Trump’s Gravest Threat Yet Rose From Manhattan, Not Mueller

(Bloomberg) -- Donald Trump regularly tweets his outrage at “heavily conflicted Bob Mueller” and the “witch hunt” led by the special counsel’s “Angry Democrat Thugs.”

But what may be the gravest legal threat yet to Trump’s presidency, Tuesday’s conviction of his former personal lawyer and fixer Michael Cohen, was the work of a prosecutor hundreds of miles from the special counsel’s office.

Cohen’s guilty plea was secured as part of an investigation led by the U.S. attorney’s office in Manhattan, not by Special Counsel Mueller or Justice Department headquarters, another frequent target of the president’s derision. Instead, the deal was made by Robert Khuzami, deputy U.S. attorney for the New York office.

“We are a nation of laws,” Khuzami said Tuesday after Cohen’s plea, in which he said he was directed by Trump to make hush-money payments to two women before the 2016 election to prevent their allegations of affairs from becoming public. “The essence of what this case is about is justice and that is an equal playing field for all persons in the eyes of the law. And that is a lesson that Mr. Cohen learned today, and it is a very harsh one for him.”

Khuzami was put in charge of the Cohen investigation after the U.S. attorney who Trump appointed to lead the office, Geoffrey Berman, recused himself. It’s unclear why Berman did so, but he previously worked in the law firm of Greenberg Traurig LLP, which also employed Rudy Giuliani, a top Trump campaign supporter who’s now his personal lawyer.

Berman was appointed by Trump after the president fired prosecutor Preet Bharara in March 2017. Bharara, who was appointed by President Barack Obama and won fame for prosecuting insider-trading cases, has become a scathing critic of Trump on social media and a podcast.

Wrong Target

The sudden turn of events this week leaves the president and his allies looking like they’ve directed their fire at the wrong target. Until now, they have focused criticism on Mueller’s investigation into whether Trump conspired with Russia to interfere in the election and whether the president obstructed justice. Some House Republican lawmakers have honed their attacks in particular on Deputy Attorney General Rod Rosenstein, who’s in charge of the Mueller probe.

But neither Rosenstein nor Mueller is calling the shots for the investigation in New York, according to two people familiar with the matter. The U.S. attorney’s office for the Southern District of New York, commonly known as SDNY, has the independence to take investigative steps and charge people without approval from Rosenstein, one of the people said.

So while Rosenstein was consulted about Cohen’s plea, which implicated Trump in campaign finance crimes, he didn’t sign off on it or approve it, the person said. It’s not clear whether Attorney General Jeff Sessions’s recusal from Mueller’s probe extends to the investigation in Manhattan.

On Thursday, Trump complained about the practice of “flipping” defendants like Cohen in exchange for shorter sentences. “Everything’s wonderful, then they get 10 years in jail and they flip on whoever the next highest one is or as high as you can go,” Trump said in an interview with Fox News. “It almost ought to be outlawed.”

Titanic to Madoff

SDNY has a storied history of producing jurists who gain national renown for prosecuting criminals such as Ponzi-schemer Bernie Madoff or terrorist mastermind Omar Abdel Rahman. Claims related to the sinking of the Titanic and the aftermath of the 1993 World Trade Center bombing were tried by lawyers at SDNY. Before he was Trump’s lawyer, Giuliani rose to prominence as an attorney for SDNY, helping pave the way for his tenure as mayor of New York.

With SDNY signaling that the investigation into developments related to Cohen’s plea continues, Khuzami, 62, and other career prosecutors now hold power that could help determine the fate of Trump’s presidency. That doesn’t mean Justice Department headquarters is entirely divorced from what happens in New York.

Rosenstein oversees all U.S. attorneys. The New York office has to consult Rosenstein on any significant actions, and he could intervene to stop or alter activities. Historically, though, the U.S. attorney for SDNY has operated with a great deal of independence. Prosecutors working for the New York office and Mueller’s team are free to share information back-and-forth.

And while New York prosecutors are required to notify the Justice Department’s Public Integrity Section if they want to pursue election fraud cases, there haven’t been any signs of tension between the office and Justice Department headquarters with regard to the Cohen investigation, the person said.

Rosenstein made the decision to give the Cohen case to SDNY following a referral from Mueller. That also ensured the investigation could continue even if Trump somehow managed to fire the special counsel, a politically dangerous move that many Republicans have warned the president to avoid.

What Cohen Knows

Cohen’s lawyer, Lanny Davis, said Cohen has information that Mueller will be interested in. In an interview Wednesday with Bloomberg News, Davis said Cohen observed something indicating Trump might have had knowledge of Russia’s hacking operation before it became public.

“If that’s true, that’s part of the conspiracy to corrupt American elections,” Davis said. “If someone knows about a crime and doesn’t call the cops they become complicit in a conspiracy.”

Trump now confronts sprawling legal battles. Cohen’s guilty plea came on the same day that Trump’s former campaign manager, Paul Manafort, was convicted by a jury in Alexandria, Virginia, of tax and bank fraud in a case brought by Mueller’s team.

Some former law enforcement officials say the U.S. justice system -- and little-known career prosecutors -- have proven their resilience and professionalism.

“In spite of spurious, unjustified and unprecedented attacks, people in federal law enforcement did their jobs and, as usual, did them well,” Eric Holder, who was President Barack Obama’s attorney general, tweeted on Tuesday. “Guilty plea. Guilty verdict. Criminal acts. This is not a witch hunt.”

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