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Feds probe Trump lawyer Michael Cohen. TRANSCRIPT: 05/04/2018. The Last Word with Lawrence O'Donnell

Guests: Michael Rothfeld, Jennifer Rodgers, Indira Lakshmanan, Jonathan Alter, Ruth Marcus, Eugene Robinson

Show: THE LAST WORD WITH LAWRENCE O`DONNELL Date: May 4, 2018 Guest: Michael Rothfeld, Jennifer Rodgers, Indira Lakshmanan, Jonathan Alter, Ruth Marcus, Eugene Robinson


RACHEL MADDOW, MSNBC HOST: But, now, it is time for THE LAST WORD with Ali Velshi sitting in for Lawrence tonight.

Hi, Ali, nice to see you.

ALI VELSHI, MSNBC HOST: Rachel, great to see you. I hope you have a fantastic weekend.

MADDOW: I assure you that I will. Thank you.

VELSHI: See you later. All right.

Good evening, everyone. I`m Ali Velshi in for Lawrence O`Donnell.

Tonight, we`ve got a very special last word for you, Trump`s tangled web. From Russia collusion questions to White House staffing turmoil to the President`s tortured relationship with the truth, we`ll look at it all over the course of this hour.

The day began with a growing web of deceit and shifting stories for President Trump and Rudy Giuliani to clean up Giuliani`s now-infamous Fox News appearances.

You`ll remember that Giuliani revealed on Fox that the President reimbursed his personal lawyer, Michael Cohen, for the $130,000 Stormy Daniels hush money payment.

Well, tonight, there are new details that just broke within the last half an hour about when the President actually learned of that payment to Stormy Daniels.

According to "The New York Times," President Trump knew about a six-figure payment that Michael D. Cohen, his personal lawyer, made to a pornographic film actress several months before he denied any knowledge of it to reporters above -- aboard Air Force One in April, according to two people familiar with the arrangement.

"The Times" reports that it is not immediately clear exactly when the President learned of the payment which Michael Cohen made in October of 2016. But, quote, three people close to the matter said that Mr. Trump knew that Mr. Cohen had succeeded in keeping the allegations from becoming public at the time the President denied it.

Also breaking tonight, there are new developments from "The Wall Street Journal" about Michael Cohen`s growing access to cash during the presidential campaign.

"The Journal" reports, quote, Michael Cohen gained access to as much as $774,000 through two financial transactions during the 2016 presidential campaign as he sought to fix problems for his boss, public records show.

Those transactions could factor into a broad investigation of Mr. Cohen`s business affairs being conducted by Manhattan prosecutors and the Federal Bureau of Investigation.

According to "The Wall Street Journal," in February of 2016, Cohen nearly doubled the amount he could use on a bank credit line tied to his Manhattan apartment, increasing his ability to borrow by $245,000.

Three months earlier, he gained access to another $529,000 through a new mortgage that he and his wife consigned -- co-signed on a condominium owned by her parents at Trump World Tower.

Well, it isn`t clear whether Michael Cohen ever used these new sources of cash to settle problems for Trump, but sources tell "The Wall Street Journal" that federal prosecutors and the FBI are examining whether Michael Cohen committed bank fraud by making false statements, inflating the value of his assets, to obtain loans or by misstating the intended purpose of the loan.

Michael Cohen has said he used his home equity line of credit to make the $130,000 hush money payment to Stormy Daniels.

In an interview with "The Washington Post" this week, Rudy Giuliani said the President had reimbursed Michael Cohen for the Stormy Daniels payment and indicated that Trump had reimbursed Cohen for other matters as well.

Quote, he was paid by Donald Trump`s personal funds, and he was paid out of personal funds which covered that and possibly a few other things that, you know, would be considered incidental. The repayments took place over a period of time, probably in 2017, probably all paid back by the end of 2017. That and probably a few other situations that might have been considered campaign expense expenses.

Giuliani also said this week that Cohen resolved other problems similarly for Trump, although he didn`t specify what they were or the source of funds that were used.

Joining us now by phone is Michael Rothfeld, one of "The Wall Street Journal" reporters who broke tonight`s story on Michael Cohen.

Michael, good to talk to you. Thank you for being with us and thank you for your reporting on this.

What`s the implication here? Michael Cohen ended up taking $774,000 combined worth of home equity loans in the months before the election.

MICHAEL ROTHFELD, REPORTER, THE WALL STREET JOURNAL (via telephone): That`s right, Ali. So the question is -- what prosecutors are looking at is whether any laws were broken in terms of how Michael Cohen may have gotten access to cash during this period to use to help solve problems for President Trump, to keep things quiet, such as the Stormy Daniels payment, or were any misrepresentations made, as you said, in his applications to banks or statements to banks or in terms of what kinds of campaign finance laws may have been violated.

And what we found was that in -- well, first of all, in November 2015, Michael Cohen`s in-laws refinanced an apartment and took $529,000 out of the equity from the apartment, and he co-signed the loan for that. So it`s not clear what happened to that money, but it is unusual in the sense that he had never co-signed a mortgage for their apartment before and the cash was taken out.

And then, secondly, in February 2016, which was right as Donald Trump was entering the Republican primaries -- he was leading in the polls, he was doing surprisingly well for someone who had no experience -- Michael Cohen then doubles his home equity line roughly from $255,000 to $500,000.

