Show: THE RACHEL MADDOW SHOW Date: August 7, 2017 Guest: Jonathan O`Connell, Richard Painter, Ramesh Srinivasan, Marc C. Johnson

REP. KEITH ELLISON (D), MINNESOTA: — who live near them, their voters. And some of those people may not be the same race as the people who are the majority who live there. And so, we`ve got to get people who can speak authentically about the fact that so many people are just struggling to get food on the table in this economy.

And, of course, we need black women candidates. I`m all in favor of that and want to promote that. But we`ve got to get candidates who can really address the serious problems everywhere, all across this country, whether it`s in Detroit, Minneapolis or in western Ohio, and Appalachia.

CHRIS HAYES, MSNBC HOST, ALL IN: All right. Congressman Keith Ellison, Christina Greer, thank you for joining me.

That is “ALL IN” for this evening.

THE RACHEL MADDOW SHOW starts now with Joy Reid in for Rachel.

Good evening, Joy.

JOY REID, MSNBC HOST: Thank you very much, Chris. Appreciate it. Have a great night.

HAYES: You bet.

REID: All right. Thanks to you at home for joining us. Rachel has one more night off but she will be back tomorrow.

All right. It has now been five days since Donald Trump signed a Russians sanctions bill into law. Yet unlike previous, less consequential pieces of legislation, there was no elaborate signing ceremony, no Trump show and tell. The president signed the sanctions legislation, which was passed overwhelmingly by Congress in private, out of the public eye.

Prior to the signing, Russian President Vladimir Putin had announced that Russia would retaliate for the new sanctions by ordering the U.S. to cut its staff in Russia by 755 people. And on the day that Trump signed the legislation, Russian Prime Minister Dmitry Medvedev went, added another insult, going on a tweet storm, including this, quote: The Trump administration has shown its total weakness by handing over executive power to Congress in the most humiliating way. That was five days ago and we had been looking to see how the administration would react to this latest move from Russia and until today, the response had been basically silence, not even a patented Donald Trump Twitter clap back.

In fact, there`s been no response from the administration at all, that is until today. When following a weekend meeting with his counter part, Russian Foreign Minister Sergey Lavrov, Secretary of State Tillerson announced the next U.S. steps.

(BEGIN VIDEO CLIP)

REX TILLERSON, SECRETARY OF STATE: I told the foreign minister that we have not made a decision regarding how we would respond to Russia`s request to remove U.S. diplomatic personnel. We had — I asked several clarifying questions just to ensure I understood kind of their thinking behind that diplomatic note we received, but told him we would responsibility by September the 1st.

(END VIDEO CLIP)

REID: That`s Rex Tillerson today saying the U.S. will respond to the latest moves of expelling U.S. diplomats from their country. They`re still figuring out what exactly that response will be. But we know that response will come by September 1st. So, sometime in the next three to four weeks. Stay tuned.

In addition to the question of how the administration responds to Russia, there`s also the question of how it will respond to special counsel Robert Mueller and his investigation into Russia`s interference in the 2016 election. On Friday, “The New York Times” broke the news that Mueller had recently asked the White House to turn over documents related to former national security adviser Michael Flynn. “The Times” reported that the request though not a formal subpoena is the first known instance of Mr. Mueller`s team asking the White House to hand over records. Now, remember, it was FBI`s investigation into Michael Flynn and the president`s potential interference in that effort which led indirectly to the appointment of Mueller as special counsel in the first place.

Mueller`s appointment as special counsel came the day after “The New York Times`” Michael Smith reported on an existence of a memo from fired FBI Director James Comey, saying that during a meeting in the Oval Office, the president had pressured him to drop the investigation into Michael Flynn. Quote, I hope you can let this go, Donald Trump told Comey, according to that memo.

The decision to appoint Robert Mueller special counsel was made by the number two at the Justice Department, Deputy Attorney General Rod Rosenstein, who you will recall also wrote the memo used as the pretext to fire Comey. In his order establishing the special counsel, Rosenstein charged Mueller with investigating quote any links and or coordination between the Russian government and the individuals associated with the campaign of Donald Trump, as well as any matters that arose or may arise directly from the investigation.

In subsequent testimony on Capitol Hill, Rosenstein made it clear he would protect Mueller from any undue interference from the administration.

(BEGIN VIDEO CLIP)

SEN. SUSAN COLLINS (R), MAINE: If President Trump ordered you to fire the special counsel, what would you do?

ROD ROSENSTEIN, U.S. DEPUTY ATTORNEY GENERAL: Senator, I`m not going to follow any orders unless I believe those are lawful and appropriate orders. Under the regulation, special counsel Mueller may be fired only for good cause and I am required to put that cause in writing. And so, that`s what I would do and if it were not good cause, I would consider it. If there were not good cause, it wouldn`t matter to me what anybody says.

(END VIDEO CLIP)

REID: Deputy Attorney General Rod Rosenstein back in June, saying that Robert Mueller could only be fired for, quote, good cause. So, this weekend, Rod Rosenstein appeared to defend Robert Mueller and his mandate again. Appearing on a Sunday show, Rosenstein said Mueller could investigate any crimes he uncovered.

