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U.S. Charges Assange in Hacking Conspiracy; Democrats Unhappy with Barr's Spying Comment; Avenatti Indictment New Conference. Aired 12-12:30p ET

Aired April 11, 2019 - 12:00   ET

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

(COMMERCIAL BREAK)

[12:00:26] JOHN KING, CNN ANCHOR: Welcome to INSIDE POLITICS. I'm John King. A busy day, including a packed hour ahead.

Federal prosecutors in Los Angeles moments away from detailing 36 charges against the lawyer, Michael Avenatti, the attorney who, of course, gained fame representing the adult film star Stormy Daniels and who, yes, not long ago flirted with running for president.

Also in minutes, the South Korean president arriving at the White House, hoping to keep diplomacy with North Korean on track, but facing growing skepticism from team Trump.

But we begin the hour with a big arrest across the pond, on an indictment long in the making here at home. The U.S. Justice Department today unsealing charges against the WikiLeaks founder, Julian Assange, charges that have been kept secret, or close to secret, for more than a year by federal prosecutors.

The 2010 episode detailed in today's indictment is very well known. Assange and WikiLeaks publishing nearly a million classified documents about America's wars in Iraq and Afghanistan, as well as secret State Department cables. Assange and his defenders say he's a journalist and the charge, they say, a big chill on a free press.

(BEGIN VIDEO CLIP)

JENNIFER ROBINSON, ATTORNEY FOR JULIAN ASSANGE: This precedent means that any journalist can be extradited for prosecution in the United States for having published truthful information about the United States.

KRISTINN HRAFNSSON, EDITOR-IN-CHIEF, WIKILEAKS: This is journalism. It's called conspiracy. It's conspiracy to commit journalism.

(END VIDEO CLIP)

KING: But in the indictment, U.S. prosecutors say that even if Assange could be considered a journalist, he crossed the line into law-break when he conspired with a U.S. Army private to crack a government password to steal more classified document. U.S. officials unsealed the new charges just hours, you see the pictures here, after London police stormed the Ecuadorian embassy this morning and arrested the WikiLeaks founder on an extradition warrant. A bearded Assange shouting before being stuffed into a police van, quote, you must resist.

With me to share their reporting and their insights this day, CNN's Kaitlan Collins, CNN's Kara Scannell, CNN's Kylie Atwood, and CNN legal analyst and former Justice Department national security lawyer Carrie Cordero.

Let me come to the attorney first on this question raised by the Assange legal team and the WikiLeaks editor-in-chief saying he's a journalist, so he published secrets. So what, he's allowed to do that. Where is the law?

CARRIE CORDERO, CNN LEGAL ANALYST: Julian Assange is not being indicted for publishing classified information. That is the most important takeaway. He is not being charged with espionage, and he's not being charged with unauthorized disclosure of information, which is what government people, Chelsea Manning and others who leak classified information are charged with.

He is charged with conspiracy to commit computer fraud. So, in other words, they have -- the government has specific facts indicating that he tried to assist Chelsea Manning in the actual unauthorized access into the Department of Defense systems. And that is a violation of computer fraud crime law.

KING: So they're trying to stay away from the whole First Amendment, journalism argument there.

CORDERO: Right.

KING: It's one charge. One charge. They have to prove the case now for extradition. Is it enough, or is there more coming?

KARA SCANNELL, CNN REPORTER: Well, according to our Evan Perez, who's got some new reporting from a source -- a U.S. official who's been briefed on this, is that the DOJ does intend to bring more charges. It's not clear what those charges are going to be or when they'll be brought.

And this is something that Assange is -- the publisher of WikiLeaks standing beside his lawyer there had said when they were addressing the reporters. He said, you know, there's no assurance that additional charges won't be added when he's on U.S. soil. And they were saying that this is something that they're really concerned about, that the U.S. is trying to get him extradited before they can raise these issues in the U.K., where the U.K. might block extradition on those charges, because it has to be a parallel for an extradition.

