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Interview With California Congressman Eric Swalwell; Criminal Probe Into Trump Inaugural Committee; Trump Lashes Out at Cohen, Mueller; Alleged Russian Spy Admits to Conspiracy to Infiltrate GOP and Influence U.S. Policy; China Detains Second Canadian Escalating Diplomatic Dispute. Aired 6-7p ET

Aired December 13, 2018 - 18:00   ET

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

[18:00:03]

WOLF BLITZER, CNN ANCHOR: Did top donors give money in exchange for access to the new president?

Passing the buck. Mr. Trump is desperately trying to distance himself from Michael Cohen, after being implicated in some of his former fixer's crimes. Tonight, he's breaking his silence about Cohen's sentencing in a new interview that twists the truth.

And Kremlin cooperator. An alleged Russian spy pleads guilty, offering new evidence of Moscow's efforts to influence President Trump and his party. We're going to tell you about the new revelations in her cooperation deal.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

ANNOUNCER: This is CNN breaking news.

BLITZER: We're following two major breaking stories right now involving President Trump and potential illegal activity.

A source telling CNN that Mr. Trump was present at a 2015 meeting when his former fixer Michael Cohen discussed hush money payments with the publisher of "The National Enquirer," David Pecker. That would mean the president was personally aware of and involved in payments later found to have violated campaign finance laws.

Also breaking, CNN confirms that the Trump inauguration committee is now under federal investigation. "The Wall Street Journal" reports it's a criminal probe into possible misuse of funds and attempts by donors to buy influence with the incoming administration.

I will get reaction from Congressman Eric Swalwell. He's a member of the intelligence and Judiciary Committees. And our correspondents and analysts are also standing by.

We're going to have much more on the investigation of the Trump inaugural committee in just a few moments.

But, right now, let's go to our chief White House correspondent, Jim Acosta.

Jim, we have new and powerful evidence tonight of the president's direct involvement in those payments to silence women who claimed they had affairs with him.

JIM ACOSTA, CNN CHIEF WHITE HOUSE CORRESPONDENT: That's right, Wolf.

Tonight, there is new information tying President Trump to the scheme to pay off his alleged mistresses just before the 2016 election. CNN has learned the president as a candidate was a part of a meeting aimed at limiting damaging stories about those alleged affairs.

The president is in damage control tonight on all of this, but, as is often the case, the president's facts are outnumbered by the falsehoods.

(BEGIN VIDEOTAPE)

ACOSTA (voice-over): Tonight, CNN has confirmed President Trump attended an August 2015 meeting where then candidate, along with his former attorney Michael Cohen, and the publisher of "The National Enquirer," David Pecker, discussed ways to downplay stories about the GOP contender's relationships with women that could damage the campaign.

Still, earlier in the day, the president maintained he wasn't aware of any kind of financial arrangement he had made with the tabloid.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I have to go check -- I don't think they even paid any money to that tabloid, OK? I don't think we made a payment to the tabloid. I was asking the question, let's -- I don't think we -- A, we made a payment.

ACOSTA: In an interview with FOX, the president claimed federal prosecutors in New York were out to embarrass him by forcing Cohen to admit he paid hush money to a porn star and a Playboy Playmate to cover up Mr. Trump's affairs just before the 2016 election.

TRUMP: Because what he did was all unrelated to me, except for the two campaign finance charges that are not criminal and shouldn't have been on there. They put that on to embarrass mow. They put those two charges on to embarrass me. They're not criminal charges.

ACOSTA: But that's not true, as the payments Cohen said Mr. Trump directed him to make were found to be crimes. Even the parent company of "The National Enquirer" admitted in the case that it was also part of the hush money scheme.

The president seemed to have an answer for all of that as well, insisting it was Cohen's job not to break the law.

TRUMP: Let me tell you, I never directed him to do anything wrong.

Whatever he did, he did on his own. He's a lawyer. A lawyer who represents a client is supposed to do the right thing. That's why you pay them a lot of money. ACOSTA: Yet, even as the president said he relied on Cohen to stay out of hot water, he mocked his former fixer's legal skills.

TRUMP: He did very low level work.

QUESTION: Why did you need him?

TRUMP: He did more public relations than he did law. But he did -- so if you'd see him on television, he was OK on television.

ACOSTA: The president tends to downplay the roles of his former aides who find themselves in legal jeopardy.

Consider what he tweeted about us now convicted foreign policy adviser George Papadopoulos: "Few people knew the young low-level volunteer named George, who has already proven to be a liar."

And don't forget how the president referred to his former campaign chairman Paul Manafort, now a convicted felon.

TRUMP: Paul Manafort worked for me for a very short period of time.

ACOSTA: But the president is defending his former National Security Adviser Michael Flynn, who's asking for no prison time in his legal saga.

TRUMP: They took a general that they said didn't lie, and they convinced them he did lie, and he made some kind of a deal. And now they're recommending no time.