(BEGIN VIDEO CLIP)

ROSENSTEIN: The special counsel is subject to the rules and regulations of the Department of Justice and we don`t engage in fishing expeditions. If he finds evidence of crime that`s within the scope of what Director Mueller and I have agreed as the appropriate scope of this investigation, then he can. If it`s something outside of that scope, he needs to come to the acting attorney general, at this time me, for permission to expand his investigation.

(END VIDEO CLIP)

REID: That`s the attorney general — the deputy attorney general appearing to draw a line in the sand, saying that if Robert Mueller finds evidence of a crime within the scope of his investigation, then he should be allowed to fully investigate it without interference. Now, that was yesterday.

This morning, “Axios” reported that the president`s outside legal team appears to be adopting a new, more conciliatory tone toward Robert Mueller in an effort to lower the temperature regarding the Russia investigation. The article warned that despite the new tone coming from his lawyers, quote, what will matter is what Trump says, and he has shown he`s willing to change course with any whim or tweet.

And as if right on cue, Donald Trump began tweeting disparagingly about Connecticut Senator Richard Blumenthal today, and calling the Russian story a hoax after the senator appeared on television to discuss legislation that he`s proposing that would prevent the president from firing Mueller.

A few hours later, at a news conference in his home, Senator Blumenthal discussed his fears about the fate of the investigation.

(BEGIN VIDEO CLIP)

SEN. RICHARD BLUMENTHAL (D), CONNECTICUT: The special counsel and the president of the United States are on a collision course. They are heading toward a constitutional confrontation that could lead to a crisis.

(END VIDEO CLIP)

REID: One sure way to determine whether the White House and special counsel are indeed on a collision course and heading towards a constitutional confrontation will be whether the White House complies with Mueller`s request for White House documents regarding Michael Flynn. Now, again, as “The Times” reports, this marks the very first time the special counsel had asked the White House to voluntarily comply with a document request.

So what will be the response?

Joining me now is “New York Times” Washington correspondent Michael Schmidt, who co-wrote the story about special counsel Mueller seeking White House documents on Mr. Flynn.

Michael, good to see you. Thanks for being here.

MICHAEL SCHMIDT, WASHINGTON CORRESPONDENT, THE NEW YORK TIMES: Thanks for having me.

REID: So, let`s talk about that voluntary request. In you reporting, were you able to determine why the request was voluntary rather than a subpoena?

SCHMIDT: Yes, this is very early on in the investigation. It`s kind of like the second inning. And early on, the government will go to one side that it`s trying to learn information from and ask for the documents voluntarily. A lot of times, lawyers are able to work out that and hand over the documents. And when they`re not, then you see things like subpoenas and then in the most extreme cases search warrants.

But — so, this is sort of the initial thing saying, hey, look, we`re interested in looking at these issues, we`re interested in this stuff. Can you produce this stuff to us voluntarily? And that`s what we`ve seen here.

REID: And were you able to determine sort of the scope of the kinds of documents they`re looking for? Are we talking about things related to Michael Flynn`s participation, the Trump campaign, or broader request related to sort of other business dealings that were going on at the time he worked with the Trump team?

SCHMIDT: Well, there`s a few things we can learn from this. We would know that this would not be a specific request about the campaign because that stuff would go to the campaign. So, this is stuff about Flynn`s time at the White House. And it`s not stuff — you know, personal to Flynn, that would go to Flynn`s lawyer.

So, it`s something about Flynn`s time at the White House and about him specifically. We don`t know anything beyond that. And what we know is the issues that came up with Mike Flynn when we was at the White House. One of them was an FBI interview just days after Trump was sworn in about Flynn`s call with the Russian ambassador during — in the weeks before Trump was inaugurated and that we also know about the questions about whether Flynn was still, you know, taking money from the Turkish government and doing work for them when he was national security adviser at the White House. If you remember, Flynn, you know, basically is gone within the first month of the administration, is forced to resign.

REID: Right. And, you know, he only lasted that 27 days as you mentioned, but within that time, you had Sally Yates coming over from the Justice Department to warn the White House counsel`s office and others potentially in the White House about Flynn. In your reporting, do you have any information that Robert Mueller`s investigators may want to talk to all of the people that Sally Yates talked to and indeed talk to Sally Yates?

SCHMIDT: No, I mean, I think that Mueller is going to want to talk to everyone at the White House because if you remember, the big question here, which sort of starts all of this is this February 14th meeting in which Comey and Trump are — Comey says they`re alone in the Oval Office and Trump asked him any investigation into Flynn because before that meeting, the vice president, the chief of staff and several other members of the cabinet and aides were in the Oval Office before the president cleared it out. So, Mueller at the very least will want to talk to those folks about whether they were cleared out of the Oval Office and whether this one on one meeting actually happened between Mueller and Comey, because Comey obviously testified, laid all of this out to Congress about the one on one meeting, but Trump said to us, we interviewed him last month, and he said that meeting had not happened.

So, even basic questions like that that Mueller will try to get at will require interviewing a lot of folks that were in the White House and are a part of the administration.

REID: And I`m wondering if your reporting also backs up this “Axios” reporting that the Trump legal team is trying to adopt this more conciliatory tone, to sort of lower the temperature on their interactions with the special counsel`s office, Donald Trump`s Twitter habits notwithstanding.

