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Erin Burnett Outfront

Now: Flares Seen Over Gaza As Israel Launches Biggest Assault Yet; U.S. Intel: Hezbollah Could Be Getting Russian Missile System; Trump's Sons Testify At Trial That Threatens Family Biz; House Passes $14.3B Israel Aid Bill, Ties It To Spending Cuts; Interview With Treasury Secretary Janet Yellen; Haley Is Having A Moment, But Does She Pose A Threat To Trump? Aired 7-8p ET

Aired November 02, 2023 - 19:00   ET

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

[19:00:44]

ERIN BURNETT, CNN HOST: OUTFRONT next, the breaking news. New flares over Gaza as Israel launches its biggest air assault on strips since the start of the war. Israeli forces also now coming face to face with Hamas fighters.

Plus, fears of a second war growing at this hour. CNN witnessing more rockets entering Israel from Lebanon tonight, as CNN learns Hezbollah is about to get a Russian missile system added to its already massive arsenal.

And, an OUTFRONT exclusive this hour, the Treasury Secretary Janet Yellen on why the House just passed aid package for Israel is bad for the United States.

Let's go OUTFRONT.

And good evening. I'm Erin Burnett.

OUTFRONT tonight, the breaking news. We are seeing new flares right now over the Gaza strip. What you are looking at took place just moments ago, as part of a dangerous new phase in the war between Israel and Hamas. And, rockets have been raining down on Gaza over the past few hours, as flares have lit up the night sky. You can see what happened not long ago, in the night time in Gaza City. It is the biggest aerial attack we have seen since the October 7th terror attacks by Hamas.

Israeli officials telling CNN that the area now being targeted, they say, is a Hamas stronghold. The smoke screen that you see covering the ground, suggests that Israeli troops are on the move, or maybe on the move, but that screen would be obviously to mask their movements. That's according to our Nic Robertson, who, of course, is along the Gaza border.

And a spokesperson for Israel's military says they have now encircled Gaza City. And now, if that is indeed the case, if the IDF surrounds Gaza City, it means that Israel has completely cut off northern Gaza from the rest of the 25 mile long strip. They can get, in and no one can get out. Israel's military chief of staff says that Israeli troops are right now engaged in, quote, and face-to-face battles with Hamas. That's hand to hand street fighting.

And, they are now inside important Hamas facilities, that are both above and below ground, which is a seeming reference to IDF forces, perhaps being inside Hamas's massive tunnel system, where, of course, we understand command centers are there, Hamas fighters and hostages. Israeli Prime Minister Benjamin Netanyahu adding, quote, we are making progress, nothing will stop us.

Hamas, however, is fighting back. During the massive air assault, Hamas fired rockets back at Israel. The Iron Dome did appear to have thwarted those specific attacks.

But tonight's fighting comes as there are growing fears of a second war, this one along Israel's northern border against a much better armed and trained foe. Our Jim Sciutto reporting tonight that there's been a definite pick up in the face of rocket fire from Lebanon into Israel.

We have so much to get to tonight. Nic Robertson, Jeremy Diamond, they are both live along that Israel-Gaza border. Jim Sciutto is in northern Israel.

Nic, let me begin with you though, because you have seen these flares, seeing these smoke screens, seeing this activity behind you. Just, very close to where you are. Tell us more.

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yeah, right now, we are seeing what looks like tank fire going across the horizon. Behind, as you might see these red tracers that go across low, across close to the ground. This has been part of what we've been witnessing here over the past few hours. We hear heavy machine gun fire. And these flares that are being dropped right now, perhaps you can hear that detonation behind me, the flares that are coming down right now appear a little further away than there were a little earlier on, perhaps, around the town of Beit Lahia.

The heavy, heavy flares that were dropping a couple of hours ago, sustained flares, that illuminated the sky brightly, for about half an hour, that was around Beit Hanoun. And not only were these flares illuminating the sky, but the ground underneath was just dense smoke, the sort of smoke that the military often uses to maneuver troops, so they can keep them out of danger.

So, it would stop Hamas, for example, from being able to see them. Hamas has been using armor piercing rocket, shoulder launch rocket propelled grenades, tanks and armored fighting vehicles full of infantry. So it is a very dangerous environment for the IDF forces on the ground there. And it does appear as if they are tightening their encirclement of Beit Hanoun which has received multiple, multiple missile strikes and artillery strikes over the past couple weeks, potentially going into the town itself.

[19:05:14]

We don't have those details from the IDF, but we do know across the whole Gaza Strip, and over the past few weeks, more than 9,000 civilians have been caught up and killed, in these heavy strikes. More than 22,000 injured, according to the Hamas-led Palestinian ministry of health.

