The Rachel Maddow Show, Transcript 8/22/17 Russia dossier

Guests: Barbara McQuade, Greg Stanton, Walter Shaub

Show: THE RACHEL MADDOW SHOW Date: August 22, 2017

Guest: Barbara McQuade, Greg Stanton, Walter Shaub

RACHEL MADDOW, MSNBC HOST: I`ve never felt so much pain at the word cute before, right? I`ve never actually thought of the word cute as something that can inflict harm. But aw!

CHRIS HAYES, MSNBC HOST, ALL IN: Yes.

MADDOW: Yes. Thanks, my friend. Appreciate it.

HAYES: You bet.

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

We`ve got a big show tonight. The mayor of Phoenix, Arizona, is here with us live in just a few minutes.

President Trump, of course, is in Phoenix, Arizona, tonight, despite requests from local authorities there, including the mayor, that the president please not make this trip, that he please not do this rally, not in Phoenix, not now. The mayor of Phoenix is about to join us in a moment. He is a Democrat.

But some of the news breaking tonight about the conflict over the president`s Arizona rally really is not Democratic versus Republican politics. It`s very much just Republican politics.

Republican politics sort of pushed to the max to the point where the former chief of staff to the top Republican in the Senate, Mitch McConnell, his former chief of staff is tonight issuing threats to President Trump that if President Trump doesn`t back off what he`s doing to attack other Republicans right now, he may find himself facing impeachment in the Senate sooner rather than later.

Unnamed Republican sources are also making serious allegation to "The New York Times" tonight that beyond the allegations already been investigated, that the president may have pressured the FBI to drop its Russia investigation. Beyond the existing investigation into whether or not the president obstructed justice when he fired the FBI director to try to stop the Russia investigation, unnamed Republican sources are telling "The New York Times" tonight that the president may also have tried to block the investigation into the Russia matter that`s being conducted in the United States Senate by the investigating committees in the United States Senate.

In fact, these allegations tonight from these Republican sources speaking to "The New York Times" are that those efforts by the president to potentially obstruct those inquiries into that part of the Russia matter, those efforts by the president may be continuing to night as we speak. So, this is actually, I think, potentially a very serious turn in the ongoing investigations into this president, into the Russia scandals that continue to swirl around this presidency.

Now, in order to understand what`s going on here, though, the details of this, I`m just going to -- I`m going to lay out the story as "The New York Times" tell us tonight. The details of this at first are going to sound like a politics story. But if you wade through those beltway politics just a little bit what you end up with very quickly looks like it may be a brand-new problem for the White House in terms of potential obstruction of justice by the president personally.

All right. So, here`s the story. The president tonight, as you know, has gone to Phoenix, Arizona. Phoenix has a Democratic mayor who we`re going to speak with in a moment. But the state also has a Republican governor and two Republican senators.

Now, it is not an accident tonight neither the Republican governor of Arizona nor the two Republican senators from Arizona are going to be attending this event with the president. That is because those two Republican senators from Arizona at least, they appear to drive this president crazy.

Even before Arizona Senator John McCain blocked the last Republican effort to repeal Obamacare in the Senate, the president`s hatred and disdain for Senator John McCain had brought Trump close to political disaster with his attacks against McCain, even targeting McCain`s heroic war record. So, that`s McCain. He`s the senior senator from Arizona.

The junior senator from Arizona is Jeff Flake, who has been more confrontational toward President Trump, than almost any other elected Republican anywhere, including in a recent book where he`s highly critical not just of President Trump, but he`s critical of himself and the Republican Party for allowing Trump to become the party`s nominee and their president.

Since then, President Trump has repeatedly gone after Senator Flake, giving him the schoolyard nickname Flake Jeff Flake, which is even a good name as Trump nicknames go.

More substantively, he has been hyping a Republican Senate primary challenger in Arizona who ran against John McCain in the last election cycle and who wants to run against Jeff Flake in the next election cycle. She lost quite badly to John McCain last year. It`s hard to tell at this point whether she poses a real threat to Jeff Flake next year. But she is expected to be at this rally with President Trump tonight in Phoenix, and that comes after Trump has spent days now hyping her candidacy and taking up her chances against Jeff Flake.

So, that is -- I know that sounds like, you know, electoral politics, right? Just beltway politics. That is the immediate political context, the immediate political background of what`s going on in this story.

Mitch McConnell, of course, is the top Republican in the Senate. Whatever you think about him as a politician, as a leader, as a Republican, Mitch McConnell definitely does take seriously his own responsibility in the Senate to help other Republican senators keep their seats, to help sitting Republican senators fight off primary challengers, to win their general elections against Democratic candidates, to fend off scandals that might unseat them from their Senate seats, right?