SCHMIDT: Yes. I mean, I think the thing about Trump world is that there`s different factions. There`s the lawyers who want to take a more conciliatory tone and want to, you know, not attack Mueller and want to see if they can work with him and move things along in that direction but then there`s other folks in Trump`s world that really want him to attack Mueller and they really want to go after Sessions, and would want him to do that.

So, what we`ve seen here is sort of a tug of war between the two of them. At times, Trump has really gone after Mueller, really gone after Sessions. At other times, it seems like in recent days, he`s sort of ratcheted that back. And it remains to be seen whether the president will be able to keep that posture towards Mueller, or whether he will erupt and criticize Mueller publicly in tweets or even go as far as firing him, something that Democrats, you know, essentially say is a red line for them.

REID: Yes, absolutely. Well, we will definitely keep an eye on it. “The New York Times” Washington correspondent, Michael Schmidt, thanks as always for you time.

SCHMIDT: Thanks for having me.

REID: Thank you.

All right. For more on this potential collision course between the White House and the special counsel, let`s bring in Barbara McQuade, a former U.S. attorney who was fired, along with all the other U.S. attorneys, earlier this year.

So, let`s pick up where we left off there. The White House trying to change the tone but Donald Trump again going on a tear today, taking it out on Richard Blumenthal, on the senator who is trying to make it harder for him to fire Robert Mueller.

Just from a legal standpoint, what does that do for the legal strategy when the client is going off when they`re trying to be more conciliatory inside the legal house?

BARBARA MCQUADE, FORMER U.S. ATTORNEY: I think any defense attorney would tell you that they would like for their client to just keep his mouth shut. That would be the strategy that I think most defense attorneys would suggest to their client.

But I think Donald Trump is appealing not just to the legal issues here but is also trying to win in the court of public opinion with his base. And so, by undermining efforts to investigate him or anyone who might be his critic, I think he`s trying to shore up his base so that if at some point down the road there are charges, he can say I told you all along that this was a bunch of nonsense and these people were not to be believed.

REID: And Richard Blumenthal talked about — Senator Blumenthal talked about a potential constitutional crisis. You know, so far, there`s the conciliatory tone from the attorneys. But what if this request for voluntarily turning over documents is then denied and the White House fail to do it. Where would we then go from there?

MCQUADE: Well, it is not uncommon as we heard to start a request with — you know, an informal request such as this to see if you can voluntarily get the documents that you need without fighting it out. But if those documents are not turned over, then the next step would be to use a grand jury subpoena, which has powers, it has contempt powers. If the White House should fail to comply with that compulsion of a subpoena, then people could be put in jail.

So, I think they`re taking it through a route of professional courtesy. But if not, I think all the lawyers involved know that they have a heavy hammer to back it up if they don`t comply.

REID: And just, putting on your U.S. attorney hat, what do you make of Donald Trump`s fertile (ph) sensitivity to anything about Michael Flynn? That seems to set him off, any mention of Michael Flynn. There`s the allegation by Comey that he specifically asked him to lay off Michael Flynn.

What does that tell you just in sort of your investigative mind?

MCQUADE: Well, it sets off red flags for me because I think as we have seen, Donald Trump is not particularly loyal to the people who work for him. And so, the idea that he`s trying to protect him out after a sense of friendship or loyalty doesn`t really ring true. It makes me wonder if there isn`t some red flag that they`re on to something that could lead to an investigative path toward the Trump campaign o Trump himself.

REID: And lastly, you know, sort of a similar question that I asked Michael Schmidt. If you`re talking about that 27-day period when Michael Flynn was the national security adviser, the warnings about him came from Sally Yates. They potentially went through the White House counsel`s office. For all we know, they could have gone to the attorney general of the United States. You know, how wide are we talking about in terms of people who could potentially be subpoenaed and have their records subpoenaed to testify about Michael Flynn and his activities?

MCQUADE: Well, one thing of the first things the prosecutor wants to do is get his or her arms around all the documents and identify all of the people who might have information about this. We`ve been talking about a lot of the famous names that we heard, the Sally Yates (AUDIO GAP) Comey and the like. But there are a whole series of people who are likely involved whose names we don`t know, the aides, the staffers, the naval stewards who served lunch or dinner to Jim Comey and President Trump. All of those people who may have overheard something or been involved in some meeting, and were witness, it will be just as important for Mueller and his team to interview those people.

REID: Yes. All people who now have to find the money for lawyers, they must be excited about that.

Former U.S. Attorney Barbara McQuade, thank you so much for your time.

MCQUADE: Thanks, Joy.

REID: Thank you. All right. A lot more to come here tonight, including what could be a way for Vladimir Putin to get around U.S. sanctions.

And up next, why a little “help wanted” ad reveals a whole lot about the American president and his family.

We`ll be right back.

(COMMERCIAL BREAK)

REID: OK. You`ve heard the old saying, necessity is the mother of invention. Well, watch this.

Those are protesters outside the Trump National Golf Club in Bedminster, New Jersey, where the president is currently on his 17-day vacation that he totally insists is not a vacation because he really totally is working at the golf club.