So it is not only dangerous tonight for the IDF forces, it is also dangerous for the civilians down there, as this military campaign by the IDF, to close in on Hamas's stronghold, root them out of their tunnels, as it gains traction. This is what we're witnessing tonight, Erin.

BURNETT: All right. Nic Robertson, thank you very much. To see a sky lit up like, that at night in red, and to know that there are people, of course, beneath those flares, dying.

I want to go to Jeremy Diamond in Ashkelon, north of Gaza. Jeremy, obviously when we talk about the north, if indeed Israeli troops have been circled Gaza City, that would of course it means the north is truly cut off now, from the rest of the strip. And you have been witnessing an uptick in fighting, in the northern parts of Gaza -- of course, adjacent to Ashkelon.

JEREMY DIAMOND, CNN CORRESPONDENT: Yeah, no doubt about it, Erin. Earlier today, before we saw those flares, and it's clear uptick on the ground operation around the city of Beit Hanoun. Earlier today, already, the fighting had grown more intense in that part of the Gaza Strip. We were not far from Nick's position earlier today, watching as there were mortar -- mortar shells that appear to be fired inside of Gaza. We also heard a steady thud of artillery fire there.

But also, intensity of small arms fire, and intense gun battles ongoing between Hamas militants and Israeli forces in that area, more intense that we have heard in recent days. And all this is very interesting, particularly as you consider the context of Israeli officials saying, tonight that they have encircled Gaza City. They may have encircled, as they say, having various positions around Gaza City and in the city itself.

BURNETT: Yeah.

DIAMOND: But clearly, they have not cleared the way in the northern part above Gaza City, between the border with Israel and Gaza City. Clearly, there is still very intense fighting there. And so, regardless of whether or not the not they have encircled it, clearly, Hamas fighters remain north of Gaza City, and there is still very intense fighting there.

You know, as I've been trying to get a better sense from Israeli officials about what this encirclements actually means, and what the next steps, the next phases of this military ground assault will be, they have been very cautious this evening, to characterize what those next steps will be. Will this be a siege of Gaza City? Will Israeli forces actually go in and engage in the very intense, and perhaps even bloody and deadly business of urban fighting inside those densely populated areas in Gaza City. They simply won't say.

What they are telling me tonight, Erin is, that they will do whatever it takes to achieve the aims of this war, which as you heard from the Israeli prime minister and other officials, is to eliminate Hamas's capabilities inside the Gaza Strip, and to remove it from power.

BURNETT: All right. Jeremy, thank you very much.

And I want to go now to General Joseph Votel, former U.S. CENTCOM commander. He oversaw military operations in the Middle East up to 2019. And Lieutenant General Ben Hodges, former commanding general of U.S. Army Europe.

So, I appreciate both of you being with us.

General Votel, let me start with you.

This major aerial assault that we saw tonight, with all of those flares, 30 minutes of nonstop rocket fire and explosions, bombarding Gaza. This came right after the IDF said that its troops had fully encircled Gaza city itself. And you saw that smoke, low smoke as Nic Robertson described, as possibly being used to disguise Israeli troop movements.

What do you think is happening right now inside Gaza City?

GEN. JOSEPH L. VOTEL (RET.), FORMER CENTCOM COMMANDER: Yeah, thanks, Erin. It's great to be with you.

I think what is happening here is, Israel has -- has closed in around the city, and is trying to create the best positions of advantage that they can, for what will come next, which will be actual operations into Gaza City. So, it is likely that they make contact with Hamas forces on the outskirts of the city. They have to fight to get into position. And I think, that is a lot of what, a lot of what we have seen, and will likely see in the near future.

BURNETT: General Hodges, this is the heavy bombardment we have seen by far since October 7th. And I just want to be clear, because the context here matters, right? It has been day in and day out of 300 to 400 aerial strikes a day, for a month. And tonight is the biggest night yet.

What do you think the next 24 hours is going to look like?

[19:10:00]

LT. GENERAL BEN HODGES, FORMER COMMANDING GENERAL OF U.S. ARMY EUROPE: Well, I think by encircling Gaza City, the Israeli Defense Forces actually have created a situation where they have some options. What U.S. forces did around Sadr City in Baghdad, and again around Kandahar was to encircle and you try to separate the terrorists from the innocent people. So this could actually create a situation, where they could begin to try and evacuate some people from Gaza City, which will obviously make the task simpler for forces, when they do have to go in.