At the very least, Mitch McConnell needs to keep 50 other Republicans in the Senate so he gets to keep his job running the Senate. But also, regardless of that math, he just habitually goes to bat for any sitting Republican senator in order to keep them in their jobs.

Well, now that this Republican president has moved on from just insulting one Republican senator in Arizona to now trying to unseat the other Republican senator in Arizona, heading into this Arizona rally tonight, we knew that Mitch McConnell was upset with the president`s behavior. We knew that he was trying to undercut the impact of what the president is doing.

We knew that Mitch McConnell was going to try to sort of blunt the effect of Trump`s screw Jeff Flake trip to Arizona by hosting his own Mitch McConnell high dollar fundraiser for Jeff Flake this week.

We also learned today that a PAC associated with Mitch McConnell has started running ads against that Trump endorsed candidate who is going to run against Jeff Flake in the Republican primary next year.

And I know how this sounds. If you`re interested in partisan politics, if you`re interested in interparty fighting and electoral politics and the balance of power in the Senate and stuff like that, those are all interesting details, right? This is an interesting story. This is an interesting tale of intraparty fighting to follow.

But you only have to follow it that far before it jumps to a place that is way beyond politics, because tonight in "The New York Times", this little politics story moved from interesting to uh-oh if you are the White House.

First, there`s that impeachment threat that I mentioned. A man named Billy Piper is quoted by name tonight in "The New York Times." He`s now a lobbyist. Until recently, he was chief of staff to Senator Mitch McConnell. And Billy Piper throws this threat in the president`s direction tonight in "The Times."

When you hear the threat, you`ll understand why it`s important that he allowed himself to be quoted by name in making it. Here`s what he said, quote: The quickest way for Trump to get impeached is for him to knock off Jeff Flake and Dean Heller and be faced with a Democratic Senate.

Now, in a typical political fight, that would be the place where you would give a little bluster, a little brush back. You don`t want to lose the Senate, do you? With this president, a brush back citing basic Senate math like that very quickly becomes a fairly credible threat of impeachment for the president. And Republicans apparently are not afraid to say it, including Republicans very, very close to the top Republican in the Senate who controls what happens in the Senate, Mitch McConnell. So, there`s that, the impeachment threat.

But here`s the worst part from the White House`s perspective. Apparently, before Trump and McConnell stopped speaking to each other all together, which is where they are at now, apparently, the last time they spoke, they had what is described in "The Times" tonight as a, quote, profane shouting match on the telephone. This reportedly happened on August 9th.

President Trump apparently placed the call from one of his golf courses and he spoke with Senator McConnell directly. Citing Republicans quote briefed on the conversation, Alexander Burns and Jonathan Martin at "The New York Times" tonight report that there were two subjects that Trump and McConnell screamed and swore at each other about on that call on August 9th.

Number one was who is responsible for Republicans failing to repeal Obamacare. OK. Got it. We knew they were fighting about that already.

But the other subject they apparently screamed and swore at each about was something very different. I think I`ll quote to you direct think from "The Times." Quote: During the call which Trump initiated on August 9th from his New Jersey golf club, the president accused Senator McConnell of bungling the health care issue. Quote: He was even more animated though about what he intimated was the Senate leader`s refusal to protect Trump from investigations of Russian interference in the 2016 election. Again, that`s according to Republicans briefed on the conversation.

So, in a call that is described as devolving into a profane shouting match, the president is reportedly berating and screaming and swearing at the majority leader in the Senate because the senator hasn`t protected him from the Russia investigations that are being carried out under his purview by various committees in the Senate. This is according to multiple Republican sources who were briefed on that reported conversation between Trump and McConnell on August 9th. The reason that is very, very important and not just a salacious detail about famous people yelling at each other, the reasons that potentially a big uh-oh for the White House here is because the criminal concept of obstruction of justice applies not only to law enforcement, i.e., FBI investigations, it also applies to efforts to influence, obstruct or impede the due and proper exercise of the power of inquiry or investigation as being had by either House in Congress or by either committee in either house of Congress.

And if that sounds wordy or arcane as language, it`s because in reading that, I am quoting the language of the criminal statute that defines obstruction of justice and makes clear that obstruction of justice as a crime, as a criminal matter, that applies to efforts to impede or pervert or pressure investigations not just by cops and prosecutors, by the FBI, it also applies to efforts to impede or pervert or obstruct congressional investigations. Now, we`re going to have some expert advice on that in just a moment.

But remember how we got the special counsel investigation of this president in the president. I mean, where the Bob Mueller special council investigation came from was not just allegations about Russian interference in the last election. It was not, you know, Trump administration figures constantly being caught lying about their contacts with Russians, things they initially denied but then later had to admit to. None of that was enough.