ACOSTA: But that's not exactly true. Flynn pleaded guilty to lying to federal investigators about his contacts with the Russians during the transition period in late 2016.

[18:05:05]

Yet the president repeated that claim later in the day.

TRUMP: Well, the FBI said Michael Flynn, a general and a great person, they said he didn't lie. And Mueller said, well, maybe he did. And now they're all having a big dispute.

ACOSTA: The president was spreading other falsehoods away from the Russia investigation, claiming once again that Mexico will somehow pay for a border wall, tweeting: "I often stated, one way or the other, Mexico is going to pay for the wall. This has never changed. Our new deal with Mexico and Canada is so much better than the old very costly and anti-USA NAFTA deal that, just by the money we save, Mexico is paying for the wall."

Democrats are saying, hold on.

REP. NANCY PELOSI (D-CA), HOUSE MINORITY LEADER: What money is he talking about that is going to go pay for the wall? It's just isn't -- it just doesn't measure up.

(END VIDEOTAPE)

ACOSTA: The president also claimed today that he's making progress in his search for a new White House chief of staff, telling reporters that he's down to five candidates.

A source close to the White House tells CNN the outgoing chief of staff, John Kelly, is confiding to friends that he is relieved that he is leaving his post.

And it's no wonder why.

As for these latest revelations involving Michael Cohen and the scheme to pay off the president's alleged mistresses, the White House is not commenting so far on these latest developments. But, Wolf, in just the last few moments, the White House press secretary, Sarah Sanders, she was talking to reporters on the driveway outside the White House here.

She was asked about this new criminal investigation into the president's inauguration in early 2017, January 2017, Sarah Sanders telling reporters just a few moments ago that that investigation does not deal with the president. But, of course, some top aides and people who are close to the president may well be under investigation -- Wolf.

BLITZER: Good point. We're going to get a lot more on that in just a few moments.

Jim Acosta, thanks very much.

Let's talk a little bit about our new reporting on the president being in the room when Michael Cohen and David Pecker discussed hush money payments to women back in 2015.

Let's go to our national political correspondent, M.J. Lee.

M.J., how significant is this breaking news?

M.J. LEE, CNN NATIONAL POLITICS CORRESPONDENT: Well, Wolf, what is significant tonight is that now we have confirmed all of the three actors who were in that meeting in August 2015.

Let's just walk through the three people that we know attended that meeting. AMI, of course, confirmed yesterday that they had met with -- David Pecker, the chairman of AMI, met with Michael Cohen, as well as another member of the Trump campaign. And this was their discussion to come up with a strategy to kill stories that were potentially unflattering for then candidate Trump.

Second, of course, Michael Cohen's involvement in this meeting, we have known about this since the summer, when he pleaded guilty, among other things, to at least two campaign finance violations involving these hush payments.

And now today, CNN is able to confirm that Donald Trump himself was also in that August 2015 meeting in that room with David Pecker and Michael Cohen to discuss, again, a strategy to try to come up with a plan to kill stories, stories particularly about women who claimed that they had relationships with Donald Trump.

All of this again heading into the 2016 election -- Wolf.

BLITZER: M.J., this clearly makes it harder for the president to deny any knowledge of these hush money payments.

LEE: Well, look, frankly, I think that train left the station a long time ago, Wolf.

It is basically impossible for Donald Trump at this point to argue that he had no knowledge about these payments. And I think what is so significant, if you look at the last 24 hours or so, take a close look at the words that Donald Trump has chosen to address the Michael Cohen prison sentencing yesterday.

He said: I never directed Michael Cohen to do anything wrong. I never directed Michael Cohen to do anything illegal.

Well, frankly, it doesn't matter if Donald Trump argues that he literally never told Michael Cohen to do something wrong or do something illegal. If you look at the other actors that were involved in this plan and what they are saying, they have all confirmed that the purpose of those payments was political.

So every piece of the puzzle right now, Wolf, points the fact that the purpose of these payments was political. And this is not the narrative that Donald Trump, of course, is sticking to -- Wolf.

BLITZER: M.J., the agreement says that AMI, the American Media, Inc, the parent company of "The National Enquirer," will continue to cooperate with prosecutors.

So how damaging could that be to the president?

LEE: The fact that AMI is committed to cooperating in the future, not just in the past, of course, suggests that they could have information that is important to investigators potentially about other stories that they may have tried to kill on behalf of Donald Trump.

And, frankly, if more information like that were to come to light, that would not be surprising. This is not a narrative where it appears as though there was only one or two or three stories. You could very well believe that there were other stories that AMI was involved in, in planning with Michael Cohen, with Donald Trump, and perhaps others, try to kill heading into the election, so that Michael -- Donald Trump could avoid unflattering stories.

So, of course, we don't know exactly how AMI is going to cooperate with investigators, but the fact that they are committed to future cooperation is very, very significant.

[18:10:07]

BLITZER: And David Pecker and AMI, they received immunity in exchange for their full cooperation.

M.J. Lee, thanks very much.