Police banned protesters from congregating outside the club, citing road safety. So, the local chapter of We The People decided to get creative, no picketing, no problem. They can still drive. So, they formed a motorcade.

Bedminster is Donald Trump`s summer retreat. But tonight, “The Washington Post” have a scoop about the president`s winter retreat, Mar-a-Lago. It may only be August, but apparently, it`s not too soon to staff up for the winter. The social season down in Palm Beach, Florida, is hot and Mar-a- Lago is hiring.

Here`s the help wanted ad on page C8 of “The Palm Beach Post”. Get out your magnifying glass. They need 35 workers to, quote, serve food and beverages, take orders, complete side work, clear and carry dishes, keep stations clean, supply linens. You can mail in your resume or get this, apply by fax. That`s so throwback. Fax.

The ad ran only two times and then it disappeared. Poof. But if you`re thinking that`s a strange way to get the best applicants for your business, you would not be wrong. The teeny tiny little ad tucked away on page C8 written in fine print so small you need bionic eyesight to see it appears to have been at best a less than sincere effort to hire American as Donald Trump is so fond of saying. At worst, it appears to have been a ruse. “The Washington Post” has been reporting tonight that suggest — has reported tonight that suggests it might be the latter.

One week before that teeny tiny little ad ran, Mar-a-Lago asked the Labor Department for permission to hire foreign workers, not American workers, 70 of them, 35 waiters, 20 cooks, 15 housekeepers. They would come to the U.S. on what are called H-2B visas. In order to get those H-2B visas, you first have to prove that you couldn`t find qualified Americans to fill those jobs.

By law, Mar-a-Lago needed to search for American workers for 14 days before it could move to the next step in the process, seeking visas for foreign workers. That second step is to send documentation to a Labor Department office attesting to the company`s inability to hire Americans. Attesting to its inability to hire Americans.

So, let`s just get this straight. The Labor Department says that before you can hire the foreign workers, you first have to prove you at least attempted to hire Americans but you couldn`t find any American workers. And you can`t find any American workers if they never apply and they can`t apply if they don`t see the ad. You see where I`m going?

So, think about it. If your real goal is to hire foreign workers, but first, you have to prove there aren`t any Americans for the job, what would you do? Maybe? Maybe? You`d place a tiny sad little ad, an ad that`s hidden away in the back of a newspaper and it`s gone the blink of an eye.

Mar-a-Lago put that ad because that request in for foreign workers smack in the middle of Made in America Week and the ad ran days before Stephen Miller took to the briefing room podium to unveil the Trump administration`s new immigration plan, which would crack down on legal immigration.

And this scoop comes from “The Washington Post`s” Dave Fahrenthold and Laurie Rosa (ph). Fahrenthold, you might remember, took home a Pulitzer Prize for his dogged reporting during the campaign, relentlessly following the money when it came to then-candidate Trump`s charitable donation or lack thereof.

And tonight, one of his colleagues at “The Post” has delivered a scoop of his own, using the same kind of bloodhound determination. This reporter spent every single day in the month of May in and around the Trump Hotel in D.C., and we`re going to tell you what he discovered next. You do not want to miss it.

(COMMERCIAL BREAK)

REID: The day after he ousted Reince Priebus, Donald Trump dine out with his brand-new chief of staff, General John Kelly, at his very favorite place to eat in D.C., the Trump International Hotel, less than a mile away from the White House. As “The Hill” noted at the time, it was the 57th day he spent in a Trump property as president.

Now, that was a week and a half ago and already, that number has climbed to 62. According to “The New York Times`” running count of all of the things about the Donald Trump presidency that are abnormal. Perhaps the most abnormal of all is the way that he and his family are making money off his being president.

As “The Washington Post” puts in an incredible piece of reporting today, quote: For the first time in presidential history, a profit making venture touts the name of a U.S. president in its gold signage. And every cup of coffee served, every fundraiser scheduled, every fillet mignon ordered feeds the revenue of the Trump family`s private business.

The Trump D.C. hotel sits in the old D.C. Post Office building, a property being leased by the Trump Organization from the government which is now, of course, being led by Donald Trump. Once he became president, Donald Trump turned over the management of the hotel to his sons and promised not to take any profits from it while he`s in office. However, he still has an ownership interest in the hotel, meaning he`s still going to profit from it eventually.

“Washington Post” reporters spent every day in May in the Trump Hotel`s bars, restaurants and lobby to get a sense of who is spending time and money there. It`s a place where Republican Party bigwigs, business and foreign interests, and tourists go to wheel and deal and wine and dine with the president of the United States at the place he likes to eat at in D.C., something that`s unprecedented in American history.

Joining us now is Jonathan O`Connell, “The Washington Post” reporter responsible for this story.

All right. Jonathan, so tell us what you found. Who is hanging out at the Trump D.C. hotel?

JONATHAN O`CONNELL, COVERS THE TRUMP ORGANIZATION, THE WASHINGTON POST: It`s really a mix of all sorts of different groups. But the thing that I really want to get across is that the hotel has become the center of Republican politics in Washington. You know, any given night you go down there, if you went down there tonight, you could see a member of Trump`s inner circle, you could see a member of his family, you could see a Republican member of Congress holding a fundraiser for reelection.

