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The Situation Room

Interview With Rep. Jackie Speier (D-CA); Sources Say Trump Privatel Clashed With G7 Leaders Over His Push To Let Putin Into The Alliance; Russia Denies Visas For FOP And Democratic Senators; Jeffrey Epstein's Victims Speak Out In Court, Angry That His Suicide Robbed Them Of A Trial; Lori Loughlin, Husband Return to Court in College Admissions Scandal; Israel on Alert As Proxy War with Iran Threatens to Explode After a Series of New Airstrikes. Aired 6-7p ET

Aired August 27, 2019 - 18:00   ET

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

[18:00:10]

WOLF BLITZER, CNN HOST: Happening now, breaking news: in the storm's path. A new forecast out tonight drives home the danger to Puerto Rico, as a powerful storm is now on track taking a more direct hit on the hurricane-ravaged island. We're tracking Dorian as it's approaching hurricane strength.

Tax access. A major bank just made it clear it does have some tax returns related to the Trumps. Does that mean Democrats may finally get their hands on the president's tax records?

Victims speak out. More than a dozen women describe sexual assault and abuse by Jeffrey Epstein, sharing their stories in open court, even though the millionaire's suicide deprived them of an actual trial. Tonight, they're vowing to keep fighting for justice.

And full-court press. Actress Lori Loughlin and her husband return to court, trying to present a united front against charges in the college admissions scandal. Is the "Full House" star more worried than ever about going to prison?

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 breaking news on the imminent threat of a new storm disaster.

A just-released forecast warns that Tropical Storm Dorian is gaining strength and is expected to be near hurricane force when it hits Puerto Rico tomorrow. The U.S. territory still recovering from a devastating blow by Hurricane Maria two years ago.

Tonight, President Trump on the defensive for his hurricane response in Puerto Rico, tweeting about the coming storm and asking, will it ever end? Also breaking, Deutsche Bank just told a federal court it does have some tax returns related to the Trump Organization and family. This may open the door for the documents to be turned over to House Democrats who have subpoenaed the president's tax returns.

This hour, I will talk with Democratic Congresswoman Jackie Speier, a key member of two committees investigating the president. And our correspondents and analysts are also standing by.

(WEATHER UPDATE)

BLITZER: Let's go live to Puerto Rico right now.

CNN's Omar Jimenez is on the scene for us.

Omar, the island was so devastated by Hurricane Maria two years ago. How are residents preparing tonight?

OMAR JIMENEZ, CNN CORRESPONDENT: They, of course, have the devastation that Maria brought, again, close to two years ago, still top of mind.

[18:05:02]

That is really why, at this point, they are playing it safe, rather than sorry. And you can see why. The home I'm stepping on right now is a home that was destroyed over the course of Maria, a home that was not able to be rebuilt.

The owner told us they just weren't able to secure the funding from FEMA. It was for a restoration, really a repair job that at this point you could see is really more of a rebuilding notice.

But across the island, everyone is trying to dig in. The Puerto Rico National Guard has told us that they are monitoring the storm as closely as they possibly can, ready to deploy resources as necessary.

Up in San Juan, shelters are already open, as, of course, the entire island is under a state of emergency right now. We are expecting to hear some words from the governor of the island as well.

We are in the calm of the storm, and officials are really trying -- the calm before the storm, I should say -- and officials are really trying to take advantage of this opportunity to make sure they have all their T's crossed, all their I's dotted, so that, matter how Dorian comes into the island, whether it's as a hurricane or as a tropical storm, or how much rain comes in, that they are as ready as possible, and try to stay as far away as possible from the devastation that we saw, again, nearly two years ago -- Wolf.

BLITZER: All right, Omar, thank you very much, Omar Jimenez in Puerto Rico for us.

Now to President Trump and his response to the storm that's bearing down on Puerto Rico.

Our White House correspondent Kaitlan Collins is joining us right now.

Kaitlan, the president seemed to complain that Puerto Rico might be facing another natural disaster.

KAITLAN COLLINS, CNN WHITE HOUSE CORRESPONDENT: Yes, Wolf, you will remember two years ago, when Hurricane Maria devastated Puerto Rico, the president spent the aftermath feuding with local officials, getting a firestorm after the way his visit to those storm-ravaged areas that Omar was just talking about went.