And so they're already raising this as a concern. But DOJ is continuing to investigate this. And, you know, the big question is, will there be charges related to the hacking of the U.S. election? And right now, I mean, what has been brought by Special Counsel Robert Mueller's team against the Concord Managements and these associates who -- and actors that have ties to the Russian government don't indicate anyone else was involved in the hacking. And, as far as we know right now, it's that Assange published those already hacked materials.

But, you know, the -- the tone of this view from DOJ changed when they obtained these new communications which showed Assange was more of an actor than just the publisher.

KING: Right. And to the point about the change in the sense that, look, this happened during the Obama administration. It goes back to the George W. Bush administration, the classified information about the Iraq War, about Afghanistan, the State Department cables.

The Obama administration was reluctant to do it for the point you made, Carrie. They didn't want to get into messing with the journalism. This indictment, these documents, pre-date Bill Barr, the new attorney general. They go back to when Jeff Sessions was still the attorney general. The Trump administration clearly believes it has, a, legal standing, but, b, is philosophically willing to take a tougher stance here.

[12:05:09] KYLIE ATWOOD, CNN NATIONAL SECURITY REPORTER: That's right. And we've seen Secretary Pompeo do so during his first year in the administration when he was the director of the CIA. He came out and said that WikiLeaks is a non-state, hostile intelligence service. He also went after Julian Assange pretty directly and personally saying that, you know, he was hiding behind a screen and also that he was a coward. So even though this doesn't necessarily have to do exactly with what WikiLeaks has put forth, the administration has already sort of conflated the two in going after Assange in this personal way and drawing WikiLeaks directly into their attacks on him.

KING: So now you have this major international legal case and the whole question, a, first do you get extraditions. And when he's brought here, will there be additional charges? This goes back -- again, the current charges go back in time. The Justice Department can consider whether there's something more recent from 2016 that would be a violation of U.S. law.

But this is -- we're in -- we live in an interesting world that the president of the United States, we could hear from him within minutes, if reporters get into the session in the Oval Office with the South Korean president. He has praised Julian Assange. His allies in the conservative media have praised Julian Assange for the 2016 hacks and release. But the president, clearly, this is his Justice Department going ahead with this.

KAITLAN COLLINS, CNN WHITE HOUSE CORRESPONDENT: Yes, so people are going to say, what is the president going to say about this because he's on camera in front of huge crowds praising him multiple times, on several occasions, even though his secretary of state, Mike Pompeo, has referred to them as this hostile foreign government actor. But what is different now is this allegation of the computer hacking because back in 2013 the reason they were so hesitant to bring charges against Julian Assange is because then could they also bring charges against "The New York Times" for publishing classified information that they received. So that was the big change here is that journalists do not help their sources crack codes to get into government computers.

Now, that's an allegation here. Of course, he's innocent until proven guilty. But they don't do that. They receive classified information at times. They publish it. But they don't do that, which is the extra thing here that is really making such a big difference. Whether or not the president agrees with this will be something pretty interesting. I'm not exactly sure how he'll react to this.

KING: All right, here's what he did say back in 2017. "The Associated Press" asked him in the Oval Office about this and he said, I'm not involved in that decision. This is when we got word that the -- Sessions, as the attorney general, was starting to look into this. I'm not involved in that decision, but if Jeff Sessions want to do it, it's OK with me. I didn't know about that decision, but if they want to do it, it's OK with me.

So he's not saying much on the substance. It's kind of like, OK, if that's happening, I'm all right with it. It will be interesting to see what he says.

I want to read the key piece of the indictment, because this is the question. Again, the Obama administration steered away from this because they were worried about the journalism part of it. The Trump administration, the indictment says this, on or about March 8, 2010, Assange agreed to assist Manning, that would be the Army Private Bradley Manning, now Chelsea Manning, in cracking a password stored on United States Department of Defense computers connected to the Secret Internal Protocol Network, a United States government network used for classified documents and communications.

So that is where they're hanging the legal argument, that this isn't about what you published, it's about how you got it.

