Manhattan Madam meets with Mueller team. TRANSCRIPT: 08/06/2018. All In with Chris Hayes

Guests: Jonathan O`Connell, Zephyr Teachout, Lee Gelernt, Tierney Sneed, Michael Isikoff

Show: ALL IN with CHRIS HAYES Date: August 3, 2018 Guest: Jonathan O`Connell, Zephyr Teachout, Lee Gelernt, Tierney Sneed, Michael Isikoff

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CHRIS HAYES, MSNBC HOST: Tonight on ALL IN.

PAUL MANAFORT, FORMER CAMPAIGN CHAIRMAN, TRUMP CAMPAIGN: You`re not going to like what you`re going to hear, but it`s going to happen on Tuesday.

HAYES: Explosive new testimony in the trial of Paul Manafort

MANAFORT: I`m not going to get into what tactics news.

HAYES: Tonight why Paul Manafort accountant says she falsified records at his request, what it means for Donald Trump`s former Campaign Chair.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Paul Manafort just came on, he`s great.

HAYES: Then, why the Manhattan Madam just met with Robert Mueller.

KRISTIN M. DAVIS, MANHATTAN MADAM: He never forced anyone to do anything.

HAYES: And what it has to do with Roger Stone.

ROGER STONE, FORMER ADVISER, TRUMP CAMPAIGN: Kristin Davis is a good friend of mine.

HAYES: Plus, new reporting on the Saudi money flooding Trump`s New York hotel and why a federal judge tonight is calling the Trump Administration reunification efforts unacceptable when ALL IN starts right now.

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HAYES: Good evening from New York, I`m Chris Hayes. At the close of the first week of Paul Manafort`s trial, things do not look good for the former campaign chairman of the Trump Campaign. And today, in particular, the testimony about Manafort`s alleged tax evasion and bank fraud took on a very human dimension when his accountant admitted under oath, on the stand that she had in fact knowingly falsified tax documents in order to save Manafort hundreds of thousands of dollars in taxes. Manafort`s accountant Cindy LaPorta testifying "I knew it was wrong, I could have refused but that would expose the accounting firm to the risk of litigation or I could have called longtime clients liars." I very much regret it." And so concluded day four of the Manafort trial, the first of two trials of Paul Manafort being brought by Special Counsel Robert Mueller.

Let`s take stock of what Mueller`s team of prosecutors have put into evidence so far through the testimony of 14 witnesses already because they haven`t just presented evidence of Manafort as a ravenous clotheshorse, there was an underlying method to Manafort`s consumer madness. For instance when Manafort bought clothing from the House of Bijan like for instance gray with pink pinstripe suit for $12,000 or a dark brown with green pinstripe suit for $12,000 or even a suede beige coat with leather detailing for $18,000, he often made those purchases with a wire transfer from one of his alleged 30 foreign bank accounts. See right there on the invoice, paid wire transfer $128,280 or from the Oriental Rug Gallery wired transfer or nearly $63,000 to Mercedes-Benz of Alexandria from the Marfin Popular Bank of Cyprus.

And the prosecution showed that those items were purchased through wire transfers from those Cyprus bank accounts to prove that Paul Manafort was, in fact, hiding millions of dollars of income from the IRS, tax evasion. But here`s the thing it got worse for Manafort. After the testimony of his bookkeeper, his tax preparer now his accountant and today jurors as well as met afford himself were shown one by one the tax returns from the years 2010 through 2015 in which Manafort had again and again checked no on the very direct and explicit question about whether he had any foreign bank accounts. Paul Manafort wife Kathleen wiped her eyes of the tissue and walked out of the courtroom for a moment when Manafort`s CPA said she had known -- he had no -- she had no knowledge of more than a dozen foreign entities that we now know to be owned by Manafort.

For more on today`s dramatic testimony, I`m joined by two reporters who are inside the courtroom today, NBC News National Security and Justice Reporter Julia Ainsley and Tierney Sneed Reporter for Talking Points Memo. Julia, what struck you today? It sounded like a pretty dramatic day.

JULIA AINSLEY, NBC NEWS NATIONAL SECURITY AND JUSTICE REPORTER: Yes, it was. You know, it`s funny Ken Dilanian and I have been going back and forth and I thought Ken had all of the really exciting stuff with the clothing and I was going to get the boring tax stuff. I think I might have had the better day today, Chris. I mean, what we heard we`re really the nuts and bolts of this case. It was sort of where exactly Paul Manafort lied and we`ve had that told to us through their tax preparers. There`s one man, Philip Ayliff, who said that he was asked to lie by Paul Manafort when he had e-mails showing that. He was asked to lie and to say that of residents that Paul Manafort owned to New York was a personal residence for the Manafort and not a business rental as it really was.

Paul Manafort wanted him to lie because he was trying to change his financial situation so that he could get more loans as his right as his money from Ukraine is starting to dry up and he`s finding himself in a desperate position to keep that lifestyle. Then we saw another tax preparer Cindy LaPorta who took over from Ayliff after he retired. She actually -- I mean there`s a reason she has immunity because she was complicit in falsifying these tax documents. She said that she was pretty disturbed and that she eventually drew a line where she stopped doing this but she`d never wanted to report it because of course, she -- like you pointed out she didn`t want to open up her firm to any litigation.