And now the president seems to be reliving that as he's looking ahead and preparing for potentially this next storm, even though he is inflating the numbers when it comes to Puerto Rico, and still dealing with the backlash from his trip to France.

(BEGIN VIDEOTAPE)

COLLINS (voice-over): Tonight, President Trump is back at the White House after leaving world leaders at the G7 summit reeling from diplomatic whiplash.

Behind closed doors, he's now bracing for a different kind of storm, this time, a tropical one, tweeting: "Wow, yet another big storm heading to Puerto Rico. Will it ever end?"

Trump falsely claiming Congress approved $92 billion in disaster aid after Hurricane Maria devastated Puerto Rico two years ago. Congress approved roughly $40 billion in aid, but Puerto Rico has received only a fraction of that. And the Budget Office estimates it could receive close to $90 billion over the next two decades, this as the president is facing blowback over a demand he made while in France.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I think it would be better to have Russia inside the tent than outside the tent.

COLLINS: Sources telling CNN tonight that, during a dinner at the summit, Trump pushed for Russia to be invited back to the G7, and other leaders, including German Chancellor Angela Merkel and British Prime Minister Boris Johnson, pushed back, arguing Russia is only more anti-democratic since being expelled in 2014 for illegally annexing Crimea.

Privately, Trump blamed his predecessor, as he later did publicly.

TRUMP: It was a president, Obama -- I'm not blaming him, but a lot of bad things happened with President Putin and President Obama.

COLLINS: Today, a group of top Democratic senators also warning the president that under no circumstance should President Putin be invited to participate in the G7 until the Russian government shows its willingness to behave responsibly both domestically and abroad.

The lawmakers highlighting Russian interference in the U.S. election, the nerve agent attack on foreign soil, and continued illegal occupation of territory that's not theirs.

Trump is also facing pushback for the mixed messages he's sending in his ongoing trade war with China.

TRUMP: The way I negotiate, it's done very well for me over the years.

COLLINS: The president says he's confident his tactics will work. But some farmers are losing patience. According to the American Farm Bureau, farm bankruptcy filings were up 13 percent this year. And loan delinquency rates are on the rise.

In the meanwhile, after the G7 summit renewed hopes of U.S. talks with Iran:

TRUMP: If the circumstances were correct, were right, I would certainly agree to that.

COLLINS: Iranian President Rouhani now says he won't sit down with Trump unless Washington lifts all sanctions against Iran.

TRUMP: Each country can have their own villa or their own bungalow.

COLLINS: And after pitching his golf property in Miami for the location of the next G7 summit, tonight, Trump is tweeting: "No bedbugs at Doral. The radical left Democrats, upon hearing that the perfectly located Doral National Miami was under consideration for the next G7 spread that false and nasty rumor. Not nice."

[18:10:13]

The rumor may not be nice, but it is also not new. A guest sued the club in 2016 after claiming he was bitten multiple times by bedbugs while staying in the Jack Nicklaus Villa, alleging in court documents that he woke up with welts, lumps and marks over much of his face, neck, arms, and torso after sleeping at the president's property.

The Trump Organization denied the allegation and settled the case in 2017 after Trump took office.

(END VIDEOTAPE)

COLLINS: Now, Wolf, back to those clashes that the president had at the G7 summit with those other world leaders, we're told that he was making the argument for Russia to be invited, saying it would be better to confront Russia in person at the summit than it would just to talk about them.

But he got pushback from other world leaders, who said that, if they did invite Vladimir Putin, it would be giving him too much legitimacy -- Wolf.

BLITZER: All right, Kaitlan, thank you, Kaitlan Collins over at the White House.

There's more breaking news we're following involving the battle by House Democrats to get their hands on the president's tax returns. A major bank just informed the court about Trump-related tax documents in its possession. Our political correspondent, Sara Murray, is joining us. She has got

details.

Sara, what are you learning?

SARA MURRAY, CNN NATIONAL POLITICAL CORRESPONDENT: Well, Wolf, we're learning that Deutsche Bank did have to answer the court today about whether they had any of these tax returns related to Trump, to his family, to his businesses.

And they said, in fact, we do. But they're not saying publicly which ones. They filed this answer to the court under seal, and the people that these tax returns to pertain to or the entities, that part is redacted.