And with Secretary Blinken arriving tomorrow, I think that's going to be huge pressure on the Israeli government, to do some sort of pause. The Israelis clearly they want to have the city encircled, before they have to actually pause. BURNETT: Right, and of course, there is incredible pressure, new

pressure from Biden tonight, to that -- to do that very thing, as you point out General Hodges.

General Votel, the military state chief of staff from Israel as I mentioned says that IDF forces are now underground, inside important Hamas facilities. Okay, so that is how they phrased it. It seems pretty clear, that means underground, obviously, in the tunnels, in some capacity. When I say in some capacity, that could be a lot of different things, right. We have a map of the vast network of tunnels, such that we even know it exists. The IDF says it previously has destroyed it already, some of them.

So what do you think is actually happening right there? General, in those tunnels, which are home to Hamas fighters, command centers, weapons stashes, and hostages?

VOTEL: Well, I think what's -- I think what's happening right now is, the IDF closes in around Gaza city. And, moves through different parts of Gaza, they are trying to get control of the entrances and exits for these tunnel systems, because the people who control that, you begin to gain control over the movement of Hamas. You begin to take away one of their critical, critical advantages, and that is the ability to ship fighters that will, to move and distribute supplies, and, to conduct command and control upon them.

So, while this is a very difficult aspect of the fight, it is very critical for them to try to get control of the tunnels. And I suspect a lot of what we are seeing is just in fact that.

BURNETT: So, General Hodges, I want to ask about Secretary Blinken. Because these images tonight are dramatic, and you point out that, it's not random, that you are seeing a night like tonight, right ahead of Secretary Blinken's next visit. Because everyone knows that visit, in large part is a big push for the Israeli government to pause, to pause military operations in Gaza, for humanitarian purposes.

Obviously, the U.S. has also been pushing such a pause as a way to release hostages, although Israel has said it wouldn't succeed in that, right. But that is part of it. So, do you think that Israel will be forced to concede to that pressure?

HODGES: Well, look, the Israeli government, their objective here is to eventually end up in a situation where they could peacefully coexist with their neighbors. So what they are doing now has to contribute towards that instinct, much more than just destroying Hamas. And that means they are going to need support from the West, not just the United States, but other countries, and Arab countries.

So what's in Israel's interest, actually, to find a way to damage Hamas severely, but still be able to have support from Arab countries and the United States. So they can't be dismissive of the message that Secretary Blinken is bringing tomorrow.

BURNETT: All right. And he is bringing it in person. Now, Biden is obviously made it, but bringing it in person with the import that that carries.

General Votel, General Hodges, thank you both very much. I appreciate your time.

And our breaking news coverage continues, on this most intense evening of this war so far, fears of a second war along Israel's northern border now intensifying, because the leader of Hezbollah is expected to break his silence. He could alter the course of this war.

Plus, I speak to American pediatrician Dr. Barbara Zind. Her harrowing journey out of Gaza, as you know, the time there we have been following closely. She will be reunited on camera with her husband tonight.

And a tense showdown between the attorney general's lawyer and Trump's son Eric, who says he knows nothing about financial statements that inflated the family's wealth. But that is not what the emails show.

(COMMERCIAL BREAK)

[19:18:11]

BURNETT: And we're back with our breaking news. Just moments ago, flares seen across the sky in Gaza, just as we were coming to air. We are right now, witnessing, in the midst of this, wherever you are watching in Gaza, the biggest air assault anyone who is there on that 25-miles strip since that war began, on October 7th.

And it comes as our CNN team in northern Israel is also not witnessing rocket fire from Iranian-backed forces in Lebanon, into Israel. This is a pivotal moment, a crucial moment. The leader of Hezbollah, in fact, is about to speak, for the first time since the war began. What he says could change the trajectory of the war.

Jim Sciutto is OUTFRONT on the ground.

And, Jim, what have you been seeing there today?

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY ANALYST: Well, this whole past week and longer, we have seen an exchange of fire along this northern border, mostly artillery fire, mortar fire.

Today, though, we saw the sky filled, rockets coming from Lebanon into northern Israel and then we also saw Israeli missile defense high in the sky, taking out some of those rockets. It did not appear they got all of them. Israeli fighter jets higher up in the sky, responding as well, helicopters moving in both directions. Just a level of activity in the sky that shows the level of alarm today, on the border, as the attacks stepped up, coming in from Hezbollah and Southern Lebanon, and fears of the opening of a new front.