Now to the breaking news involving the federal investigation now under way of the president's inauguration committee. "The Wall Street Journal" first reporting about a criminal probe into possible misuse of funds and donors attempting to buy influence with the incoming administration.

Let's bring in CNN's Kara Scannell. She's working the story for us.

Kara, you have confirmed there is an investigation. How did it unfold?

KARA SCANNELL, CNN CORRESPONDENT: Well, Wolf, right, we have confirmed that the U.S. attorney's office in Manhattan is investigating the spending of the Trump's inauguration fund.

And that fund raised over $100 million, which was twice as much money that was raised during Obama's inauguration. So what "The Wall Street Journal"'s reporting is that this investigation began out -- in part, at least, from the raid of Michael Cohen, Trump's former personal attorney, of course, and out of information that they received from that raid.

They're citing a recording that was obtained through the raid of Michael Cohen having a conversation with a woman who worked on events for the inauguration. And during that conversation, according to "The Journal," there -- she was expressing some concern about how the money was being spent.

Now, "The Journal" said it did not know when the recording occurred. But their sources tell them that the information began in part out of the raid of Michael Cohen.

BLITZER: What's the relationship between the special counsel and possible links to foreign money?

SCANNELL: Well, we know that the special counsel's office has been looking at inauguration money too to some extent.

They interviewed one individual that did donate money who is related to a Russian oligarch. They stopped that oligarch at the airport to ask him questions about money. They were looking into the broader question of were their straw donors that was bringing foreign money into the election through Americans?

And, now, we have not seen anything come out of that. But we do also know that Rick Gates, who "The Wall Street Journal" said did meet with the U.S. attorney's office in Manhattan, has pleaded guilty with the special counsel's investigation and has been cooperating with them.

And Rick Gates was at the inauguration. He was on the inauguration committee, and he's been asked about it. We also know from other sources that various other people connected the campaign were asked about donations coming into the campaign and into the inauguration -- Wolf.

BLITZER: What are you hearing, Kara, from the inaugural committee?

SCANNELL: Well, we just got a statement from the inaugural committee, in which they tell us that they are "not aware of any pending investigations and have not been contacted by any prosecutors. We simply have no evidence the investigation exists. The names of donors were provided to the FEC and have been public for nearly two years, and those donors were vetted in accordance with the law, and no improprieties have been found regarding the vetting of those donors."

So, Wolf, the inauguration committee is saying that they have not had any contact, that they're not aware of this investigation. And so that's the -- that's the latest that we have from them.

BLITZER: Kara, thanks very much for your reporting, Kara Scannell working the story for us.

Let's talk about all the breaking news.

Joining us right now, Congressman Eric Swalwell. He's a Democrat. He serves on both the Intelligence and Judiciary Committees.

Congressman, thanks for coming in.

REP. ERIC SWALWELL (D), CALIFORNIA: Thanks for having me back, Wolf.

BLITZER: And let's talk, first of all, about this new investigation, preliminary investigation into the Trump inaugural committee.

You saw "The Wall Street Journal" report saying it's a criminal investigation right now. The committee raised $107 million. And the allegation is, what they're investigating is some of that money was misused. Some of it was brought in to try to influence the incoming administration.

SWALWELL: It's looking more and more, Wolf, that Donald Trump was a part of a criminal campaign, a criminal transition, and now presides over a criminal presidency.

And remember, back in August, Sam Patten, a Republican lobbyist, pled guilty for failing to register as a foreign agent for his role in trying to get a Russian-Ukrainian oligarch tickets to that inauguration.

So there's always been skepticism about whether they really followed the rules on their inaugural campaign. But this also, I think, shows, Wolf, that the promise that Donald Trump made as a candidate that he would drain the swamp has not been fulfilled, if indeed they're investigating that there was a pay-to-play operation going on for that inauguration.

BLITZER: You used the words criminal presidency? Is that what you're saying?

SWALWELL: Yes. Well... BLITZER: What does that mean?

SWALWELL: Well, right now, we have the president of the United States who is under investigation for at the very least obstruction of justice for the firing of James Comey, for the way that he has treated Jeff Sessions and intimidated him to try and back off of the Russia investigation or leave the office, so that he could put someone else in.

And so I think that -- fortunately, we're not powerless to the DOJ policy that you can't indict a sitting president. Now a new Congress will be able to at least shine a light on these abuses, intervene where possible, and hold the president accountable if necessary.

BLITZER: So, you're going to be a member of the new Democratic majority in the House of Representatives, on the Intelligence Committee, the Judiciary Committee.

[18:15:00]

The Judiciary Committee has to deal with the whole issue of impeachment. Where do you stand on that?

SWALWELL: Yes, well, we will give the president a fairer investigation than he probably deserves, and he very well may be impeachable. But, if that's the case, it'll be because we put together an airtight case, we sought bipartisan buy-in, and the American people understood why that was necessary.

But we're also going to seek to collaborate on issues of infrastructure, DREAM Act, reducing gun violence. But we're not going to look the other way, as Republicans have before. And this president, it's going to be a wakeup call that presidential immunity is over.