But it does mean that Deutsche Bank has in its possession potentially Donald Trump's tax returns, potentially his company's tax returns or potentially tax returns relating to his family. And it's still an open question, Wolf, whether the court is going to force the bank to make those names public.

As of right now, they remain under seal. And one other bank had to answer the question today, Wolf. That was Capital One. They said they do not have any tax returns that pertain to the request from the court.

BLITZER: What are Democrats in Congress looking for, Sara? What could these tax returns tell us?

MURRAY: Well, this is part of a broader fight, Wolf.

As you pointed out, Democrat lawmakers want to see Trump's financial records and records related to his business. And they say it's for legislative purposes. They need to know if they need to write new financial regulation laws. They need to know if there should be potentially new laws governing someone's finances if they want to be president.

Now, the president's lawyers take a pretty dim view of that. They say that these are just Democratic lawmakers who are trying to play law enforcement and act as cops essentially in order to get their hands on the president's financials.

BLITZER: We will see what happens on that front.

Sara Murray, reporting for us, thank you.

Joining us now, Congresswoman Jackie Speier. She's a Democrat who serves on the Intelligence, Oversight and Armed Services Committee. She's a very busy member of Congress.

Congresswoman, thanks so much for joining us.

Let me get your reaction first to this development involving Deutsche Bank. Do you think Congress will see the president's tax returns before Election Day 2020? REP. JACKIE SPEIER (D-CA): That's a very good question, Wolf.

I think that Deutsche Bank has his tax returns. The question is, will he then do as he did with his accounting firm, Mazars, intervene to try and prevent the tax returns from being made available to Congress?

So, this will go through the courts, the same way that the other documents were resisted. And the real question is, this is the president when he was a candidate who said that he wanted to make his tax returns available, to make them public, but he was under audit.

Well, there's been a number of tax years since he became president. I presume he hasn't been audited during those tax years. Maybe he should just release his tax returns from 2017 and 2018.

BLITZER: I suspect he's not going to be doing that, Congresswoman.

You heard, on another sensitive subject, all the reporting that the president actually got combative with other world leaders at the G7 summit in France, advocating, for example, for Vladimir Putin to be included in the G7 and make it once again the G8. How do you make sense of that? What's your reaction?

SPEIER: Well, you can't make sense of his visit to the G7 at all. Frankly, it was the G6, plus the United States, because all he did there was pitch his country club, Doral, not his country, but his country club, and pitched Vladimir Putin coming back into the G7 to make it G8.

The other members of the summit recognize, that if they were to allow Russia to come back, it would be rewarding them for being imperialistic and aggressive by taking on Ukraine and by annexing the Crimea.

[18:15:05]

BLITZER: Russia just denied visas to two members of Congress who were going on a congressional delegation, a visit over there.

And it's been conducting missile tests, showing military force. Is President Trump sending the message that it's OK with all of that type of Russian aggression?

SPEIER: Well, the president is, frankly, a puppet for Vladimir Putin.

We see it over and over again, whether it was during the campaign or since he was elected president. He can say nothing wrong about President Putin. He can say everything wrong and criticizes our allies repeatedly.

So we have a president who is, frankly, decompensating in front of our eyes.

BLITZER: We're also following this storm, as you know, that's bearing down on Puerto Rico, could hit sometime tomorrow afternoon the island. Many of the island residents still haven't recovered from Hurricane

Maria two years ago. They have received only about $14 billion in disaster aid so far. That's nowhere near what the president tweeted this morning, claiming $92 billion in aid.

How do you ensure, Congresswoman, that Puerto Rico gets the federal support it needs?

SPEIER: Well, even when we appropriate the funds, it appears the administration is acting very slowly to getting those funds to Puerto Rico, where we have American citizens. We sometimes forget that.

But they're all American citizens. And I don't think the president can do another photo-op where he throws out paper towels and makes that somehow effective terms of doing what we always do when there is a serious weather event. We are there with our FEMA operation to provide assistance.

BLITZER: As you know, at the very same time, and it was confirmed today, the Trump administration is going to divert more than $150 million from FEMA, the Federal Emergency Management Agency, to support its immigration policies.

Is that appropriate?

SPEIER: Of course it's not appropriate.

I mean, this is a president who is acting without the support of Congress in making these various decisions. I mean, he's taking money from our Department of Defense to build a wall on our borders. He's now taking money from FEMA to support yet another effort.

