(Bloomberg) -- Michael Cohen, the longtime personal attorney for President Donald Trump who has been drawn into a potentially costly legal battle, has put up his family’s Manhattan apartment as collateral for millions of dollars in loans to his troubled taxi business.
The transaction, outlined in public filings this week, indicates the financial pressure on Cohen is hitting close to home as federal prosecutors delve into a broad range of his business activities, including a hush payment to a porn actress.
As of March, businesses owned by Cohen and his wife owed Sterling National Bank of Montebello, New York, as much as $12.8 million on loans extended in 2014. Those loans were secured by New York City taxi medallions, which have plummeted as much as 80 percent in value since then as Uber and Lyft cut into the cab business.
Cohen and his wife have now pledged their apartment in the Trump Park Avenue -- a 10th-floor spread combining three units -- as additional collateral to the bank, which valued it at $9 million, according to filings of the April 22 transaction.
“It looks to me like the lender probably said you have to guarantee these existing loans, and by the way you have to pledge your real estate to backstop your guaranty," said Joshua Stein, a Manhattan real-estate attorney who reviewed the public filings.
Cohen, responding to text messages, said the loan numbers were wrong. “With all due respect, you don’t remotely understand my loan,” he said.
Sterling declined to comment through Andrew MacMillan, an outside spokesman for the bank.
Sterling’s loans to the Cohen-owned taxi companies were restructured earlier this year, and the April mortgage document references the modified loans. The loans were a point of acute financial pain for Cohen, Bloomberg reported last month, after federal investigators in New York swept up records from his residences and office as they investigate possible bank fraud among other issues. Cohen and the Trump Organization are fighting U.S. prosecutors to shield documents from review they claim are protected by attorney-client privilege.
For more than a decade, Cohen’s Park Avenue apartment had a $2 million mortgage against it. Then, in early 2016, his wife, Laura, took out a $500,000 home equity line of credit from First Republic Bank.
Cohen has said he used a home equity line of credit to make a $130,000 payment to Stephanie Clifford, an adult-film actress known as Stormy Daniels, who says she had an affair with Trump. Trump initially denied knowledge of such a payment. But last week, Trump lawyer Rudy Giuliani said Cohen had been reimbursed in the form of monthly retainer payments.
The Park Avenue apartment could be valued at $8 million or more, based on the price-per-square foot sales figures of other non-penthouse units in the building during the past year.
Cohen and his wife hold the unit through a trust designed to mitigate taxes when transferring homes to heirs. A typical mortgage, with principal payments, could undercut the tax advantages of the trust structure.
Cohen is one of three taxi clients of Sterling National, and the other two were already in a debt restructuring process at the end of 2017 or were not making payments, filings for that period show.
During the first quarter of this year, the bank moved its third client, with $12.8 million of debt, into a category it calls a “troubled debt restructuring” -- defined by federal bank regulators as a concession a creditor grants to a debtor facing financial difficulties -- according to a bank filing on May 4. The timing matches the issuance of new liens issued by Sterling against Cohen’s assets.
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