But it was really interesting -- I mean, there`s a pattern through all of these witnesses that we`ve seen that Rick Gates and Paul Manafort worked hand-in-glove. It was not Rick Gates going out on his own and gives the wishes of Paul Manafort who wanted to wash his hands of everything and that also time and time again Paul Manafort both personally in his own individual tax returns and with his company tried to hide and obfuscate what his financial situation was. Whether he was trying to act like he had more money so he could get more loans or whether he was trying to erase money from the books so that it wasn`t obvious how much money was coming in from this foreign bank accounts.

HAYES: Yes. And LaPorta tyranny strikes me as important for this reason. Part of the argument I think of the defense to the extent there`s been one is like whatever is being done he didn`t know about slash maybe was just all a mistake, like oh I didn`t know he had to check the box. It says you have a foreign bank account and like there`s money going and money going out. LaPorta is up there saying like we -- I knew what they were doing, they knew what they were doing, they were they were committing crimes.

TIERNEY SNEED, REPORTER, TALKING POINTS MEMO: Yes, what LaPorta was able to do was take us through the time period where you see Paul Manafort really being a financial crunch and need more loans to keep up his lavish lifestyle. And so what we saw through our testimony as these accounting tricks and you know allegedly fraudulent accounting tricks that they use to convince banks to give him more money and that Paul Manafort was cc`d on these e-mails, he was instructing them to listen to Gates and Paul gives instructions in terms of sending two banks doctored financial documents so that they could secure these loans.

HAYES: You know, there`s something here as I -- as I read testimony the case and as I`ve sort of paged through some of the -- some of the bits of evidence the government has entered, Julia, that there`s a desperation here that`s almost cinematic. I mean, you can feel wafting off the e-mails right? These are people that are scrounging and starved for cash.

AINSLEY: Desperation is the word here, Chris. I`m glad you use that because I think that`s the one word that the prosecution wants to have sticking in the jurors` mind would they go to deliberate. They want to show that this man was desperate enough that he would have worked with he`s incredibly shady characters like Viktor Yanukovych, that he would have falsified his tax returns. He would have even put his whole business and family at risk because he was so desperate. There was even a point brought up yesterday he got to a point he might not even be able to pay his own health care premiums but he still wanted to be able to fund the lifestyle and keep the house in the Hamptons.

This was a man who was desperate not only to survive but to keep up his own image. He was desperate not in a way that you or I might be financially desperate but desperate to kind of hold on to this kind of pseudo-power that he had amassed around him. And I think that they`re going to want to spell that out as we move into the rest of the Mueller probe if he was desperate why didn`t did he go work for the Trump campaign for free?

HAYES: That is something I want to circle back to but -- because that is the thing that you just keep coming back to as you watch this this this testimony come through. Tierney, what about the defense? I mean, they don`t have I think much to work with factually. Like he`s pretty -- there`s a lot there in black and white but what was their approach today?

SNEED: So far the defense hasn`t -- as you said they don`t have a lot to work with. They spent a lot of time talking, asking you know, both the vendors, the accountants that prepare -- the tax preparers, did you work with Rick Gates, did you communicate with Rick Gates, wasn`t Rick Gates handling all of this? Didn`t Paul Manafort have trouble keeping up with things? Wasn`t he always telling you to talk to Rick Gates? They`re trying to establish that this was Rick Gates` fault basically. And what we`re seeing is the tax repairs and the bookkeeper saying well Paul Manafort we talked too, and Paul Manafort was approving these expenditures, and Paul Manafort was cc`d these e-mails. And so they`re trying to make it look like this was all Gates` fault but I don`t think they`re being fully successful in that endeavor.

HAYES: All right, Julia Ainsley and Tierney Sneed, thanks. That was great. For mounting legal consequences facing Manafort after this week I`m joined by MSNBC Legal Analyst Barbara McQuade, former U.S. Attorney for the Eastern District of Michigan and MSNBC Legal Analyst Nick Akerman, former Assistant Special Watergate Prosecutor. Barbara, you`ve been following this trial closely. I think you`ve actually been in the room for a few days. You know, I`m an amateur. I`m just watching this. I`m just reading the coverage. I`m talking to people who are there. It does not look good for him. I mean, it`s -- it was not a great week for Paul Manafort.

BARBARA MCQUADE, MSNBC LEGAL ANALYST: Yes, I think the evidence is coming in and it seems to me very persuasive. You never know exactly how much of it the jury is absorbing but they seem very engaged, they`re taking notes, they`re listening. I think they provided very substantial evidence that Paul Manafort was using these offshore accounts to fund his lavish lifestyle and failed to report them on his income taxes. He failed to disclose these foreign bank accounts. And today we saw evidence of bank fraud in fact so well that it makes me wonder whether they`ll even have to call Rick Gates to testify as the cooperator because you know as we`ve discussed before, paper cases are a lot safer. You don`t have to worry about a witness going south. So you, know will he or won`t he testify, I think still remains a little bit of a question because the evidence is coming in so well for the prosecution.