And we know that he has said that he used that same home equity line to pay Stormy Daniels just two weeks before the elections. So the question is, was there some kind of a slush fund created for Michael Cohen as he saw Donald Trump rising during the Republican presidential primaries?

VELSHI: And, of course, this becomes all the more relevant because Rudy Giuliani has gone around saying Michael Cohen solved a lot of problems for the President, fixed a bunch of things. So this becomes relevant to say, is this the slush fund that might have been used to fix problems?

ROTHFELD (via telephone): Right, right. Rudy raised this. In fact, he says, OK, this Stormy Daniels wasn`t the only thing that he solved for President Trump. There were a few other things that he got repaid for after the election through a retainer, $35,000 a month.

So, you know, the information is conflicting and people are changing their stories. But by and by, you know, as this federal investigation is going on, we are learning more about what happened. And I think, within some short period of time, we probably will find out even a lot more about what actually happened.

VELSHI: Michael, thanks for your reporting. Michael Rothfeld from "The Wall Street Journal."

The breaking news keeps coming tonight. "The Washington Post" has just posted a new story, Giuliani tries to clarify comments on Trump`s reimbursement of payment to porn star Stormy Daniels.

In it, "The Times" reports that after Rudy Giuliani`s media tour this week, some Trump advisers said they fear that Giuliani may have waived his right to assert that his conversations with the President are private, and that government or private lawyers pursuing lawsuits could now seek to interview him.

Joining us are Jonathan Alter, MSNBC political analyst and columnist for "The Daily Beast"; Indira Lakshmanan, columnist for "The Boston Globe" -- she is with the Poynter Institute for Media Studies -- and Jennifer Rodgers, a former federal prosecutor. She is now the executive director of the Center for the Advancement of Public Integrity at Columbia Law School.

Thanks to all three of you. Well, a lot of stuff to digest here.

Jennifer, let me just start with you. Going back this Michael Cohen may be establishing a slush fund or bringing in money that he may have used to pay things off for Donald Trump, in the state of New York, that`s not actually legal. Lawyers can`t go around settling things for their clients with their own personal money.

JENNIFER RODGERS, EXECUTIVE DIRECTOR OF THE CENTER FOR THE ADVANCEMENT OF PUBLIC INTEGRITY, COLUMBIA LAW SCHOOL: Well, it`s not a crime but it`s an ethical violation. So if you`re a lawyer in New York State, you will get in trouble with the bar for doing that sort of thing. It`s definitely prohibited. That is the clear problem for Michael Cohen as far as his law practice. It goes to the extent he intends to continue that.

VELSHI: All right. Indira, at some point -- you and I were talking about this beforehand -- a lot of this stuff starts to weave itself into a narrative that a lot of people already believe. There are a lot of people who don`t believe Donald Trump could not have known.

This guy is a skinflint of legendary note. He didn`t pay people small amounts of money. There`s no real way that hundreds of thousands of dollars could be paid on his behalf without him knowing.

INDIRA LAKSHMANAN, COLUMNIST, THE BOSTON GLOBE: You`re right, Ali. And the thing is what we have this week is confirmation of things that many people already believed to be true.

I mean, just looking back a week ago, we have the "Forbes 400" first reporter-researcher saying that Donald Trump inflated his wealth wildly and pretended to be worth $500 million when he was only worth probably about $5 million.

We have his doctor saying I actually never wrote that letter saying he would be the most healthy ever to serve as president. Trump dictated it to me, which I kind of thought, well, we knew that, right?

VELSHI: Right, right.

LAKSHMANAN: By the tone of what it said. And now we have Giuliani saying, oh, yes, the President knew and he paid that back which, of course, is completely contrary to what the President said before just last month. And, in fact, he then confirmed it on Twitter yesterday, appeared to walk it back today.


LAKSHMANAN: But you end up having a situation where your credibility is lost if you`re constantly changing your story.

VELSHI: So what is this about, Jonathan? I mean, it`s chaos, but beyond that, like, the whole thing seems very perplexing.

Giuliani was brought in, in theory, not just as a political adviser because he is a political animal but to be the President`s lawyer, to try and bring some resolution to this issue of whether the President is going to sit down with Robert Mueller or be subpoenaed to talk to Robert Mueller. This doesn`t look like the way you solve a problem.

JONATHAN ALTER, COLUMNIST, THE DAILY BEAST: Well, to say that, you know, Rudy Giuliani is rusty would be really underestimating the situation. He hasn`t been a prosecutor in more than 30 years. He`s been in politics, and he has really no experience with this kind of White-collar defense at this level. And he showed it in the first couple of days and, I think, really ticked off his client, as you could tell from the President`s comments.

VELSHI: Right.

ALTER: What`s concerning to me is that, when people say, oh, I`m not surprised, I knew that about Trump -- I knew he wrote that letter for the doctor, I knew he grossly inflated his wealth, I knew he was a liar about Stormy Daniels -- it has the net effect of normalizing Trump, which has been really, to me, the great challenge, is to not just take it for granted that the President of the United States is a confirmed liar. That shouldn`t be a dog bites man story.

VELSHI: Right. Right.

ALTER: We should continue to have a sense of outrage about this, but sustaining that outrage over time, over a four-year period, is going to be very hard.