You could see a protest. He saw protests a number of nights that we were down there because those folks who are resisting the president and don`t like the administration, are using the hotel as a target on a routine basis.

And the other thing you see down there is you see fans. It`s a little bit like Trump Tower in New York where there are fans of the president that show up on a routine basis. It`s the same thing at the Trump Hotel. You see people in, you know, “Make America Great Again” hats and fanny packs that are visiting Washington.

REID: Yes. And is this because, you know, Washington is a particularly Democratic town. I know during the Obama years, it was a town that became very culturally, you know, sort of jazz and blues and very Obama like. Is it because the Republicans feel comfortable there or is it because they feel like they can influence Donald Trump by spending money there?

O`CONNELL: You know, it`s — there`s definitely a mix of folks there. I mean, I think Mr. Trump only won about 4 percent of the vote in the District of Columbia. But for Republicans who are supporters of Trump and feel like they`re a minority in this town, the hotel is a place to go and be around folks that you know are likely to share a viewpoint with you.

So — and not only that, you also get the rub shoulders with members of the cabinet, or Trump`s inner circle or other Republicans who are sort of bigwigs. There are so many different folks there who have a role in the government now or who had a role in Trump`s campaign or who had a role in other Republicans` campaigns who are going there on a routine basis. We`ve seen Rudy Giuliani. We`ve seen Newt Gingrich.

We`ve seen members of — people who are working for the administration, and it`s an every night kind of thing. It`s really the social circle of Republican politics now.

REID: And very quickly, what about the sort of foreign wheeling and dealing that`s going on there, because, you know, there`s some discomfort, at least some people in Washington, with the idea that foreign dignitaries can essentially hand over money some money to the president of the United States by swiping their card in the bar or for a room.

O`CONNELL: Sure. I mean, that`s like the principal legal concern here, I think, which is that if foreign governments are spending money at the hotel, are they doing sort of create some sort of favor to the administration? And there`s — you know, there`s a clause in the Constitution, the Emoluments Clause, little know until now, which specifically bars the president from receiving benefits or payments from foreign governments.

REID: Right.

O`CONNELL: So the hotel, specifically, the management of the hotel specifically is sort of avoiding booking foreign governments there because the company has agreed at the end of the year to donate profits from those events.

REID: All right.

O`CONNELL: So, but they make — they have a little way around that, which is they can book foreign entities that are not foreign governments and keep that money.

REID: Yes. Jonathan O`Connell, reporter for “The Washington Post”, thank you very much. Spent a month in — basically in the Trump Hotel. Thanks for doing that.

O`CONNELL: Thanks for having me.

REID: All right. Joining us now is Richard Painter, vice chairman of Citizens for Responsibility and Ethics in Washington. He`s the former chief White House ethics lawyer under President George W. Bush, and he`s part of a lawsuit alleging that Donald Trump is illegally making money from foreign governments by way of that very Trump D.C. hotel.

So, Richard, thanks for being here.

You heard Jonathan`s story. There`s one part in his story where he talks about a group that`s suing Saudi Arabia, 9/11 families who wound up having their bill paid by the Saudi government just before Donald Trump went to Saudi Arabia. Is that the kind of thing that has led the CREW and the group that you`re part of to sue?

RICHARD PAINTER, FORMER CHIEF WHITE HOUSE ETHICS LAWYER UNDER PRESIDENT GEORGE W. BUSH: Well, yes, that`s part of it. The president and other United States government officials are prohibited from accepting presents or emoluments. And emoluments means profits or benefits from transactions with foreign governments. And this would include any foreign government picking up the tab at a Trump hotel.

It also includes the financing that the Trump Organization is getting from foreign governments, foreign governments owned banks and perhaps sovereign wealth funds. And the president refuses to disclose the financing of his business empire and gets every nervous whenever Robert Mueller wants to get anywhere near his financial arrangements, which makes us that much for suspicious that we`re on to something here, that that there is significant amount of foreign government money coming in and out of the Trump organization.

And that`s something that the Founders did not want. They said that nobody holding a position of trust in the United States government can accept presents and emoluments. That is profits or benefits from dealings with a foreign government. And that`s what`s going on here. And we`ve asked a federal judge in New York to look at this, find out what the president is getting, interpret the Emoluments Clause and then enter an injunction and tell him what he cannot keep.

REID: But before you even get to that, I think what I`ve never been able to really understand, and Richard, you were, you know, a White House ethics lawyer. You worked in the White House. How did Donald Trump get it approved to be both the landlord and the tenant essentially as the head of the United States government, he`s the head of government and he is essentially leasing that hotel from his own government.

How can — how is that legal?

PAINTER: I don`t think it is. The lease that the Trump Organization signed with the GSA said that a United States government official could not share in the profits of the lease and that`s exactly what he is doing. And the GSA said, well, we`re just paying the profits to a trust instead of to Trump directly. Well, guess who the beneficiary of the trust?

What they`re doing is putting form over substance. And that`s exactly the type of thinking that gave rise to Enron and Wellcome. We have all the shell entities.

What you`ve got to do is focus on the economic reality. Economic reality is the money is going to the president of the United States. The GSA wanted to prevent that in the lease. It`s a violation of the lease terms.