But, meanwhile, we're going to have Mother Nature inflicting serious damage to our country from time to time in the next few months. And we have got to be prepared with FEMA having the resources to provide those services.

BLITZER: We are in the hurricane season right now.

Representative Jackie Speier, as usual, thanks so much for joining us.

SPEIER: Thank you, Wolf.

BLITZER: Just ahead, a major bank addresses a congressional subpoena, and says it does have Trump-related tax returns. Could House Democrats end up with president's tax returns after all?

We will be right back.

(COMMERCIAL BREAK)

[18:22:42]

BLITZER: We're following multiple breaking stories including new record word on Trump-related tax returns demanded by House Democrats.

Let's bring in our analysts.

Sara, could Democrats in Congress see this response from Deutsche Bank as an encouraging sign?

MURRAY: I guess in some ways it's encouraging, because it tells them that Deutsche Bank does have some of the documents that they are interested in.

But, Wolf, I mean, Deutsche Bank only provided this response after a fight, and essentially was forced by the judges to acknowledge that they even had some returns that this committee might be interested in looking at, at some point.

I do think that Democratic lawmakers are right to assume that the president and his attorneys are going to fight this tooth and nail, and certainly the banks have their own concerns, because they don't want it to look to their other customers like they are going to give up data about their customers willingly or easily.

BLITZER: Susan Hennessey, what do you expect in terms of a timeline here? Do you think, for example, that the Democrats will actually see these tax returns before the 2020 election?

SUSAN HENNESSEY, CNN LEGAL ANALYST: I think it's becoming increasingly likely that the outcome is the Democrats ultimately prevail on the merits, but not before the 2020 election.

It's sort of a Pyrrhic victory, right? So, they might actually win the case, but to the extent there's legislative remedies here about how the president's tax returns are audited, how they're handled, it isn't really going to matter if it comes after the election, because the point here is about producing information for the American public to actually make a political decision whenever they go to the polls.

I think it's worth noting, though, to the extent that the Democrats are losing -- or losing on sort of the timeline here, it's really because they have been dragging their feet. You know, at the beginning, House Ways and Means Chairman Richard Neal, it looked like he was being very careful, very methodical, taking the time to build a case.

At this point, it really looks like he's just dragging his feet. The committee has not been aggressively litigating this, has not been pressing the courts for expedited review, and actually seems to be sort of resisting moving this forward.

It's a little bit baffling why they aren't treating this as really an urgent question of oversight. Keep in mind, Donald Trump isn't just the first president to be elected since Nixon to not release his tax returns. He's also the first United States president ever to refuse to divest from his personal businesses.

[18:25:00]

And that makes the question of how Trump makes his money, to the extent to which he's profiting off his office, profiting at the expense of the American public, a really, really important question.

And so it's a little bit sort of baffling why we're seeing such lethargic congressional oversight in this really important area.

BLITZER: Which raises, Shawn Turner, the question of whether these tax returns would be able to provide some insight into the president's business relationships abroad.

SHAWN TURNER, CNN NATIONAL SECURITY ANALYST: Yes, Wolf.

You know, if these are the president's tax returns, they could potentially shed some light on his interests abroad for a couple of reasons. First, if the president received any income at all from, for example, rental properties abroad, that income would be reportable in the United States and it should be reflected on those tax returns.

So, that would be the first reason. The second reason -- and I think this is one that is more important -- if the president held debt that was financed or funded by a foreign entity, say, a state-backed foreign bank, well, that debt could also be reflected in these tax returns.

So, it could potentially shed some light on his interests abroad. If these are not the president's tax returns, and they belong to a member of the president's family, well, then we begin to look as -- as we know, the Trump enterprise is somewhat at its core a family enterprise -- we begin to look at where their income came from.

Did it come from the Trump enterprise? And if so, did it come from Trump interests abroad? So, across the board, whether these are the president's tax returns or they belong to a member of his family, there is some potential here that they could help us better understand what the president's interests were overseas.

And, by extension, that could help us understand some of the president's current policy positions with regard to foreign actors.

BLITZER: Yes, on another sensitive issue, David Swerdlick, we're also following the storm that's bearing down on Puerto Rico right now.

Let me read what the president tweeted earlier today: "Wow, yet another big storm heading to Puerto Rico. Will it ever end? Congress approved $92 billion for Puerto Rico last year, an all-time record of its kind anywhere."

