Tabloid Helped Cohen Head Off Scandals for Trump
Posted August 22, 2018 10:13 p.m. EDT
Updated August 22, 2018 10:19 p.m. EDT
The federal campaign finance and tax evasion case that is embroiling the White House began in the unlikeliest of places: the world of supermarket tabloids.
It is populated by porn stars and Playboy models, shadowy “story brokers” and the ultra rich and powerful, who can buy back their secrets on an underground exchange run by gossip scribes who set the rules, the prices and, frequently, the reputational toll.
That world has now come to life on the stark pages of federal court documents that detail violations of campaign finance and tax laws, implicating President Donald Trump and reprising Watergate-era talk of “high crimes and misdemeanors” and possible impeachment.
In laying out the charges to which Michael Cohen, Trump’s longtime lawyer, pleaded guilty Tuesday, the documents filed in New York also entangle several unidentified people in Trump’s business and from his campaign.
The anatomy of the crime the court papers describe — stemming from hush money payments to two women who claimed they had sexual encounters with Trump — has a reality-television twist that has come to typify the Trump presidency. One of the women, pornographic film star Stephanie Clifford, known as Stormy Daniels, went public with her story earlier this year in a media blitz, and she was represented by a brash lawyer who says he now is considering running for president. “You have to go back to Watergate-era scandals to find similarly colorful and outrageous events,” said Daniel A. Petalas, a former head of enforcement at the Federal Election Commission and a former Justice Department public corruption prosecutor. “When political figures are engaged in conduct that might be tawdry or salacious, it’s not unusual that the other participants have colorful histories and backgrounds themselves.”
Like so many political scandals before it, this one began with a typical worry for some candidates: that their history of extramarital affairs and other sexual behavior could undermine a bid for office.
The trouble for Trump, some of which was first disclosed just before the 2016 election, began a decade earlier, shortly after the birth of his son with Melania Trump. Trump allegedly began affairs with Clifford, whom he met at a celebrity golf tournament; and Karen McDougal, then a Playboy model he met at the Playboy Mansion while filming an episode of his NBC hit “The Apprentice.”
Trump had an ally in the nation’s biggest tabloid news publisher, American Media Inc., which controls nearly every gossip magazine on checkout counter racks throughout the country, and is a magnet for people with embarrassing tales to sell about the rich and the famous.
Its flagship, The National Enquirer, proved in 2008 that it could be as threatening to a politician as to a Hollywood star, when it uncovered an affair that John Edwards, the Democratic presidential candidate, had with a campaign worker that resulted in the birth of a child. Political supporters of Edwards helped finance the cover-up, leading to an unsuccessful yet groundbreaking campaign finance case that created a template for the charges against Cohen.
The court documents filed Tuesday in connection with Cohen’s guilty plea provided a far more detailed account than previously known about the payments made to suppress women’s stories about Trump that could have threatened his election prospects. The filings revealed the involvement of executives at The Trump Organization, who routed reimbursements to Cohen through a Trump trust using “sham invoices.”
For the first time, prosecutors said that tabloid publisher American Media Inc. had been involved in deals to buy the silence of both Clifford and McDougal. And as early as August 2015, prosecutors revealed, Cohen communicated with the chairman of American Media, David J. Pecker, who agreed to turn the organization’s tip line into a trip wire that could detect potential trouble for Trump. Pecker agreed to “help deal with negative stories,” about Trump’s “relationships with women by, among other things, assisting the campaign in identifying such stories so they could be purchased and their publication avoided.”
Pecker made that promise, prosecutors said, “in coordination with” Cohen, “and one or more members of the campaign.”
Prosecutors and Cohen said that he undertook his work with AMI at Trump’s direction — an assertion the president denied, telling Fox News on Wednesday that he learned of the payments only later. In the campaign’s early days in 2015, Trump was operating a bare-bones staff that included his communications director, Hope Hicks; his campaign manager, Corey Lewandowski; and, until that August, his longtime consigliere, Roger Stone.
