This story originally appeared in The Daily Beast newsletter, Pay Dirt. Sign up for that newsletter: HERE.
Given events this week (did something happen this week?), we felt a special issue of PAY DIRT was in order. Today, we’re devoting the entire newsletter to unwrapping and analyzing what is unquestionably the biggest campaign-finance story of the Trump era: the criminal hush-money payments made by Michael Cohen.
We’ll resume our regularly scheduled programming in next week’s edition.
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The Myriad Holes in Trump’s Defense of Michael Cohen’s Illegal Politicking
President Donald Trump and his supporters are offering some specious defenses of Michael Cohen, the president’s longtime personal attorney and fixer who on Tuesday admitted to violating campaign-finance laws on his boss’ behalf. Born partly of ignorance and partly of political spin, a number of the president’s and his supporters’ talking points over the last 36 hours have been wholly divorced from the reality of campaign-finance rules. So we thought we’d help clarify what Cohen actually did wrong, and why few of the apologias for Cohen’s and Trump’s conduct pan out.
First it’s important to understand exactly what Cohen did. Cohen pleaded guilty to two campaign-finance-related felonies, both stemming from hush-money payments in October 2016 to a pair of Trump’s alleged former mistresses, Stormy Daniels and Karen McDougal. Cohen arranged for a payment directly to Daniels in exchange for her signature on a nondisclosure agreement. He also arranged for American Media Inc., the tabloid empire run by Trump associate David Pecker and the publisher of the National Enquirer, to buy McDougal’s story of her affair, a story that AMI then killed for Trump’s benefit. Cohen admitted to prosecutors that he understood both payments to be illegal expenditures in support of the Trump campaign, far exceeding legal contribution limits and structured to evade financial disclosure. He also claimed that both were undertaken at Trump’s behest. What’s more, Cohen was at least partially reimbursed for the Daniels payment by a Trump company, effectively making that reimbursement an illegal contribution to the campaign by a corporate entity.
Now for the post-facto justifications. Let’s take them one at a time.
Claim: The payments were legal because the source of the money was Trump himself, not his campaign.
This defense, offered by Trump himself in an interview Wednesday, is the most bizarre of the bunch, as it gets the law entirely backward. If the Trump campaign had paid off Stormy Daniels directly, it likely would’ve been entirely aboveboard. The criminality lies in the fact that someone other than the campaign (or the candidate—we’ll get to that in a moment) spent significant sums of money to influence the election in Trump’s favor. That made those expenditures in-kind contributions. But the per-cycle contribution limit to a federal campaign is $5,400. The $130,000 paid to Stormy Daniels far exceeded the limit and was not disclosed in Federal Election Commission filings.
Trump claims that he reimbursed Cohen personally for the Daniels payment. First of all, an illegal campaign contribution is still illegal even if it’s later reimbursed. But prosecutors found that it wasn’t just Trump individually paying Cohen; one of his companies also contributed to a pool of $420,000 used to reimburse Cohen for hush-money payments, as well as a separate $50,000 payment to an unnamed “technology company” for apparently undisclosed services in support of the Trump campaign.
It wasn’t just Trump personally who paid Cohen, in other words. But even if it were, the president’s apparent belief that that would excuse the conduct—and that criminality would only have occurred if the campaign itself paid off Daniels and McDougal—betrays a fundamental misunderstanding of the criminal conduct that threatens to envelop not just his White House but also his private business.
Claim: The Obama campaign engaged in comparable conduct.
The president tweeted this Wednesday morning: “Michael Cohen plead guilty to two counts of campaign finance violations that are not a crime. President Obama had a big campaign finance violation and it was easily settled!”
Putting aside the bizarre contention that Cohen pleaded guilty to crimes that are not actually crimes, the latter part of that claim is worth dissecting. Trump appears to be referring to a $375,000 civil fine levied against Barack Obama’s 2008 presidential campaign—at the time the largest fine the FEC had ever imposed. It stemmed from a huge number of excessive contributions to the campaign, and a number of contributions late in the 2008 election cycle that were not disclosed in periodic 48-hour reports, which require campaigns to disclose all contributions over $1,000 within two weeks of an election.
In pointing to that fine, Trump unwittingly makes the case for Cohen’s criminal prosecution. The FEC did indeed find extensive reporting violations by the Obama campaign. What it didn’t find was any evidence that the campaign willfully or knowingly failed to file complete and accurate FEC filings. The Obama campaign was awash in small-dollar contributions, and any campaign with that makeup of financial support will inevitably run into paperwork errors. Indeed, since 2015, the FEC has flagged nearly 25,000 excessive, impermissible, undisclosed, or otherwise suspicious contributions to Trump’s presidential campaign, totalling more than $14 million.