First of all, the number $92 billion is wildly inaccurate, but why does it seem like he's complaining about having to help out U.S. citizens?

DAVID SWERDLICK, CNN COMMENTATOR: Two things, Wolf.

I think, for one, the president has never fully adjusted, almost three years into his presidency, to the idea that the job of president of the United States isn't just spiking footballs and celebrating touchdowns. It's taking care of people in need and when they're in trouble, and Puerto Ricans are American citizens. He seems to have to be reminded over and over again. The second

thing, Wolf, I will just say is that we don't know for sure, but if I'm at all a student of the president's Twitter oeuvre, his style, his syntax, it doesn't just seem like he's complaining. He also seems gleeful that Puerto Rico is sort of getting its comeuppance for not being grateful for the round of help given the first time, which, as you said, he overestimated.

BLITZER: Everybody, stick around. There's a lot more we need to discuss.

We will right after a quick break.

(COMMERCIAL BREAK)

[18:30:00]

BLITZER: We're back with our analysts. And, David Swerdlick, we're getting details on the rather contentious dinner at the G7 Summit in France where President Trump repeatedly confronted the other world leaders about letting Vladimir Putin back into the G7, making it once again the G8, how do these other leaders view that?

SWERDLICK: Yes, Wolf. I think that although not all European leaders, many European leaders pushed back in private as we're learning from this reporting against the idea of letting Russia back into the G8, now G7, for the reason that none of the conditions have changed since Russia was kicked out.

Europeans were persuaded by President Obama in 2014 among other things to kick Russia out because of the Ukrainian or the annexation of Crimea, and that still remains the case. Russia is the country against which NATO was formed. And these NATO allies are looking at President Trump and thinking, you know, wow, what is going on here? We rely on America to be our leader but America seems to be falling backwards in this case.

BLITZER: As you know, Sara, top Democratic senators right now, they're urging the president not to invite Putin back to the G7 Summit when the U.S. hosts the event next year. What are their major concerns?

MURRAY: Well, I mean, a lot of their concerns are the same ones that David laid out that other world leaders share, that Russia has not done anything to back away from their invasion and annexation of Crimea.

But if anything, as these Democratic lawmakers point out, Russia has been even more aggressive. They've meddled in the U.S. elections. They've meddled in European elections. They've essentially shown that they want to do nothing to change their very aggressive behavior and they have stepped it up. And they see inviting Putin to something like this is a way of essentially legitimizing him and saying, we don't care about all of this stuff, we're not that worried about all of this stuff. And, again, it's leading these lawmakers to question why the president is insistent on cozying up to Vladimir Putin in the face of all of this Russian aggression.

BLITZER: And on top of this, Shawn, Russia -- the Russian government has just rejected visas for Republican Senator Ron Johnson, Democratic Senator Chris Murphy, and we're seeing more Russian missile tests, more military shows of force. With all of these rising tensions, what message does that send when President Trump goes to bat in effect for Putin?

[18:30:03]

TURNER: Yes, Wolf. You know, for all the president's efforts to convince us that he's been tough on Russia, as he says, tougher than any president has ever been on Russia, and all the recent efforts to blame all of Russia's bad behavior on President Obama, it still remains the case that President Trump either is afraid to or extremely reluctant to stand up to Vladimir Putin. And as we've said many times, we don't really know why. We don't really understand why.

Look, I think that this sends a very clear message to Vladimir Putin that as far as the president is concerned, as far as his administration is concerned, that there is little interest in continuing to serve as a leader on the international stage. And as we all know about Vladimir Putin and other world leaders, where the United States leaves a void, they will step in and fill that void. So I think he's sending a clear message to Vladimir Putin, either because of something he's afraid of or because of his personal dealings, his financial dealings that he's not going to stand up to him, and that's something that everyone in the national security space is concerned about.

BLITZER: Senator Ron Johnson and Senator Chris Murphy, Susan, they were supposed to go on a routine congressional delegation, a visit to Russia, meet with Russian officials, meet with others, and other members have received the visas, they have not. How extraordinary is that?