The reason we got the Bob Mueller special counsel investigation was because the president fired the director of the FBI, and that firing followed credible allegations that the FBI director was fired after he refused to accede, to pressure from president that the FBI should drop the Russia investigation. If the president has also been or is also now pressuring the leader of the Senate to drop the Russian investigations that are under his purview in the Senate, then that`s not just personally driven political gossip. That`s a big deal.

I mean, particularly, if he`s been pressuring the Senate leader to protect him from these Russia investigations and McConnell has not been doing that to president`s satisfaction and now, in response, the president is politically punishing Mitch McConnell for not going along with his pressure. And this part of it is not secret cloak and dagger stuff. I mean, if this August 9th phone call that is reported in "The New York Times" tonight, if this happened the way these Republicans sources say it happened, if the president was berating Mitch McConnell on August 9th, berating him and swearing at him over McConnell not protecting the president from the Senate Russian investigations, if that`s true, well, look what`s happened since that call happened.

Starting August 9th, the president has been using his Twitter feed repeatedly to attack Senator Mitch McConnell by name. The day after the reported call, on August 10th, the president gave availability from his golf course in New Jersey where he suggested that perhaps Senator McConnell should resign as the leader of the Republicans in the Senate.

Now, tonight, less than two weeks later, the president is in Arizona trying to inflict maximum political pain on Senate Republicans in direct political conflict with Senator Mitch McConnell. It`s one thing if that`s just politics. It`s interesting, but it`s politics.

If instead, this is the president politically punishing Mitch McConnell for McConnell refusing to accede to the president`s Russian demands, then this will likely open a new front in the investigation of potential obstruction of justice by the president.

Now, the Russia investigations that are happening in the investigative committees in the Senate, those investigations as far as we can tell, are full steam ahead. Today, the Senate Judiciary Committee took what is reported to be many hours of testimony from the head of the political research group behind the infamous dossier of alleged Russian dirt on Donald Trump. That dossier was reportedly handed over to the FBI last year. It was published by "BuzzFeed" in January. It has been the source of a lot of controversy.

Glenn Simpson is a former investigative journalist for "The Wall Street Journal." He was interviewed by Senate Judiciary staff today for ten hours. There`s one report tonight that he handed over as many as 40,000 documents to the committee. Again, Fusion GPS, his outfit, is the group that ultimately commissioned that dossier and he just handed over 40,000 documents?

The leader of that committee is Republican Senator Chuck Grassley. And we`ve talked about here on the show the fact that Senator Grassley in the past has made an effort to try to undermine the dossier by attacking its origins and attacking Fusion GPS. So far, those efforts have really been to no effect.

But today, ABC News reports that the man who actually created the dossier, not the guy who, you know, commissioned it and arranged for payment of it, the former MI-6 officer in Britain who collected the intelligence, who contacted the sources, who wrote up the dossier in the first place, the man who was hired by Fusion GPS to create the dossier, Christian Steele himself, according to ABC News today, not only has talked to the FBI in detail about the dossier and how he put it together. According to ABC News today, Christopher Steele has given the FBI specific information about the identity of his sources that he used to put the dossier together.

Now if that ABC News report is true, that would allow the FBI to retrace Christopher Steele`s steps to either verify or disprove what is in that incredibly inflammatory dossier. You`ll remember that the key claim of the dossier, aside from a bunch of salacious personal stuff, is that the Trump campaign not only knowingly colluded with the Russian attack on election last year, but that it was the end product of a years-long relationship that involved the exchange of politically useful information, that included potential coercion by Russia toward Trump and that included extensive, illicit financial ties between Trump, Trump businesses and Russian entities, including some that are close to Vladimir Putin.

I mean, that`s what`s in the dossier, right? If the firm that paid for that information just handed over 40,000 pages worth of documents, and the founder of that firm just gave 10 hours of testimony, and if the intelligence agent who collected that information has confided information about his sources to the FBI for their own investigation of those matters, well then you could see where the pressure might be boiling up in from terms of the White House really wanting to shut down these investigations.

And looking ahead in terms of next steps, Christopher Steele himself, the former MI-6 agent, he is eagerly sought by the investigative committees in the Congress as a potential witness for their inquiries. We do not know if that will ever happen. Obviously, that would be basically a truckload of political dynamite for this country if he did testify, if his story held up.

So, I mean, obviously, there were high stakes here already. If this "New York Times" reporting and this ABC News reporting tonight bears out, the stakes have gotten that much higher.