Cohen, on the other hand, admitted to prosecutors that he knew the hush-money payments he was arranging were illegal, and that he engaged in that conduct anyway. That’s the real standard for criminal wrongdoing when it comes to campaign-finance laws. Trump’s attempt at exoneration is similar to those made by convicted straw donor Dinesh D’Souza, who claimed that a number of Rosie O’Donnell’s campaign contributions, made under different spellings of her name and using different addresses with which she’s associated, were comparable to his conscious scheme to evade campaign-finance limits. Paperwork problems are to be expected in FEC reporting; Cohen’s problem—and Trump’s, and D’Souza’s—stems from a willful violation of the law. There’s no evidence of one in the Obama campaign’s case.
Claim: Trump would’ve made these hush-money payments regardless of his presidential campaign.
This explanation holds that Cohen’s hush-money payments couldn’t have been illegal transactions in support of the campaign, as Trump would’ve paid off these women whether or not he was running for office. It’s similar to the defense offered by former Sen. John Edwards, whose mistress received hush-money payments from two Edwards family friends while Edwards sought the 2008 Democratic presidential nomination. The FEC eventually ruled the Edwards payments did not constitute illegal in-kind contributions to the campaign, agreeing with the defense team that they were of a personal, not political, nature.
This is the least implausible of the three defenses of Cohen’s conduct, and Trump attorney Rudy Giuliani made it explicitly Thursday morning. “The payments, as determined by the Edwards FEC ruling, are NOT ILLEGAL,” he wrote. “The truth is [Cohen] paid to protect his good friend and family,” not to help sway an election.
There are a couple of problems with this explanation, though. First, it was not a coincidence that Daniels and McDougal emerged to tell of years-old affairs just weeks before the presidential election. Say what you will about their motives, but the timing clearly indicates that they sought to either affect or cash in on Trump’s presidential aspirations. That inherently linked efforts to silence them with the 2016 election.
But more to the point, Cohen admitted that the expenditures were political. As stipulated in his plea deal, Cohen “caused and made the payments described herein in order to influence the 2016 presidential election. In so doing, he coordinated with one or more members of the campaign, including through meetings and phone calls, about the fact, nature, and timing of the payments.”
Edwards and his allies maintained to the end that his associates’ hush-money payments were not connected to his political campaign. Here, we have a top aide to the president telling prosecutors that he was seeking, through these expenditures, to affect political outcomes, and that he was doing so at Trump’s direction. That’s a smoking gun that Edwards prosecutors never had.
Claim: The Clinton campaign’s funding of Fusion GPS should be investigated by the same standard.
Giuliani reiterated this tired GOP talking point on Thursday morning. “If there is any justice left at DOJ why is payment by Hillary Clinton and DNC to FusionGPS for the phony Steele dossier not under investigation,” he tweeted. “On your theory in Cohen plea it’s an illegal campaign contribution.”
None of that is correct. Fusion GPS was retained by Perkins Coie, a prominent Democratic law firm that represented the Clinton campaign and the Democratic National Committee, to dig up dirt on Trump. As part of that effort, it hired former British spy Christopher Steele as a subcontractor. Steele gathered the information that made it into the infamous “dossier” presented, alongside additional evidence, by federal authorities seeking a foreign intelligence surveillance warrant against one-time Trump campaign adviser Carter Page.
Let’s put aside questions about that FISA warrant, as they’re not germane to Giuliani’s allegations of violations of campaign-finance laws. The key point is that Fusion GPS’ services for the Clinton campaign were paid contracting work. The campaign and the DNC disclosed payments to Perkins Coie, which outsourced some services to Fusion GPS. All parties involved, as far as we know, provided their services at fair market value and were paid accordingly.
This, in a way, exposes the absurdity of Trump’s insistence that the hush-money payments were aboveboard because they didn’t come from the campaign. If his campaign had, for instance, made large payments to Jones Day, its law firm, which then used that money to pay off Daniels and McDougal, it would’ve been a more comparable arrangement to that between Fusion GPS and the Clinton campaign. And it likely would have been considered aboveboard.
By contrast, if a company owned by Hillary Clinton had paid Fusion GPS for its work, or if Clinton herself had paid for it without disclosing a candidate contribution to her campaign, the structure would have been similar to Cohen’s payments, and likely would have been illegal. But that’s not what happened, and Giuliani likely knows it.