VELSHI: I want to just remind everybody that, after everything that Indira laid out about what Donald Trump said and what Giuliani said, Trump then, this morning, said to reporters that Giuliani needs to get his facts straight. Let`s listen to this in the President`s words.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I`ll tell you what, Rudy is a great guy but he just started a day ago. But he really has his heart into it, he`s working hard, he`s learning the subject matter.

And he`s going to be issuing a statement, too, but he is a great guy. He started yesterday. He`ll get his facts straight. He`s a great guy.

I will tell you this. I will tell you this. When Rudy made the statement -- Rudy`s great, but Rudy had just started, and he wasn`t totally familiar with every -- you know, with everything.


VELSHI: And as the President said Rudy Giuliani did release a statement this afternoon. Here is part of it, the part about the campaign and the funds.

He said, first, there is no campaign violation. The payment was made to resolve a personal and false allegation in order to protect the President`s family. It would not have been done in any event, whether he was a -- it would have been done in any event, whether he was a candidate or not. Second, my references to timing were not describing my understanding of the President`s knowledge but instead my understanding of these matters.

Jennifer Rodgers, Rudy Giuliani, in the same interview in which he said that this wasn`t a campaign violation, said, can you imagine if this had come out right before the election? I mean, the implication, again, to what everybody else in the country thinks, Rudy Giuliani said that was the case. Now, he`s walking that back. If you`re a prosecutor in this thing, I mean, this is too easy.

RODGERS: Well, you know, it`s interesting. So if the prosecutors are looking into this, if they want to make this campaign violation count, they will look at these things. They will have them in the arsenal for inconsistent statements and so on, and they obviously now know what the defense is going to be.

But what they`re really going to do is make the case with the facts, right, not with all of these statements. They`re going to look at exactly what happened, how the money was obtained, who paid whom when, who knew what based on the communications among all of the witnesses. So, you know, they don`t build their case with this back and forth and the nonsense going around.

VELSHI: Right.

RODGERS: They build their case with the evidence. And then they just kind of have this to have a little fun with, with the inconsistencies.

VELSHI: I mean, Michael Avenatti, where this is not a -- this is a civil case, but he`s having some fun with this.

RODGERS: Oh, for sure.

VELSHI: He`s enjoying the fact that everybody who needles either Rudy Giuliani or the President gets something out of it.

LAKSHMANAN: So I talked to Michael Avenatti today about this, and the thing that you have behind you, Trump`s tangled web is, of course, a reference to him quoting Sir Walter Scott on Twitter and saying, oh, what a tangled web we weave. You know, he is basically saying this is all about deception.

He says that he and his client, Stormy Daniels, are leaning back and actually enjoying this. They`re describing Giuliani as dazed and confused. And that the more and the deeper that they go into this, the more they say, the better it makes Ms. Daniels` case -- or Stephanie Clifford, her real name.

But, I mean, it`s not only the question of potential campaign finance violation, potential ethics violations, it`s also potential false statements and potential obstruction of justice. Because let`s not forget, one of the most important things that Giuliani said in that Sean Hannity interview was he said President Trump fired James Comey because he refused to say that Trump was not the target of the investigation.

VELSHI: Right.

LAKSHMANAN: The goes right back to obstruction of justice.

ALTER: So, you know, the latter part of that line, "oh, what a tangled web we weave" is "when we practice to deceive." And these guys are not practicing much. Now, they --


ALTER: It seems more like the Keystone cops, except it`s Keystone criminals.

VELSHI: Right.

ALTER: You know, they really didn`t get the memo a lot of the time on how to lie. And so this is what we`ve been seeing unfold this week.

But they also had some very good news this week. There`s a judge in the Paul Manafort case, Judge Ellis, who essentially rebuked Mueller and his team and said they were out to hurt the President. Now, we don`t know if that`s an indication that --

VELSHI: Of which way he`ll --

ALTER: Of which way he`ll move.


ALTER: Whether he might throw the case out or do something else that would be unfavorable to the government, but this is a story where, you know, it`s not all going to be bad news for the President. He had some good polls this week, too, so --

VELSHI: Oh, and he was very quick -- I`m going to talk about that in a little bit, but he was very quick to quote Judge Ellis when he got to the NRA.

ALTER: Right.

VELSHI: This had all happened earlier this morning. I wanted to go back to you, Jennifer, on the legality of it because to Jonathan`s point, this is -- it doesn`t seem like they`ve all practiced this.

Giuliani, overnight, to NBC News, described his conversation with Donald Trump about the Cohen reimbursements. I don`t know why he`s talking about this stuff to the news media, but he said in an -- I`ll just read you our story.

In an interview with NBC News, Giuliani insisted that he had only shared the details to Daniels with Trump about -- of the payment to Daniels with Trump about a week ago.

I don`t think the President realized he paid him back for that specific thing until we, his legal team, made him aware of the paperwork, he said.

Giuliani said the President responded, oh, my goodness. I guess that`s what it was for.

RODGERS: Yes. "Oh, my goodness" doesn`t sound like the President to me.


RODGERS: So, you know, maybe --

VELSHI: Right.

RODGERS: -- Rudy is paraphrasing there. I mean --

VELSHI: But why are we even hearing these conversations?

RODGERS: Right. So, you know, nowadays, lawyers play multiple roles, right? They`re lawyers, of course. They also are often P.R. people and spokespeople and the rest of it.