(BEGIN VIDEOTAPE)

SCIUTTO (voice-over): A rocket fired from southern Lebanon, sets the street on fire, in Kiryat Shmona. Today, northern Israel suffered under one of the biggest barrages of

rockets since the start of the war. Our team witnessed the Iron Dome missile defense system intercept two incoming rockets, though at least one other caused substantial damage.

[19:20:06]

In response, the Israeli military fired back at what it says was the culprit, Hezbollah in southern Lebanon.

Hezbollah sits on a massive stockpile of rockets and missiles, far bigger than that of Hamas, numbering more than 100,000, many have the range and accuracy to strike deep into Israeli territory, including all the way to Tel Aviv.

And this is one sign of how seriously Israel is taking the Hezbollah threat.

Today, we watched Israeli special forces, and tank units, conduct a live fire exercise, training to defend Israel, in case of invasion from the north.

These are combined arms exercises Israeli special forces, IDF special forces here. There is also two tanks involved in this. It is live fire, it is a measure of the seriousness with which they are keeping their forces trained up, ready to go if necessary in the north, but also, given that we are within sight of Syria here, just a few miles from the Lebanon border, this is also a show of force to Iran's proxies in the region.

A show of force perhaps, to this man, Hassan Nasrallah, leader of Hezbollah. To his admirers in the Muslim world, he is the leader of the resistance, credited with forcing Israeli forces out of southern Lebanon in 2000, after an 18-year occupation. To Israel, he is an existential threat on its northern border.

Tomorrow, he will address his followers, and the world for the first time since the October 7th Hamas attacks. The question for many, will he order his forces to join the war against Israel more aggressively?

GEN. DAVID PETRAEUS, U.S. ARMY (RET.): They have the capacity to do enormous damage. But I am not certain that they really want to be on the receiving end of what Israel is going to send their way.

SCIUTTO: The threat of escalation extends beyond Hezbollah. Yemen- based Houthi rebels, also backed by Iran, are firing long range missiles that Israel from the southeast. Another potential front in a war that would see Israel surrounded.

(END VIDEOTAPE)

SCIUTTO (on camera): As the world awaits the words of Hezbollah's leader, Nasrallah, Hezbollah fighters issued their own public letter earlier this week, saying that their hands, their fingers are on the trigger. Israeli officials have had their own strong words, communicating to Hezbollah via interlocutors in Europe, that if Hezbollah gets into this war in numbers, that Israel will strike back deep into Lebanon. Strong words now, and now all eyes, tomorrow, on the words of the Hezbollah leader -- Erin.

BURNETT: Very sobering. Jim, thank you very much.

And more breaking news on this because, CNN is now learning that Syria has agreed to provide Hezbollah with a Russian-made missile defense system.

And Oren Liebermann is OUTFRONT at the Pentagon, breaking this news.

And, Oren, you are just getting these breaking details from your reporting. This obviously would be a very significant and very serious development. What more are you learning?

OREN LIEBERMAN, CNN PENTAGON CORRESPONDENT: Erin, according to two sources familiar with the intelligence, Syrian President Bashar al- Assad has agreed to provide a Russian made aerial defense system to Hezbollah. And it is the Russian mercenary group, Wagner, that will transfer that SA-22 or Pantsir missile defense system, from Syria to Lebanon, where it could be set up to be used.

Now, what's unclear from the intelligence, according to these sources, is whether the system has already been transferred. It is a medium range air defense system and would add to Hezbollah's capabilities if and when it arrives in Lebanon.

Now, the Israelis have dealt with this system in the, passed in Syria. Take a look at this video. This is from May of 2018. This is video from the IDF, of them striking SA-22 in Syria, that was operated by Iran, or being used by Iranian proxies there.

So they have shown the capability to handle these systems, and to strike him from the. But of course, now the situation is entirely different, with Israel embroiled in a war in Gaza, and the possibility that Hezbollah could enter this in a much more significant fashion.

So, even if Israel has dealt with an SA-22 before, certainly, not under these circumstances. And that is what everyone here is watching very closely.

According to other sources on the matter, so far, the U.S. believes that Iran and its proxies don't want to get involved in a big way. But, of course, as Jim pointed out, the speech from Hezbollah leader Hassan Nasrallah, everyone is watching that speech, to see where this, goes and what it means. It is also worth pointing out the common denominator here, Hezbollah, backed by Iran, Syrian President Bashar al-Assad, backed by Iran, and they have work of Russia, there which is also backed Assad, and provided that Wagner supports. So you see the ties here, linking all of these different groups, Erin.

[19:25:03]

BURNETT: Absolutely. And thank you very much, Oren Liebermann.