I just want to put one last point on it. We just got some exclusive new national polling. We just got in from PPP, Public Policy Polling. This is due to come out tomorrow. They`ve given us an exclusive first look at these numbers tonight. So, you haven`t heard this anywhere else. These were exclusive to us.

This is a national survey results factoring in Democrats and independents and Republicans who, of course, remain very loyal to Donald Trump. Here are these national top line results.

Quote, do you think that the Russia story is fake news or not? Answer from the American people, no, America do not think the Russia story is fake news. Question 21, quote, do you think that members of Donald Trump`s campaign team worked in association with Russia to help Trump win the election for president or not? Answer from the American public, yes, we think members of Donald Trump`s campaign team worked in association with Russia to help Trump win the election for president.

And here`s the crucial follow-up question, question 22, quote, if evidence comes out that proves conclusively that members of Donald Trump`s campaign team worked in association with Russia to help Trump win the election for president, do you think Trump should continue to serve as president or do you think he should resign? Answer from the American people, by a 20-point margin -- yes, in that case Trump should resign. So says a clear majority of the American public in that instance.

Again, this is new national polling that`s coming out from Public Policy Polling tomorrow. They gave us an advanced look at some of the numbers tonight. In terms of the methodology of the polling, it was conducted through yesterday, so it doesn`t include any reaction to whatever the president is going to say tonight in Arizona. And it doesn`t involve reaction to this new reporting in "The New York Times" story that president may have another obstruction of justice line inquiry to worry about now.

This time what`s reported to be an effort by the president to shut down the congressional investigations into his campaign in Russia. Again, we`re going to have expert advice on that potential new inquiry, coming up.

Plus, the Phoenix mayor joining us live.

We`ve got a lot to get to night. Stay with us.

(COMMERCIAL BREAK)

MADDOW: OK. We`re following several breaking stories here tonight, including the forthcoming rally in Phoenix that the president is holding there tonight despite requests from local officials that he not do it. The mayor of Phoenix is going to join us in just a moment.

We`re also following breaking news on another front related to the infamous dossier of alleged Russian dirt on Donald Trump. The political research group behind the dossier is called Fusion GPS. The co-founder of Fusion GPS, the head of that firm, is Glenn Simpson, who`s a former investigative reporter for "The Wall Street Journal."

Now, his legal team has just released a very interesting statement tonight. This has just come out tonight and it`s about the head of that firm, Glenn Simpson, spending ten hours today meeting behind closed doors with investigators from the Judiciary Committee in the Senate.

In the statement tonight, Glenn -- following this marathon testimony, they`re describing -- Fusion GPS is describing the dossier, the dossier about Trump, as a, quote, road map for investigation. They also say that they stand by their work. They stand by that dossier and what`s in it.

And then look at this. Look at how they end their statement. They`re basically requesting that the committee release the transcript of those 10 hours of interviewing that Glenn Simpson sat for today. Quote: The committee has the right -- excuse me, the committee has a transcript of the interview. The committee has the right to disclose the transcript if it wishes to do so, which I think is Fusion GPS basically inviting the Judiciary Committee to make the content of the ten-hour interview available to the public. Gulp.

And that statement and that very provocative prospect has just come out tonight on the heels of this new "New York Times" reporting that the president, according to Republican sources, may have pressured the top Republican in the Senate to protect him from the Russian investigations happening in Congress. If that report is true, would that potentially open another line of inquiry into the president potentially having tried to obstruct justice on the Russia investigation?

Joining us now is Barbara McQuade. She`s a former U.S. attorney for the eastern district of Michigan.

Barbara, thank you for being with us tonight. I really appreciate you being here on short notice.

BARBARA MCQUADE, FORMER U.S. ATTORNEY: Well, my pleasure.

MADDOW: I feel like I`ve come to learn in recent months about what obstruction of justice might mean, what it means in criminal terms in terms of somebody trying to block or pervert or pressure an FBI inquiry. Does the same criminal framework apply to somebody trying to block an investigation by Congress?

MCQUADE: Yes, there`s a different statute but a very similar one in the criminal code that makes it a crime to corruptly or by threats obstruct, impede or interfere with an investigation by Congress or any committee of Congress.

MADDOW: Does the law spell that out? How far does that statute go in spelling out what kind of things would be considered obstruction?

MCQUADE: Well, it has the same kind of language. It parallels the same statute that covers investigations by agencies or the FBI.

But the key words there really are corruptly or threaten. If this news report is true, it sounds like you would have the elements of an offense, certainly the facts always matter. But one thing that`s really important in stark contrast to what we saw a couple of weeks ago when President Trump was threatening members of the Senate like Lisa Murkowski in the legislative arena, saying, I`m going to withhold federal funds unless you vote for health care. That`s OK. That is political hardball. They call that logroll. That happens all the time.

