Trump Campaign Probe's New Overseer Built Chops in Iran-Contra

(Bloomberg) -- The federal investigation into President Donald Trump’s business and campaign finances will fall into new hands with next month’s exit of Robert Khuzami as the number two federal prosecutor in Manhattan.

The probe will be overseen by Audrey Strauss, who will become second-in-command of the Southern District of New York. Strauss is no stranger to the office, after working her way into a senior position there 40 years ago and returning last year as chief counsel.

Khuzami, who will leave the office April 12 to return home to Washington, has been overseeing the case against Trump attorney Michael Cohen since U.S. Attorney Geoffrey Berman recused himself last year for reasons that remain unknown.

“Audrey Strauss, who has been invaluable as Senior Counsel, will undoubtedly continue the important work of the Deputy U.S. Attorney,” Berman said in a statement Friday.

The Trump-related probes in Manhattan may pose a grave challenge to the president apart from the one from Special Counsel Robert Mueller’s investigation into Russian election meddling. Cohen, Trump’s longtime fixer, told lawmakers last month that he was continuing to cooperate with federal prosecutors in Manhattan, perhaps the nation’s premier U.S. attorney’s office with expertise in finance, terrorism and political corruption.

Strauss, 71, worked her way up in the Manhattan office starting in 1976, and served as the chief of an appeals unit and the head of the securities and commodities fraud unit. She left in 1983, working on the Independent Counsel’s staff probing the Iran Contra scandal in the later years of the Reagan administration, and as chief legal officer for Alcoa. She rejoined the Southern District in February 2018 as senior counsel to Berman.

“She is really a first-class lawyer, serious and careful,” said Gary Naftalis, the co-chairman of Kramer Levin in New York who has worked with and against Strauss over decades of practice in New York. “She will make sure everything is done the right way.”

Khuzami, who was enforcement chief at the Securities and Exchange Commission from 2009 to 2013, has been the Southern District’s second-in-command since January 2018. He presided over Cohen’s case, in which the ex-Trump fixer has pleaded guilty and been sentenced to three years in prison. The Southern District has continued its investigation into whether others at the Trump Organization aided in campaign-finance violations or separate crimes.

“Rob has been commuting weekly from Washington D.C. since January 2018,” Berman said in the statement. “While his desire to continue to serve remains strong, he understandably has decided to return home to his family,” he added, calling Khuzami “an extraordinary and brilliant lawyer.”

Khuzami didn’t respond to an email message seeking comment. At a conference in New Orleans earlier this month, he acknowledged rumors that he would be leaving but declined to comment on them.

Craig Stewart, a partner at the Arnold & Porter law firm, will return to the Southern District to become chief counsel, Berman also announced. Stewart, 60, served there from 1987 to 1998 and worked in both the civil and criminal divisions. He was previously the chief of the narcotics unit, deputy chief of the criminal division and chief appellate attorney.

Khuzami’s announced departure is the latest personnel change on the team that has led the Cohen investigation. Rachel Maimin, who had been the longest-tenured prosecutor on the group, recently left for private practice. Andrea Griswold, who had been seconded to the team from the securities-fraud unit, has returned to her prior position there, with a new member, Rebekah Donaleski, joining from the terrorism and international narcotics unit.

Strauss was previously a partner both at Fried Frank Harris & Jacobson and at Mudge Rose Guthrie & Alexander. She attended Barnard College and earned her law degree at Columbia Law school. She was also a board member on the Innocence Project, a not-for-profit that seeks to exonerate wrongfully convicted defendants.

She joined Alcoa in 2012. Less than two years later, the company paid $384 million to resolve criminal and civil probes into a years-long scheme to pay tens of millions in bribes to the royal family of Bahrain and officials at a state-owned company.

In the Iran-Contra probe, which grew out of an effort by Reagan Administration officials to evade a law against supplying arms to guerrillas in Central America, Strauss’s job was to ensure that investigators didn’t undermine potential criminal cases while granting immunity to various witnesses, according to Michael Bromwich, a colleague there.

“She’s an outstanding lawyer, smart, thinks through issues and sees around the corner to any issues that my arise,” said Bromwich. “She has very good judgment and very high standards. She will be aggressive, but careful, which is an odd combination.”

To contact the reporters on this story: Christian Berthelsen in New York at cberthelsen1@bloomberg.net;Greg Farrell in New York at gregfarrell@bloomberg.net

To contact the editors responsible for this story: Heather Smith at hsmith26@bloomberg.net, David Glovin, Jeffrey D Grocott

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