BLITZER: You heard the president the other day say the American people will revolt if you guys impeach him.

SWALWELL: Yes, he tried to goad us into talking about impeachment during the campaign. I think he sees that as an issue for his base.

We stuck to what the American people cared about with health care, with making sure tax cuts didn't go to the wealthy, and reducing corruption. And the same thing here. We're not going to be reckless in rushing to impeachment.

But, again, we see that there are red lines that can't be crossed in our democracy, and we will hold him accountable, if our investigation shows that he crossed them.

BLITZER: But don't you think you should wait to begin impeachment proceedings in the House Judiciary Committee until after Robert Mueller, the special counsel, completes his investigation?

SWALWELL: Absolutely. But there's -- it's not -- his exposure to oversight is not limited to

what happened with Russia. That's important. There's also cashing in on access to the Oval Office. Seeing his tax returns will tell us whether his financial interests are driving policies in Saudi Arabia.

And, also, Wolf, we know that this president gave -- reduced sanctions on ZTE, a Chinese telecommunications firm, at the same time that he received a $500 million loan on a Trump Tower project in Indonesia.

So there's a lot to look at. And, again, it may just be that we're intervening and preventing his worst instincts from materializing. But if he did cross the line, we can't look the other way.

BLITZER: The other breaking news we're following right now is that CNN has confirmed president was -- was in the room, was in the room when there was a conversation back in 2015 involving Michael Cohen, his former lawyer, David Pecker, the publisher of American Media, Inc, the parent company of "The National Enquirer," in which the issue of hush money payoffs, payments to women who allegedly had affairs with the president were discussed.

Then candidate Donald Trump was in the room. What does that say to you?

SWALWELL: Well, it shows that he had knowledge. It shows also that there are two witnesses. So he's outnumbered, as far as, you know, the accounts here.

But, most importantly to me, because I think what Americans really care about is how this affects them, it shows that the president was a shadowy operator. And if he acted that way with respect to these payoffs, I think we should be looking at whether he acts that way with his taxes, with his finances and the relationships that he's entangled us in with many of our foreign adversaries.

BLITZER: The chairman, the incoming chairman of the Intelligence Committee, Adam Schiff, he was here with me in THE SITUATION ROOM yesterday.

He says he wants Michael Cohen to come back and testify before he starts his prison term in March. What do you want to ask him? What do you think he might be able to share with your committee?

SWALWELL: Sometimes, when you interview a witness, it's better to let them just do the talking. And he seems to be a witness now where you just want to ask him, what happened? What did you see? What did the president hear? What did the candidate do?

And I think of June 1973, when John Dean sat down and gave a full come-clean allocution before the House for the Watergate proceedings. And I think Michael Cohen, because he lived in all three of Trump's worlds, personal, political and financial, he knows a lot.

And, Wolf, it's also very informative. When someone who lied before comes clean, you understand why they lied before, but it also puts in context all the outstanding lies that are still being told by people just like Michael Cohen who are still trying to protect the president.

BLITZER: Yes, the bottom line, as you take a look at all of this, do you believe a sitting president can be indicted?

SWALWELL: Yes.

But I also believe that the Department of Justice has discretion. And if their policy is that a sitting president cannot be indicted, we must do all we can to make sure that he doesn't escape criminal liability just by getting reelected or running out the clock. We should look at extending the statute of limitations if a DOJ policy prevents someone from being indicted.

BLITZER: Congressman Swalwell, thanks for coming in.

SWALWELL: My pleasure.

BLITZER: The breaking news continues next, President Trump in the room for talks about illegal hush money payments, but saying he didn't order his lawyer Michael Cohen to break the law.

Is that a relevant defense?

(COMMERCIAL BREAK)

[18:24:10]

BLITZER: We're back with the breaking news.

The Trump inauguration committee now under federal investigation for potential financial abuse.

This also breaking, CNN confirms that Donald Trump was at a 2015 meeting when his former fixer and lawyer Michael Cohen discussed illegal hush money payments with the publisher of "The National Enquirer," David Pecker.

Let's bring in our analysts.

Nia-Malika, let's talk a little bit about this story. The president was there when they originally discussed it back in 2015. How significant is this development?

NIA-MALIKA HENDERSON, CNN SENIOR POLITICAL CORRESPONDENT: It's big.

It puts him in the room with two people who both -- who both said the same thing. And that is that this hush payment, hush money scheme was all about impacting the campaign. We know that Cohen obviously got sentenced to three years, in part because of his involvement in that.

David Pecker, who's the head of AMI, which is over "The National Enquirer," has been granted immunity. He's saying the same thing.

[18:25:02]

And if you think about when this came, this was an August of 2015. This is a couple of months after Donald Trump announces that he's going to run. It's as debates are starting to happen. It is also as he leading in polls as well.

It also contradicts almost everything he initially said publicly about this, this idea that he didn't know anything about it, that this was all Michael Cohen, he didn't know where any of the money came from.