And next, the American Doctor Barbara Zind, whose story we've all been following, in her own words. Of course, she was trapped in Gaza. She told us about 800 people sharing a toilet. She told you about the duress and distress there.

So, she is now out. What is it like there. What was it like, as she left? She'll tell you.

Plus, breaking news, the House voted to tie billions of aid to Israel, to spending cuts. And Treasury Secretary Janet Sellen is sounding the alarm. Why? Our exclusive conversation, coming up.

(COMMERCIAL BREAK)

BURNETT: Breaking news, you are looking at a massive new assault on northern Gaza tonight, the biggest bombardment since the war began, aerially. Flares and rockets, lighting up the sky, explosions booming, troops at this hour, Israeli troops surrounding the heart of Gaza City, according to the Israeli defense forces. This offensive, that some Americans are finally making it out of Gaza.

And one of them is Dr. Barbara Zind, an American pediatrician, she arrived the day before the October 7th terror attacks, to treat children in Gaza, and that kept her trapped in Gaza than for 26 days.

You've all been following her story closely, as viewers of this show. And tonight, she is on her way home. She is on a plane, as I speak, going to Colorado to see her family. And I was able to speak with her, just as she was going to catch that flight.

(BEGIN VIDEOTAPE)

BURNETT: OUTFRONT now, Dr. Barbara Zind.

And, Dr. Zind, it is incredible to finally see. I know you are literally on your way back home. I can only imagine the conflicted feelings you have about that, you are eager to be going home, but of course leave behind so much suffering.

[19:30:04]

How do you feel right now?

DR. BARBARA ZIND, AMERICAN PEDIATRICIAN WHO JUST LEFT GAZA: Well, just as you said, I feel mixed. I am relieved to be on my way home, I know being there, I couldn't do anything to help what was going on. But also, yeah, just so sad for the people of Gaza, and concerned about what is going to be going on in the next weeks to months to, however long it takes to get some peace there.

BURNETT: And, there is so much suffering.

I know, Barbara, while you were there, it was so hard for you to get any contact. I mean, your husband Paul who we respect to every day, sometimes he got a text from you, sometimes he couldn't even. And he was obviously quite distressed. But you know, there were times he told us you are sleeping in a car with six other people. You had reported that food and water were in short supply. You have

seen people fighting over food outside of the compound where you were. And you talked about a toilet shared by 800 people, which just to imagine the thought of that what that means for, people the duress.

What more can you tell us about the conditions inside Gaza right now, Dr. Zind?

ZIND: Well, you know, it is great that the aid is moving in, but there is so much more aid that is needed. And so, it's so difficult. The camp next to us ran out of water. And we were getting short on water. And at one point, we only thought we had about two more days of food left.

And, we were able to have someone risked their lives and go to north Gaza and get some food for our group and we were the fortunate ones. So, really, people were just having trouble just getting food, finding food in the grocery stores, and getting water. A friend of mine there today says he is drinking the tap water, which is salty, and not safe, 80 percent of the water there is unsafe.

So it is concerning, it is concerning about the health. And like you said, the toilet issues, the sanitation, that's diarrhea, dysentery for those, especially the children there. And you know, that's half of the population.

BURNETT: Yes, and of course the population to which you have dedicated your career, and your life and your care. But, Dr. Zind, I mention your husband Paul, and I just want to bring him into the conversation because he was with us, and everyone watching every day, sharing any update he had from you throughout this entire ordeal.

And, Paul, I know you can see Barbara, literally on her way to come home to you. How does it feel to finally be in this, moment to see her, to know that she is safe, and you know that she is on her way home to you?

PAUL PRESTON, HUSBAND OF DR. ZIND, U.S. PEDIATRICIAN WHO JUST LEFT GAZA: Well, it's incredible. It's one of those things where I knew it would happen, but it seemed like time was dragging on. And then at some point, I did get pretty pessimistic. But otherwise, I'm just -- I'm very happy that she is on her way home.

BURNETT: Dr. Zind, I mean, I know that you have -- you can text, you can talk, but here in this moment. I mean, is there anything that you would want to say to Paul, before you get on that plane. And, obviously you'll be with him tomorrow night at this time?

ZIND: Yeah I you know, I think it's harder to be the people at home. Granted, we had challenges here. But you know, it's harder to be the people at home, and so I really -- I really appreciate all the love and support from Paul and son Danny have given me, and I just am also there for them.

BURNETT: Well they had such incredible care for. Dr. Zind, you mentioned your conflicted feelings, because of what you

are leaving behind. You -- this was not your first trip to Gaza. You've been several times before, to help children there. Do you think you will go back?