But when you get into Congress`s investigative powers and you seek to interfere with those, then that becomes a crime.

MADDOW: And who would investigate that? Is that something that Congress itself investigates because it`s a crime against or in relation to a congressional investigation or is that something that the Department of justice or the FBI would look into?

MCQUADE: No, the FBI and the Department of Justice would look into it. I would suggest that this is part of the purview of the special counsel Robert Mueller who has the authority to look into ties between Russia and the Trump campaign and matters that may arise out of it, including obstruction of justice.

So, my guess is Robert Mueller and his team would be interested in learning the facts of this case. It could be another count in any indictment or presentment that goes to Congress. And in these kinds of cases, it can really bolster a second count. So, if you`ve got a count involving efforts to intimate or obstruct with Jim Comey and those conversations and then you also have another count that has the same kind of theme against Senator McConnell here, those two counts can really become self bolstering of each other. It demonstrates a common scheme or plan that really helps bolster both of those counts.

MADDOW: And, briefly, Barbara, forgive me ignorance on this, but if Mitch McConnell is the key witness to this, if this pressure happening in a phone call what`s described in "The New York Times" today is that there were other Republicans who are briefed on the contents of the call.

But if he was alone with the president on that call, he would obviously be the key witness here. Could Robert Mueller compel him to testify? Is there anything about his status as the Senate majority leader that might protect him from having to provide testimony to any sort of inquiry?

MCQUADE: There`s nothing to protect him from being compelled. My guess is that Robert Mueller would first attempt to obtain information through an interview with Senator McConnell, in hopes that he can get it that way and, you know, only if he was not able to provide that voluntarily would he have to go to that measure of compelling. But there`s nothing that would protect him from being compelled under the law.

MADDOW: Barbara McQuade, former U.S. attorney in Michigan, thank you for your time and always for your incredible clarity. Really appreciate you being here.

MCQUADE: Thanks.

MADDOW: All right. Mayor of Phoenix joins us live in just a moment. Stay with us.

(COMMERCIAL BREAK)

MADDOW: It was 105 degrees today in Phoenix, Arizona. At this time of the year in Phoenix, that means today is a today that ends in Y. Tonight, temperatures were higher than usual. Outdoor exertion was greater than usual in downtown Phoenix, thanks to protests both for and against the president, outside his rally at the Phoenix Convention Center tonight.

The combination of the heat, the controversy over the president`s recent remarks on race, the vitriolic anti-immigrant speech he gave the last time he was in Phoenix, the president has apparently abandoned the idea of using tonight`s appearance to grant a presidential pardon to the famously anti- immigrant recently convicted former sheriff of Maricopa County. All of these things tonight have combined to create some real worries about what was going to happen at this rally, about potential clashes between Trump supporters and Trump protesters at the site of the rally and all around downtown Phoenix.

Now, police have been trying to keep the two sides separated. The Democratic mayor has been fervently making the case in the recent days that the president shouldn`t do this, shouldn`t take it out on Phoenix if he has a continuing desire to stoke racial tensions after his comments last week praising the very fine people at the white supremacist last weekend in Virginia. But the president has made his way to Phoenix tonight, as have the protesters.

Joining us now from Phoenix is the mayor, Greg Stanton, who asked the president, quote, to postpone this trip.

Mr. Mayor, thank you for making time to be here with us tonight. How things gone tonight so far?

MAYOR GREG STANTON (D), PHOENIX, ARIZONA: So far, Rachel, things have gone very smoothly in the city of Phoenix. There have been huge crowds, people expressing their First Amendment rights outside of the convention center, a large number of people entering the convention center to hear Mr. Trump`s speech. So far, so good.

Yes, I was very disheartened when the president`s press secretary indicated that there would be no pardon for Sheriff Joe. Obviously, the president on occasion doesn`t listen to his staff. So, we`re still going to pay close attention.

But I think that that announcement that there was no pardon for Sheriff Joe and all of his civil rights violations did make us feel a lot better that things were going to go safely here in Phoenix tonight.

MADDOW: Obviously, as you described there, that`s great news about the peaceful nature of the protests and the fact that there hasn`t been violence that people were so worried about tonight. Obviously, that`s why a lot of people have their eyes on Phoenix tonight as partly because of those worries.

I have to ask you, though, about a lot of the photos that we`ve seen today of folks with guns. Interestingly, both Trump supporters with guns and a couple of protesters on the other side at least also open carrying tonight. Obviously, Arizona is an open carry state.

Does the presence of so many visible guns at tonight`s protests increase your concern?

