Giuliani Remark May Hurt Bid to Keep Trump Secrets in Cohen Case

(Bloomberg) -- By admitting that President Donald Trump reimbursed a hush payment to a porn actress, Trump and his lawyer Rudy Giuliani have spawned a fresh crop of questions about possible campaign-finance violations.

The latest comments -- which contradicted Trump’s earlier ones -- were an attempt to put to rest the question of whether campaign funds had been used for the payoff. Instead, the newest narrative sent lawyers and journalists back to review the complicated finance and ethics disclosures required of individuals.

The revelations could even ripple through a criminal probe in Manhattan of Michael Cohen, the longtime Trump confidante and lawyer who initially paid $130,000 just before the 2016 election to keep the silence of Stormy Daniels, whose given name is Stephanie Clifford.

Since federal agents raided Cohen’s home and office last month, Trump has been fighting to keep any documents related to their work away from prosecutors. Trump is asserting attorney-client privilege, which can be pierced in instances of illegal activity.

Giuliani and Trump say campaign money wasn’t used to pay Clifford. Still, if the payment was intended to benefit the campaign -- something the Trump team disputes -- then additional disclosures would have been required.

“I don’t know what Giuliani was doing, but it doesn’t help” Trump, said Larry Noble of the Campaign Legal Center, a money-in-politics watchdog. “It’s either an excessive campaign contribution or an ethics issue. If he owed Michael Cohen $130,000, his financial disclosure report should have listed that as an outstanding debt. This story does not fit together."

Personal Account

In a series of interviews over the last 24 hours, Giuliani said Trump wasn’t aware until recently of Cohen’s payment to Daniels. Giuliani said Trump was generally aware that Cohen would try to make problems like this go away, and that’s why he paid him a monthly retainer. It was done from Trump’s personal account, Giuliani said in one interview, and it covered payments like the one to Daniels, as well as any taxes. Giuliani said that in all, $460,000 went to Cohen in 2017 and early 2018 for such matters.

On Thursday, Trump tweeted that he had repaid Cohen, and that no campaign violation occurred.

Under campaign finance laws, a candidate can spend unlimited amounts of his own money on his campaign. Trump put up $66 million in his bid for the White House. Disclosures don’t reflect a $130,000 payment to Cohen.

Giuliani told Sean Hannity on Fox News that Trump repaid Cohen over time. To the Office of Government Ethics, the president is obligated to report any liability or debt in excess of $10,000. But Trump, who had to attest to the accuracy of the forms with his own signature, appears not to have disclosed such a $130,000 loan.

Citizens for Responsibility and Ethics in Washington, an advocacy group, urged the Justice Department two months ago to look into Cohen’s payment to Daniels as a liability that Trump should have disclosed.

The group, known as CREW, sent a revised letter Thursday to deputy Attorney General Rod Rosenstein and Robert Khuzami, deputy U.S. Attorney in Manhattan overseeing the Cohen inquiry. The letter cited Giuliani’s statements as further evidence that Trump violated ethics rules by failing to disclose a debt to Cohen.

Private Matter

Trump’s team counters that no disclosure is required because the matter was private, not related to the candidate’s election.

Giuliani said the payoff was to prevent Clifford from publicly making hurtful allegations about an encounter that the president has previously denied. “The president had been hurt personally -- not politically, personally -- so much and the First Lady, by the false allegations,” he said on “Fox & Friends.”

That position has some merit, said Charles Spies, a campaign-finance specialist at Clark Hill.

“That payment is not a violation of federal election law, as long as there were business or reputational reasons for it," Spies said. If there’s a history of Trump paying people off to avoid reputational harm, he continued, that would be an argument in his favor.

Yet in his TV interview Thursday, Giuliani acknowledged that it wouldn’t have looked good for Trump to show up at a debate against Hillary Clinton in October 2016, facing accusations that he had engaged in an extramarital affair with an adult film actress.

Trevor Potter, president of the Campaign Legal Center, characterized Giuliani’s statement as “an admission” that the pre-election deal influenced the 2016 elections. He said Cohen’s payment, and Trump’s acceptance and reimbursement of it, could violate campaign-finance laws.

Campaign-Trail Image

Violations of federal laws on campaign contributions are usually settled with fines. Occasionally, such cases lead to criminal prosecutions.

Former U.S. Senator John Edwards was charged in 2011 with violating campaign-finance laws related to large contributions by two donors to cover the living expenses of his former mistress, Rielle Hunter, who had a child with him.

According to the Justice Department, hundreds of thousands of dollars were spent to shroud the relationship with Hunter lest it undermine the campaign-trail image of Edwards as a devoted family man. The government dropped the case after a jury acquitted Edwards of one charge and deadlocked on the others.

Tyler Harber, who managed a congressional campaign in 2012, received a two-year prison sentence for illegally coordinating $325,000 of independent expenditures on behalf of his candidate. Harber used an alias to conceal his involvement with the super PAC that spent the money.

To contact the reporters on this story: Greg Farrell in New York at gregfarrell@bloomberg.net, Bill Allison in Washington at ballison14@bloomberg.net, David Voreacos in federal court in Newark, New Jersey, at dvoreacos@bloomberg.net.

To contact the editor responsible for this story: Jeffrey D Grocott at jgrocott2@bloomberg.net.

©2018 Bloomberg L.P.