Attorney Michael Cohen arrives at Trump Tower in New York, U.S., (Photographer: John Taggart/Bloomberg)

Trump Fixer's Bad Week Gets Worse With Confirmation of Probe

(Bloomberg) -- Michael Cohen’s bad week reached a crescendo Friday as federal prosecutors confirmed he’s a target of a criminal investigation and a judge ordered him to appear in court Monday with a list of his clients.

Trump Fixer's Bad Week Gets Worse With Confirmation of Probe

The week started for Cohen, long known as President Donald Trump’s “fixer,” with an FBI raid on his office, home and hotel room. Agents also seized the content of a safety deposit box and two of his cell phones.

In all, the FBI may have taken thousands, if not millions, of privileged documents from the attorney, Cohen’s lawyers claimed in an emergency request to stop prosecutors from going through the data before they had a chance to review it. U.S. District Judge Kimba Wood, after three separate hearings Friday, gave the lawyers till Monday to file further paperwork and prepare arguments.

Prosecutors said Cohen has been the target of a months-long federal investigation in New York, separate from Special Counsel Robert Mueller’s probe of Russian interference in the U.S. elections. Trump’s advisers believe the Cohen investigation is a bigger threat to the president than the special counsel’s inquiry, New York Times reported Friday.

Cohen wasn’t in court for the hearings. Instead, television cameras caught him sitting on a bench outside the Loews Regency Hotel in Manhattan -- where the FBI conducted one of the Monday raids -- chatting with a group of men and smoking a cigar. Wood told his lawyers she wanted Cohen to attend Monday’s hearing.

Investigators are seeking evidence of crimes “many of which have nothing to do with his work as an attorney, but rather relate to Cohen’s own business dealings,” prosecutors said.

Even so, McClatchy reported Friday that the special counsel has evidence that Cohen secretly made a late-summer trip to Prague during the 2016 presidential campaign, citing two unnamed sources familiar with the matter. That confirms a detail in a retired British spy’s report that Cohen has denied.

BuzzFeed reported separately Friday that a former Russian spy helped Trump’s business team seek financing for a Trump-branded tower in the heart of Moscow during the 2016 presidential campaign, citing two unidentified sources. That project didn’t work out, but at least one email to Cohen about the potential deal mentioned a contact in Russia who could help -- a former colonel with Russia’s military intelligence, the two sources told BuzzFeed.

Hush Payments

Cohen has wide-ranging business interests, including in New York City taxi companies. The attorney also arranged a $130,000 payment to adult-film actress Stormy Daniels, whose real name is Stephanie Clifford, to keep her quiet about an alleged sexual tryst she had with Trump in 2006. And the FBI seized records relating to Karen McDougal, a former Playmate who said she had a 10-month affair with Trump, according to a person familiar with the matter.

And in another bizarre turn Friday, Cohen was linked to another hush payment to cover up an affair.

Elliott Broidy, a top Republican donor, said he had a relationship with a Playboy Playmate --who wasn’t named -- and that Cohen had approached him after having talked to the woman’s lawyer, Keith Davidson. Davidson had also represented Daniels and McDougal.

Broidy agreed in late 2017 to pay $1.6 million to the woman, according to a person familiar with the matter. The woman had become pregnant, and ended the pregnancy, Broidy said.

“It is unfortunate that this personal matter between two consenting adults is the subject of national discussion just because of Michael Cohen’s involvement,” Broidy said in a statement, adding he hadn’t previously hired Cohen.

When asked on Friday whether Cohen was still Trump’s personal attorney, press secretary Sarah Sanders said she wasn’t sure. Deputy Press Secretary Raj Shah later said on CNN that Cohen remained as Trump’s personal attorney.

Evidence gathered in the Manhattan probe so far shows that the "overwhelming majority" of material seized during the raids won’t be privileged, prosecutors said in a memo to the judge. The government said it’s not even apparent that Cohen has any attorney-client relationships with anyone other than Trump -- and that there is "reason to doubt" that his communications with the president regarding Daniels are protected.

“Among other things, President Trump has publicly denied knowing that Cohen paid Clifford, and suggested to reporters that they had to “ask Michael” about the payment,” the prosecutors wrote.

The U.S. attorney’s office in Manhattan had obtained earlier search warrants on multiple different email accounts maintained by Cohen, and reviewed them for privileged material, the prosecutors said.

“Zero emails were exchanged with President Trump,” they wrote and investigators have reason to believe “that Cohen has exceedingly few clients and a low volume of potentially privileged communications.”

In an unexpected twist, Trump sent his own lawyer to Friday’s hearing to assert his privilege.

Trump’s lawyer, Joanna Hendon, said that as Cohen’s client, Trump has the right to assert what’s privileged.

“He has an acute interest in those proceedings and the manner in which these materials are reviewed,” Hendon told the judge. Her firm, Spears & Imes LLP, was retained on April 11 and she said she had just two hours notice of the arguments.

Daniels’s lawyer Michael Avenatti also got involved in the hearing, telling the judge his client also has an interest in the proceedings.

“We have every reason to believe some of the documents seized relate to my client,” Avenatti said.

Daniels has another case underway in Los Angeles, where she sued Cohen and Trump to void the non-disclosure agreement she signed shortly before Trump was elected president.

Avenatti told reporters after the Friday morning hearing that he had no doubt the materials seized include documents concerning the negotiations with Daniels.

“There could be a whole host of documents relating to that agreement, the payment, what the president knew, when he knew it, and we’re hopefully going to find out exactly what’s in the documents,” Avenatti said.

©2018 Bloomberg L.P.