ZIND: I have to talk to Paul about that. I definitely want to come back, and continue to work with Palestinian children. But, we will have to make that a family discussion, right.

BURNETT: Paul?

PRESTON: Yeah, we'll have -- we'll have vigorous discourse on that, yes.

BURNETT: I can only imagine. I guess I'm glad that, I guess I'm glad eavesdropping on your conversation here, it made us all smile, in such a moment of darkness and pain and everything that you have witnessed and endured, Dr. Zind.

My thoughts are with you. And please have a safe trip home, and we will all be so glad that the two of you will be reunited, and your son as well. So thank you, again.

ZIND: Thank you.

PRESTON: See you later, sweetie.

ZIND: Okay, see you, sweetie.

(END VIDEOTAPE)

BURNETT: And they, of course, we'll be seeing each other, in just hours.

[19:35:03]

And next, Trump's son Eric caught in a gotcha moment while testifying on his father's fraud trial. You'll see it.

Plus, the breaking news, the House just passing $14 billion in aid for Israel. But it's tied to spending cuts, and actually adds to the deficit. The treasury secretary, Janet Yellen, is my exclusive guest tonight.

(COMMERCIAL BREAK)

BURNETT: Tonight, caught red-handed. It was a dramatic day in the Trump fraud trial. Eric Trump testifying under oath that he had no knowledge of his father's financial statements that massively inflated Donald Trump and his company's net worth.

Moments later though, and the prosecutor then showed emails proving otherwise.

Brynn Gingras is OUTFRONT.

(BEGIN VIDEOTAPE)

BRYNN GINGRAS, CNN CORRESPONDENT (voice-over): Former President Donald Trump's two eldest sons, in court, with smiles and thumbs up for the cameras. Eric and Donald Trump Jr., testifying in New York in a civil fraud trial, accused, along with their, father of falsely inflating the value of properties, like Trump's previous own hotel in Washington, Trump Tower in Chicago, and their Miami resort, by hundreds of millions of dollars.

DONALD TRUMP JR., DEFENDANT: Before even having a day in court, I'm apparently guilty of fraud for relying on my accountant, to do, wait for it, accounting.

[19:40:01]

GINGRAS: The brothers, executive vice presidents at the Trump Organization, where they worked most of their adult lives, took over the company when Donald Trump was elected president in 2016.

DONALD TRUMP, FORMER PRESIDENT: Don and Eric are going to be running the company.

GINGRAS: Donald Trump Jr. testifying he still believes the financial statements submitted in the case were, quote, materially correct, end quote, though Judge Arthur Engoron already ruled the evaluations were false.

Both brothers saying they did not prepare the financial statements for bank loans.

I never worked on the statement of financial conditions, Eric Trump said. I didn't know anything about, it really, until this case came into fruition. When pressed by prosecutors in a tense exchange, Eric acknowledged emails from a decade ago appeared to show that he knew about those very financial statements.

So you did know about your father's annual financial statement, as of August 20, 2013, didn't you? The prosecutor asked. It appears that way, yes, Eric Trump said.

Trump Jr. told the court he relied on accounting and legal teams to assure him the documents or correct, when he signed them.

I'm fine with a bank relying on that information, he testified. I don't know that I intended for them to do anything. I'm signing off on it.

TRUMP JR.: The banks in question made hundreds of millions of dollars. I mean, think about this, right? They are not claiming that they are victims. They are not saying that they were misled.

GINGRAS: Trump Jr. said he did in fact check the value of properties, including his father's apartment, which the attorney general alleges was described as more than three times larger in square feet than it actually is. The New York attorney general says the fraud got the Trumps better loan and insurance policy terms. LETITIA JAMES, NEW YORK ATTORNEY GENERAL: The evidence is clear, and

that is key inflated his statements of financial interests to enrich himself, and his family.

GINGRAS: It's a case former President Trump called fake, and formally discredited.

TRUMP: This trial is a disgrace. It should have never been brought.

GINGRAS: If the judge rules against the Trumps, they could be forced to pay back millions, and lose their business license in the state.

(END VIDEOTAPE)

GINGRAS (on camera): And court ended on another tense exchange, this one between the judge and Trump's defense lawyer, Christopher Kise. The judge didn't like a comment Kise made about the judge's clerk, even saying he will extend that gag order that is against the former president to the entire defense team. Kise defended himself, and reiterated his concern about this clerk's role in the trial.

Now listen, Eric Trump comes back on the stand tomorrow, and then possibly we see the former president under oath, next week, Erin.