But now we know that he was in that August 2015 meeting with those two other gentlemen. So it's not a good day for him. And it fills in a piece of the puzzle that we have all been wondering about.

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: The president has said, this is all based on advice of counsel, I took Cohen's word for it.

But what you have to look at when you're looking at someone's intent is, how do they behave? Do they suggest consciousness of guilt? Did he lie about this -- his -- this payment? Yes, he did.

Did he do it openly? No, he didn't. So he doesn't have to know what part of the federal code he's violating to have criminal intent. He has to know that what he's doing is wrong. And everything Donald Trump has done about this hush money payment suggests that he knew it was wrong.

BLITZER: Susan, how do you see?

SUSAN HENNESSEY, CNN LEGAL ANALYST: No, I think that's right.

Look, Trump has all been admitted that he actually directed Cohen to make these payments. And so now we know that he actually was in the room for a discussion. So I think any effort to sort of distance himself from this is just going to fall flat.

His newest sort of story that, well, there was no reimbursement for this AMI payment and therefore it wasn't an illegal campaign contribution, that's just not legally relevant. The laws of conspiracy say that if you agree to something and take substantial steps towards it, laws of attempt, you actually are still criminally culpable for that act.

And so the president really is trying to sort of do some P.R. lawyering and try and convince people that actually he actually hasn't violated the law here. But he's offering facts that just aren't legally relevant.

BLITZER: The fact is, though, that both David Pecker and Michael Cohen, they admit, they say as part of their agreements -- and if they're committing perjury, that's a crime.

They admit that their intent was to influence the presidential election and help Donald Trump got elected, because if these stories about these hush money payments came out, presumably, it could hurt the president's campaign.

PHILIP MUDD, CNN COUNTERTERRORISM ANALYST: No, that's right. I mean, a week ago, you might have walked into a room, if you're the

president, and said, look, I did not want to walk into a conversation with my wife and say I paid off women. So, therefore, the intent of the conversation had nothing to do with the election. It was about embarrassment in the face of a conversation with my wife.

Obviously, with this information, the intent is much clearer. It's not about a private conversation. It's not about embarrassment. It's about influencing an election.

One of the hardest things in any investigation is not what happened. Did somebody transfer money? Well, where's the money? Where are the financial records? Where's the e-mails? Where's the phone records?

The hardest thing to figure out is why they did it. This tells me it wasn't about embarrassment, it's not about talking to your wife. It's about you wanted to influence an election. That's really important.

BLITZER: The president reverted to this familiar rhetoric of his by suggesting Michael Cohen was simply some low-level guy, he tried to help him, he felt sorry for him.

But why would he let some low-level guy get involved in such a sensitive issue like hush money payments to women?

HENDERSON: That's right.

I mean, it wouldn't make any sense that you would get somebody who you just hired 15 months ago or something into this meeting that is about such a sensitive issue. It's about a personal issue. It's about a campaign issue, at least according to the folks who were in that meeting.

And, listen, Michael Cohen has been by the president's side for more than a decade. People who have covered Donald Trump know this. He was like a gatekeeper for Donald Trump.

So this idea that somehow he's just some nobody, in the way that he tried to cast George Papadopoulos, for instance, like a coffee boy, it just doesn't pass the smell test.

BLITZER: The other defense, Jeffrey, that the president makes, and he insists he never directed Michael Cohen to break the law or to do anything wrong.

How effective a defense is that for the president?

TOOBIN: Well, you don't have to be in charge of a criminal conspiracy to be part of a criminal conspiracy.

Sammy Gravano was the deputy to John Gotti. But they were both involved in criminal activity.

That -- the fact that he didn't direct this is not legally relevant. By the way, based on what we have seen, Trump may well have directed it. So that may be a lie too. But, as a criminal matter, it's irrelevant.

MUDD: Can we hold on for just a minute about who's significant and who's not?

Flynn lied. Hope Hicks, by the way, obviously not indicted, walks out of the White House and says, I told white lies. Sean Spicer gets out and says, hah-hah, 24 hours into the White House, I lied. Paul Manafort lied. Michael Cohen lied.

My point is, the president can say, look, I wasn't responsible for this. One of the things he is responsible for is, what's the tone once the president of the United States, representing 330 million people in the most significant democracy on the planet, walks in the White House?

The tone should be, when you speak to a prosecutor, you speak to the truth. Everybody lied.

BLITZER: What do you think?

[18:30:02]

SUSAN HENNESSEY, CNN LEGAL AND NATIONAL SECURITY ANALYST: I think it's also significant that AMI is apparently sitting on a bunch of dirt about the president of the United States. That is a huge liability and risk for this nation. Not only does it speak to his character, but there actually is sort of security threats and security issues.

So you know, if this is what we're seeing, I do think that there's questions, one, about potentially other transactions, but two, what is the other substantive information that they have been -- may have been conspiring to hide?

