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

Guests: Shane Harris

Show: THE RACHEL MADDOW SHOW Date: February 27, 2018 Guest: Shane Harris

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

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

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

HAYES: You bet.

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

Where do you want to start tonight?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

HARRIS: Thanks, Rachel.

MADDOW: Congratulations again.

HARRIS: Thanks. Thanks.

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

I can`t imagine this sustains. Can it?

Hold that thought.


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

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

Hi, Nicolle. How are you?

NICOLLE WALLACE, MSNBC HOST, "DEADLINE: WHITE HOUSE": You just said that, now, you threw me. I forgot everything I just learned.

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


MADDOW: So in "The Washington Post" tonight, Shane Harris is the lead story -- is the lead reporter, this strikes me as a big scoop among big scoops.


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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

MADDOW: To get Lewandowski on his side --

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

MADDOW: Right.

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

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

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

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


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

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

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

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

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

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

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

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


MADDOW: And there you`re wrong.

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

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


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


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

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

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

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

As we learn more, we let you know.


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

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

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

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


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

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

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

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

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

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

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

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

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

DAVID FAHRENTHOLD, MSNBC POLITICAL ANALYST: Thank you. It is great to be here.

MADDOW: Great.

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

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

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

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

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

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

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

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

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

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

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

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

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

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


MADDOW: Thanks.

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


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

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

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

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

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

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

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

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


Good evening, Lawrence.



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