Tipping Off the Fixer
Prosecutors identified June 2016 — around the time Trump effectively clinched the Republican nomination — as the beginning of the plot to pay off McDougal. A fitness specialist and model by then, McDougal had been named Playboy’s Playmate of the Year for 1998 but came from wholesome roots as a preschool teacher. Even in recent interviews, she has maintained that she admires Trump, saying she broke off their relationship in 2007 out of her own sense of guilt about being involved in an extramarital affair.
She has said that she decided to sell her story in 2016 when another former Playboy model hinted at it on Twitter, causing her to worry that it would become public whether she liked it or not. After a friend convinced her that she might as well make money from it, she decided to approach the tabloids and hired a Los Angeles lawyer, Keith M. Davidson, to help her do it.
Davidson’s client list included professional athletes like Manny Pacquiao and Jalen Rose, but his work also brought him into the orbit of regular subjects of tabloid news such as wrestler Hulk Hogan and the “Austin Powers” actor Verne Troyer. He had worked with AMI and other gossip publishers, both in selling informationand in seeking to block stories that might damage clients’ reputations.
According to prosecutors, when McDougal and Davidson approached American Media, Pecker — along with his top editorial executive, Dylan Howard — immediately informed Cohen. More important, prosecutors allege, Cohen then urged AMI to buy her story in order to suppress it, “so as to prevent it from influencing the election.”
The First Amendment gives media companies wide latitude to communicate with candidates and, several campaign finance law experts have said, even allows them to coordinate coverage with campaigns — which makes sense for a country that had a very partisan press corps at its founding.
“A media entity can talk with a campaign about coverage as part of its media function,” said Trevor Potter, a founder of the Campaign Legal Center who helped write part of the campaign finance law.
But a media company makes an illegal corporate contribution if it acts outside its “legitimate press function” in coordinating with a campaign to spend money to influence an election. Such activity “is not like the action of a media company deciding what to cover and exercising editorial judgment,” Potter said.
And that’s where, prosecutors allege, the relationship between Cohen, Trump and potentially others in his campaign took an illegal turn.
Speaking in court on Tuesday, Cohen said he arranged the payment “in coordination with, and at the direction of, a candidate for federal office.” Prosecutors said that AMI’s $150,000 agreement with McDougal came after Cohen promised the company that it would be reimbursed. Prosecutors report that Cohen effectively moved to do that several weeks later, setting up a shell company to buy the rights to McDougal’s story about Trump from AMI. The deal was coming together around the time that Cohen taped a conversation with Trump in which they appeared to come to a realization: As loyal as Pecker was, there was no guarantee he would always be in place to protect Trump’s secrets. As Trump said on the tape, which Cohen’s lawyer released last month, “Maybe he gets hit by a truck.” At the last minute, according to prosecutors, AMI backed out of the deal and instructed Cohen to destroy related paperwork. He did not. It is now in the possession of federal prosecutors.
Cohen and Pecker shared a commitment to protecting Trump. The two men had already had a trial run at that in July 2015. When a man approached Cohen to say he had a potentially compromising photograph of Trump signing a woman’s bare breast, Cohen arranged to connect the man with AMI to discuss a deal, The New York Times previously reported. Though a deal never materialized, Cohen told The Times that his goal was to keep the photo hidden because “Mr. Trump has a family,” and “I felt like I had to protect his family.”
AMI said at the time that neither Trump nor Cohen “has attempted to, or ever, influenced (or will ever influence) coverage at AMI’s publications. Period.”
During Trump’s run through the Republican primaries, The National Enquirer routinely bashed his rivals and promoted his candidacy. Similarly, The Enquirer became a powerful political billboard for Trump during the general election campaign.
“You could read horrible things about Hillary Clinton and wonderful things about Donald Trump, and people were exposed to this at many supermarkets,” said Kathleen Hall Jamieson, director of the Annenberg Public Policy Center and professor of communication at the Annenberg School for Communication. “You might say nobody reads the tabloids, but actually most of us do — through inadvertent exposure.”