We cannot have a situation where there`s a building there, it`s a federal government owned property and people are going there, paying a lot of money to the Trump Organization for access to Trump administration officials. We just don`t do business that way. We don`t have the president put his hat out in front of the White House and people put money in it to go into the White House and talk to people.

REID: Yes.

PAINTER: We don`t do this at the Trump Hotel. It`s not acceptable for people to have to pay money to the Trump Organization or to get in there and get access to United States government officials.

And this is corruption. And it makes our country look like a corrupt country. It`s really destroying our reputation around the world.

And I don`t understand why President Trump doesn`t understand the need to simply get rid of the property. He could have sold the hotel. That`s a project he went in to before he became president, before he ever thought he would become president. Why not just sell the hotel —

REID: Yes.

PAINTER: — and focus on being president? He has one place on Pennsylvania Avenue to take care of and it`s called the White House. He`s there to be president. Not name keeper.

REID: Yes. Well said. Richard Painter, former head of the Office of Government Ethics under President Bush — thank you so much for joining us.

PAINTER: Thank you.

REID: Thank you.

And still ahead tonight, the way the White House is now trying to avoid us, the press. Hint, it goes well beyond presidential tweets.

Stay with us.

(COMMERCIAL BREAK)

REID: It was not clear to most observers in the days leading up to the presidential election that Donald Trump would become our next president. What was clear was that the Trump campaign was gearing up for a future beyond the White House, that they were looking for way to harness the energy that Trump cultivated on the campaign trail to possibly turn it into a very powerful and potentially lucrative media venture.

“Vanity Fair” first pointed this out last summer with this blunt headline, quote: Exclusive, is Donald Trump`s end game the launch of Trump news?

It didn`t take the Trump campaign long to say hey why can`t we do that right now.

(BEGN VIDEO CLIP)

UNIDENTIFIED MALE: Ten seconds.

UNIDENTIFIED MALE: All right.

UNIDENTIFIED FEMALE: OK.

UNIDENTIFIED MALE: Nine, eight, seven —

UNIDENTIFIED FEMALE: Happy New Year.

UNIDENTIFIED MALE: We`re live.

UNIDENTIIFED MALE: All right. Welcome in to Trump Tower live. I`m Cliff Simms (ph) with the Trump campaign. I`m joined by Boris Epstein on my right, and campaign manager Kellyanne Conway on our left. We`re going to each night, about 6:30, come to you live right here from the Trump campaign war room.

(END VIDEO CLIP)

REID: Wow. And they were off.

Trump TV found a home on Donald Trump`s Facebook page during the campaign. It never really broadened beyond that page. And when Trump actually won the election, Trump TV kind of fizzled out.

But now, Trump TV is back in more ways than one. For one, the Facebook videos are back. They`re being paid for by Trump`s reelection campaign and filmed at Trump Tower. They`re produced to look like short news updates anchored by presidential daughter-in-law, Laura Trump, wife of Eric, who insists that she`s giving you the, quote, real news.

(BEGIN VIDEO CLIP)

LAURA TRUMP, PRESIDENTIAL DAUGHTER-IN-LAW: Hey, everybody. Laura Trump here.

I bet you haven`t heard of all of the accomplishments the president had this week because there`s so much fake news out there. We wanted to give you a glimpse into his week.

(END VIDEO CLIP)

REID: It`s the real news.

This weekend, Trump TV snagged a veteran of actual cable news when former CNN commentator Kayleigh McEnany announced her departure from CNN on Friday. She then turned up on Trump`s Facebook page delivering the news, straight to the camera the following day.

As of today, she has yet another new gig. She`s officially on the RNC payroll as their new spokesperson.

So, Donald Trump`s reelection campaign has just reignited Trump TV. But the president`s media operations is expanding even beyond Facebook. Your friendly neighborhood Trump supporting commentator/faux anchor who you saw in that video that we showed you from October, remember him? That was Boris Epshteyn, who you`ll remember as one of the main Trump surrogates during the campaign.

Until April, he was working for the White House. Well, now, he works Sinclair Broadcast Group as its chief political analyst and host of a series of mini on-air reports called “Bottom Line with Boris.” Sinclair Broadcast Group owned stations in 81 markets across the country and in June, Sinclair told its stations that they were required to air the “Bottom Line with Boris” segments nine times a week. They are must run segments and they are basically on topics the White House wants you to hear about, framed in a way that put issues in a very positive light for the administration.

And now, Sinclair is about to expand its reach further, through a new deal that they are pursuing which once it goes through will allow Sinclair stations to reach 72 percent of all U.S. households nationwide. That`s beyond the reach that the FEC typically allows.

But luckily for Sinclair, they`ve got a friend in the government, specifically the FCC, Ajit Pai, the man handpicked by Donald Trump to be the FCC chairman. You may know Mr. Pai as the person who`s trying to kill net neutrality. Well, he`s also the guy bending the rules that will ensure Sinclair can reach three-quarters of the country with their pro-Trump “Bottom Line with Boris” messaging. And if it hasn`t done so already, Trump`s preferred narrative may soon be creeping into your regular news diet and it`s happening really quickly.

Joining us now is Ramesh Srinivasan and he`s a professor of information studies at UCLA and author of the book “Whose Global Village? Rethinking How Technology Shapes Our World.”