NICK AKERMAN, MSNBC LEGAL ANALYST: I totally agree. I mean, the defense that the defense put on in there some opening it`s just falls apart. They have not been able to substantiate that this was all Rick Gates` is fault. In fact, the evidence is just the opposite. They have it in e-mails. Both Manafort and Gates are cc`d on everything. They`re both in conference calls with the tax preparers. I mean, there --

HAYES: There`s in fact -- I think there was an e-mail in evidence today if I`m not mistaken in which the tax preparer says to Manafort, hey, do you have any foreign bank accounts and he writes back all caps no.

AKERMAN: Right.

HAYES: Well that`s pretty clear.

AKERMAN: Right, you can`t get any clearer than this. So I mean, whatever theory the defense had of this case, it has really gone down the toilet today. It is not there. He is absolutely gone on this case. And I agree with Barbara. As I said the other night, I just don`t think they`re going to be calling on Rick Gates. There`s no reason to at this point. I mean, even on the issue of conspiracy that the judge spoke to the prosecutors about, they`ve got them to conspiring on e-mails, they`ve got them conspiring on phone calls with the accountants.

HAYES: There was a sidebar, Barbara, that was interesting because it reminded me of a kind of defense that Rudy Giuliani has used for the President which is when talking about the President`s possible obstruction of justice, he says, well it can`t be obstruction, he`s just doing it in broad daylight. He`s saying it on camera like that`s not how you do obstruction. And there was a sort of analogous argument made by Mr. Downing who is the lawyer for Manafort for today. He says in a sidebar, he says therefore only a fool would give that kind of information to his accountant if he was trying to conceal the information from the IRS -- the court. So now he wants to provide evidence for the jury that says look, there`s a trail in these documents that could lead to the truth in that and somebody who intended to violate the law which you have to prove would not have done that. It`s just inconsistent with someone who wanted to violate the law. That seems like a pretty flimsy argument.

MCQUADE: Yes, I agree with you. In fact, you know, the person sitting next to me said wow, if that`s the best argument you got he`s in big trouble. The facts were that Paul Manafort had disclosed to his accountant the names of some of these entities that he controlled but he told them that they were clients not that they were his own entities. So it`s about three steps removed that he`s disclosing this and doing this crime in broad daylight. So if that is the best argument that they have I agree with this spectator that they are in trouble.

HAYES: It does seem to. Remember, this is a Mueller prosecution, right? We`ve got all of that lurking in the background. This is adjacent to the case. It doesn`t have to do with the Trump campaign, it doesn`t have to do with collusion. That`s been very clear both in terms of what the court will allow and what the case is being tried on. But you can`t but look at it and say this guy was so desperate at the scene. He`s so desperate there`s even an e-mail in there where he is trying to basically squeeze his daughter over furniture purchases for a shared piece of property they have. That`s how -- that`s how squeezed the guy is, right? He writes a stern e- mail to say like hey, we got this share property. I need to see those receipts from the furniture. That that same dude during this period goes and works for free on the Trump campaign.

AKERMAN: Well, I think it wasn`t -- nothing`s for free. Let`s start with that premise. I mean, what he was doing was also trying to ingratiate himself with various oligarchs. Deripaska was one in particular. He was offering to provide him updates on the campaign as it went along. I mean, that was one of the people that was providing him with all that money during that time period.

HAYES: Remember the e-mail -- let me just read this. The e-mail when he gets a job, he turns around he goes to Konstantin Kilimnik who has been assessed as a possible agent of the Russian intelligence, an asset of Russian intelligence who is his deputy in Ukraine. He says how do we use to get whole? Meaning, how do we use my job to get whole? Has Oleg Deripaska operation seen that I have this job?

AKERMAN: That`s right. I mean, that`s exactly what he was using this for to try and get back into that Russian money, the exact same thing. I mean, there was a motive to his madness here.

HAYES: Barbara, what is your sense about the arc of this? I mean, this trial that the judge has been cracking with the way upbeat, the testimony has gone very quickly. I think the prosecution has made this case quite quickly. They`ve moved through the witnesses pretty quickly, crosses have not been particularly long. What do you see for next week?

MCQUADE: Well, you know, maybe we will or maybe we won`t see Rick Gates. I also think that they are teeing up kind of a summary witness for many of the witnesses who`ve testified. The prosecutors have put in front of them a chart that has not been published to the jury but they`ve just been asked have you verified the accuracy of the numbers in the chart. I think what we`re going to get is likely either an FBI agent or an IRS agent to sort of make it crystal clear to the jury what these numbers mean, what the numbers were going in what was going out. So I think we are likely to see that coming out next week.

HAYES: Someone to sort of tabulate it all and basically be like look, I`m the one who kind of made the case. Here`s the evidence you`ve seen and here`s what we were able to make out of it.

MCQUADE: Yes, I think so. Just to make sure that the jury draws the appropriate conclusions. They`ve heard all the raw evidence but you know, it can be difficult to keep up. In long days it`s tedious, some of these witnesses are testifying about lengthy, testimony about tax returns, you know, line 17, line 22, and so I can imagine having a summary a witness in the form of an FBI or IRS agent who kind of pulls together the relevant numbers that have -- they`ve already heard about but puts it into context for them.