BLITZER: You know, but that's one thing the safe that the "National Enquirer" has, presumably with a lot of details in that safe, information they've kept over the years, catch and kill.

But you know what's even a bigger potential problem for the president? Two things: the secretly-recorded audio tapes that Michael Cohen did with various people. We know about two of them. But presumably, there's a lot more than that. The FBI and the prosecutors have that information.

Also, Allen Weisselberg, he's received immunity. He's been with the Trump organization for 40 years. He's the chief financial officer. He obviously knows a lot, as well.

Stick around. There's much more we need to discuss. More on the breaking news right after this.

(COMMERCIAL BREAK)

[18:35:41] BLITZER: We're back with our analysts and another major breaking story we're following. President Trump's inauguration committee now under criminal investigation for potential financial abuses. What a nightmare, potentially, this could be.

NIA-MALIKA HENDERSON, CNN POLITICAL CORRESPONDENT: Yes. That's right. So this is an investigation into the $107 million that was raised by this inaugural committee. What they're looking at is whether or not any money was misspent, whether or not there were any foreign contributions which, of course, would be illegal. Also whether or not there was any sort of pay for play scheme, any sort of corruption where people were donating to this with an intent to get access or to influence policy.

What's interesting about this is this comes from the Cohen tapes. We talk about how much information he might have. This comes from a conversation that he taped, that he had with a Melania Trump aide, who was working on the inaugural committee, raising concerns about whether or not there were any misspent funds.

BLITZER: Because he secretly recorded --

HENDERSON: Yes.

BLITZER: -- a lot of his phone conversations. We know about two of them now, but there are a lot more that these federal prosecutors have.

JEFFREY TOOBIN, CNN CHIEF LEGAL ANALYST: Well, that's right. And just stepping back, Donald Trump's campaign is under criminal investigation. His inauguration is under criminal investigation. His presidency is under criminal investigation. His high school, as far as I can tell, is not under criminal investigation. But I mean, it's a pretty extraordinary record, and he's only been president for not even two years.

BLITZER: Yes. The legal ramifications of all of this, Susan, are enormous.

HENNESSEY: Yes, so I think there are, potentially, a number of different issues. You know, as we discussed, trading money for access or for political favors, that potentially runs afoul of sort of federal anti-corruption laws.

Also, you know, the inauguration is a nonprofit and so diverting funds away from a nonprofit, that also, you know, potentially is criminal.

This appears to be a preliminary investigation. We're at sort of the early stages of this. One thing that I do think is notable is these are the types of crimes that tend to produce lots and lots of financial records. And as we saw in the Paul Manafort prosecution, the strength and sort of the sheer quantity of evidence against Manafort, I do think that, if there is any misspending of funds, you know, prosecutors in the Southern District are likely to find it.

That said, we do appear to be at the beginning of yet another major political scandal for the president. You know, and thus far in this administration, things always turn out to be a whole lot worse than they initially seem. BLITZER: What does it tell you, Phil, that they started this criminal

investigation of the inaugural funds as a result of that secretly recorded Michael Cohen phone conversation?

MUDD: This is not a nightmare; this is not a scandal. This is an early Christmas gift. Let's do the investigation here.

No. 1, there is no way that this is the only conversation Michael Cohen knows about if, in fact, the reporting is accurate about inappropriate contributions to the campaign, because people wanted pay for play.

No. 2, Cohen's cooperating, so if there's intent behind the conversation, in other words, if he knows that somebody is calling in saying, "I'm going to give you 100 grand, because I want access to the president," Cohen is supposed to talk about that.

And the last thing, I love this, there's somebody at the other end of the phone. They don't know what Cohen says, and they don't know what's in the documents and the tapes that were -- the phone conversations that were seized from his office. So the feds are going to go to those people and say, "When did you call Michael Cohen or anybody else about contributions for the campaign or for the inauguration and what did you say on that phone call?"

This is not a nightmare for an investigator. This is great.

BLITZER: If you're the president, Jeffrey, right now, and you look at all these investigations that are under way, what's your biggest legal fear?

TOOBIN: Well, I think his biggest legal fear is that his Republican base will abandon him. Because that's what's keeping him in office. He is still very strongly supported by his Republican base. And frankly, I haven't seen anything in the Michael Cohen revelations, in this inaugural story that will shake his Republican base.

And that means the Republican politicians who keep him from getting -- you know, keep Democrats from 67 votes in the Senate, they're not going anywhere so far.

So if I'm Donald Trump, I'm worried about losing my Republican base. As long as that's intact, he's not going anywhere.

BLITZER: He's got to be worried, though, Nia about the Democratic majority, the incoming Democratic majority in the House, the subpoena power that these various chairs of all these committees are going to have, going after all sorts of information, including Nancy Pelosi, the incoming speaker, she's saying they want to get his tax returns.

[18:40:13] HENDERSON: Yes, that's right. They talked about the tax returns. They've just talked about his financial dealings more broadly, Saudi Arabia, everything that this president has done is going to be up for scrutiny.