CORDERO: That's exactly right. So they're not charging him with publishing the information, because that would affect other media organizations. They are charging him with assisting in trying to crack that password. That -- it falls under the computer crime statutes. And so that is the department's theory.

And I would say, though, there is just this one instance that is described in this current indictment relating to the Manning case. So I am really curious as to whether or not there are additional charges related to other activities that WikiLeaks and Assange were involved with related to other hackings. And I think that's just such a huge question.

COLLINS: And that's what makes this such a sticky situation, because there are these press freedom advocates that saying that this is an assault on the First Amendment, to do this to Julian Assange. But the difference here is, of course, the computer hacking, whether or not that occurred, because they said back in 2013, you know, we can't implicate him because we'd have to implicate "The New York Times," unless he is also implicated in some kind of criminal activity, like hacking a government computer.

But I think this will be a relief, and this is focusing on whether or not they hacked the computer. But like you said, if they do bring him back to the United States, then they bring other charges that fall under the Espionage Act. That's where these free press advocates are going to have a problem.

KING: And to the point about where could this go? I'm right in that Chelsea Manning is still jailed, right, refusing to --

SCANNELL: That's right.

KING: For refusing to cooperate with a grand jury investigation, which one would have to assume could very well have something to do with this.

SCANNELL: Right. And especially when you look that this indictment was brought last year, and Chelsea Manning was brought back before a grand jury just a few weeks ago and has been in jail for refusing to give testimony to that grand jury. So that indicates that they -- this is an ongoing investigation and they're looking to bring new charges here.

KING: And we focused on this one charge, but Julian Assange, WikiLeaks, the -- hold up in the Ecuadorian embassy for years has become sort of this -- he has become an international celebrity. A villain to some, including the secretary of state, but a celebrity to others.

[12:10:00] ATWOOD: Yes. And we also have the president of Ecuador actually visiting the U.S. next week. It's going to be interesting to see what the president does. Does President Trump welcome him? Does he want to meet with him? He's not here specifically for meetings at the White House.

But it's going to be interesting to see how he's received and how he's received on The Hill. We have, you know, more than a dozen candidates running for the presidency on the Democratic side and they're going to have to speak to this too in an informed way, which will be interesting.

CORDERO: Well, and coming back, John, just to the comments that the president had made throughout the campaign about WikiLeaks. He said, I love WikiLeaks. Over 50 different campaign events I think it was that he invoked WikiLeaks. And that was so bizarre to people in the national security community who knew, as Secretary Pompeo finally said when he was head of the CIA in the spring of 2017, finally said that WikiLeaks is not like a normal journalistic enterprise. They are affiliated with hostile intelligence agencies.

We're watching the president of the United States and Melania Trump waiting outside the West Wing for President Moon of South Korea and his wife, about to arrive. Again, they will go into the White House. We don't expect to hear anything here. This is just the traditional greeting here. You see the Marine guards as well outside the West Wing. They'll go inside of the Oval Office. We expect reporters to be allowed into that meeting where we could get the comments from the president. To the point you just made, Carrie, where the president is on the record publically saying great things about WikiLeaks. Does that have any impact, if you're Julian Assange's lawyers? Is that something you can bring in -- this is a case that goes back pre-Trump. It's a case that's about computer hacking. It's not a case about, you know, you can't -- the president's not a character witness. Or is it anything or is it just a part of the political argument.

You see President Moon and his wife arriving here just out -- I'm sorry, that's not the West Wing. It's the other side of the White House. That is the South Lawn of the White House.

CORDERO: Well, his defense lawyers are going to make a big deal about -- they're going to make this broad First Amendment claim. So they're going to try to make this about the First Amendment, when really it's a statuary computer fraud case. They might try to bring in statements from the president, although the president's such a conflicted history of truth-telling that I'm not sure that that would really be in their interests.