STANTON: Yes, it does. And I wish that people who were coming downtown to express their First Amendment rights either opposing the president and his policies and unfortunately his failure of moral leadership after Charlottesville just a few days ago, or those who supporting the president would leave their weapons at home. They don`t need to try to antagonize others in the audience by bringing those very large weapons.

It`s unfortunate but Arizona is an open carry state and, thus far, there have been no arrests for any kind of weapons violations in Phoenix tonight.

MADDOW: And, Mr. Mayor, you were quite outspoken ahead of this that you did not want the president to come to Phoenix and do this rally there, that you were worried about what he might set off and his motivations for coming there.

I just have to ask, did the -- did the president reach out to you? Did the White House ever contact you to address your concerns or to find out more about whether there was a way they could do this that would be less antagonistic? Did you ever have any contact with them?

STANTON: Rachel, I put out a public statement strongly making the case that this was not the time for this campaign rally. And it is a campaign rally. The Phoenix Convention Center was rented by the Trump for President Campaign. Such a short time after the tragedy in Charlottesville, with the tragic murder of a young lady at the hands of a neo-Nazi, with the specter of a potential presidential pardon of Sheriff Joe, despite all of his civil rights violations of Latinos in our community, that it simply wasn`t the right time.

But shortly thereafter, a spokesperson for the White House indicated that they were not going to heed to my advice and they were going to move forward with tonight`s campaign rally here in Phoenix.

MADDOW: And they never called you about it and you never spoke with the president about it?

STANTON: I have not had the opportunity to speak to President Trump about it. I think -- look, I`m not naive or Pollyannaish. I didn`t reasonably think that he would listen to me.

But I think the point had to be made. I think I spoke on behalf of most of Phoenicians and most of the people across the United States of America that said that after the president failed so miserably to provide leadership in this country after the tragedy in Charlottesville, that such a short time thereafter to do a campaign rally in Phoenix, it was just -- it wasn`t right. And so, I stand by my statement that this should have been postponed.

We`re not saying never do it. Look, we understand politics is politics and, eventually, you have to do campaign rallies. But this wasn`t the right time here in Phoenix.

MADDOW: Phoenix Mayor Greg Stanton, sir, thank you for joining us. I know it`s a very, very busy, fraught night.

STANTON: Thank you so much.

MADDOW: Let us know what you hear from the president anytime soon. I appreciate your time tonight, sir.

STANTON: We will. Thank you.

MADDOW: All right. We`ve got much more to come tonight. Stay with us.

(COMMERCIAL BREAK)

MADDOW: In April, "Reuters" had a fascinating report about a billionaire investor you might have heard of. His name is Carl Icahn.

"Reuters" reported that last year, Carl Icahn did something that nobody else had done before in a big way in the market. He started betting for some reason that the price of a specific kind of regulatory instrument was going to drop. It was going to get cheaper.

As part of a regulatory framework that`s been around for a while, some oil refineries have to buy a thing called a bio fuel credit. They have to buy these credits and Carl Icahn started betting as a refinery owner himself, he started betting that the price of those credits was going to drop. And that was weird. Nobody had ever really shorted those things before in the market. Nobody had ever made a big multimillion dollar bet that the price of the credits was going drop.

But Carl Icahn did. Why did he do that?

Well, turns out that Carl Icahn was going to be named Donald Trump`s special adviser on regulatory reform. And after he got that adviser gig at the White House, wouldn`t you know it, he immediately set about advising the president to do things that would drop the price of those credits. So, then he could collect on that otherwise mysterious a typical bet that he made that those credit would get cheaper.

I mean, it sounds complicated if you don`t follow short selling and market stuff like this all of the time. But it`s really a simple and jaw-dropping thing. Billionaire bets on the market that a thing will happen. Billionaire then joins Trump administration to ensure that that thing will in fact happen.

Billionaire collects. That`s it. Congratulations. Your country is now a former Soviet corruptostan and the ruling family and their crony oligarchs would like to see you now.

This is just like textbook banana republic corruption. People taking government jobs that then they use to make themselves rich in the private sector.

I mean, the thing that`s actually most unnerving about the Carl Icahn story is how out in the open it`s all been happening. I mean, "Reuters" made this chart showing how the value of those biofuel credits dropped starting in December. First, on Carl Icahn`s advice, Trump named an EPA director who said he shares Carl Icahn`s views on those biofuels regulations. And so, the price of those credits dropped, and the White House announced that Carl Icahn will have an official role as an adviser and the price of those credits dropped a little more.

Then, a new biofuels regulation plan conceived by Carl Icahn was delivered to the White House and, yes, the price of those credits dropped even more. Every time that happened, Carl Icahn -- that bet that he made was getting better and better and better. I mean, if you are Carl Icahn, and you made that bet a few months back that the value of the credits would drop -- yes, you made a prettily good bet, but it really looks like your actions as part of the Trump administration are what made that bet turn out so well for you.

