Trump Lawyer Cohen Finds Finances Examined by Prosecutors
(Bloomberg) -- Before he was known as Donald Trump’s pugnacious lawyer, Michael Cohen made a modest fortune assembling taxi fleets in New York and Chicago, with company names like Mad Dog Cab Corp., Smoochie Cab Corp. and NY Funky Taxi Corp.
From a declining taxi business to a portfolio of New York City apartments to the board of Eric Trump’s charity to a top fundraising post at the Republican Party, Cohen soared in prominence as he swatted away adversaries on Trump’s road to the White House.
Now he’s in the cross-hairs of federal prosecutors. FBI agents raided his New York office, home and hotel room last week, reportedly hauling away documents to support an investigation into potential bank fraud, wire fraud and campaign finance violations.
It’s unclear precisely what prosecutors are pursuing, but they sought information about several embarrassing episodes in Trump’s private life that endangered his candidacy and now could imperil his presidency, according to the New York Times. They include a $130,000 payment Cohen said he made to a porn star who claimed to have had sex with Trump, another payment to a Playboy playmate, and the infamous “Access Hollywood” tape in which Trump bragged about grabbing women’s genitals. Agents also sought records on Cohen’s taxi business, CNN reported.
“You could imagine a search warrant that describes that Michael Cohen got a loan from a bank to make a payment on Trump’s behalf and made misrepresentations to the bank about how the money would be used,” said Renato Mariotti, a former federal prosecutor. “Investigators would want to know: did he get reimbursed by Trump, or did he discuss it with anybody?”
Cohen’s attorney, Stephen Ryan, has described the search, overseen by the U.S. Attorney’s Office in Manhattan, as “completely inappropriate and unnecessary.” He didn’t respond to a request for further comment.
Among the questions is whether any of the payments or services constituted an improper campaign contribution. Trump has denied any knowledge of the payment to Daniels. Cohen has said he paid it out of his own pocket, tapping a home equity loan to cover the cost.
Common Cause, the public interest group, has filed complaints with the Federal Election Commission and Justice Department over the Daniels and McDougal payments, saying they amounted to improper campaign contributions.
Prosecutors will closely scrutinize the puzzling Daniels arrangement. It raises questions about a man who has long served as Trump’s fixer, lawyer and confidante, and who made millions of dollars and endured downturns in two quintessential New York enterprises -- owning real estate and taxi medallions.
Cohen, 51, worked for the Trump Organization for a decade and protected his boss with a blunt, in-your-face style during lawsuits, campaign appearances and media interviews.
After growing up on Long Island, he attended American University in Washington and went to law school at Western Michigan University. He returned to New York to practice law. He married into a Ukrainian family and soon bought taxi medallions, which allowed them to operate cabs on the congested streets of New York City.
In an unsuccessful campaign for City Council in 2003, he described himself as a “Businessman, Attorney and Community Activist” and said he had bought more than 200 taxis.
Legal filings in a dispute with his long-time partner, a polo-playing Ukrainian emigre named Simon Garber, show that Cohen and his wife made $90,000 a month from their medallions in 2011.
But Cohen’s taxi fortunes appear to have waned. Municipal records show Cohen and his wife have 32 taxi medallions in New York City and at least 22 in Chicago.
While New York medallions were worth more than $1 million each as recently as 2014, their value has plunged with the rise of ride-sharing companies like Uber and Lyft. Medallions are now worth about $200,000.
That drop would have affected Cohen, who has refinanced his New York medallions an average of every 1.4 years, records show. His last round came in December 2014, with Sterling National Bank. Those loans are due in December 2019, unless he refinances again. Records don’t reflect how much he actually borrowed.
The Washington Post reported Thursday that during their raid, FBI agents sought Cohen’s communications with Sterling. A bank spokesman didn’t immediately respond to a request for comment.
Cohen also owns lots of New York City real estate. He said last year he owned 115 apartments in the city. And he has a history of buying units in Trump buildings.
In 2001, he bought a 15th-floor unit in Trump World Tower, across from the United Nations. The building, which opened in the wake of historic capital flight from Russia, became a magnet for funds from the former Soviet Union. Among those who moved in were a Russian accused of mob ties and extortion by an oligarch, an Uzbek jeweler investigated for money laundering who was later shot and killed on the street in Manhattan, and a pro-Moscow Ukrainian politician.
Cohen’s in-laws, who are from Ukraine, followed him into the building, spending almost $8 million on three units in the building between 2003 and 2005. Cohen bought a $5 million unit at Trump Park Avenue, around the corner from Trump Tower in Manhattan.
In classic Trump fashion, Cohen’s devotion to the brand earned him entree into Trump’s circle. In 2007, the New York Post chronicled Cohen’s purchases in Trump buildings.
“Trump properties are solid investments,” Cohen told the paper. “Michael Cohen has a great insight into the real-estate market,” Trump said in the same article. “He has invested in my buildings because he likes to make money – and he does.”
Trump hired Cohen three months later.
As Cohen became ensconced in Trump’s world, he took on his own development projects. From 2011 through 2013, limited liability companies affiliated with Cohen purchased four walk-up buildings in lower Manhattan, paying $11.4 million in cash, before taking out another $13.9 million to pursue an aggressive flipping effort, replacing boilers, updating plumbing, and adding partitions to create more bedrooms.
The quick work drew ire from residents, who filed formal complaints about burst water pipes, and work being done without proper permits.
But the plan proved lucrative. In late 2014, Cohen’s companies doubled their initial investment when they sold the buildings to companies affiliated with the descendants of Clarence Seid, a Brooklyn-born lawyer and ham-radio enthusiast. The family, including Herbert Chaves, who married Seid’s daughter Jane, was looking to reinvest its gains from the $38 million sale of a Brooklyn development site to a partnership of SL Green and Kushner Cos., then run by Jared Kushner, Trump’s son-in-law.
The Seid-Chaves family partnered with Cohen again a few months later, to purchase an Upper East Side apartment building for $58 million, taking out a $17 million mortgage to do so. Cohen’s companies control 38 percent of the property, public records show.
In October of last year, Cohen sold his unit in Trump World Tower for $3.3 million. His in-laws still have units there.
©2018 Bloomberg L.P.