They'll likely bring Michael Cohen in at some point, as well, and you can imagine what sort of testimony he might provide in public.

You know, there is all this talk about impeachment. It doesn't really seem like that's a reality because -- because of where the Senate is and because that Donald Trump is still so strong with his base and still so strong with Republican senators. But it's going to get worse. I mean, it's going to be kind of a drip, drip, drip, I think, for months and months to come for this president.

TOOBIN: This week has been more like a torrent than a drip, yes.

BLITZER: My suspicion -- and Susan, I'm anxious for yours -- is it's only just beginning.

HENNESSEY: I think that's right. And sort of from an investigative standpoint as we sort of see these investigations spiraling out in lots of different directions, that is expanding the pool of people who potentially have a reason to cooperate against the president and actually offer damaging information.

And so as investigators sort of get more and more people to talk, they're going to know different pieces of the Trump Organization, what occurred in the Trump campaign, that is all mounting legal -- legal jeopardy for the president.

BLITZER: There's also word, suggestion that this federal criminal investigation into the president's inaugural committee is also looking into foreign money that may have come in one way or another, in exchange for maybe a more positive U.S. policy towards various countries.

MUDD: I think you've hit the nail on the head. I don't think this is about Democrats. I don't think this is about elections. I think this is about money, and money that the family -- forget about Democrats and Republicans -- the family took, maybe domestically, maybe overseas.

Why does the president not talk that much about Papadopoulos? He doesn't talk about Flynn. He's supportive of Flynn. He doesn't talk much about Rick Gates, the Manafort deputy who flipped. He talks about one person, Michael Cohen.

I don't think that's because Cohen paid off women. I think that's because Cohen knows about family money. The president's worried about money, not about politics, I think.

TOOBIN: If we can just -- I mean, this inauguration thing is a very early stage, but if I can just quote my mentor, Michael Kinsley, who always liked to say the scandal isn't what's illegal; the scandal is what's legal.

Why do you think all these companies were paying millions of dollars to the inaugural committee? Because they really cared that there was really a nice set there? No, they were paying for access. Why do people give money to politicians? Why do you have to pay extra to go to a small reception? I mean, this is what goes on in American politics politics. Now, you can go too far, but we have to remember how awful and seedy this system is even when it's legal.

BLITZER: All right, guys. Stick around. There's more breaking news we're following. We're digging into new information that we're getting on all the breaking stories with potentially huge implications for the president.

Plus, another piece of the Russia puzzle emerging right now as an alleged Russian spy admits to a plot to influence U.S. politics and infiltrate the president's party.

(COMMERCIAL BREAK)

[18:47:43] WOLF BLITZER, CNN HOST: We're following a lot of breaking news this hour involving the president and potential illegal activity. But right now, we want to turn to new revelations about Russian efforts to influence American politics, the alleged spy, Maria Butina, pleading guilty earlier today.

Our political correspondent Sara Murray is all over the story for us.

Sara, Butina says she knowingly engaged in the conspiracy against the United States.

SARA MURRAY, CNN POLITICAL CORRESPONDENT: That's right, Wolf. She faces up to five years in prison but it could be much less depending on how much cooperative she is with the federal government.

(BEGIN VIDEOTAPE)

MURRAY (voice-over): Russian national Maria Butina admitting she conspired to act as an illegal foreign agent, as she pleaded guilty in D.C. federal court today.

A.J. KRAMER, FEDERAL PUBLIC DEFNDER FOR THE DISTRICT OF COLUMBIA: She was satisfied with her lawyers and made the decision voluntarily.

MURRAY: Wearing a green prison jumpsuit and a tattered undershirt beneath it, Butina spoke clearly with a Russian accent as she entered her plea. Butina admitted she acted at the direction of a Russian official who CNN has identified as former Russian banker Aleksandr Torshin while attending American University and failed to notify the U.S. government. As she cooperates with investigators, Butina is providing information about how her boyfriend, Republican operative Paul Erickson, aided her activities in the U.S.

MARIA BUTINA, ALLEGED RUSSIAN SPY: Studying law school from Russia.

MURRAY: According to her plea, Butina's plot to build relationships with politically influential Americans and advance Russian interests included attending National Rifle Association meetings and organizing a Russian delegation to attend the 2017 National Prayer Breakfast in D.C.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Thank you very much.

MURRAY: According to the plea, she proposed getting $125,000 from a Russian billionaire to attend conferences and arrange other meetings.

At one 2015 political event, she asked Donald Trump about his views on Russia.

BUTINA: If you would be elected as a president, what will be your foreign politics especially in the relationships with my country?

TRUMP: I believe I would get along very nicely with Putin, OK?

MURRAY: That same year, she invited an NRA delegation to Moscow to build closer ties. Afterwards, she sent Torshin a message saying we will let them express gratitude now, we will put pressure on them quietly later.

[18:50:04] Butina also attended the NRA's 2015 annual meeting, meeting Wisconsin Governor Scott Walker. Soon after he announced his bid for president, with Butina in the audience.

