Political News

There's a 'very high' likelihood that laws were broken in the Stormy Daniels fiasco

Posted May 3, 2018 4:50 p.m. EDT

— Former New York City Mayor Rudy Giuliani's admission Thursday night that President Donald Trump reimbursed attorney Michael Cohen for a $130,000 payment to porn star Stormy Daniels exploded the White House's narrative on what Trump knew and when he knew it.

It also raised questions about whether Cohen, Trump or anyone else in the campaign orbit broke federal election laws governing contributions and expenditures.

To shed light on that -- and to guide me through the dense thicket that is campaign finance law -- I reached out to Larry Noble, the senior director and general counsel at the Campaign Legal Center and a CNN contributor.

Our conversation, conducted via email and edited only for content, is below.

Cillizza: First, a basic question. What campaign finance laws are we talking about here?

Noble: The Federal Election Campaign Act (FECA) prohibits certain entities (e.g., corporations, labor unions and foreign nationals) from contributing to federal candidates and sets limits on what individuals can contribute. Under FECA, an individual can give up to $2,700 per election to a candidate (the primary and general are considered separate elections). There is no limit on what a candidate can give to his or her own election campaign. FECA also requires that a campaign committee publicly report all contributions and expenditures that exceed $200 in an election cycle. These reports have to identify the contributor, as well as the dates and amount of each contribution. When reporting expenditures, the campaign has to report the amount, date, recipient and purpose.

While most contributions take the form of providing money directly to the campaign, an "in-kind" contribution takes place when someone gives the campaign something tangible (such as a car or free rent) or makes a payment to a third party for goods, services or anything of value for the campaign or for the purpose of influencing the election.

A loan or advance of money to a third party is an in-kind contribution that must be reported by the campaign and is subject to contribution limits. A loan that exceed $2,700 from one person is an excessive contribution, even if eventually repaid. In-kind contributions are generally subject to the same limitations and reporting requirements as any other contribution. However, when someone pays a third party for the benefit of the campaign, the campaign had to know about it or otherwise accept it for the campaign to have accepted he contribution. Acceptance happens when the campaign physically accepts the tangible property or, when the campaign, the candidate or another agent of the campaign is involved in the transaction.

Cillizza: We now know Trump paid back Michael Cohen for the $130,000 hush payment to Stormy Daniels. How is this not an in-kind contribution to the campaign by Cohen?

Noble: It looks like it is an in-kind contribution, even if it was a loan to be repaid.

There are two issues: First, was the payment for the purpose of influencing the election? The timing of the Cohen payment right before the election provides strong evidence it was done to stop Daniels from talking about Trump during the final weeks of the campaign and right before a debate. Also, Rudolph Giuliani, Trump's new lawyer, seemed to confirm this in an interview today when he acknowledged the campaign did not want the information coming out right before the election.

The second issue is whether the campaign accepted the in-kind contribution. Now that they have admitted that Cohen was repaid by Trump through payments to Cohen's firm, it is clear Trump knew about it at some point. Even if neither Trump nor anyone with the campaign knew about it before the election, they at least accepted the in-kind contribution when Trump agreed to repay Cohen. However, it is also likely Cohen was an agent of the campaign when he made the original payment and/or Trump knew about the payment from the beginning.

Cillizza: Giuliani said this on Wednesday night: "Imagine if that came out on Oct 15, 2016, in the middle of the, you know, last debate with Hillary Clinton. ... Cohen didn't even ask. Cohen made it go away. He did his job." How much does that complicate the argument that the payoff had nothing to do with the campaign?

Noble: As noted above, this is strong evidence that at least Cohen thought he was protecting Trump as a candidate. This contradicts the statements from others that this had nothing to do with the campaign. Also, it rings true. Giuliani was only expressing the first thought anybody involved in the campaign would have had when they learned that Daniels was about to go public. Giuliani does say "Cohen didn't even ask," possibly trying to suggest no one at the campaign knew. But it is hard to believe he would make a payment like this, and draw up an [non disclosure agreement] for Trump to sign (even though Trump never signed it), without telling Trump. Moreover, it has been reported that Cohen expressed frustration at not getting the money from Trump quickly.

Cillizza: What is the penalty for the sort of violations we are discussing? Slap-on-the-wrist stuff or more?

Noble: If this was just a failure to report an in-kind contribution, they would face a civil penalty that could go as high as the amount in violation, and be forced to amend the campaign reports to reflect the transactions.

But there is strong evidence that they intentionally tried to hide the in-kind contribution, such as Giuliani's admission that they funneled Trump's payment to Cohen through Cohen's law firm and tried to disguise them as retainer fees. Also, Trump publicly said he knew nothing about the payments, but is now admitting he did know. This could potentially lead to it being found a knowing and willful violation, which carries larger civil penalties and can be prosecuted as a felony.

Cillizza: Finish this sentence: "The chances that someone in Trump's orbit broke some sort of campaign finance law in this Stormy Daniels situation is ________." Now, explain.

Noble: The chances that someone in Trump's orbit broke some sort of campaign finance law in this Stormy Daniels situation is very high and reflective of a culture that puts the immediate interests of the candidate above compliance with the law. From the beginning, the Daniels matter has been about protecting the campaign from damaging information. Not only is it likely the original transaction was illegal, but their actions and statements after it came out has shown an intent continue to do or say whatever is necessary to protect the candidate.