HAYES: Well, I`ve been getting my nightly digest from you guys and I`m wrapped so I`m good. I`m on it. Barbara McQuade and Nick Akerman, thank you both. Next why a woman known as Manhattan Madam spoke with Special Counsel Robert Mueller`s team? We`ll tell you that story in two minutes.

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HAYES: Once upon a time in New York City in the tabloids at least there was no bigger story than the Manhattan Madam scandal. The Madam was Kristin Davis and before she was arrested in 2008 she ran a high-end escort service that provided sex workers to rich and famous businessman, athletes and at least one major politician. That would be the former Governor of New York Eliot Spitzer. Wednesday Kristin Davis met with the team of Special Counsel Robert Mueller. See, Davis is apparently a good friend of Trump confidante Roger Stone who was her campaign strategist when she ran very unsuccessfully for New York Governor back in 2010.

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DAVIS: The key difference between the MTA and my former escort agency is that I operated one set of books and my former agency delivered on time and reliable service.

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HAYES: That`s a good line. Now, Roger Stone has recently been making super, super weird Instagram posts about Davis like the ones you see there with her child and he says, "why do FBI agents dispatch by Robert Mueller keep asking my friends if I am the father of this baby and what does that have to do with Russian collusion in the 2016 election? Followed by a lot of hilarious hashtags. In a statement today Stone said Kristin Davis is a longtime friend and associate of mine. I am the godfather of her two-year- old son. She knows nothing about alleged Russian collusion, WikiLeaks collaboration or any other impropriety related to the 2016 election which I thought was the subject of this probe.

Joining me now to help me understand just what is going on Michael Isikoff co-author Russian Roulette: The Inside Story of Putin`s War on America and the Election Donald Trump. What is going on?

MICHAEL ISIKOFF, CHIEF INVESTIGATIVE CORRESPONDENT, YAHOO! NEWS: Good question, Chris. Look, I can first of all a test that Kristin Davis was very close to Roger Stone at the crucial period that Robert Mueller is looking at. I interviewed -- remember interviewing Roger Stone at the offices of Yahoo! in New York in the closing weeks of the campaign and Kristin Davis showed up with him handling logistics side by side and then they left together. So you know, clearly what`s interesting here to me is that Mueller obviously -- Stone obviously remains very clearly focus -- a subject of Mueller`s investigation.

Mueller has farmed out other aspects that he`s come across such as Michael Cohen`s taxi and taxi stuff and the election -- the illegal election money to the Southern District in New York, he hasn`t done that with Roger Stone. When that indictment came out a couple of weeks ago, about the hacking of the DNC, there was an explicit reference to Stone not by name but there was no question it was Stone he was talking about as somebody who was in regular touch with Donald Trump during the 2016 campaign and was in -- was in communication with Guccifer 2.0, the the Russian military intelligence persona. So most likely this relates to information that she may have about who Stone was in communication with and how he was communicating during that crucial time in September and October.

HAYES: Yes, I mean that`s that part of it to me right, the only way to make sense of her talking to Mueller is that she`s talking about Stone. I mean, maybe there`s something that we don`t know, right? That she`s --

ISIKOFF: Right. And Stone, having something to do with Stones communications in 2016 in the closing months of the campaign.

HAYES: Which again is part of you know Andrew Miller who`s an associate of Stone who just was word to testify after losing a lawsuit against this sort of constitutionality of the entire Mueller operation. It just seems very clear that you know, we don`t know what`s going to happen but to your point about he`s farmed other stuff out, Stone seems like he`s like sitting right there in the tractor beam of the Mueller investigation.

ISIKOFF: Yes, look all the signs are that that Mueller is closing in on Stone I think if we`re going to see a case I think it`s extremely likely we could be seeing it in the next few weeks. The expectation is Mueller is not going to do anything after Labor Day. He doesn`t want to be accused of bringing cases and in the course of the election so you know, this may drag out until post-election but I would think given the pace of activity that it`s reasonable to think that we could be seeing something very soon.

One of the things worth mentioning, yes, we`ve all been focused on those communications that Stone appeared to have or his advanced knowledge appeared to have about what WikiLeaks was going to be releasing. You know, it`s the Podesta`s time in the barrel. October is the -- there`s going to be an October surprise. There was the Podesta e-mails. There was also -- Stone also was running this operation he called stopped the seat -- stopped the steel which was kind of an election poll watching event that was really designed to intimidate voters or suppress African American participation in the election. You know there may be questions about the funding of that that Mueller is interested in and that Kristin Davis could provide some answers for.

HAYES: I didn`t realize that the b-roll were just running before and your testimony to this that is sort of the closeness of them. These are two people that are hanging out all the time. They`re showing up to interviews together like it all kind of makes a bit more sense in the context of that. But what doesn`t make sense of the bizarre Instagram posts of Roger Stone which maybe they`re asking about the child but it`s just weird, that`s -- those are weird.

ISIKOFF: There`s a lot of things that Roger Stone has been doing of late that is weird. It seems to be somewhat unhinged. I`ve seen some of the texts he`s sending to various people caught up in this investigation and they`re quite intemperate and provocative. So I -- you know I think Stone is clearly feeling the heat.

HAYES: Michael Isikoff, thank you so much for being here.

ISIKOFF: Anytime.

