Time’s Running Out in Michael Cohen’s Bid for a Reduced Prison Sentence

(Bloomberg) -- Time is running out for Michael Cohen, who has less than two months until he reports to prison.

Since his televised congressional hearing where he accused President Donald Trump of being a cheating, racist con man, Cohen has been a blur of activity. He has testified to Congress behind closed doors, sued Trump for legal fees and feuded publicly with the president over whether he ever sought a pardon.

Outside the public glare, Cohen, Trump’s former personal lawyer, has been on an urgent private mission -- seeking to provide fresh leads about Trump to prosecutors so they’ll recommend leniency in his own case. Facing three years behind bars, he has testified that he’s been cooperating in investigations into possible crimes by Trump, his family business and his inner circle.

It could be a tough sell, according to legal experts and a review of federal sentencing data.

Cohen’s credibility is under siege after he admitted that he lied to lawmakers. Prosecutors have already pored through Cohen’s seized electronics and documents for evidence. If Cohen does have a magic bullet, it would have to be unique information providing prosecutors an investigative road map against Trump, said former federal judge Nancy Gertner.

“If he testified about information on the inner workings of the Trump business that they wouldn’t otherwise have, that would be very helpful to investigators” and Cohen, said Gertner, who teaches at Harvard Law School.

Cohen’s bid may also be complicated by the way his case played out. Because he didn’t reach a cooperation deal with prosecutors early on, he’s now angling for a golden ticket -- a reduction to a prison term that’s already been set. Prosecutors can request post-sentencing reductions under Rule 35(b) of the Federal Rules of Criminal Procedure, but they’re granted infrequently, according to experts and federal data.

They’re particularly rare in Manhattan. What’s more, Cohen’s seeking a sympathetic ear from the same prosecutors who bashed him before his Dec. 12 sentencing as a lying, remorseless tax cheat.

Cohen declined to comment. His lawyer, Lanny Davis, didn’t respond to a request for comment.

Possible Fraud

Cohen made little secret of his mission in his televised congressional testimony, referring to Rule 35(b) several times. He suggested that the Trump Organization misstated its finances when applying for loans and insurance policies, actions that have spawned investigations of possible mortgage and insurance fraud.

Cohen’s quest to shave his term comes as experts questioned whether Trump’s former campaign chairman, Paul Manafort, got off too easily. Manafort, 69, was sentenced this month to four years in prison, with a different judge last week adding 3 1/2 years.

Cohen, 52, was sentenced for nine felonies he admitted, including tax evasion, lying to lawmakers and banks, and violating campaign-finance laws by arranging hush payments to women claiming affairs with Trump.

Cohen pledged to cooperate with investigations by Special Counsel Robert Mueller, who is examining Russian interference in the 2016 election, and the Southern District of New York, which is examining Trump’s company. Before sentencing, Mueller’s prosecutors praised his cooperation on Russia, while New York federal prosecutors have said he’d been “forthright and credible” on campaign-finance matters.

But the Manhattan prosecutors faulted him for not opening up about possible crimes he and others committed, citing his “minimal” remorse and “strong” instinct to blame others.

Prosecutor Reservations

Defendants typically have a year after sentencing to seek a reduction. Cohen must overcome prosecutors’ reservations about his truthfulness, said Jeff Ifrah, a white-collar attorney and co-author of “Federal Sentencing for Business Crimes.”

“What better way to show that you have repented from your crime of lying than if you’ve provided honest, credible testimony?” Ifrah said.

That may be a tough sell in Manhattan. Prosecutors in a handful of the 94 federal jurisdictions frequently reward defendants for cooperating after sentencing. By contrast, those in the Southern District of New York overwhelmingly reward defendants for cooperating beforehand.

Between 2009 and 2014, judges there reduced fewer than 10 sentences a year after conviction, according to U.S. Sentencing Commission data. That represents 3.6 percent of its sentence reductions for cooperators, below the national average of 15.8 percent.

“For many prosecutors, there’s an inclination not to allow a defendant to benefit from cooperation so late in the day” because defendants typically offer better leads earlier, said Douglas Berman, a law professor at Ohio State University.

Tax Plea

Among other crimes, Cohen admitted that from 2012 to 2016, he failed to tell the Internal Revenue Service about $4 million in income -– roughly 40 percent of what he actually earned -- and underpaid his tax bills by about half, or $1.4 million.

Cohen pleaded to those financial crimes in August, a few days after he learned that prosecutors planned to charge him, court papers show. That left him with a weekend to wrestle with the prospect that prosecutors could charge his wife, who co-signed their returns. Without access to the financial records that the FBI had seized months earlier, Cohen reached a quick and fateful decision.

Later, his attorneys argued in court papers that his tax crimes could have been handled civilly rather than criminally, citing cases involving musician Willie Nelson and others who avoided prosecution. They said he gave all of his bank records to his accountant, never hid cash transactions and didn’t use offshore accounts or phony deductions.

Prosecutors dismissed Cohen’s explanations. In court papers, they said Cohen gave his accountant incomplete information, lied about assets and income sources and rebuffed questions that would have revealed his hidden income.

Bloomberg News reviewed several years of the checks and bank statements that Cohen said in court papers he provided to his accountant. Those records appear to reflect some of the income that the Justice Department says Cohen hid from the IRS. They also reveal a man who kept meticulous financial records to support tax returns for his taxi and real estate businesses. They typically ran nearly 2,000 pages per year.

Credibility Questions

Cohen has been dogged by lingering questions about his credibility. Republicans said he lied to the House Oversight Committee on Feb. 27 when he testified that he never asked for a pardon from Trump and wouldn’t accept one. The battle has continued to brew, with Cohen’s legal team saying he was open to the possibility of a pardon but didn’t ask for one himself.

Gertner, the retired judge, said such questions could undermine his cooperation.

“The issue is the value of his cooperation, and that’s a function of whether he was disclosing everything he knew, whether it comes at a time that would make a difference to the prosecution, and whether he’s credible,” Gertner said. “You don’t know the scope of the information given by Cohen, and the information he withheld. It sounded substantial, but it’s hard to know.”

To contact the reporters on this story: Shahien Nasiripour in New York at snasiripour1@bloomberg.net;David Voreacos in New York at dvoreacos@bloomberg.net;David Kocieniewski in New York at dkocieniewsk@bloomberg.net

To contact the editors responsible for this story: Kevin Whitelaw at kwhitelaw@bloomberg.net, Jeffrey D Grocott, David S. Joachim

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