BURNETT: All right. Brynn, thank you very much. That Clerk, of course, has been a lightning rod in this case.

And next, a billionaire investor, attacking Treasury Secretary Janet Yellen for not taking advantage of low interest rates.

(BEGIN VIDEO CLIP)

STANLEY DRUCKENMILLER, INVESTOR: It was the biggest blunder in the history of the Treasury.

(END VIDEO CLIP)

BURNETT: Secretary Yellen responds exclusively, next.

And Nikki Haley, emerging as the alternative to Donald Trump. So, what is her path to winning?

(COMMERCIAL BREAK)

[19:46:52]

BURNETT: The breaking news, the GOP-led House just passing a $14.3 billion aid to Israel bill, a bill that has no funding for the Ukraine war against Russia, and a bill that adds $14.3 billion in IRS cuts, cuts that new Speaker Mike Johnson says offset the aid. Twelve Democrats joined most Republicans to pass it.

The bill, of course, may go nowhere in the Senate, where Democrats and even some top Republicans want Ukraine aid included.

Treasury Secretary Janet Yellen spoke with us earlier, and I began by asking her whether the House bill is a nonstarter.

(BEGIN VIDEOTAPE)

JANET YELLEN, TREASURY SECRETARY: Absolutely, I think it's an irresponsible bill, tying support for Israel, lacking support for Ukraine, which are both vital national security interests, and then, tying aid for Israel to what is really an irresponsible proposal, to cut funding for our Internal Revenue Service.

The only gainers from that are tax -- wealthy tax cheats and corporations that will pay fewer taxes that they owe because the IRS will be deprived of $14 billion of money for tax enforcement.

The Congressional Budget Office estimated that the loss of $14 billion would result in almost twice that, around $27 billion of reduced tax revenues.

So, overall, cutting funding for the Internal Revenue Service doesn't cut the deficit. It raises it substantially.

BURNETT: Secretary, if you're forced, though, into a situation, just through the political process, where it's, say, getting aid to Israel, in addition to some IRS cuts or other things you don't like, or no aid for Israel at all -- which would you choose?

YELLEN: Well, the president has made clear that he would veto the bill in the House that ties aid for Israel to cuts in funding for the Internal Revenue Service. The Ukraine situation and Israel both have strong bipartisan backing. And it's critical that we quickly provide both of those forms of aid.

With respect to Ukraine, we have a country that is fighting hard to preserve its democracy, after a brutal attack by Russia. This is not something that is our funding only good for Ukraine. It's in our own national security interest because if we don't stand up when Russia attacks Ukraine, we don't know what countries might be next.

BURNETT: Secretary Yellen, we live in uncertain times and very frightening times. And these wars are obviously both part of that.

[19:50:02]

I mean, in the Israeli war against Hamas, I know this matters to you as an American but, also on a personal level.

You've talked about your father's family coming to the U.S. from a small town in Poland. And you've talked about how much of that town was destroyed in the Holocaust. Nearly the entire Jewish population was deported or murdered. And, Secretary, I know that included your own family.

And, now, we're seeing a disturbing rise in antisemitism around the world. And in the United States, a 400 percent rise in antisemitic incidents reported by the Anti-Defamation League. And that's just since the terror attacks on October 7th.

I mean, Secretary, are you taken aback by this? How troubled are you by this?

YELLEN: I'm very troubled by this. I was appalled by the brutal attacks by Hamas on Israel, and felt that Israel deserves our unqualified support. But it's critically important also to attempt to minimize casualties of civilians in Gaza.

And I'm very supportive of efforts to -- as President Biden is -- to bring humanitarian relief to Gazans, so that we don't see needless tragedy there as well.

BURNETT: Secretary, I do want to ask you also about some other comments, which you may well have seen, just the other day, from the billionaire investor Stanley Druckenmiller. He was speaking on a panel, and he was talking about what he sees as the Treasury Department's failure to lock in low interest rates.

And he was saying virtually all Americans went and refinance, locking in low mortgage rates. Companies went out and borrowed money to take advantage of the incredibly low interest rates. He says -- he says everybody did it, except for the Treasury Department. He puts this on you personally.

Here's what he said.

(BEGIN VIDEO CLIP)

STANLEY DRUCKENMILLER, INVESTOR: Janet Yellen, I guess because -- political myopia or whatever --- was issuing two years of 15 basis points when she could have issued 10 years at 70 basis points, or 30 years at 180 basis points.

I literally think if you go back to Alexander Hamilton, it was the biggest blunder in the history of the Treasury. And I have no idea why she has not been called out on this. She has no right to still be in that job.

