Trump Lawyer's Records Are Seized as Hush Money Questions Swirl

(Bloomberg) -- Michael Cohen, the president’s personal attorney, began the week as an embattled fixer who had paid adult film star Stormy Daniels to keep silent about her claims of having had sex with Donald Trump more than a decade ago.

By the end of the day Monday, Cohen faced an ominous future after the FBI raided his office, home and hotel room in New York as part of an investigation into possible financial crimes.

Cohen is under investigation for bank fraud, wire fraud and campaign finance violations, the Washington Post reported. Agents seized records related to the $130,000 Cohen paid Daniels, took his computer, phone and personal financial records from his New York office, the paper said.

“I think it’s very likely that they will be looking at the source of that money paid to Stormy Daniels, and any other women,” said Mimi Rocah, a former federal prosecutor in New York.

The searches were executed by FBI agents after Special Counsel Robert Mueller referred the case to New York federal prosecutors, according to Stephen Ryan, Cohen’s lawyer. Ryan called the raids “completely inappropriate and unnecessary” and said they led to the “unnecessary seizure” of documents protected by attorney-client privilege. A federal magistrate judge had to approve the warrants used by the FBI.

New Avenue

At the White House, Trump lambasted the aggressive move, which appears to open a new investigative avenue. Mueller is already examining Russian collusion in the 2016 election and possible obstruction of justice by Trump. Mueller has charged 19 people and obtained five guilty pleas, including from Trump’s former national security adviser and campaign aides.

“Just heard that they broke into the office of one of my personal attorneys,” Trump said. “Good man. And it’s a disgraceful situation, it’s a total witch hunt, I’ve been saying it for a long time.”

The raid came after prosecutors in the Southern District of New York convinced the judge they had probable cause that evidence of crimes existed at the locations. Manhattan U.S. Attorney Geoffrey Berman was appointed by Trump.

“Even if their primary focus is the payment that was made to Stormy Daniels, they’re going to be interested in more than that for purposes of a search warrant,” said Lee Vartan, a former federal prosecutor. “Quite clearly, they’re going to want to see what other payments exist, and other patterns.”

Longtime Defender

Cohen has been a combative and fierce defender of Trump for a decade, serving him when he was a reality-television star and promoter of the Trump real estate brand around the world.

In October 2016, he set up Essential Consultants LLC, and used it days later to make the payment to Daniels, whose real name is Stephanie Clifford. She has said she had sex with Trump a decade earlier. Former Playboy model Karen McDougal has also said she began a 10-month affair with Trump in 2006, and she took money to stay silent before the election.

The raids, which The New York Times first reported, pose a danger for Trump because of how long Cohen has represented him, said Harry Rimm, a former federal prosecutor.

“Who knows what he’s received in writing from his lawyer,” Rimm said. “It could be devastating.”

Misdirection?

The timing of the raid could also have been coordinated as a head-fake, to make people assume the development relates to Daniels, Rimm said. The investigation could focus on something completely different, he said.

“That would keep people on their toes, keep evidence from being destroyed and keep people from preparing for the right topics when they’re interviewed,” Rimm said.

Prosecutors couldn’t get a search warrant for a fishing expedition, said David Sklansky, a professor of criminal law at Stanford University.

They must show probable cause of criminal activity, but it doesn’t necessarily have to point to Cohen. Rather, it could be a client or somebody else connected with his office, according to Sklanksy. It could also be related to allegations that the “hush payment” by Cohen violated campaign finance laws.

“It’s a criminal violation that could prompt a federal search warrant,” Sklansky said.

The information investigators seized from Cohen’s office won’t necessarily be shielded by attorney-client privilege, Sklansky said. That data is only privileged if it is a confidential communication that pertains to legal advice, he said.

Even then, it isn’t off limits to prosecutors if the communication was made to commit a crime, he said.

“If you hire a lawyer to commit a fraud, the privilege doesn’t apply,” Sklansky said.

To contact the reporters on this story: David Voreacos in federal court in Newark, New Jersey, at dvoreacos@bloomberg.net, Erik Larson in New York at elarson4@bloomberg.net, Edvard Pettersson in Los Angeles at epettersson@bloomberg.net.

To contact the editors responsible for this story: Jeffrey D Grocott at jgrocott2@bloomberg.net, Elizabeth Wollman

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