowing there are some disconnect, some grumbling out of the very quiet, very disciplined Mueller investigators?

RUCKER:  Certainly Nicolle and there could be more in the days to come.  I mean, we should keep in mind that in a, you know, week or two weeks time we`re expected to see the full report in its redacted form.  I don`t know how many redactions the attorney general will make.  But there will be a much clearer picture by then of what exactly Mueller found, what he documented, what the legal analysis and certain investigative steps he took to arrive at his conclusions and there`s a tremendous danger here for the president and his allies and his team that they`ve spiked this football way too early and that this report could be much murkier for him than Barr portrayed in that four-page letter.

WALLACE:  Phil Rucker and Robert Costa, multitasking for me.  Thank you.

RUCKER:  Thank you.

WALLACE:  Coming up.  The president calls his recent breach at his Florida resort a fluke but it takes more than a mere fluke to catch the attention of the FBI`s Joint Terrorism Task Force.  THE 11TH HOUR back after this.



UNIDENTIFIED MALE:  Are you concerned that the Chinese may be trying to conduct espionage against the United States by spying on you at Mar-a-Lago?

DONALD TRUMP, PRESIDENT OF THE UNITED STATES:  Well, I saw the story.  I haven`t spoken anybody about it other than had brief meeting.  Gave me a little bit of information.  No, I`m not concerned at all.  I have -- we have very good control.  We have extremely good and it`s getting better in cyber -- frankly, what were doing with cyber is a story of itself.  No, I think that was just a fluke situation.


WALLACE:  A fluke.  President Trump today seemed to dismiss concerns that a woman was able to illegally enter his Mar-a-Lago estate while he was out golfing last weekend.  According to court documents the woman identified herself with two Chinese passports and said she was there to use a pool and attend an event.  Neither story held up.

She was arrested carrying four cell phones, a laptop and external hard drive and thumb drive loaded with malware.  Notable, she wasn`t carrying a bathing suit to the trip to the pool.

News of the incident prompted Democrats to demand the security review.  The "Washington Post" reports that they want the FBI to determine whether the facilities and equipment President Trump uses to access classified information are vulnerable foreign exploitation.

And the White House announced just tonight that Trump will meet with the Chinese vice premier tomorrow.  Still with us, Frank Figliuzzi and Jeremy Bash.

Jeremy, this seems like the kind of story that everyone can understand.  I think a lot of people -- we throw around the word skips the kind of secure rooms where you review classified information.  But everyone remembers or can be reminded of that information of Donald Trump sitting at Mar-a-Lago at his club`s dining room eating cake while the country was ordering air strikes against Syria.  And now an attempt that was seen for the Chinese to infiltrate Mar-a-Lago.

JEREMY BASH, FMR. CIA CHIEF OF STAFF:  Yes, and looks what happening this week the president is actually hosting a meeting tomorrow with the senior Chinese official.  And they run up too some intensive period of trade talks with the Chinese.  There`s also talk to the president would host Xi Jinping down in Mar-a-Lago.

And so it makes sense to me, well it looks to me like an effort by the Chinese intelligence services to run a technical operation, a human enable technical operation where they send an agent to possibly implant malicious code in the communications network.

It doesn`t just have to be on the classified system.  It could also be on the cell phones or other unclassified systems to do what, so that the Chinese can actually gain and apprehend by learning what the American side is engaging in during negotiations.  This is very troubling and I think it`s all part of the fact the president basically auctioning off access to his residents which is very dangerous for national security.

WALLACE:  And Frank, we learned about this first in the "New York Times" and then some reporting that broke during the 4:00 p.m. Hour when you run some of this in the Miami Herald that there is actually a federal investigation into what Jeremy is talking about, the Chinese effort.  Talk about that.

FRANK FIGLIUZZI, FMR. FBI ASST. DIRECTOR FOR COUNTERINTELLIGENCE:  Not surprising.   We have a president who`s declared the national emergency and wants to build the wall to keep people out.  But at its own weekend residence he maintains an environment, insist on an environment where people can come and go freely because it`s a private for profit club and members and guest need to be there.

It must drive the security apparatuses around him crazy and the nation that foreign adversaries of all stripes must be trying to penetrate and see whether they can get shore on water, whether they can get guests inside, get invitations to events and now this extremely odd incident.

What I know about Chinese intelligence is that they typically are very persistent.  They also will try as Jeremy said right before a particular targeted event to get in there and penetrate.  But I will also say they can be very subtle.  So this is extremely brazen and if indeed this was part of a larger operation, they`ve treated this woman as expandable.

She`s a caught and she may not fully understand what she was being task to do but are that equipment, the malware that was found.  We need know a whole lot more about that.  And it`s just not China that will be targeting Mal-a-Lago.  We have a president that continues to use his personal cell phone to conduct government business.  He ignored security clearance recommendations for senior staff.  The security around him is very, very vulnerable.