COLLINS: Where all of this could get interesting is, of course, we know the special counsel didn't establish any collusion between the Trump campaign and Russia. They also did not charge Julian Assange with anything. But if he does get brought back to the U.S. and he is under questioning, he could be faced with questions about Roger Stone, any contacts he had with Roger Stone because, of course, there were allegations about his contacts with WikiLeaks. So we really could learn a lot from this if they do -- if he is brought back to the United States.

KING: Right. And your point is a good one in the sense that this is one of those examples when as CIA director Mike Pompeo disagreed with the president, Made clear, took a much tougher line than the president on something, but he has survived. Many others have not survived. And Director Pompeo, now Secretary of State Pompeo.

A fascinating day. You saw the two leaders going into the White House there. We'll see if we hear from them in just a few minutes.

Up next for us, what exactly did the attorney general mean when he told Congress there was spying on the Trump campaign?

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[12:16:47] KING: Some attempted cleanup at the Justice Department today as Democrats accuse the attorney general of unmasking a bias that puts what the president wants, they say, above the facts or the law. Sources close to the A.G., Bill Barr, now insisting this is just a big misunderstanding. And when he used the term "spying" at yesterday's Senate hearing, he didn't mean it in, quote, the classic sense. All he meant to say, these Barr allies says, is that he wants to double check to make sure all the rules were followed back when the FBI began its surveillance of suspicious Russia-related activity in the 2016 Trump campaign.

At the hearing, the attorney general said he believes spying, his word, did occur. Top Democrats say Barr is too experienced to not know how the use of that word "spying" would be interpreted. And, they say, it is more proof to them he cannot be trusted to be an honest broker when it comes to the Mueller report.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA): Let me just say how very, very dismaying and disappointing that the chief law enforcement officer of our country is going off the rails.

SEN. MARK WARNER (D-VA): The idea that the FBI, with the evidence they had, wouldn't have launched a counterintelligence investigation, it would have been irresponsible. So I don't understand the attorney general's comments. I don't understand what basis he's making them on.

(END VIDEO CLIP)

KING: Joining the conversation, CNN's Phil Mattingly and Julie Hirschfeld Davis with "The New York Times."

The speaker especially there -- I mean politicians ramp it up, they know the cameras are in the room -- but she seemed pretty PO-ed (ph), to borrow a term.

JULIE HIRSCHFELD DAVIS, CNN POLITICAL ANALYST: Well, absolutely. I mean I think -- I think they -- you know, the Democrats started out with a pretty low level of trust and a lot of suspicion of Barr and whether he was going to sort of an apologist for the president, a defender of the president, and not sort of do the impartial job that the attorney general is charged with.

The fact is he may have, you know, not meant spying in the way that it's classically understood. But the significant thing to my ear, and I think to a lot of Democrats' ears is, he was echoing what the president has said.

KING: Right.

DAVIS: You know, this is -- this is a -- sort of a theory that President Trump has pushed repeatedly over and over again. Remember when he was talking about spy-gate several months ago and the whole idea that this was sort of a conspiracy to infiltrate his campaign, that he was the victim rather than a potential, you know, suspect in what went on here with regard to Russia. Whether he meant to or not, Bill Barr was echoing the president's rhetoric there, and that just gives Democrats another reason to really mistrust what he's going to do here going forward.

KING: And on the whether he meant it or not, the Democrats, especially, but also a lot of other people who have been around town long enough saying, wait a minute, this guy was attorney general before. Sure, he's been off the media bike, if you will for 30 years. He hasn't been doing congressional hearings for a long time. But he was a high-powered attorney, including at one point for the parent company of this company. He -- and when he said the word "spying," then he should have stopped himself. That if it came out by accident, that right -- as soon as he said it, he should have said, well, let me be clear, and he didn't.

PHIL MATTINGLY, CNN CONGRESSIONAL CORRESPONDENT: And he was given the opportunity to amend a couple of times by Democrats who understood that it was a load statement. And I think, look, anybody who's been conscious over the course of the last two years understands that that's a load statement. I think that's what kind of brushed Democrats back a little bit. You add in the technical details of a number of Democrats on the -- or the Democrats on the Gang of Eight, kind of like the elite individuals who have the most highly classified clearance, who were given a briefing by Justice Department officials last year, I believe, about how the process worked into the surveillance of individuals involved in the Trump campaign, came away from that, Republicans and Democrats who did speak publically saying nothing untoward happened. So they're frustrated by that.

