Political News

Giuliani’s Explanation of Payments Could Be Legal and Political Threat for Trump

Posted May 3, 2018 9:34 p.m. EDT

WASHINGTON — President Donald Trump’s new legal team made a chaotic debut as Rudy Giuliani, who was tapped recently to be one of the president’s lawyers, potentially exposed his client to legal and political danger by publicly revealing the existence of secret payments to Michael Cohen, the president’s personal lawyer.

After he moved into the White House, the president began paying Cohen $35,000 a month, Giuliani said, in part as reimbursement for a $130,000 payment that Cohen made to a pornographic film actress to keep her from going public about an affair she said she had with Trump. The president confirmed he made payments to Cohen in a series of Twitter posts on Thursday morning.

The explosive revelation, which Giuliani said was intended to prove that Trump and Cohen violated no campaign finance laws, prompted frustration and disbelief among the president’s other legal and political advisers, some of whom said they feared the gambit could backfire.

Legally, the failure to disclose the payments could be a violation of the Ethics in Government Act of 1978, which requires that federal officials, including Trump, report any liabilities of more than $10,000 during the preceding year. Trump’s last disclosure report, which he signed and filed in June, mentions no debt to Cohen.

Politically, Giuliani’s remarks — made in television appearances and interviews — raised questions about the president’s truthfulness and created a firestorm at the White House, where aides were caught off guard and furiously sought to deflect questions they could not answer. Sarah Huckabee Sanders, the White House press secretary, said she had been unaware of the payments before Giuliani’s interviews.

“Everyone is wondering, what in the world is he doing?” said George Arzt, a longtime New York Democratic consultant who has known Giuliani for decades. “I would not have sent out Rudy to talk about the investigation. But Trump likes chaos and Trump just added to the chaos.”

By the end of the day, the president and his advisers had done little to clarify the confusion that Giuliani had set in motion a night earlier.

Giuliani did not consult every member of the president’s legal team, or the network of lawyers around Washington whose clients have been entangled in Trump’s legal disputes, according to several people close to the team. Emmet Flood, a lawyer hired by Trump on Wednesday, was not involved in Giuliani’s plans to reveal the payments to Cohen during an interview with Sean Hannity on his Fox News program, one person said.

The abrupt disclosure — which even caught Hannity, a confidant of the president’s, by surprise — set off a flurry of calls between Trump’s lawyers as they sought to determine whether Giuliani meant to reveal the president’s reimbursement. Witnesses and lawyers around Washington scoured transcripts, watched television clips and called each other in an effort to grasp the consequences of what Giuliani had said.

The president’s other lawyers ultimately determined that Giuliani had consulted with Trump, people close to them said, but were left speechless about why he decided to make the disclosure in such a high-profile way and without any strategy to handle the fallout.

Giuliani recognized the situation was problematic, two people close to him said, because Trump had previously said on Air Force One that he was unaware of the hush payments to Stephanie Clifford, the actress who performs as Stormy Daniels. However, Trump and his aides see lying to or misleading the news media as far less troublesome than lying to investigators, they said.

Even some of the president’s own advisers said they were skeptical of Giuliani’s statements that Cohen entered into a settlement, made payments to a pornographic film actress and was reimbursed by the president all without Trump’s knowing why. Giuliani’s disclosure is a sign of how Trump’s reshuffled legal team — which now includes a highly paid Washington lawyer, a famous former mayor, a constitutional lawyer who specializes in religious cases and former federal prosecutors — will function in the coming weeks as they sort out who takes the lead on representing the president.

Giuliani has said he is the lead lawyer dealing with the special counsel’s investigation in Washington. But his statements Wednesday night related to the continuing investigation in New York that is examining the conduct of Cohen. People close to the president are concerned that Trump and Giuliani may create more problems for themselves if they consult only with each other and leave out the other lawyers who may know more about the nuances of the cases.

Trump faces a two-front battle with the Justice Department: one investigation in New York into Cohen and the special counsel investigation in Washington.

Whoever runs the president’s legal defenses will almost certainly adopt a more aggressive strategy than the previous team, which was led by Washington lawyers John Dowd and Ty Cobb.

Despite the president’s desire to take on the special counsel, Robert Mueller, and the Justice Department, Dowd and Cobb persuaded Trump to buy into their strategy of cooperation. The more helpful the president was, Dowd and Cobb told him last year, the more likely the investigation would conclude by year’s end.

Instead, the investigation has intensified, and the president has concluded that approach was a mistake, according to people close to him. Convinced that the investigation is a growing threat to his presidency, he has resorted to his initial inclination to fight.

Trump appears to hope that Giuliani, a like-minded political street fighter from New York, will aid his combative approach. Giuliani’s comments on Wednesday and Thursday were an attempt to do just that.

His aggression carried risks. Besides revealing that the president had reimbursed Cohen, Giuliani appeared to admit that the payment to Clifford just before Election Day in 2016 was made because of concerns about the coming vote. That could be used to argue that it was an illegal campaign contribution.

“Imagine if that came out on October 15, 2016, in the middle of the, you know, last debate with Hillary Clinton,” Giuliani said on the Fox News program “Fox & Friends.” “Cohen didn’t even ask. Cohen made it go away. He did his job.”

Violating campaign finance laws can be serious. John Edwards, a former Democratic senator and presidential hopeful, was charged with corruption for his role in trying to hide details of his affair with a videographer during his 2008 bid for the White House. Edwards’ trial ended in an acquittal on one count with the jury unable to reach a verdict on five others.

Giuliani’s comments also raised fresh questions about the president’s relationship with Cohen. As Giuliani told it, Cohen entered into a legal agreement with Clifford and paid her without Trump’s knowledge. Giuliani described that as commonplace, saying he performed similar services for his own clients. But legal ethics experts said such an arrangement was highly unusual and would only expose Cohen to new questions.

Lawyers are required to keep their clients fully informed of their activities and are generally prohibited from advancing money to or on behalf of their clients, said Deborah L. Rhode, a scholar on legal ethics at Stanford Law School. “This is a guy who says he’ll take a bullet for the president,” she said. “And what they’re giving him is the legal ethics equivalent of a bullet.”

“Giuliani thinks he’s serving President Trump’s interest,” she said. “President Trump’s interest is not the same as Michael Cohen’s interest.” In his tweets Thursday, Trump contradicted his earlier statements that he knew of no payment to Clifford. Trump said he paid a monthly retainer to Cohen and suggested that the payment to the actress could not be considered a campaign contribution.

Government watchdog groups warned that willfully violating the financial disclosure laws can be punished by a fine of up to $50,000 and a year in prison. Although federal officials who lie on the forms are also typically charged with other, more serious offenses such as bribery or fraud, more than 20 officials or former officials have been charged in the past 12 years with making false statements to federal officials, a felony offense. An Environmental Protection Agency official who failed to report a source of income on the form, for instance, was convicted and sentenced to probation.

“Mr. Giuliani did his client no favors,” said Norman L. Eisen, the chairman of the good-government group Citizens for Responsibility and Ethics in Washington.

Cohen had worked for Trump for a decade and has said he would “take a bullet” for him. Trump, however, treated Cohen poorly over the years, people familiar with their relationship have said.

Clifford is suing Cohen to try to be released from the nondisclosure agreement. And Cohen is under federal investigation into possible bank fraud, raising concerns in the president’s inner circle that Trump’s longtime personal lawyer will cooperate with the government. Federal agents raided Cohen’s office and home last month and seized documents that included information about payments to Clifford.

Cohen recently invoked his Fifth Amendment right against self-incrimination in Clifford’s lawsuit.