So just because you`re sharing a conversation with your client doesn`t mean that you`re waiving privilege for all reasons. It may be that that`s something that they decided that the lawyer is going to out and be the spokesperson about. You know, there are very good reasons for not having the client speak all the time.

VELSHI: Right.

RODGERS: So, you know, it doesn`t mean that privilege is waived. But, you know, why they decided, as a strategic matter, that these were things that should be shared is beyond me.

VELSHI: Well, because, to Jonathan`s point, it doesn`t seem to be in order. The narrative is not clear. It seems to change so much.

RODGERS: It`s very incoherent.


RODGERS: It is not the communications strategy that you would want.

VELSHI: Part of me wonders whether that`s the goal. All right, thanks to you guys. Stick around.

For more on this breaking news, I want to bring in "Washington Post" deputy editorial page editor Ruth Marcus and columnist Eugene Robinson. Both MSNBC contributors.

Ruth, thank you for joining us. Let me just start with you. What do you make of all of these developments, the idea that Rudy Giuliani has really put on the table for scrutiny exactly how this all went down between the President, Michael Cohen, and Stormy Daniels? I don`t know that he has advanced the President`s cause much in his media blitz in the last few days.

RUTH MARCUS, DEPUTY EDITORIAL PAGE EDITOR, THE WASHINGTON POST: That`s a very restrained way of describing the premiere of the Giuliani story. I mean, when the President is out there cleaning up after his lawyer, that kind of has things a little bit backwards.

I think there`s two different questions here. One is the kind of public relations aspect to the question and one is the legal aspect. And as a public relations matter, these constantly shifting stories and unraveling tales and as to "The New York Times" story that says that the President had known for months about the payment to Stormy Daniels, well, duh?

That`s the -- I mean, it`s a great story. Congratulations to my friends at "The New York Times," but that`s the only narrative that really makes any sense. But question whether people in the public who aren`t already completely exasperated with the President`s relationship with the truth are going to be moved by any of this.

As a legal matter, it`s less completely clear to me that the implications of this go -- make Donald Trump and the people around him`s life worse -- materially worse than they were before all of these allegations.

There`s, you know, a conspiracy case. There`s questions about Michael Cohen`s handling of client funds and bank statements and things like that. All of this is a big, big mess, but I`m not sure it makes the legal mess that much messier.

VELSHI: Eugene, let`s just think about -- for those of us who are trying to piece this story together, you`ve got the President saying what he`s saying vis-a-vis -- or at least in opposition to what Michael Avenatti and Stormy Daniels are saying about these payments. Then you got Giuliani coming out there, contradicting the President. The President contradicting him.

But then Michael Cohen -- I don`t know why he`s talking either -- talked to Donny Deutsch. Donny Deutsch then went on "MORNING JOE" to describe it. Let`s just listen to that conversation. That was this morning.


DONNY DEUTSCH, CHAIRMAN EMERITUS, DEUTSCH, INC.: I spoke with Michael Cohen yesterday, and his quote about Giuliani was he doesn`t know what he is talking about. He also said that, look, there are two people that know exactly what happened, myself and the President, and you`ll be hearing my side of the story. And he was obviously very frustrated of what had come out yesterday.


VELSHI: OK. My side of the story, that`s what I wanted to get clear.


VELSHI: Is the President trying to keep Michael Cohen from telling him "my side of the story"? Who is on whose side right now?

ROBINSON: Well, look, my wild -- this is just a wild guess. I would guess that Michael Cohen probably knows things that Donald Trump doesn`t want made public, right? He doesn`t want him to tell.

Now, I don`t know what those things are. I don`t know if they have to do with Stormy Daniels or with other things or whatever. There could be things about the Stormy Daniels affair that Cohen knows and Trump knows and Trump doesn`t want to get out.

And you know, but -- and I think Michael Cohen, through Donny Deutsch, was just kind of reminding everybody, I`m over here, I have a story to tell too.

And meanwhile, you have the extraordinary situation, as Ruth alluded to, of the President essentially devising his own legal communication strategy, at times not even bothering to let his lawyers know what that is. Certainly not cueing in his new lawyer, Rudy Giuliani, as to exactly what the script is supposed to be.

This is -- you know, this is a -- he has a -- he`s representing himself. So he has a fool for a client. This is ridiculous. And he will only get himself in more trouble, not less trouble, by continuing this way, I think.

VELSHI: And, Jennifer Rogers, as a federal prosecutor, what do you make of the idea that maybe Michael Cohen was, you know, facing the pressure from federal prosecutors and may be deciding that he was going to cooperate and that, somehow, this was a signal?

The idea that Donald Trump paid Michael Cohen back was meant to say Michael Cohen didn`t do something of his own accord that was illegal, so don`t flip on us. Does that make sense?

RODGERS: You know, it`s so hard to say. I mean, the decision to cooperate is a very personal decision to each person, and, you know, it depends on your family situation, how much time you`re facing, whether you can do that time, your relationship with the person against whom you`d be expected to cooperate, all sorts of actors.

So, you know, I have no idea what`s going on in his head. I think that him being willing to kind of say out there that guy doesn`t know what he`s talking about is showing some frustration here. You know, the fact that he is kind of speaking out means he`s not a hundred percent happy just staying quiet and kind of letting the chips fall where they may.

But whether he ultimately flips will depend on a lot of things. And I think we`ll know a lot more about that when we see the charges against him because that will be the big moment for him.