At a 2016 NRA meeting, Butina and Erickson tried to lay the groundwork for a meeting between Donald Trump and Russian President Vladimir Putin. Their efforts fell short.

Erickson's role in aiding Butina has been a focus of the investigation. But so far, he has not been charged with any crimes.

(END VIDEOTAPE)

MURRAY: Now, despite the Russian government's claim that Butina is being tortured while in custody, her lawyer told the court today that she is doing well, mentally -- Wolf.

BLITZER: All right. Thanks very much, Sara Murray, all over that story for us.

Just ahead, China detains a Canadian businessman who boasts about his ties to Kim Jong-un after arranging Dennis Rodman's trip to North Korea. We're following this intensifying diplomatic dispute.

(COMMERCIAL BREAK)

[18:55:35] BLITZER: Tonight, we have confirmation that a second Canadian has been detained in China as Beijing is apparently striking back at Canada for arresting a top Chinese technology executive. China claims businessman Michael Spavor as well as former diplomat Michael Kovrig are suspected of undermining China's national security. Spavor gained notoriety for helping to arrange visits to North Korea by the former NBA star Dennis Rodman.

CNN's Brian Todd is digging into all this for us.

Brian, tell us more about Spavor, his connection to Dennis Rodman, and to Kim Jong-un.

BRIAN TODD, CNN CORRESPONDENT: Wolf, tonight, Michael Spavor's caught up in a web of intrigue and diplomatic retaliation. He's got a history with Dennis Rodman and kim Jong-un going back at least five years. And tonight, we've looked into whether that connection played into Spavor's detention by Chinese officials.

(BEGIN VIDEOTAPE)

TODD (voice-over): On his Facebook page, Michael Spavor proudly displays pictures of him and Kim Jong-un in a friendly embrace. And chatting with Kim over drinks on a boat. There's also a shot of him standing with the North Korean dictator, along with the former NBA star who Spavor helped get into North Korea, Dennis Rodman.

Tonight, Michael Spavor, a Canadian businessman based in China, is believed to be languishing in a Chinese jail after having disappeared this week. Canadian officials tell CNN Spavor was detained in China after being questioned at an airport there. The Canadians say when they were on the phone with Spavor during his interrogation, he sounded concerned about the line of questioning.

CHRIS VOLO, MANAGER OF DENNIS RODMAN'S TRIPS TO NORTH KOREA: I'm shocked he's in the situation that he is right now. I've known Michael for many years now. I always knew him to be sort of like a quiet, kid-like guy.

TODD: Chris Volo managed several of Rodman's visits to North Korea, including one where they celebrated Kim's birthday.

DENNIS RODMAN, FORMER NBA STAR: Happy birthday to you --

TODD: He says Michael Spavor, who runs a company that helps facilitate trips to North Korea helped them with three of Rodman's visits there.

VOLO: Mr. Spavor was basically in charge of getting our visas and organizing hotels. He lives in China. He's a Chinese resident. China is his home. The last thing he would ever want to do is do anything to endanger the security of his home.

TODD: That's not what Chinese officials are saying tonight. They say they're investigating both Spavor and another Canadian in China, former diplomatic Michael Kovrig, who they're also believed to have detained this week

LU KANG, CHINESE FOREIGN MINISTRY SPOKESMAN (through translator): Canadian citizens Michael Kovrig and Michael Spavor were suspected of having engaged in activities that endanger China's national security.

TODD: But Chinese officials won't be more specific than that. They say they're taking, quote, compulsory measures on Spavor and Kovrig.

DEAN CHENG, THE HERITAGE FOUNDATION: I think the compulsory measures means detainment, probably placed into a Chinese jail cell, basically kept isolated, wondering what their future is going to be. It is certainly possible there could be some roughing up. I doubt very, very much they are going to torture citizens of Canada.

TODD: Tonight, analysts are concerned that these two Canadians are pawns in a high stakes retaliation play. Spavor and Kovrig were accosted by Chinese officials just a few days after Canadian officials arrested Meng Wanzhou, a top executive of a Chinese telecommunications firm in Vancouver. U.S. officials accuse her of helping her company, Huawei, dodge U.S. sanctions on Iran.

CHENG: I think it's very clear that the Chinese are livid about the detainment of Ms. Meng, both because of who she is, CFO of a major Chinese company, the daughter of the founder of Huawei but also in the belief that this is not about breaking Iran sanctions but really the Americans playing hardball in trade negotiations.

(END VIDEOTAPE)

TODD: Since the North Koreans have had a relationship with Michael Spavor, could they possibly lobby their allies, the Chinese, for his release. Analysts say that's not likely because the North Koreans are still beholden to the Chinese for helping them get around sanctions. We reached out to North Korean officials at the U.N. to ask if they would lobby on Michael Spavor's behalf. They have not been responsive to us -- Wolf.

BLITZER: Brian Todd, thanks very much.

"ERIN BURNETT OUTFRONT" starts right now.