AMI did not respond to requests for comment on the prosecutors’ assertions about its role in the payments.
A Payoff, and a Bonus Clifford met Trump in July 2006, at the American Century Championship golf tournament, where Trump also had an assignation with McDougal.
She had starred in pornographic movies including “Space Nuts” and “Love Potion 69”; Trump was on a top television show, “The Apprentice.” The idea that he would be president and she would pose a later legal threat would have seemed improbable as they spent one of their dates watching “Shark Week.” (Clifford has said they had sex only once; Trump denies the affair.)
But it was Clifford who helped blow open the case earlier this year, along with her aggressive, media-ready lawyer, Michael Avenatti, who could match Trump tweet for tweet, quip for quip — so much so that he says he is now considering a run for the presidency himself. Avenatti has been representing Clifford in a lawsuit to nullify her nondisclosure agreement.
In the fall of 2016, Clifford was discussing selling her story at an inopportune time for Trump, just after a recording leaked of raw “Access Hollywood” footage in which he boasted about groping women.
Once again, the American Media trip wire alerted Cohen of trouble for Trump. Prosecutors reported Tuesday that an agent approached Howard, the AMI editor, to tell him that Clifford was preparing to talk about her encounters with Trump. In fact, prosecutors said, Howard and Pecker connected Cohen with Davidson, the lawyer who represented Clifford then.
Cohen initially struggled to come up with the $130,000 payment to Clifford, which Trump did not readily provide. Clifford then considered selling her story elsewhere.
Upon learning from Davidson about Clifford’s plans, Howard texted Cohen, urging that they “coordinate something on the matter,” or “it could look awfully bad for everyone,” the court papers said. Then, according to prosecutors, Pecker and Howard spoke with Cohen over an encrypted telephone line, persuading him to finalize the deal.
The obscure shell company Cohen used to pay her, Essential Consultants LLC, has since been disclosed. But then it remained secret, even after a Wall Street Journal article about McDougal’s deal with AMI, published days ahead of the campaign, noted that Clifford had spoken to the news media about selling her story but then disappeared.
It wasn’t until January 2017 that Cohen initiated the process of being repaid, presenting executives at the Trump Organization with records showing Essential Consultants’ payment to Clifford.
According to prosecutors, executives at the company signed off on paying Cohen $420,000, which included a $60,000 bonus, money to cover any taxes on the payment to Cohen and a reimbursement for undefined “tech services.” As prosecutors noted, Cohen would be paid in $35,000 installments. Cohen submitted invoices that falsely identified the payments as part of a “retainer agreement.”
Upon receiving the first two invoices, a company executive whom prosecutors identified as “Executive-1” forwarded the invoice to “another executive of the company (‘Executive -2’),” and the fraudulent invoice was approved, according to prosecutors. Several people familiar with the investigation said one of those executives was Allen Weisselberg, the Trump Organization chief financial officer. It is unclear who the other executive was.
Even with the reimbursement, the campaign finance law views Cohen’s initial payment as an illegal contribution, in excess of limits on donations of more than $2,700 in general elections. Yet Cohen appeared not to understand that when the issue of his payment to Clifford first came to the fore in January, after the news first surfaced in The Wall Street Journal that he had taken the lead in paying off Clifford. The following month he told The New York Times that he paid the money out of his own pocket.
“Neither the Trump Organization nor the Trump campaign was a party to the transaction with Clifford, and neither reimbursed me for the payment, either directly or indirectly,” Cohen said in a statement then. “The payment to Ms. Clifford was lawful, and was not a campaign contribution or a campaign expenditure by anyone.”
Testifying under oath on Tuesday, Cohen said he arranged the payment “for the principal purpose of influencing the election,” and told the judge he knew at the time that he was doing so in violation of campaign finance laws.