VELSHI: Right. And that -- the judge in California, in a separate case, declined to act there because he said he fully expects that, at some point, Michael Cohen -- at some point in the near future, Michael Cohen will be indicted. How do you see this playing, Indira?

LAKSHMANAN: Look, I don`t think Giuliani has helped his client this week. When he came on board, the idea was he was going to have this whole case wrapped up in two weeks, right? That was the promise, that this whole --

VELSHI: Correct, he said that.

LAKSHMANAN: -- Mueller thing is going to go away in two weeks. Well, not only has that not happened, but he`s taken the President in a lot deeper. He said some, also, off-the-wall things like comparing the FBI to Nazi Stormtroopers in the Mueller case.

VELSHI: Right.

LAKSHMANAN: I mean, this is shocking coming from somebody who was the post-9/11 mayor of New York City, who was himself a federal prosecutor and all of these things. To hear him, an ally of law enforcement, calling the FBI Stormtroopers, I don`t think that plays well.

And I think all of the things he`s done has just given more ammunition to the side against Donald Trump. We saw Citizens for Responsibility and Ethics in Washington file their own complaint to the DOJ and the Office of Government Ethics demanding an investigation based on everything that he said just in a Fox News interview. In one Fox News interview.

So, so far, he has not been helping the President`s case, unless there is some very strange strategy that we don`t understand.


MARCUS: And just to pick up on Indira`s point, Mayor Giuliani said something that has not gotten a lot of notice to Fox. He suggested that Robert Mueller did not have the authority to subpoena the President. And that is really a remarkable assertion if they decide to go down that road because after the criminal case against President Nixon -- the subpoena was for tapes not for his testimony.

Certainly back in the day, when Ken Starr subpoenaed Bill Clinton, there was not a question about whether U.S. versus Nixon and whether the case in which the Supreme Court, the Paula Jones case, said the President could be civilly sued, there was not a real question about the ability of the prosecutor to subpoena a president.

VELSHI: Right. Right.

MARCUS: The ability to indict the President is something different. So if either -- I don`t know if Giuliani was with the program on that and whether that signals, you know, the potential for a long, drawn-out litigation with the Special Counsel on that subject or whether this was just another one of his off the cuff, unauthorized remarks, but it`s pretty interesting.

VELSHI: Yes. And you bring up a good point there because in -- I mean, we`ve seen subpoenas for Jefferson for documents, to Nixon for tapes, to Clinton for testimony.

Back in 1974, when Nixon was asked to present himself, I think, it was the Washington District Court, a U.S. court for Washington, that went to the Supreme Court and was resolved within three months. Nixon resigned so it made the point moot.

ALTER: Right.

VELSHI: But the fact is while we have never actually tested the idea that a subpoena of a sitting president makes its way through the Supreme Court and results in testimony, not a lot of lawyers I have spoken to, today, say it can`t happen. We seem to have a bit of history that suggests it can.

ALTER: Right. And Watergate Special Prosecutor Leon Jaworski who replaced Archibald Cox, he had the tapes, so he didn`t actually push the point of subpoenaing President Nixon. And so, you know, he had enough evidence with the tapes.

VELSHI: Right.

ALTER: And they knew these months before Nixon resigned. You know, Jimmy Carter testified twice in two cases when he was president. And so it`s pretty likely that if this went to the Supreme Court, the Supreme Court would say, yes, the President is not above the law, he must respond to a subpoena.


ALTER: And the question is, what would happen then? And I think the best predictions are that the President of the United States would take the Fifth.

VELSHI: Eugene, he could take the Fifth. He can agree to some sort of a sit-down where his lawyers are going to be present. I think most people agree that Donald Trump going before a grand jury without his lawyers near him is going to be disastrous for Donald Trump.

ROBINSON: No, I`ll keep saying it. I mean, you know, everybody in this country deserves a lawyer. Donald Trump may not believe that, but he deserves a lawyer. And if I were one of his lawyers, I would -- and he had to sit down for an interview with Mueller, I would tell him to take the Fifth because he`s just a -- you know, loose cannon is a very sort of minimalist way of saying what Donald Trump is just off the cuff.

And he could only dig himself a deeper and deeper hole, including all sorts of stuff that Mueller doesn`t know about. I mean, it just -- it would be, I think, a disaster. Even worse than the political disaster of a sitting president sitting down for an interview and taking the Fifth to everything.

VELSHI: It`s worth noting, Mueller knows a lot so the President talking off the cuff and contradicting what Mueller already knows to be true could get the President in a lot of hot water.

All right, everybody, please stay with us. Coming up, Paul Manafort`s appearance in Trump`s tangled web. Manafort may have been the one in court today, but, as Jonathan was saying, it was still all about Donald Trump and his impeachment. That`s next.

And later, how John Kelly went from reportedly calling the President an idiot to this.


JOHN KELLY, WHITE HOUSE CHIEF OF STAFF: I mean, everything is going phenomenally well.



VELSHI: President Trump`s tangled web includes every twist and turn in the Russian collusion probe this week.

Rudy Giuliani is supposed to help decide whether the President will sit down for an interview with Robert Mueller and his investigators while the President and members of his inner circle smear the Department of Justice and smear the Mueller team.