HAYES: Next, remarkable new reporting from the Washington Post that shows the President`s New York hotel reaping windfall profits from the Saudi royal family. I`ll talk to the reporter who broke the story after this.

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HAYES: Hypothetically, just spitballing here, if you wanted to bribe the current President of the United States, I think the simplest, cleanest way to do so would be just to throw money at his businesses so just think of that for a second. Now, a story today a pretty remarkable report from the Washington Post. It looked as if the Trump International Hotel here in Manhattan was all set to take a loss in the first quarter this year. In fact, Trump Hotels in blue areas of the country have been struggling.

And then came a last-minute visit to New York by none other than the Crown Prince of Saudi Arabia. This information comes from a previously unreported letter from the hotel`s general manager obtained by the post. And here`s the most telling part. The Crown Prince didn`t even stay at Trump`s Hotel but according to the general manager due to our close industry relationships, he wrote in his letter we were able to accommodate many of the accompanying travelers. So in short, the head of a foreign state has his entire retinue stay in a hotel he doesn`t stay in that just happens to be a Trump property that indirectly lines the President`s pockets.

Such transactions have fueled criticism and even lawsuits accusing the President of reaping revenue from foreign governments in violation of an explicit constitutional prohibition of the practice. To talk more about whether the stable behavior is explicitly unconstitutional and what we know about what`s going on the Trump Hotel I`m joined by the Co-author of the Washington Post piece, Reporter Jonathan O`Connell and Zephyr Teachout who is running for Attorney General of New York and a Fordham Law Professor. Jonathan let me start with you. So what do we -- what information do we have about what happened here?

JONATHAN O`CONNELL, REPORTER, WASHINGTON POST: Well, we know the Saudi Prince came to New York on a very publicized visit to America in March. We know that some members of the people traveling with him stayed at the Trump Hotel instead of the Plaza Hotel where the Prince is staying. And we know that that stay was lucrative enough -- lucrative enough for the Trump Hotel that their revenue went up by 13 percent of that quarter instead of dropping as it had done in the previous two years.

HAYES: Well that`s -- so just to be clear here. This letter -- I mean they don`t have shareholders rights, it`s the family`s owned business. My understanding of the letter is like kind of a little like the earnings call that you would do if you did have shareholders right? So he`s saying like when you want to look at like what kind of quarter we did, like we had this big boost because the Saudis rolled through and spent a lot of money basically.

O`CONNELL: Right, the specifics are that the hotel is managed and branded obviously by the Trump -- by President Trump`s company which he still benefits from financially. The units in the hotel are you mostly owned by independent investors so every so often they get a report from the general manager about how leasing is going and how they`re performing.

HAYES: Right so this was that letter to them. Zypher, you -- you`ve been very vocal about this stuff. Is this -- is this constitutional?

ZEPHYR TEACHOUT, ATTORNEY GENERAL CANDIDATE, NEW YORK: No, it`s blatantly unconstitutional. The -- on its face, the Constitution prohibits taking emoluments, profits, advantages from foreign states. And by the way the constitution even mentions Prince`s that federal officers cannot take something a value from a Prince or a foreign state and the reason for this is really obvious.

We cannot have federal officers and especially the President of the United States who is getting cash in his pocket from foreign governments while we are making critical, critical foreign policy decisions about trade and diplomacy.

HAYES: And war and peace in the Middle East in whether, you know, we are going to let the Saudis invade Qatar for instance

Jonathan, might -- one of the thoughts I have here and Zephyr I want to come back to you in a second.

One of those I have here was -- just how much we don`t know, right? Like if I -- let`s say I wanted to bribe the President and I was a Qatari Emir. I mean you could just like bluff, get 40 rooms in the Trump hotel for two weeks and my question to you is like would we know if someone was doing that?

O`CONNELL: That`s an interesting question of -- President`s company donated a $150,000 to the treasury at the end of 2017 which they said was, "The profits from the major business at their hotel company."

We don`t know anything more than that. We don`t know who the people spending that money are other than a few published reports about major stays at mostly the Trump D.C. hotel. We don`t know how much each of them spent. We don`t know how much -- who exactly stayed there.

So, there`s a really quite a bit that we don`t know and actually we may learn more about the business of the Trump Hotel in D.C. because of this lawsuit that the Attorneys General in D.C. and Maryland have already filed that which is now preceding.

HAYES: Yes. What do you think of the lawsuit, Zephyr?

TEACHOUT: Oh, it`s incredible and essential lawsuit. But of course the New York attorney general and New York should be in that lawsuit, so we can also learn about what is happening in New York with New York businesses.

The other stories from the Trump International Hotel that we don`t know. The other stories about foreign money going through Trump`s businesses that we don`t know. And actually a week after Donald Trump was elected even before he took office, I sounded the alarm and said, "Look, it looks like Donald Trump is set to violate this essential clause of the constitution," work with the incredible legal team and three days after Donald Trump took office we filed the first emolument lawsuit.

But the New York Attorney General needs to be a part of this because there -- we know there`s unconstitutional behavior but only from public reports. We don`t have the tax returns --

HAYES: Right.

TEACHOUT: -- we don`t know of the financial flows.

HAYES: What we do have now, Jonathan is that law, you know, this is sort of somewhat uncharted constitutional territory.