[12:20:14] But there's another piece of this you need to pay attention to. This is leverage for Democrats. Democrats want as little of the report redacted as humanly possible. The idea that Bill Barr is not a good actor and is an actor who's doing things and making redactions purely because he's in line with the president is something that they might say is helpful in their cause to continue to push for a more fuller release or more fulsome release of the report. And I think that's why you've seen them seize on both days of Bill Barr's testimony, even though when you talk to Democrats in a candid manner, they'll acknowledge he's pretty good at the testimony thing. He was pretty calm and pretty able and agile when it came to questions. But any piece that may have seemed suspect, they seized on, utilized it and tried to play it as another kind of example of why he's not a fair broker.

KING: Right, the cautious answer would have been, the inspector general at the department is looking into this issue. We're going to have that report in a matter of weeks. Let's all just hold our powder until then. We'll see what the inspector general says. Then I'm happy to come back and we'll talk about it publically then.

You say it gives the Democrats more leverage. It also, though, has raised the expectations, this could be a trap down the road for the attorney general of the president's allies.

Listen to Rush Limbaugh saying he said spying, amen.

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, CONSERVATIVE COMMENTATOR: He knows there was spying. He knows who the spies were. He knows the informants that were implanted into the Trump campaign. We finally got the guy who is going to dig into this. He understands exactly what happened here, as we all do. This is just the first time it has been officially said.

(END VIDEO CLIP)

COLLINS: That is not what Bill Barr said, just to make that clear for anyone who wasn't watching the testimony yesterday.

But when he was asked, does he have evidence that spying occurred, because he said, I do think spying did occur, he said he didn't have any evidence he could cite right now. So he's going to look into this. And then he later backpedaled some, saying he just wanted to make sure there was no improper surveillance. He wasn't launching an investigation of the entire FBI.

But it is interesting because the inspector general is already looking into this. We know congressional Republicans are already looking into this. And so the question here is going to be, is the DOJ shifting its tendencies to meet the president's demands because this is what the president has said, similar to what Bill Barr said yesterday, though the president says it in less measured tones when he talks about being spied on. So that's the question.

But one thing you have to keep in mind. One of the allegations of spying is about Carter Page and that warrant to surveil him. That was signed by Rod Rosenstein, still the deputy attorney general, still works at DOJ.

KING: Right. So we'll see where Bill Barr goes. But there's no question -- and, again, we'll see if the climate changes when we get whatever we do see of the Mueller report within a matter of days. By next week the attorney general promised.

But Donald Trump Junior clearly feeling his oats at the moment. Look at this tweet from him about this. Making an "I Spy" photo joke, if you will. That's -- you've got to look closely at that. But there's Barack Obama with a young kid and a magnifying glass or a telescope there, "I Spy."

Again, on the president's side, this was candy.

MATTINGLY: Yes, absolutely. And you've seen members involved with the campaign, close allies on social media, on television interviews saying this is the evidence we've been talking about now for the course of the last two years. This is kind of the alternative view of what was going on over the course of the last two years, the genesis of the investigation, which they believe is very untoward.

I would note, the report is going to come out. And it might be redacted. But the one -- you can pick up bread crumbs from the attorney general's testimony that they're making a lot of efforts to actually get as much of the report out as they possibly can. He made clear, individuals who are considered public -- like kind of well- known public citizens, i.e. the president, are not going to have their information redacted. More private citizens is what he was talking about with peripheral third parties.

So once this report comes out, it might not satisfy everybody, but I do think it's worth saying, let's just wait for the report to come out.

KING: (INAUDIBLE). Important context that's often missed in this town and sometimes in the business that, you know, we -- yesterday was a big day. It was an interesting day. But we're going to see next week in the -- for the most part the attorney general was trying to say, can we just wait a week on this conversation, but he did -- he raised his own controversy by using that term.