And today, in federal court, Manafort`s attorneys are trying to get the charges of bank fraud dismissed, arguing Mueller has overstepped the bounds of the Russia investigation.

Judge T.S. Ellis, appointed by President Reagan, said he thinks the Special Counsel wants to squeeze Manafort for information that, quote, would reflect on Mr. Trump or lead to his impeachment. According to NBC News, Ellis then opined that the American people do not want a special counsel with unfettered power.

By the time President Trump landed in Dallas to speak at the NRA convention, he had read the news, and he used it on stage.


TRUMP: So just when I`m walking on the stage, a highly respected judge in Virginia made statements. It says -- "The Wall Street Journal," it says, judge questions Mueller`s authority to prosecute Manafort.

Judge T.S. Ellis, who is really something very special, I hear, from many standpoints -- he`s a respected person -- suggested the charges before the U.S. District Court for the Eastern District of Virginia were just part of the Mueller team`s designs to pressure Mr. Manafort into giving up information against on President Donald Trump or others in the campaign.

I`ve been saying that for a long time. It`s a witch-hunt.


VELSHI: All right. We got room at the table for one more. Pull up a chair, Ken Dilanian, intelligence and national security reporter for NBC News, because he was at that court hearing today.

Ken, this is interesting. I think what our viewers are going to be curious about is, was this a judge who was on pining, or was he really talking about how he might rule in this?

KEN DILANIAN, NBC NEWS INTELLIGENCE AND NATIONAL SECURITY REPORTER: Well, that`s the big question, Ali, but a lot of legal observers I talked to think it`s more opining. Judge Ellis was trying to make a point today, and it was really interesting.

You know, representing Robert Mueller was Michael Dreeben who is one of the most accomplished appellate lawyers in the country. He has appeared more than a hundred times before the Supreme Court.

He barely got a word out before Judge Ellis started firing sharp questions at him, raising questions about how these old bank fraud and tax fraud charges against Paul Manafort could possibly relate to Russia collusion.

And everything you said there, you know, unfettered power, raising questions about the $10 million budget, this is a judge who`s clearly got some qualms of about the idea of a Special Counsel with, you know, pretty much unlimited budget, rooting around and going after the President.

That said, it doesn`t mean that he`s going to grant Paul Manafort`s motion to dismiss the charges, which is a real long shot, legal experts say. It`s possible, it`s conceivable, though, that he may say, look, this really exceeds your mandate, and this is a case properly handled by the U.S. attorney in Virginia in the Eastern District, Ali.

VELSHI: All right, Ken. I want to go to Ruth Marcus on this.

Ruth, Donald Trump, whether or not -- the argument that Judge Ellis put forward that Americans don`t want a prosecutor -- a special prosecutor with unfettered powers, Donald Trump, again, went to work, trying to denigrate the Mueller team. Listen to what he said at the NRA.


TRUMP: In all fairness, Bob Mueller worked for Obama for eight years. You look at the statements that were made. If you take a look, as an example, at the Rod Rosenstein letter to me prior to the firing of James Comey -- just read it.


VELSHI: The President spoke three times today so that was actually before the NRA. He was doing a lot of talking today, Ruth, but the point is, the President continues with this narrative of Mueller as a Democrat, you know, errand doer. The fact is Bob Mueller is a Republican who worked in the Bush administration as well.

MARCUS: Right, and he said witch-hunt multiple times in multiple appearances today.

I want to say one thing about his comments about Judge Ellis. What I love about the President`s view of the judiciary -- I`m being sarcastic there -- is that his view of a judge depends on whether the judge rules for him or against him.

If you rule against him, you`re a so-called judge and a disgraceful judge. And if you rule for him, you`re the second coming of Oliver Wendell Holmes and Louis Brandeis all rolled together. So what is the President going to say about Judge Ellis if, as Ken suggests, Judge Ellis allows the charges to go ahead?

And it strikes me that the worst that could possibly happen in the Mueller case with the Manafort charges is that they`re transferred to the Eastern District of Virginia, which handles those and can help squeeze Manafort in some way and cause trouble for the President. Just as the Cohen investigation can cause trouble for the President even though that`s being handled by the Southern District.

On the President`s comments about Mueller -- and I think he has really, really ramped it up over the last several days -- they`re just -- I`m going to use a favorite Trump word. They`re just disgraceful.

These are -- Mueller is a Republican. There are Democrats on his staff, but they`re all seasoned professional prosecutors. And there`s no reason or basis to be questioning their legitimacy or their bias.

DILANIAN: And, Ali, I just want to make a point.


DILANIAN: Judge Ellis was in no way impugning the Mueller investigation today. He was in no way endorsing the idea that it`s a witch-hunt, that it`s not well-founded.

And I am pretty certain that he did not anticipate how his comments would reverberate around the political world today, how they would be used by the President of the United States to discredit the investigation.

He was making a legal argument to a legal community about the Special Counsel and about particular laws. He was not arguing that this was a witch-hunt.

VELSHI: So, Jennifer Rodgers, as somebody who has spent time in courtrooms, what do you make of it? What do you make of what Judge Ellis was saying? Because it would be hard to think that anything you say about Donald Trump today won`t reverberate around the world, but was he just doing what judges sometimes do, sort of chastising an enthusiastic prosecution and warning them against overstepping their realm?