(END VIDEO CLIP)

BURNETT: Well, Secretary, I want to give you a chance to respond to what Stanley Druckenmiller said.

YELLEN: Well, I disagree with that assessment. We have been lengthening the maturity, the average maturity of the portfolio, and in fact at present, the duration of the portfolio is about the longest it -- it has been in decades. We have found, in regular discussions with Wall Street professionals, having regular and predictable issuance of maturities across the spectrum, both long, intermediate, and short, is critical to having deep and liquid markets for U.S. treasuries, which is critical to lowering our costs overtime. And that is exactly what we've been doing.

BURNETT: All right. I know that's the response tonight.

And Secretary Yellen, we very much appreciate your time tonight, and thank you.

YELLEN: Thank you. Thanks for having me.

(END VIDEOTAPE)

BURNETT: And next, Nikki Haley rising. And she says she still has more plans to try to defeat Trump. We'll see, next.

(COMMERCIAL BREAK)

[19:57:20]

BURNETT: Tonight, former South Carolina governor, Nikki Haley, gaining steam among some voters, and setting herself up as a Trump alternative. The thing is, the question exists, could she become a real threat to him or not?

Jeff Zeleny is OUTFRONT.

(BEGIN VIDEOTAPE)

JEFF ZELENY, CNN CHIEF NATIONAL AFFAIRS CORRESPONDENT (voice-over): Nikki Haley is having a moment in the Republican presidential race.

NIKKI HALEY (R), PRESIDENTIAL CANDIDATE: Who has decided who they are going to be with?

ZELENY: The question is whether she can turn it into a winning one. That's precisely what Haley was trying to do today in New Hampshire, working to solidify herself as the leading alternative to Donald Trump. Handshake by handshake, table by table, the former South Carolina governor is making her case in increasingly urgent terms.

HALEY: We're right there. It's just about getting as much support as we can. We have a country to save.

UNIDENTIFIED FEMALE: Yes.

HALEY: We have a country to save.

ZELENY: With a former president still dominating the Republican primary, Haley is focused for now on the race for second place, rising through the ranks in the narrow lane of anyone but Trump.

She has settled into a solid second into South Carolina, is battling for runner-up in New Hampshire, and is lacked in a tie in Iowa with Florida Governor Ron DeSantis. Polls show that Trump holding a commanding lead in all three early voting states.

GOV. CHRIS SUNUNU (R), NEW HAMPSHIRE: Her numbers are moving, surging. The one thing I know about politics is there is such thing as political momentum. I think she built a lot of political momentum coming out of the first and second debate.

ZELENY: New Hampshire Governor Chris Sununu is keeping a close eye on Haley as he decides which Republican to endorse. The third debate, next week, he, believes could be a turning point. Haley and DeSantis are on a collision course, the preview to which has been playing out in dueling ads from the respective super PACs.

AD ANNOUNCER: Governor Nikki Haley helped the Chinese companies set up shop five miles from our base on land she gave them.

AD ANNOUNCER: Ron DeSantis, he's lying because he's losing.

ZELENY: Heidi Mahoney is a Republican ready for change. She considered DeSantis, but is sold on Haley.

HEIDI MAHONEY, NEW HAMPSHIRE VOTER: I think she's tough, I think we need that. I think we need her strength.

ZELENY: Mahoney concedes, it's an uphill battle persuading Republicans to move beyond Trump. But she says Haley has the best chance to win back the White House. Haley is campaigning with an air of confidence, eager to weigh in last night on "The Daily Show" about whether DeSantis wears lifts in his cowboy boots.

HALEY: Yeah, I've always said, don't wear 'em if you can't run on 'em. So, we'll see if he can run in 'em.

ZELENY: Yet, she strikes a dead serious tone on foreign policy challenges like Israel and Ukraine.

HALEY: When you look, there's an unholy alliance. It's Iran, Russia, and China. And let me tell you, I've never been as worried as I am today that America is acting like it is September 10th all over again. And we better remember what September 12th felt like, because we're there.

ZELENY: She's embracing the momentum, but told us her defining moment is yet to come.

HALEY: My moment will be on election day.

(END VIDEOTAPE)

ZELENY (on camera): And, Erin, Governor Haley is just shaking hands here, finishing an hour-long town hall in New Hampshire.

But bottom line is this race for second place is simply a consolation prize, unless Haley or whoever emerges can start eroding some support from Trump, who has a commanding lead in this race -- Erin.

BURNETT: All right. Jeff, thank you very much.

And thanks to all of you for being with us.

"AC360" starts now.