O`CONELL: Absolutely.

HAYES: And what did happen, I mean there -- for a lot of reasons, we haven`t had like a person like this, be President of the United States before, but the federal judge at least (INAUDIBLE) said, "Yes, you`ve got standing and you can just -- this is a real case that could go forward."

O`CONNELL: Right. And the particular -- particularly tough news for the Trump organization out of that court case is that, the judge seemed to define emoluments which are banned -- the President`s banned for accepting very broadly compared to the what the Department of Justice want it the way they defined it.

So, even payments made to the President`s company at a market rate for a market -- for a service that they are paying, you know, a market rate for, could be defined as the emolument under the judge`s definition and the judges have fairly clear and if you look at what he said about the case so far that it -- that a competitor in New York, as another state may have standing if there`s a hotel in -- or business in their jurisdiction or in their area that is conducting this type of business.

HAYES: Zephyr, you`re nodding your head at the competitor point.

TEACHOUT: I was nodding my head to the whole thing. The only thing I would -- (INAUDIBLE) suddenly differently is that the Donald Trump`s lawyers had a radical and cramp and bizarre definition of emolument which basically said, "It`s only an emolument, if it is a bribe. It`s only an emolument."

If it`s it exchange for some presidential action, so the judge must set his ruling to fine emolument in a way that I and others have been pushing for now 20 months. But it`s a common sense way to understand it.

HAYES: Right.

TEACHOUT: This prohibition is against money coming in from foreign governments and you don`t have to prove this is some kind of quid pro quo.

HAYES: All right. Jonathan O`Connell and Zephyr Teachout. Thank you both.

Still to come the ongoing horror of the Trump family separation scandal. Why a judge today, federal judge, slammed the Trump administration for suggesting that somebody else take over the work of reuniting families.

And next, what even is Great Britain any ways? That`s tonight`s Thing 1, Thing 2. Right after this.

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HAYES: Thing 1, tonight. International geography lesson, United Kingdom Edition. I`m sure you`re familiar with the region, but it does have a lot of names and they can get pretty confusing.

This, in yellow circle is Great Britain also called just plain old Britain made up of three countries, England, Scotland and Wales. And this, red circles shows the United Kingdom, U.K. for short and more formally the United Kingdom of Great Britain and Northern Ireland.

It`s made of the Great Britain, that`s England, Scotland and Wales plus Northern Ireland. And finally, you have the British Isles encompassing everything in this blue circle, that would be England, Scotland and Wales, Northern Ireland, The Republic of Ireland plus of course the Isle of Man and many smaller islands.

OK. Got all that, understand? It can be confusing. And any of us, myself included, to get mix up.

But any of us is not the President of the United States.

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DONALD TRUMP, PRESIDENT OF THE UNITED STATES: People call it Britain, they call it Great Britain, they call it -- they used to call it England, different parts. But the UK, great respect.

(END VIDEOTAPE)

HAYES: And that thing 2 in 60 seconds.

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HAYES: Donald Trump owns a golf course in Scotland so you`d think he`d have a decent understanding where that is. But just last month his White House had to delete this tweet announcing the President was leaving the UK to go to Scotland which is in the UK.

Weirdly, Trump has had it -- really, really tough time with UK geography. He once told The "Wall Street Journal", "I mean you don`t hear the word Britain anymore. It`s very interesting. It`s like, nope."

Last month he told Piers Morgan, "You have different names, you can say England, you can say UK, you can say United Kingdom. So many different, you know, you have -- you have so many different names. Great Britain, I always say, "Which one do you prefer?

Last month`s NATO trip, he told the "Sun", he prefers England.

(BEGIN VIDEOTAPE)

TRUMP: You don`t use the word England as much as you should. I miss the name England. If you understand that, I miss the name England. I think England is a beautiful name. And you don`t hear it very much any more.

(END VIDEOTAPE)

HAYES: It`s so true. You just don`t hear England anymore.

Last night, Trump was in Wilkes-Barre, Pennsylvania which he pronounced Wilkes-Barre and he brought up UK again.

(BEGIN VIDEOTAPE)

TRUMP: I have great respect for the UK, United Kingdom. Great respect. People call it Britain, they call it Great Britain, they call it -- they used to call it England, different parts. But the UK, great respect.

(END VIDEOTAPE)

HAYES. Great respect. OK. What can you ask for? I mean nobody elected this man to get the names of places, right?

(BEGIN VIDEOTAPE)

TRUMP: And I`m greatly honored to host this lunch to be joined by the leaders of Cote-d`Ivoire, Ethiopia, Ghana, Guinea, Namibia.

Tanzania.

China

Belgium is a beautiful city.

We are also praying for the people of Puerto Rico. We love Puerto Rico.

Heroin overdoses surging and meth overdoses in Nevada, Nevada. And it`s great to be back in Missouri. (INAUDIBLE).

This Russia thing with Trump and Russia.

Jews is not just the heart of three great religions.

Nobody says it the other way. It has to be Nevada, right? And if you don`t say it correctly, and it didn`t happen to me, but it happened to a friend of mine, he was killed.