Hope I didn`t mangle your name too badly.

RAMESH SRINIVASAN, UCLA CENTER FOR GLOBAL DIGITAL CULTURES: You actually nailed it.

REID: I got it. All right. Yes!

So, let`s talk about the Sinclair deal because I think to the ordinary person you`re thinking, wait a minute, how can one company reach 72 percent of the country with essentially propaganda.

SRINIVASAN: Right. So, this is actually a nothing less than a massive assault on our democracy and on our media institutions. What we`re talking about here is the takeover of local television stations by a conglomerate. Previously, Sinclair was only allowed, like any other media company, allowed to access 39 percent of American households. And if you saw the distinction between the two maps that you showed —

REID: Yes.

SRINIVASAN: — you can see that now, this media group has taken over local TV stations. So, this is not national TV stations that some people have skepticism around.

REID: Right.

SRINIVASAN: This isn`t “Breitbart”. This isn`t, you know, sort of a right wing, even FOX News Channel.

REID: Yes.

SRINIVASAN: This is your local channel.

So, the people in this country have some sort of sense of division and they have a sense of distrust of institutions right now. But one thing people tend to trust are, you know, the mom and pop places, the local TV stations. But what happens when those are taken over by a conglomerate that we know that is planting, directly forcing stories onto local TV networks? So, this is a media strategy and this is fundamentally anti-democratic.

REID: And Sinclair has a history, right? I mean, this isn`t their first time, “Bottom Line with Boris” isn`t their first foray into sort of tilted news.

SRINIVASAN: Exactly. And you see these very various sorts of shadow media figures that are behind the Trump rise, right? I mean, we`ve, of course, talked about Steve Bannon, I have spoken on MSNBC before about Cambridge Analytica and Robert Mercer and the data kind of wars.

REID: Yes.

SRINIVASAN: And this is another figure. Mr. Smith, the CEO of Sinclair. And we see examples of how Sinclair has actually essentially used Epshteyn to show up on various channels to dispute and change narratives around various sorts of more factually forums of reporting that are actually critiquing what Trump is doing. For example, around the Flynn story.

REID: Right. And has there been any pushback from the stations themselves and the employees there?

SRINIVASAN: It`s really hard to do, right? I mean, these stations tend to not have a lot in terms of financial sustainability. They`re being bought out by conglomerates.

And this is the issue. In the divided America, this is the key point for me, in a divided America, what does Trump need to survive? Trump has not been successful at almost anything. I can`t say for his life, given his public life, he`s not been a great businessman, apparently he`s not a great golfer either.

But what he`s successful for was the ratings that he got as a media showman, right?

REID: Yes.

SRINIVASAN: So, if he`s the showman on a media empire that`s taking over not just Facebook and so on, but also your local TV stations, there`s a powerful possibility to maintain that base, because we see that base eroding.

REID: Yes.

SRINIVASAN: And this is a very intelligent media strategy that I think people need to pay attention to. I`m really glad you`re reporting this.

REID: Yes, it`s scary stuff.

Ramesh Srinivasan, thank you so much for being here.

SRINIVASAN: My pleasure.

REID: Really appreciate you.

All right. UCLA professor Ramesh Srinivasan, he will definitely be back.

And now, Russian President Vladimir Putin had just made a significant about-face and it could help him avoid international sanctions, believe it or not. That story is next.

(COMMERCIAL BREAK)

REID: OK. So for this segment, to get us all on the same page, we`ve decided to employ a time-worn television device, the visual aid. This is a crisp $20 bill. It still has Andrew Jackson on it, so we`ll overlook that.

Now, as you know, it`s worth $20 because the United States government says it is, right? Both the secretary of the treasury and the treasurer of the United States have put their official signatures on it. You can fold this paper up. You can put it in your pocket. Bye-bye, 20. It`s mine now.

Or you can hand it to someone in exchange for goods and services and put it in the bank.

You get these dollars, like the one I`m probably going to give back, from the bank in the first place, which gets them from the United States government. But, of course, you knew that.

This, however, is bitcoin. There`s no physical coin to put in your pocket, just a long string of numbers and letters that represents your wallet, and another one that represents the wallet of the person you`re trading with. You send your bitcoin to them using your laptop or your phone, and you get back whatever it is you agreed to trade your bitcoin for, which sometimes is just regular money.

This is what a bitcoin transaction looks like. We just picked one out at random that happened sometime today and blurred a few digits just to be on the safe side. Now, we have no idea who this transaction is between or what it`s about.

Bitcoin is a crypto currency, which is a fancy way of saying it uses encryption to keep transactions safe. I can`t pretend to be you, and you can`t pretend to be me when we trade with bitcoin because of the encryption, and it makes the transaction impossible to forge. And each transaction is verified and recorded by other bitcoin users in a kind of digital ledger called a block chain.

How they do it is not really important for the purposes of this story, but the fact that digital currency allows for unanimity is super important. Why, you ask? Well, guess who suddenly really interested in crypto currency? Guess who suddenly appears to be interested in creating a Russian version of crypto currency similar to bitcoin?

I`ll give you one guess. His name rhymes with had a beer gluten.