RODGERS: Well, they do sometimes do that, judges. I`ve been in courtrooms where the judge has complained about policies of the U.S. Attorney`s Office. I`m seeing too many cases like this, I don`t like the way the office is handling that. It`s often, to be honest, judges who used to be in the office, and so they kind of are picking a little bit at the policies of their old place of employment.

But, in this case, it`s just surprising that the judge wouldn`t understand the play that this was going to get and how it was going to be used. So, I mean, I do think that he probably said it with a purpose. I mean, I agree that --

VELSHI: Enough of a purpose, if you were one of those lawyers, USA versus Manafort, one of the federal prosecutors, would that scare you?

RODGERS: Well, I don`t think he`s going to dismiss the case. I mean, the general comments he made don`t even really go to the issue of whether there`s a jurisdictional problem here. The motion is a jurisdictional motion, so.

VELSHI: Right.

RODGERS: And having read the papers, I think he will not dismiss it. But I do think he made those comments understanding that there was -- you know, that they were going to be heard and that they would be used at least for some reason.

ALTER: So Judge Ellis is A 78 -- you know, he turns 78 in a couple weeks. He`s been on senior status for more than 10 years. He basically retired years ago. And one thing that he did not mention is that Rod Rosenstein signed off on this.

This is -- the Mueller team didn`t just expand the scope of its investigation on its own. The person -- the Deputy Attorney General gave them permission to do so. So it`s a little hard to see what the judge`s legal reasoning would be to say that they had overstepped their bounds since that`s the job of the Deputy Attorney General.

VELSHI: Indira?

LAKSHMANAN: And I want to say that`s it`s not just Judge Ellis and this particular point here. There`s more to the Manafort investigation that has come out this week.

First of all, we know that Ukraine has stopped cooperating with the Manafort investigation once the U.S. offered and decided to sell weapons to Ukraine. That is very significant.

We also know now that the Mueller team, you know, has questioned a Russian billionaire who was on the sanctions list. They don`t seem to be particularly interested in him specifically but possibly in his ties to Manafort.

So this is much more than this Judge Ellis, who -- let`s be honest, I don`t think any of us believe that Donald Trump had ever heard of Judge Ellis before these clips were handed to him and he suddenly called him very special and very great. Because as Ruth said, you know, it`s about whether are you on his side or not on his side.

VELSHI: Right.

LAKSHMANAN: I don`t think it`s about the -- you know, it`s about any of the legal understanding here. But let`s not forget that the Manafort investigation has a bigger picture. And with this Russian billionaire, with the Ukrainians suddenly stopping, there`s a lot more that we`re still waiting to hear some other shoes drop.

VELSHI: Indira, thank you so much.

Indira Lakshmanan, Ken Dilanian, Jennifer Rodgers, thank you to all of you.

Coming up, Donald Trump may have lavished praise on his Chief of Staff in front of the cameras today, but new reporting tonight finds that behind the scenes, Trump is relying less and less on John Kelly and taking matters into his own hands.


VELSHI: Our Friday night look at Trump`s tangled web continues. And perhaps no area is more tangled than just trying to follow the Trump administration employment chart.

All you have to do is look at how Rachel`s wall has grown over the course of the Trump presidency, trying to keep track of everyone who has been fired. Look at that wall.

When the boss, Donald Trump, praises you, it`s not necessarily a good thing. Here he is today.


TRUMP: I want to just tell you something. General Kelly is doing a fantastic job. There has been such false reporting about our relationship.

We have a great relationship. He`s doing a great job as Chief of Staff. I could not be more happy, so I just want to tell you that.


VELSHI: Now, in March, it was Trump`s legal team that was doing a great job.

He tweeted, the failing "New York Times" purposefully wrote a false story stating that I am unhappy with my legal team on the Russia case and I`m going to add another lawyer to help out. Wrong! I`m very happy with my lawyers, John Dowd, Ty Cobb, and Jay Sekulow. They are doing a great job.

Well, we all know how that turned out. John Dowd and Ty Cobb are out. Donald Trump hired the lawyer that he said he wouldn`t hire, Emmet Flood.

And today, Donald Trump said White House Chief of Staff John Kelly is doing a great job, praising him after a week in which NBC broke the bombshell news that Kelly referred to Trump as, quote, an idiot multiple times. The "New York Times" added yesterday that Kelly and Trump, quote, have grown tired and irritated with each other.

And POLITICO reported today that Kelly has been marginalized by some White House staff and by the President, according to 10 sources. But despite the private tensions, John Kelly is still willing to publically flatter the man he reportedly thinks is an idiot.

Here is Donald Trump giving John Kelly the chance to publicly declare his admiration for the President.


TRUMP: "The New York Times" has falsely reported -- they`ve said things that are absolutely false, so I just wanted to tell you that.

And, General, you may have something to say.

KELLY: Well, I would just say it`s an absolute privilege to work for a president that has gotten the economy going. We`re about to have a breakthrough, I believe, on North Korea. The jobs report today -- I mean, everything is going phenomenally well, attacking the opioid crisis.

It`s nothing less than brilliant, what`s been accomplished in 15 months, I believe.


VELSHI: So what happens now to the man who called the President an idiot? That`s next.



TRUMP: He`s doing a great job as Chief of Staff. I could not be more happy, so I just want to tell you that.

KELLY: It`s nothing less than brilliant, what`s been accomplished in 15 months, I believe.