And God bless the United States. Thank you very much. Thank you.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

HAYES: So that is the scene at the victory party for Diane Black last night. All pretty bleak as she trailed by double digits in her bid to secure the GOP nomination for governor of Tennessee. Is Congresswoman Black had sacrificed a lot to run for state wide office, resigning from her chairmanship, chairmanship for the House Budget Committee and giving up her seat in Congress, yet all for naught.

Last night she lost definitely coming in third behind two local businessmen. And with that Congresswoman Diane Black became just the latest house Republican rejected for higher office by their own party`s voters. Like Congressman Raul Labrador who gave up his sit run for Idaho governor, rejected. Congressman Evan Jenkins who run in the Republican West Virginia Senate primary, rejected. Congressman Luke Messer of Indiana, rejected in his home state Senate primary.

His competition met race congressman Todd Rokita, also rejected. Republican primary voters have even rejected congressmen who are just trying to keep their Mark Sanford of South Carolina and Robert Pittenger of North Carolina both ousted in their primaries this year.

The Congress in general is massively unpopular, has been for a long time. The average approval rating wallowing around 15%. And Democrats are beating Republicans in the generic congressional ballot right now by about 7%.

And with seven Republican members of Congress rejected in various primaries this year, House Republicans are also being shunned by their own party`s voters. The midterm elections would be balance of power in the House and the Senate up for grabs are just 95 days away.

(COMMERCIAL BREAK)

HAYES: Federal judge today once again shut down the government`s attempts to skirt responsibility for reuniting immigrant families. Calling the administration`s delays and getting still-separated migrant children back to their children unacceptable.

The Trump administration, get this, wanted the ACLU to take the lead in family reunification, even though it was this administration that separated those families in the first place. But then, non-profits have been trying to clean up the government`s mess on this very issue for months, as our own Trymaine Lee found out back in June, when he traveled to Arizona and talked to the Florence Project. That`s a group that provides free legal services to detained immigrants.

(BEGIN VIDEOCLIP)

ANNABEL BRAZAHA: It`s very empty. It`s very isolating. Physically and emotionally. The detention centers are placed out there for a reason. It is very intentional.

TRYMAINE LEE, MSNBC CORRESPONDENT: Annabel Brazaha drives this dusty highway four times a week, 70 miles into the Arizona dessert to the infamous Eloy Detention Center. It`s a jail run by a private prison corporation. Now it houses undocumented immigrants. Fifteen of them have died in as many years, due to suicide or inadequate medical care.

What`s in it the toughest part about making this trip?

BRAZAHA: The toughest part. Not being able to help them in the way that they want you to help them.

LEE: Annabel works for the Florence Project. They call themselves legal first responders for immigrants. Some who have been separated from their children by the U.S. government. Many don`t know their rights. They often don`t have money for an attorney and don`t speak English. Annabel is here trying to help them.

Was this a good day or a not-so-good day?

BRAZAHA: I don`t think it was a good day, personally. Just from the conversations and the reactions that I had and the tears that I had, I definitely think I would need to decompress a little bit and see how I can help further.

LEE: These parents were in tears?

BRAZAHA: Yes, they were in tears.

LEE: There are more than 3,000 undocumented immigrants imprisoned in Arizona on any given day. And the Florence Project is the only nonprofit providing free legal aid to them.

LAURA ST. JOHN, MANAGING ATTORNEY, FLORENCE PROJECT LEGAL DIRECTOR: What we`re seeing right now is completely unprecedented in terms of the family separation.

LEE: Laura St. John is the Florence Project`s legal director.

ST. JOHN: A 2-year-old can`t tell you, their mother or father`s name. It`s just mommy and daddy, right? A 2-year-old can`t tell you, well, how does mom tell spell that name. And we have to be able track this person down and identify them and it`s extremely difficult.

LEE: Is there any legal recourse for those family members who have had their kids ripped away from them.

ST. JOHN: There is no public defender in immigration or little proceeds. So if you`re being deported, you might have right to have an attorney, but only if you can pay for one. And that means that at least in the facilities that we work in, approximately 86% of the people here will go through the process without an attorney.

LEE: What kind of outcomes do they face? I mean they`re going against these trained lawyers, think the American government, a court system that operates differently than the American criminal court system, right?

ST. JOHN: Overall, the system is extremely difficult for people and there are a lot of people who have potentially valid claims, who simply for lack of a lawyer, are not able to explain themselves well enough to be able to prevail on those claims.

BRAZAHA: Not only are they`re worried about themselves and their case but they`re also worried what`s going to happen in the case of children.

LEE: Annabelle this is the first point of contact for many of these 7,500 immigrants the Florence Project helps each year. She`s a lifeline.

What`s going through their mind? I mean they`ve been separated from their child. They have one phone call. What are they thinking?

BRAZAHA: You know, one of the clients said, you know, this isn`t justice, but this is how it is.

(END VIDEOCLIP)

HAYES: The latest government numbers on separated families, 572 immigrant children remain in government`s custody across the country. Not been reunited.

With me now, legal deputy director of the ACLU`s immigrant rights projects. I`ve got to say, when you look at that pack, right. So Florence Project, they`re not as big as the ACLU, you guys are big national organization. But even the ACLU, am I -- is it as crazy as it seems to me for the federal government, who separated the kids, to turn around and go to a federal court and say, we think the ACLU should put everyone back together?