(LAUGHTER)

REID: Joining us now is Marc C. Johnson. He`s a former CIA officer and a contributor to “The Daily Beast.” And he wrote an eye-catching story this weekend called: Why is the Kremlin suddenly obsessed with crypto currencies?

Marc, thanks for being here.

And why is the Kremlin so interested in crypto currencies?

MARC C. JOHNSON, FORMER CIA OFFICER: Thanks for having me, Joy.

Well, you know, I mean, I think there`s a lot of reasons why the Russians would be interested in crypto currencies. You know, there are plenty of very legitimate uses for them, and the banking industry in the United States and elsewhere is exhibiting a lot of interest in it. But the point I make in the piece is that the sanctions that have been put on the Russians are getting more stiff by the day, and that causes them to, you know, look for other ways of getting money out of the country.

And the sanctions that the Congress just put in place, I think, are going to make it even harder for the Russians to move money. And so, they`re looking for other alternatives.

REID: Now, there was a time when the Russian government, when the Kremlin was very opposed to these kind of crypto currencies, right? When did the change take place?

JOHNSON: Yes, about a year ago, as recently as a year ago, they were talking about imprisoning people for up to seven years for using bitcoin. And so, you know, it was really interesting to me, and this is sort of the genesis of this story when I noticed that, all of a sudden, they were saying, you know, not only are we not going to make it illegal, but we are interested in doing our own kind of crypto currency.

And Vladimir Putin actually met with one of the founders of one of these coins on the fringes of the St. Petersburg National Economic Forum in June. So, that was — that was sort of, you know, what — that was a signal at least to me that they had completely changed their script and were now really interested in pursuing crypto currencies.

REID: And do you have specific reporting that Vladimir Putin and his sort of oligarchic friends are specifically interested in it as a way to evade sanctions?

JOHNSON: Yes, and that was actually the real aha moment in the story is I discovered that there`s this guy — there`s a parliamentarian Andrei Lugovoy (ph) who said that he`s really interested in not bitcoin specifically but some other types of crypto currencies, and he thought that they were actually away they could get around sanctions. He actually told this to a conference.

But the key point was that — was who this guy is. Andrei Lugovoy (ph) is one of the two guys that they believe is responsible for the death of a Russian spy, Alexander Litvinenko with polonium 210 poisoning in London. So, you know, that really got my attention.

REID: Yes. And your story has certainly gotten our attention. Former CIA officer and “Daily Beast” contributor, Marc C. Johnson, thank you so much for walking us through all of that.

JOHNSON: Thanks for having me, Joy.

REID: Thank you.

All right. Well, two things to keep an eye on this week. One, Rachel will be back here tomorrow night. Those of you who just tweeted me, that is the answer to your question.

And two, well, for that, you`re going to have to stick around. We`ll be right back.

(COMMERCIAL BREAK)

REID: Members of the House and the Senate officially kicked off their August vacation because lucky for them, Congress does not have to show up for work in August. At least 50 members of Congress have town hall meetings scheduled over the August recess, and the people at home are ready.

(BEGIN VIDEO CLIP)

UNIDENTIFEID MALE: Cory Gardner, why on earth did you vote for the Republican health care bill when the vast majority of your constituents opposed it?

(CHEERS AND APPLAUSE)

SEN. CORY GARDNER (R), COLORADO: Five hundred thousand people, Coloradans who were promised they could keep their plans if they like their plans, had their plans canceled. We`ve seen higher cost increases in insurance. If you live in Colorado, the insurance commissioner says that you will see double-digit insurance increases this year. The challenge is — the challenge is —

UNIDENTIFIED MALE: He asked you a direct question.

GARDNER: Why I voted for it? Because I will vote to continue to work to repeal and replace the Affordable Care Act that will (INAUDIBLE) cost and increase the quality of care.

(END VIDEO CLIP)

REID: Well, that was Durango, Colorado, this past Friday. Republican Senator Cory Gardner getting an earful from his constituents for voting yes to repeal Obamacare.

Today, Republican Congressman Mark Meadows held a town hall in Flat Rock, North Carolina. He tried to explain the latest in the Republican plan to replace Obamacare.

(BEGIN VIDEO CLIP)

REP. MARK MEADOWS (R), NORTH CAROLINA: The most talked about thing in the last two weeks has actually been a proposal that Lindsey Graham has been working on, and that is more with granting Medicaid and Obamacare subsidies. We`ll get into that later.

(BOOS)

Well, we`ll get into whatever you want to talk about. We look at actually increasing some of the funds that are there and block granting those to the state. So that way North Carolina —

(BOOS)

This is a Republican who is saying that this — we`re wanting to do this with a Democrat governor, guys. I mean y`all talk about — so —

UNIDENTIFIED MALE: One-point-three million people lose coverage in North Carolina.

(END VIDEO CLIP)

REID: Wow, the congressman might want to start wishing they had booked their summer vacations in Europe instead of heading back to their home districts. There`s still 24 days left in august. It`s going to be a long recess. Watch this space.

All right. That does it for us tonight. Rachel will be back in this very chair tomorrow.

Right now, it is time for “THE LAST WORD” with the great Lawrence O`Donnell.

Good evening, Sir Lawrence.

END

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