HENNESSEY: I think it is quite extraordinary. And I also think it's notable that Senator Ron Johnson is a Republican. To some extent, the extent to which Republicans have sort of carried water for Trump been willing to go along with his policy positions has disguised the degree to which Trump is a really, really dramatic aberration, his affection for Putin, his views on Russia are really, really at odds with the views of his own party in the very, very recent past.

Again, you know, as Shawn and others have mentioned on this panel, the big question being why, you know. But at the end of the day, I don't think anybody is holding their breath wondering who Donald Trump is going to side with, a senator of his own party or the Kremlin? And just the fact that we already know the answer to that question at the outset, that itself is just really an extraordinary testament to the reality we're in.

BLITZER: That's a very worrisome development indeed. All right, guys, stick around, we've got more news we're following.

We're about to hear from victims of sexual predator Jeffrey Epstein. They got a chance to publicly share their stories even though Epstein's suicide denied them a trial

And actress Lori Loughlin was just back in court in the college admissions scandal. We're going to tell you what happened today.

Much more right after this.

(COMMERCIAL BREAK)

[18:40:00]

BLITZER: Tonight, the victims of sexual predator Jeffrey Epstein have gotten their day in court, even though his prison suicide robbed them of an actual trial. One by one, the accusers told their stories and vented their anger.

CNN Crime and Justice Reporter Shimon Prokupecz covered the emotional hearing in New York City for us. Shimon, so what did these women say?

SHIMON PROKUPECZ, CNN CRIME AND JUSTICE REPORTER: It was certainly very emotional and powerful at times, Wolf, to have these women come in one by one, stand up in court and tell their story, a story that they feel they have not been able to tell, and now certainly were not going to be able to tell until a judge here in New York City decided to allow these victims to come in and say what happened to them.

At times, these women were emotional, crying, but as you said, there was also an overall theme here that they were angry. Some of the women calling Jeffrey Epstein a coward, saying he took the easy way out by killing himself, not facing justice and they were just happy to have the opportunity to come to court and tell their side.

Another one of the victims, and one of the most powerful moments described how she ran from the home of Jeffrey Epstein's, on that private island that he owns, to a villa, a villa that she was being housed at by Jeffrey Epstein. And she described how she was bleeding, her feet were bleeding as she was running from the home.

And then some of the victims came out, and they came before the microphones and the cameras and here's what they said, Wolf.

(BEGIN VIDEO CLIP)

JENNIFER ARAOZ, JEFFREY EPSTEIN ACCUSER: It was so powerful in there hearing all of the other victims and very similar stories that I have endured. I wanted to thank the judge for letting us speak, having some closure.

CHAUNTAE DAVIES, JEFFREY EPSTEIN ACCUSER: It makes me sick to my stomach that there's perpetrators out there that obviously helped him in many ways for a very long time, and they are still out there with no punishment. (END VIDEO CLIP)

PROKUPECZ: And, Wolf, the Southern District of New York, federal prosecutors here in New York City, saying that they're going to continue to investigate and it is likely that we will see some of the co-conspirators, people who may have helped Jeffrey Epstein get charged in this case, something obviously that many of the victims want.

BLITZER: Shimon Prokupecz in New York for us, Shimon, thanks for that update.

Just ahead, Lori Loughlin and her husband on the same page as they fight charges in the college admissions scandal. They were just in court and we gave details.

Also, we'll go live to the Middle East where Israel says it attacked kamikaze-style drones as its shadow war with Iran heats up.

(COMMERCIAL BREAK)

[18:49:31] BLITZER: Tonight, there was no autograph signing as former "Full House" star Lori Loughlin was back in court. She was there with her husband trying to present a united front as they both face charges and potential prison time in the college admissions scandal.

CNN's Scott McLean in Boston for us.

So, Scott, what happened in the courtroom.

SCOTT MCLEAN, CNN CORRESPONDENT: Hey, Wolf.

Lori Loughlin was here in Boston to clear up a procedural issue, specifically whether her lawyers have a conflict of interest. Now, her appearance was relatively brief, only about 40 minutes, but it still attracted a lot of attention.

(BEGN VIDEOTAPE)

[18:50:06] MCLEAN (voice-over): Tonight, actress Lori Loughlin and her husband fashion designer Mossimo Giannulli back in court. Loughlin sober demeanor walking into the courthouse is a stark contrast from how his last trip to Boston in April when she signed autographs and posed for pictures, waved to fans smiling as she walked into the court.