WALLACE:  Vulnerable because of practices and behavior and gaps I assume the President doesn`t let his security professionals close for him but Jeremy Bash also perhaps vulnerable by design.  We see the president kicking American officials out of one on one meetings with the dictator of North Korea.  All five meetings with Vladimir Putin.

We see, you know, we just see breach after breach.  We see the president over ruling a CIA flag on his son in law, Jared Kushner.  Is it more than just incompetent practices?  Is it more than just a failure to understand how sacred and precious our national security secrets are in your view?

BASH:  Well, he thinks that all these security procedures are just bothersome and they`re kind of harassing him as part of a deep state effort.  Maybe they conduct espionage on him which of course ridiculous.  What he doesn`t realize is that those officers who are part of our security professional cadre, they are duty bound.  They`re sworn to protect our nation and protect our nation`s secrets, and are doing it for the benefit of all of us.

So when the President engages with trade talks with his Chinese counterpart down in Mar-a-Lago, he`s actually doing it on behalf of all the American people, not just him or his financial cronies, and it`s very important in those talks and any other diplomatic engagement of the Chinese not have an upper hand.  Yet it appears that because of lack security procedures they might.

WALLACE:  We learned not so long ago that a counterintelligence investigation was opened into the President around the Russia question.  We learn today of another investigation, not into the president but into this Chinese effort.  How many counterintelligence investigations would you assume are open right now?

FIGLIUZZI:  Well, if you`re talking about revolving around those in the circle of the president?  This has got to be precedent setting numbers of cases, numerous field offices.  Because look at what we know publicly about Manafort and Flynn, and Cohen and Jared, and all the approaches and entanglements with foreign entities.

Imagine what we`re not seeing.  Imagine what the intel is on the classified side.  What`s being picked up from human sources, from intercepts abroad.  All looking at finding vulnerabilities to penetrate the circle around the president.  I`m going to go on a limb and say there`s a record-setting number of C.I. cases open round this president.

WALLACE:  Jeremy really quick.  We`re out of time.  Do you agree with that?

BASH:  I do.  I think this is a threat in the making down in Mar-a-Lago.  It`s going to require a lot more congressional and public scrutiny.

WALLACE:  Frank Figliuzzi and Jeremy Bash, thank you so much for staying up with us.  Coming up, the heats keep on coming.  House investigators turn their attention to the Trump inauguration and possible foreign influence there too.  THE 11TH HOUR back after this.


WALLACE:  New reporting reveals the House Intelligence Committee is seeking documents and an interview for the top organizer on President Trump`s Inaugural Committee.  Stephanie Winston Wolkoff is a former adviser to Melania Trump and as "The Wall Street Journal" reports "The House Intelligence Committee sought from Ms. Wolkoff an array of materials, including matters related to contacts between the inaugural fund and foreign entities.  Specifically in Russia, Saudi Arabia, Qatar, and the UAE."

Reporting for Vanity Fair, I quote, the document request represents one portion of a broader Democratic effort to build on the work begun by Robert Mueller.  As has previously been reported prosecutors in the Southern district of New York have also been investigating Trump`s inaugural committee.

Multiple reports today say Wolkoff has been cooperating in that investigation and was ordered not to disclose a subpoena issues in the case.  As Maggie Haberman of "The New York Times" points out, "It`s unusual for such a gag order to be put in place.  Mueller periodically used them with folks like Gates but SDNY is not known to have done so in any of the other cases other than with Winston Wolkoff."

Earlier today our own Frank Figliuzzi told me there could be multiple reasons for the gag order.


FIGLIUZZI:  A prophylactic gag order it looks like just to make sure that she`s not giving up what`s on.  This is not someone who`s been outspoken about her cooperation but rather someone they need to keep secret of that cooperation.

WALLACE:  It`s an protection (ph)?  Is that in the witness tampering protection category?

FIGLIUZZI:  I think it`s probably twofold.  I think it`s one to protect her and then secondly to insure she`s not tipping off certain people.  She can`t talk to individuals who are potential subjects of the case and let them know what`s going on.  It`s a significant finding.


WALLACE:  Here tonight two of the reporters working on this story today.  Emily Jane Fox, National Correspondent for "Vanity Fair," who has chronicled the flight of Michael Cohen, is the author of "Born Trump: Inside America`s First Family" and Rebecca Davis O`Brien, reporter for "The Wall Street Journal."

I learned everything from the story from both you.  So take us through what you reported.

REBECCA O`BRIEN, THE WALL STREET JOURNAL REPORTER:  Sure.  This emerged -- thank you for having me on.  This emerged in a letter that Ms. Walcoff`s lawyer sent to the Inaugural Committee this week, and he laid out for the committee that she had or explained for the first time publicly that his client not only had received a letter from the intelligence committee, but also had been subpoenaed last October, six months ago now, by the Southern District of New York and that there was a letter accompanying that subpoena that prohibited her from speaking about the subpoena.

WALLACE:  So we`re learning about that because that`s expired?