This is just textbook. In the months after Trump`s election, the stock price of Carl Icahn`s refining company which directly benefitted from the dropping price of those credits, the stock price of his refinery company nearly doubled. That`s hundreds of millions of dollars for Carl Icahn.

But now, Carl Icahn is out, all of a sudden. He resigned as special regulatory adviser of the president last week. He resigned literally moments before "The New Yorker" published this bombshell piece by Patrick Radden Keefe detailing, and I mean detailing, just exactly how Carl Icahn used his position in the Trump administration to make himself hundreds of millions of dollars.

Experts interviewed by "The New Yorker" strongly suggesting that Icahn may have legal concerns that follow him home from this job that he precipitously just quit. The chief ethics lawyer for President George W. Bush telling "The New Yorker", quote, he`s walking right into possible criminal charges. Quote: He cited -- this is from "The New Yorker", quote, he cited a federal statute that makes it illegal for executive branch employees to work on me matter in which they may have a direct financial interest. The president and the vice president are exempted from that statute. Unpaid White House advisers like Carl Icahn are not exempted from it.

Richard Painter suggested that the Public Integrity Division of the Justice Department should be investigating. Quote: If I were Carl Icahn`s private lawyer, I would tell him he should not have accepted that special adviser title.

Well, consider that advice taken retroactively, because this is the defense. This is incredible. The White House and Carl Icahn are now pretending that this whole thing never happened. That Carl Icahn was never appointed to anything in the Trump administration. He never had that title.

Honestly, this is their defense. The White House tells "The New Yorker`s" Patrick Radden Keefe that Carl Icahn never had a, quote, formal appointment or title after inauguration day. Never had it. They`re saying this never happened.

President-elect Donald Trump names Carl Icahn special advisor to the president on regulatory reform. That is their own press release. They`re saying this never happened. No way.

Why would you think that this happened? Why would you think that Carl Icahn had ever been named a special regulatory adviser to President Trump? Why would you think something so crazy? Clearly, that never happened. This is the press release.

The White House lawyer in charge of conflicts of interest making sure that conflicts of interest like this don`t happen in the U.S. government is literally saying now that Carl Icahn never had that gig at all, despite what you might have heard. They claim now that he was, quote, simply a private citizen. That lawyer -- that`s the ethics lawyer.

That lawyer, by the way, the one who`s supposed to make sure that Carl Icahn is complying the ethics laws, that lawyer used to work for Carl Icahn. So, clearly, he`s in a great to be the arbitrator of ethics here.

So, this is lurid obviously. But here`s the question, we`re not post- Soviet corruptostan. I mean, we appear to be on our way. But we`re not.

Isn`t somebody going to police this? Is anybody going to investigate this? I mean, the Justice Department does have a big hairy corruption unit, right? Are they going to investigate this at DOJ, or could the attorney general in New York where Carl Icahn is based, could he investigate this?

Because even if you are cynical, maybe if you expected this from the outset with this administration, this really is just bananas. This is as blatant as it gets.

Hold that thought.

(COMMERCIAL BREAK)

MADDOW: This is one of those nights. Breaking news from Washington just in the last couple of minutes: the inspector general`s office has launched an ethics investigation into a member of Donald Trump`s cabinet, Interior Secretary Ryan Zinke.

Do we have the letter that we can just put up there? This is first linked to, we just saw this from Eric Lipton at "The New York Times." But as you can see, what he posted is a letter from Office of Inspector General at the Department of the Interior.

Now, what this is about is apparently Interior Secretary Ryan Zinke making calls reportedly threatening federal resources for the state of Alaska in order to pressure Senator Lisa Murkowski over her vote on health care reform. We were just discussing this matter earlier this hour with Barbara McQuade, former U.S. attorney who was prosecuted numerous public corruption cases in the eastern district of Michigan. She was describing this is an example of log rolling, something that might be distasteful but not potentially criminal.

That said, it is now the subject of an open ethics investigation by the Interior Department inspector general. Again, that news just breaking moment ago.

Joining us now -- boy, this is good timing, is Walter Shaub. Until he resigned last month, he was director of the Office of Government Ethics for the U.S. government. He`s now senior director of ethics at the Campaign Legal Center.

Mr. Shaub, thank you very much for being here. It`s weirdly timely that you`re with us tonight.

WALTER SHAUB, FORMER DIRECTOR, OFFICE OF GOVERNMENT ETHICS: I think everyday is weirdly timely these days.

MADDOW: On ethics, certainly.