The hearing addressing conflict of interest concerns. Loughlin and her husband have attorneys from the same firm. Potential problem if there was ever a conflict between the two. Also their defense firm represented USC, the victim of the alleged fraud in a separate real estate case. And another firm represents a separate defendant in the college admissions scam.

Both told the judge they understand the risks involved with their arrangement and wanted to move forward with the same legal team. Loughlin and her husband have pleaded not guilty to fraud and money laundering charges. Each charge carries the potential sentence up to 20 years in prison. The couple is accused of paying a half a million dollars in bribes to get their daughters, Isabella and Olivia Jade, into USC as crew recruits, despite the government's allegation that neither had ever been involved in rowing.

Their parents allegedly provided photos to the school of their daughters on a rowing machine.

ANDREW LELLING, U.S. ATTORNEY, DISTRICT OF MASSACHUSETTS: These parents are a catalogue of wealth and privilege.

MCLEAN: More than 30 parents were charged in the scheme run by Rick Singer, a college admissions prep company COE and his phony charity. Singer has pleaded guilty and has been cooperating. Fifteen have pleaded guilty in exchange for leniency, including actress Felicity Huffman who took full responsibility for her actions, writing: My desire to help my daughter is no excuse to break the law or engage in dishonesty.

Huffman will be sentenced next month.

JOSEPH BONAVOLONTA, FBI BOSTON FIELD AGENT: This is a case they flaunted their wealth, sparing no expense, to cheat the system to set up their children up for success with the best education money could buy, literally.

MCLEAN: The charges have already inflicted the professional cost on Loughlin. No longer has shows on Netflix or the Hallmark Channel and brands like Sephora and Hewlett Packard had distanced themselves from daughter Olivia Jade, a social media influencer who posted this after being accepted into USC.

OLIVIA JADE GIANNULLI, LORI LOUGHLIN'S DAUGHTER: I don't know how much school I'm gong to attend. I want the experience of like game days, partying. I don't really care about school.

MCLEAN: After a scandal broke, a friend told CNN she was barely speaking to her parents. But she broke her silence on Instagram after five months, wishing her mother a happy birthday.

(END VIDEOTAPE)

MCLEAN: Now, USC would not say whether or not Loughlin's daughters are still enrolled but says there are 33 students with potential connections to the admission scheme who are under investigation. The school has also written to Loughlin's lawyers, warning them of a potential civil lawsuit -- Wolf.

BLITZER: Scott McLean reporting for us -- thank you. We have a lot more news right after this.

(COMMERCIAL BREAK)

[18:57:59] BLITZER: We're following rising tensions in the Middle East as Israel is accused of launching a series of new attacks on Iranian-backed forces. Let's go to CNN senior international correspondent Sam Kiley. He's

joining us live from Jerusalem.

Sam, Israel's proxy war with Iran seems to be threatening to explode right now.

What's the latest?

SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, Israel on Saturday, very late Saturday night, Wolf, launched missile attacks it claimed responsibility for almost as the bombs were going in. And what it said were Iranian targets and Iranian-backed militias in Syria that were on the verge of launching drones to attack northern Israel.

That is something the Israelis have accepted responsibility for. What they have not accepted responsibility, there have been a number of attacks including one that killed a militiaman over the weekend inside Syria, nor have they acknowledged any kind of connection to what is reportedly a drone attack on a Palestinian militant group backed by Iran inside Lebanon. Nor indeed have they accepted or responded to any of the allegations coming out of Lebanon that they were using drones very close to the Hezbollah media office, one of which exploded and broke some windows.

It's a rather mysterious situation across the region with Israel being blamed by her enemies really for these attacks. But very quick to claim responsibility, Wolf, when it came to hitting directly on Iranian personnel. This is more widely part of Israel's campaign, really, to make sure that Hezbollah and other militias do not get established in Syrian territory close to Israeli border, Wolf.

BLITZER: And I know, there is a lot of reports in the Israeli media that there -- the prime minister and others are nervous about a potential meeting that President Trump might have with the Iranian leader Rouhani. They're worried about the implications of that as well.

Sam Kiley in Jerusalem for us -- Sam, thanks very much for that report. And to our viewers, thanks very much for watching.

I'm Wolf Blitzer in THE SITUATION ROOM.

"ERIN BURNETT OUTFRONT" starts right now.

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