LEE GELERNT, LEGAL DEPUTY DIRECTOR, ACLU: Yes. I mean it was a stunning submission by the government. They basically were saying, look, you go do it, and you find the parents and tell us when you find them.

I mean we have a lot of support, but we have nowhere near the support the U.S. government has. And the government, worse, is sitting on information that could help us, and they haven`t given it to us. They have phone numbers of parents, they haven`t given it to us.

We got addresses from them. Sometimes it`s just a city with 700,000 people. That was the address they gave us.

They`re telling us to get us the phone numbers they need eight more days. I mean that`s terrible.

HAYES: OK. I`m confused here. So we`ve got -- you know, we had 2,500 -- the numbers get confusing, around 2,500. The vast majority have been reunited, right? I made as a documented in fact that has happened.

GELERNT: And we`re thrilled about that.

HAYES: Yes. I mean --

GELERNT: Right.

HAYES: -- 17, 1,800 somewhere in that ballpark?

GELERNT: I think without this judge`s ruling, we may have been looking at 5,000 kids separated by now.

HAYES: Wow.

GELERNT: And now we`re down to 500, but those 500 as the judge said are critical. We`re talking about them being orphaned if we don`t find these parents.

HAYES: OK. So we got 500 left. We`re down, we got 2,000 reunited, we got 500 left.

GELERNT: Right.

HAYES: The vast majority, my understanding of that class of kids who, again, they`re waking up every day in some detention facility in some, you know, foster care facility --

GELERNT: Right.

HAYES: -- in some child detention center facility. The vast majority, their parents have been deported.

GELERNT: Exactly.

HAYES: And the government is saying, look, I don`t know, they`re in Honduras somewhere. Is that basically --

GELERNT: They`re telling us -- yes, they`re telling us what country they`re in and that`s basically it. And then yesterday they gave us addresses for some of them, but they`re barely usable. And we said, you know, what about the phone numbers, they said, oh, we didn`t realize you wanted the phone numbers. That`s helpful we`re trying to get your phone numbers in about 10 days. You know, why not just go through the 400 files, and find the phone numbers. And when we get we`ve offered to send our paralegals down there and in one day they`ll get through those 400 files and see how many phone numbers there are.

HAYES: What did the judge think about the government`s idea that you put everybody back together?

GELERNT: Yes. The judge was crystal clear. The government separated these children. These children are in real harm. It`s the government`s responsibility. And he said, I want a point person from the government and I want that person to submit a plan, because right now, I thought I was getting a plan from the government. I`ve got nothing.

HAYES: There`s also real concern about the conditions these kids are in.

GELERNT: Right.

HAYES: We`ve had a number of reports. (INAUDIBLE) has been reporting about southwest key, which is one of the biggest contractors.

GELERNT: Right.

HAYES: It`s a nonprofit, but it`s got -- I think hundreds of millions of government contracts. Arizona central yesterday, another southwest key employee arrested for sex abuse at a shelter, court documents show.

GELERNT: Right.

HAYES: I believe that`s the third, if I am not mistaken, from that particular employer. Are you concerned about that?

GELERNT: We`ve been concerned about conditions in facilities housing children for a long time. And that`s exactly why you wouldn`t want to put more children there. You know, the government is suggesting that, well, even if we reunite them, maybe we`re going to detain a bunch of them. You don`t need to detain families, a mother with a 2-year-old.

There`s plenty of ways to ensure supervision. The Trump administration got rid of a way that was 98% effective that the Obama administration had created at the end. And now, they`ve released a lot of people --

HAYES: They have?

GELERNT: -- fortunately. But there still a lot of people detained. And those people need representation immediately. Because they`re in danger of being deported.

HAYES: Here`s the thing that`s so crazy to me. Play out the logic here. So let`s say the 400 children that are currently, you know, in custody are being cared for by the U.S. taxpayer, first of all.

GELERNT: Right.

HAYES: Right? I mean that -- what is the government`s plan here? If the government`s plan is, well, we deported the parents, we`re not reuniting them, like what are you going to do with the kids? You`re going to raise them until they`re 18?

GELERNT: What?

HAYES: You`re going to give them to some family like we`re in Argentina during the dirty wars? Like what`s the deal?

GELERNT: Well, you`re exactly right. I mean from the government`s just self-interest, they ought to be finding these parents.

HAYES: Yes. Why?

GELERNT: That`s less energy, less taxpayer money than trying to find a place for these children. I mean otherwise, we`re just stuck with these children. And not only that, the parents and the children want to be together.

HAYES: And they have to now. The -- the judge said they have to.

GELERNT: Absolutely.

HAYES: Lee Gelernt you`ve done incredible work on this. Thank you --

GELERNT: Thank you Chris.

HAYES: -- for your time on this Friday night.

That is all in for this evening. The "RACHEL MADDOW SHOW", starts right now with Ari Melber, talking about someone is doing a lot of work in for Rachel. Good evening Ari.

ARI MELBER, MSNBC CHIEF LEGAL CORRESPONDENT: Good evening. It`s not work if you love it.

HAYES: Yes. Lets play two -- Ernie Banks over there.

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

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