I just have to ask, and you probably -- I don`t know if you had seen this news before. They just announced it. But I want to get your top line response to this news that the inspector general at the Interior Department is looking into calls placed by Secretary Zinke to try to reportedly pressure that senator into changing her vote.

SHAUB: Well, I hadn`t seen that until you posted it. So, I don`t know the details.

What I can tell you having worked with the inspector general community and having sat on the council of inspector generals as part of my job as director of the Office of Government Ethics is that these are serious investigators. We are fortunate that cabinet agencies like the Department of Interior have inspector generals, inspectors general. There is no such thing in the White House.

So, unfortunately for Mr. Zinke, he has an inspector general. And my advice to him is he better cooperate.

MADDOW: Let me ask you about this reporting concerning Carl Icahn. Obviously, he`s a famous business figure in his own right. We have been following for months now this good, vigorous financial reporting, business section reporting about how he might have been using his position as regulatory adviser to the president basically to self deal, to help make himself many, many, many millions of dollars at his refinery business by affecting the price of a regulatory instrument that shaped the bottom line, financial picture for his company.

This all seems to have happened out in the open. How have you viewed this reporting? Is this sort of business as usual? Is this a serious matter?

SHAUB: It`s no overstatement to say this is one of the most sinister episodes of ethical concern in this administration, and frankly any time since I began working in the ethics program 15, 17 years ago. What we have here is a situation where the White House and presumably aided by the White House Counsel`s office, whose ethics official was a former attorney for Carl Icahn, have stayed out of it, and have not ruled that he is a federal employee. They tell Patrick Keefe, the reporter who wrote "The New Yorker" article, that they didn`t even analyze it. The spokesperson said there`s no need to analyze this.

Well, of course, there`s a need to analyze this because the criminal conflict of interest statute says that if you`re a federal employee, you simply cannot participate in matters that are going to affect your own financial interest. The question here is whether Mr. Icahn was a federal employee or not and the White House is telling us they never even sat down and analyzed that.

MADDOW: You sent a series of tweets in response to Patrick Radden Keefe`s report. That basically was an emergency flair to the public integrity section of the Justice Department, asking them to take a look at this. You`re promising to help Senator Grassley in the Judiciary Committee if they want it look at this.

Who should be investigating this? This does feel like an incredibly blatant red flag here if not more than that. Whose job is it to police this?

SHAUB: So flair is right. I feel like I`m standing on the deck of the Titanic and I just shot the emergency flair into the air. This is a very serious issue.

Patrick Keefe did an extraordinary job reporting on this. In fact, he did the Department of Justice`s job for them. He uncovered significant information that raises enough smoke.

Now, look, Mr. Icahn may have another side to the story and he may be able to provide more details, but there is certain lay enough here that Department of Justice needs to dig into this, take a look at it, and if they fail to do it, the Judiciary Committee should have a hearing either about Mr. Icahn`s status as to whether he was an employee or into the Department of Justice`s failure to look into this.

This entire matter unfolded without any involvement of the Office of Government Ethics. This is another example of the White House not consulting with us. And when you go to the Department of Justice and ask them for help, as the director of the Office of Government Ethics, on any type of ethics issue like that, the actual response I got from head of public integrity this year was, we read the paper, too. So, we don`t need you reporting things to us.

MADDOW: Wow. Walter Shaub, former director of the Office of Government Ethics, now senior director of ethics at the Campaign Legal Center, I really appreciate your time tonight, sir. This is a big, serious deal. Thanks for helping us understand it.

SHAUB: Thanks, Rachel.

MADDOW: Thanks.

All right. We`ll be right back. Stay with us.

(COMMERCIAL BREAK)

MADDOW: This has been another one of those nights with a bunch of different breaking news stories, including a few breaking just over the course of this hour.

Just to recap, breaking news tonight includes news from "The New York Times" about the president reportedly pressuring the Republican leader of the Senate to protect the president. That was the language used by "The Times". Protect him from the Russia investigations being conducted by Senate committees.

We`ve had news tonight about the ten hours of closed door Senate testimony that was delivered today from the founder of the firm behind the Trump- Russia dossier. Also what amounts to a call from his lawyer tonight, that the committee who took that testimony should publicly release the transcript of what he said over those 10 hours.

And then in addition to that tonight, we just got the news that Interior Secretary Ryan Zinke is now under investigation for what we`re described as arm-twisting calls that he made to Alaska senators, to try to change Lisa Murkowski`s vote over Obamacare, threats to public resources for Alaska, as a way of trying to pressure Murkowski on her vote.

All of that just breaking tonight. Lots still ahead.

Now, it`s time for "THE LAST WORD WITH LAWRENCE O`DONNELL".

Good evening, Lawrence.

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

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