O`BRIEN:  Well, yes.  I guess it`s expired now, and because there are additional requests for documentation.  And what I think is significant here is the fact that we also, as we also reported, she`s been cooperating with the prosecutors there.

So, this long silence which now we realize is the result of a gag order, she`s been providing investigators in Manhattan with that information, or a lot of information all along.

WALLACE:  So before your reporting today, you wrote a big profile about her, and I asked you at the time is she another Michael Cohen?  And I guess I ask you based on tonight`s reporting.  And this intersection -- explain this intersection to me of the intel committee being interested in her as well as the criminal investigators, the criminal prosecutors in SDNY.

EMILY JANE FOX, VANITY FAIR NATIONAL CORRESPONDENT:  So the reason why we`re hear about this today is because Senate intel wants to interview her, and has asked for a ton of documents related to actually in part her relationship and communications with Michael Cohen, as well as everything that she saw in the inauguration and during the transition as well.

There are a lot of connections between her and Cohen and a lot of similarities.  And I spent a lot of time covering both of them.  And I see it -- first of all they live in the same block in Manhattan.

WALLACE:  Crazy.

FOX:  Truly stranger than fiction.  They are two people who had such close relationships with the president and the first lady.  Both of them had close relationships with each of them, and both of them, they feel like they had been thrown under the bus by the first couple.

What I think is interesting, and what I think is going to be a factor going forward is both of them feel jilted.  Both of them feel like they had been thrown under the bus, and both of them saved everything.  And I can`t emphasize this enough they are two people -- I`ve never seen anything like it in my life -- who must have known in their heart of hearts that something like this could have happened, because they saved everything, and they have been willing to share everything with investigators.

WALLACE:  Your paper, "The Times," "Vanity Fair," "The Washington Post" have all reported on suspicious numbers of Ukrainians and others around the inaugural.  How big is this of a focus both now in the committee and in SDNY?

O`BRIEN:  Certainly the intel committee is looking in part at foreign donations, foreign, you know, efforts to conceal the identity of donors abroad.  That`s one piece of it, certainly.  The number of people who showed up, they want guest lists.  They want details about who gave, who showed up, what were they promised, did they get anything in return, did they have any special business dealings?

One thing about the intelligence committee`s letter is they are seeking information about gifts or favors with Donald Trump and his family members` businesses and affiliated entities.  So, that could be potentially very interesting.

Of course, Ms. Wolkoff was a vendor.  So --

WALLACE:  Right.

O`BRIEN:  -- one focus that we can expect to see which does come out in that letter and which we can assume is also a focus of prosecutors in New York given what they`ve subpoenaed from the committee, the inaugural committee is the vendor side of things.  So, not just what money came in, but how the money was spent.

WALLACE:  So it is a classic follow the money.

FOX:  Sure.

WALLACE:  I want to ask you about the other big story tonight.  And it`s my understanding "The Washington Post" has now matched "The New York Times" scoop about the limited information that Barr shared about the Russia investigation frustrating some on Mueller`s team.

Obviously you cover the Trump family.  You cover Michael Cohen.  You were there for his testimony.  This investigation has touched every single person in Trump world really like nothing else.  And let me read you some excerpts from this story and get some thoughts.

The report was prepared -- this was the Barr summary or Mueller report was prepared so the front matter from each section could have been released immediately or very quickly, the officials said.  It was done in a way that minimum redaction if any would have been necessary, and the work would have spoken for itself.

Mueller`s team assumed the information was going to be made available to the public, the official said.  And so they prepared their summaries to be shared in their own words and not in the attorney general`s summary of their work as turned out to be the case.  This seems like a classic Trumpian story of the president getting way out ahead of the facts.

FOX:  Well, it`s not just the president.  We saw -- I think I told you last woke on your show that I had reported that Jared Kushner was taking a victory lap like no one had ever seen before, and he went on Fox News this week in an interview essentially displaying that victory lap for the world to see and saying there has been no collusion, total vindication

We now know that is -- we all kind of knew that wasn`t the case, and now we have some great reporting to show that that wasn`t the case.  So, yes, this was certainly the Trumps getting ahead of their skis.

But I think there are a lot of people, people like Cohen who participated in this investigation, and he`s still going to prison in a month.  And regardless what comes out in the Mueller report, and hopefully it will all come out, that is not going to change for him.

And so I think having transparency and letting people know what he shared with investigators is certainly a good thing, and I think something that would make him feel happy, but it doesn`t change the fact that he is on his way to prison and no one with the last name of Trump has yet to serve any consequence.

WALLACE:  Emily Jane Fax and Rebecca Davis, thank you both for being with us.  Coming up, a quick break and THE 11TH HOUR back after this.


WALLACE:  That`s all the time we have for this busy Wednesday.  I`ll be back here tomorrow at 4:00 p.m. Eastern right here on MSNBC.  That is our broadcast for tonight.  Thank you so much for being with us.  And good night from NBC News headquarters here in New York.

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