Up next, that remark by the attorney general about spying on the Trump campaign, just one of many truly extraordinary moments this week on Capitol Hill, and I think it's only Thursday.

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KING: We're going to break the break. Take you straight out to Los Angeles. This is Nick Hanna, the U.S. attorney in Los Angeles, announcing charges against attorney Michael Avenatti.

NICK HANNA, U.S. ATTORNEY, CENTRAL DISTRICT OF CALIFORNIA: Has returned a 36-count indictment against attorney Michael Avenatti. This indictment is now the operative charging document in the case.

[12:25:02] The indictment substantially broadens the criminal conduct that was charged in the criminal complaint that was unsealed on March 25th. The charges now being alleged against Mr. Avenatti can be broken down into four general categories.

First, wire fraud, related to the theft of millions of dollars from five clients, including a paraplegic man who agreed to a multi-million dollar settlement but has received only a fraction of the money despite the fact that Mr. Avenatti received the full settlement amount over four years ago.

Second, tax fraud, including failing to file income tax returns for himself and his law firm. As you will hear in a few minutes from Special Agent In Charge Corner (ph), Mr. Avenatti also allegedly took steps designed to obstruct an IRS collection, hide his coffee company's income and prevent the IRS from collecting on a series of tax liens and levies filed since 2017.

Third, bank fraud, including the allegations in the original complaint that Mr. Avenatti received three loans from a Mississippi bank based on applications supported by phony tax returns.

And, fourth, bankruptcy fraud. The indictment alleges that after his law firm was forced into bankruptcy over two years ago, Mr. Avenatti has repeatedly lied to the bankruptcy court, to the bankruptcy trustee and to his creditors by failing to report income his bankrupt firm was receiving.

These four areas of criminal conduct alleged in the indictment are all linked to one another because money generated from one set of crimes was used to further other crimes, typically in the form of payments designed to string along victims so as to prevent Mr. Avenatti's financial house of cards from collapsing.

I will now discuss the various areas of criminal conduct in a bit more detail.

The first area of criminal conduct discussed in the indictment alleges that Mr. Avenatti committed wire fraud in relation to funds, more than $12 million in total, that he received and held in trust on behalf of his clients. While Mr. Avenatti was entitled to attorneys' fees for the settlements he negotiated, the indictment alleges that he nevertheless stole millions of dollars that rightfully belonged to his clients. There are five separate client victims in four cases in which money was stolen.

The indictment outlines how Mr. Avenatti's embezzlement scheme typically operated. In each of the four cases of embezzlement alleged in the indictment, Mr. Avenatti received money on behalf of clients into client trust accounts, misappropriated the money and lied to the clients about receiving the money or, in one case, claimed that the money had already been sent to the client.

The first client victim detailed in the indictment filed a lawsuit alleging that the county of Los Angeles violated his constitutional rights and that he suffered severe emotional distress and severe physical injuries, including becoming a paraplegic. The victim, who is identified as client one in the indictment, obtained a $4 million settlement which the county of Los Angeles paid in January 2015 to a trust account controlled by Mr. Avenatti. But more than four years later, client one is still waiting to receive his portion of the settlement. As it turns out, within months after receiving the settlement proceeds in early 2015, Mr. Avenatti had drained the entire $4 million payment from his trust account using significant portions of these funds to finance his coffee business, his auto racing enterprise, and his own personal lifestyle.

From July 2015 through last month, Mr. Avenatti made periodic payments of no more than $1,900 to client one and paid his rent at various assisted living facilities, calling these expenditures, quote/unquote, advanced on the settlement.

According to the indictment, Mr. Avenatti also undermined client one's efforts to buy a house for himself. Mr. Avenatti had assured client one that he could use the money from the settlement to buy the property, but Mr. Avenatti later falsely told client one that the settlement was not available because the county had not yet approved a trust for the disabled client. The house client one wanted to buy fell out of escrow.

[12:30:00]