VELSHI: We are back with our panel, Ruth Marcus, Eugene Robinson, and Jonathan Alter.

Ruth, help me unpack the "nothing less than brilliant." There is no White House Communications Director. The President, we don`t see his Chief of Staff with him all that often. We saw him today.

The President very clearly didn`t tell the White House Press Secretary about Giuliani`s plans. Emmet Flood, the lawyer that the President has now hired who represented Bill Clinton in his impeachment, didn`t know that Giuliani was going on T.V., but it`s brilliant.

MARCUS: Nothing less than brilliant.

VELSHI: Nothing less than brilliant.

MARCUS: Is there something more than brilliant? I`m going for a really high-brow literary reference here, and I`m going to say this is the cat in the hat presidency.

You may recall that the cat in the hat comes back. The cat takes a bath in the tub, and he leaves a pink ring. And as they try to clean it up, it just spreads and spreads and stains everything.

President Trump`s messes end --


MARCUS: I`m glad you liked it. President Trump`s messes end up staining everything, and they spread. And everybody who associates with him -- I can`t think of a single exception except for, maybe, the Defense Secretary, James Mattis. Everybody who is associated with Donald Trump ends up having his or her reputation diminished as a result. And, hence General Kelly, Exhibit A today.

VELSHI: Yes. Eugene, Neil Cavuto, on Fox, I think, said, that stink, Mr. President, is your swamp. Even those in conservative circles are starting to think this is too crazy to continue.

ROBINSON: Well, it`s too crazy to continue. Look, Cavuto, you know, was referring to all the swampiness, the very deep and getting deeper water that`s around this administration.

You look at the Pruitt situation at EPA. There`s like a new scandal every day, the latest being the reports that Scott Pruitt came into the office and gathered the staff and said, here are some places around the world I`d really like to see, so find me reasons to go there. So that`s how he works out his travel on the public dime.

That`s OK in Trump world apparently if, when you appear with the President, you do what John Kelly just did, which is, you know, flatter him with praise that would, you know, embarrass Kim Jong-un. I mean, you know, dear leader-style praise.

And that`s the sort of price of staying in the administration and having power in the administration.


ROBINSON: And beyond that, you can do what you want.

VELSHI: We`ve seen it in cabinet meetings before. But, in fact, to the Scott Pruitt point, this is remarkable, what Eugene was talking about, evidence that Scott Pruitt had a list of exotic destinations that he wanted to travel to and informed staff that he wanted them to find reasons for him to go to those places.

But Scott Pruitt and Mick Mulvaney and others in the government are doing exactly what Donald Trump wants them to do. They are dismantling regulations.

The stock market, though weak recently, has been strong. The jobs numbers are still pretty good. And this North Korea meeting, if it happens, is going to be an accomplishment. The fact is, the President still seems to think he`s doing well. In fact, he had a bluster and a confidence about him today that I hadn`t seen in a while.

ALTER: Well, unemployment is down to levels we haven`t seen since 2000.


ALTER: And so he can say to his people, to his base, I am delivering for you in certain ways.

VELSHI: Notwithstanding that those are continuations of policies we`ve seen for years.

ALTER: Right. But, you know, I think that Ruth was too kind to him with the cat in the hat, you know, reference. I mean, Donald Trump makes the cat in the hat look like Abraham Lincoln with his top hat, you know.

This is a toxic waste dump. And I think that Comey, who was wrong in a lot of areas, had it right that it`s, you know, a forest fire.

So the best that we can hope for is to start planning for what we do after. Whether it`s three years or, you know, seven years or whatever, but we need to start figuring out how we restore our democracy after the damage that`s being done. And it literally -- on a daily basis.

And the first thing are these midterm elections. So I`m struck by how there`s really not enough focus yet on how we remedy this at the polling place.

VELSHI: Jonathan, thank you.

Jonathan Alter, Ruth Marcus, and Eugene Robinson. Thanks to the three of you for spending the Friday night with me.

Tonight`s last word is next.


VELSHI: It`s been a week since comedian Michelle Wolf excoriated the press for accepting statements from the Trump administration that often turn out not to be true. But something seems to have changed, especially after Rudy Giuliani`s comments about the President and payments to Stormy Daniels.

Here is our last word for this very busy week.


UNIDENTIFIED FEMALE: When did you specifically know that the President repaid Mr. Cohen for the $130,000? You, personally.

UNIDENTIFIED MALE: About the $130,000 payment from Michael Cohen to Stormy Daniels, why the President was not truthful with the American people and with the people in this room.

UNIDENTIFIED MALE: So these are statements that are just not true.

JIM ACOSTA, CNN CHIEF WHITE HOUSE CORRESPONDENT: Were you lying to us at the time, or were you in the dark?

SARAH HUCKABEE SANDERS, WHITE HOUSE PRESS SECRETARY: -- continues to deny the underlying claim.

ACOSTA: Why can`t you just answer yes or no whether you were in the dark?

UNIDENTIFIED FEMALE: Sarah, did the President file a fraudulent personal financial disclosure last year when he filed a report that did not include a loan from Michael Cohen?

SANDERS: I don`t know.


VELSHI: And that`s tonight`s last word.

Congressman Eric Swalwell reacts to President Trump`s statements today on the Mueller investigation. That`s next on "THE 11TH HOUR WITH BRIAN WILLIAMS," which starts now.


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