Cohen Says He Broke Campaign Finance Laws on Trump's Orders

(Bloomberg) -- President Donald Trump’s former attorney admitted that he violated campaign-finance laws ahead of the 2016 election -- at the direction of Trump himself.

Michael D. Cohen made that explosive assertion during a hastily convened appearance in a federal courthouse in Manhattan on Tuesday, where he pleaded guilty to eight counts of tax fraud, false statements to a bank and campaign-finance violations. He faces more than five years in prison under federal guidelines.

His plea capped months of increasing financial and legal pressure on the longtime personal lawyer for Trump. At the same time, it ushered in a new wave of legal woes for his former boss. At the moment Cohen admitted guilt in Manhattan, a more protracted drama was culminating in a federal courtroom in Virginia, where a jury found former Trump campaign chairman Paul Manafort guilty of eight counts of tax and bank fraud.

“Michael Cohen is a lawyer who, rather than setting an example of respect for the law, instead chose to break the law, repeatedly over many years and in a variety of ways,” said Deputy U.S. Attorney Robert Khuzami in Manhattan. “What he did was pay money to silence two women who had information that he believed would be detrimental to the 2016 campaign and to the candidate.”

Cohen said he violated a campaign-finance law in 2016 at the “direction” of a political candidate he didn’t identify in court. A statement issued later in the day by Cohen’s lawyer, Lanny Davis, identified that person as Trump. The government filing refers to the candidate as the current president, without naming him.

Hush Payments

Cohen paid or helped facilitate hush-money payments to two women who claimed they had extramarital affairs with Trump. The lawyer also worked with a "popular national tabloid" to identify negative stories about Trump’s alleged extramarital affairs and quash them, according to court documents. The timing and the financial details match allegations by adult film actress Stephanie Clifford, professionally known as Stormy Daniels, and former Playboy model Karen McDougal. Trump has denied the affairs.

It’s unclear whether prosecutors will pursue others involved in Cohen’s scheme, though Khuzami told reporters, “We will not fear prosecuting additional campaign-finance cases.”

While Trump personally railed at the Manafort verdict, he was silent on Cohen after the news broke.

“There is no allegation of any wrongdoing against the president in the government’s charges against Mr. Cohen,” his lawyer, Rudy Giuliani, said in a statement. “It is clear that, as the prosecutor noted, Mr. Cohen’s actions reflect a pattern of lies and dishonesty over a significant period of time.”

Both Cohen and federal prosecutors repeatedly emphasized that the payments made to silence the women were for the purposes of influencing the outcome of the 2016 election. The assertion appeared to be aimed at precluding a potential claim that the payments were legal and meant to keep the allegations secret from Trump’s wife and family. Former U.S. Senator John Edwards successfully used that claim to defeat federal charges over hidden payments to his mistress during the 2008 presidential campaign.

In entering his guilty pleas, Cohen closes a period of intense speculation and pressure that began earlier this year and included a surprise FBI raid in April of his residences and office. Associates of Cohen said the federal investigation and public scrutiny had taken a toll on his home life and family.

Fighting Emotions

Wearing a dark suit and gold tie, Cohen didn’t appear to have any family members or other supporters with him in court. Throughout the 50-minute hearing, he often appeared to be fighting his emotions, shaking his head, closing his eyes or casting them downward. Cohen remains free on bail and will be sentenced on Dec. 12.

"Michael Cohen took this step today so that his family can move on to the next chapter,” his lawyer, Lanny Davis, said in a statement. “Today he stood up and testified under oath that Donald Trump directed him to commit a crime by making payments to two women for the principal purpose of influencing an election. If those payments were a crime for Michael Cohen, then why wouldn’t they be a crime for Donald Trump?”

Cohen’s plea deal doesn’t include an agreement to cooperate with federal authorities. However, according to former prosecutors, it’s possible that prosecutors could reach such a deal with Cohen. His guilty pleas may also allow him to give testimony to other federal authorities, including Special Counsel Robert Mueller, without further incriminating himself. Mueller’s office had referred the Cohen case to federal prosecutors in Manhattan.

Harry Sandick, a former federal prosecutor in Manhattan said it’s possible that federal prosecutors don’t consider Cohen’s information valuable or view him as a worthy witness. “It could mean that they don’t need him or don’t trust him, or just aren’t ready to cut the deal yet,” said Sandick, now a defense attorney at Patterson Belknap Webb & Tyler LLP.

Persistent Headache

Cohen’s payments to the women have been a persistent headache for Trump. He paid one woman $130,000 in the weeks before the election to keep her from going public with her story about a decade-old affair with Trump, court records say, matching Clifford’s claims. Around that time Trump was under scrutiny for his past behavior with women. In early October of that year an audio recording emerged of Trump appearing to boast about inappropriately grabbing women.

Cohen told the judge on Tuesday that he made the payment in coordination with the candidate his lawyer later identified as Trump. He also said he was reimbursed by submitting sham invoices to a company whose description matches the Trump Organization.

Another payment outlined in the plea agreement matches one made to McDougal, the former Playboy model. She sold her story in August 2016 to American Media Inc., the parent company of the tabloid National Enquirer, for $150,000.

Cohen worked with the chairman and chief executive officer of a media company, who offered to help the campaign "deal with negative stories" involving women. The description matches David Pecker of American Media Inc., publisher of the National Enquirer. The company didn’t respond to requests for comment.

He also admitted to evading personal income taxes by not reporting more than $4 million from his taxi business and other ventures, including $30,000 he made for brokering the sale of a Hermes Birkin handbag.

Personal Lawyer

Cohen, who is 51, has a decade-long view into Trump’s business and personal affairs, as a vice president of the Trump Organization and a personal lawyer to Trump himself.

Cohen once pursued a plan to build a Trump-branded tower in Moscow -- even as Trump was campaigning -- and allegedly hand-delivered a Ukraine peace proposal to the White House. Cohen raised millions of dollars for Trump’s presidential campaign and was later named a deputy finance chairman of the Republican National Committee.

Cohen profited from Trump’s surprise 2016 election, even as the modest fortune he amassed from taxi fleets in New York and Chicago began to decline. He received millions of dollars in payments from companies, including Novartis AG and AT&T Inc., that wanted an inside edge when it came to Trump administration policy. Some of the companies subsequently apologized after those payments were made public, and some of the top executives involved in his hiring took early retirements.

Cohen received funds for many of these deals through a Delaware-based company he formed, Essential Consultants LLC. He also used it to pay Clifford.

--With assistance from Chris Dolmetsch.

To contact the reporters on this story: Shahien Nasiripour in New York at snasiripour1@bloomberg.net;Erik Larson in New York at elarson4@bloomberg.net;Bob Van Voris in federal court in Manhattan at rvanvoris@bloomberg.net;Christian Berthelsen in New York at cberthelsen1@bloomberg.net;Patricia Hurtado in Federal Court in Manhattan at pathurtado@bloomberg.net

To contact the editors responsible for this story: Jeffrey D Grocott at jgrocott2@bloomberg.net, Andrew Martin, David Scheer

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