Log in
Forgot password ?
Become a member for free
Sign up
Sign up
Dynamic quotes 

MarketScreener Homepage  >  News  >  Economy & Forex  >  All News

News : Economy & Forex
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance ProfessionalsCalendarSectors 
All NewsEconomyCurrencies / ForexCryptocurrenciesEconomic EventsPress releases

Q&A : The Law Behind Michael Cohen Case--Update

share with twitter share with LinkedIn share with facebook
share via e-mail
08/23/2018 | 04:11pm EDT

By Julie Bykowicz

Michael Cohen, President Trump's former personal lawyer, pleaded guilty this week to eight federal crimes, including tax evasion, making false statements to a bank and campaign-finance violations. The plea capped a monthslong investigation into his business dealings and implicated the president in the campaign-related payments.

Here's what the case is about and how campaign-finance laws work.

How exactly did Michael Cohen break the law?

Mr. Cohen pleaded guilty to willfully causing an unlawful corporate campaign contribution and making an excessive campaign contribution. Each of those counts carries a maximum of five years in prison. With the banking and tax counts, he could have faced up to 65 years in prison. Under the deal, he would be sentenced to no more than five years in prison, with a fine of $20,000 to $1 million. He was released on $500,000 bond.

The facts of the first count are that Mr. Cohen arranged for American Media Inc. to pay $150,000 in August 2016 to former Playboy model Karen McDougal. She claimed to have had an affair with Mr. Trump a decade earlier (denied by Mr. Trump's representatives), and the AMI payment precluded her from going public with her story. Prosecutors consider that payment an in-kind contribution to the campaign.

Corporations are prohibited from making any donations to campaigns, either directly with money or "in-kind" by providing something of value.

The facts of the second count are that Mr. Cohen personally paid $130,000 to a second woman, Stephanie Clifford, a former adult-film actress known professionally as Stormy Daniels, in October 2016, to prevent her from talking about her claim of having an affair with Mr. Trump a decade earlier, something Mr. Trump has denied.

Under the law, individuals are restricted to giving a total of $5,400 to a candidate's campaign for the primary and general elections.

In his guilty plea, Mr. Cohen admitted to those two campaign-finance violations and said under oath in court that he arranged for the payments at the direction of Mr. Trump.

Who else could face legal trouble?

AMI, which publishes the tabloid National Enquirer and other titles, made an illegal campaign contribution, according to the facts laid out in the Cohen plea. AMI representatives haven't responded to returned requests for comment.

The Wall Street Journal has reported that AMI Chairman David Pecker has provided prosecutors with details about the payments Mr. Cohen arranged, and Mr. Trump's knowledge of those deals. Mr. Pecker has been granted immunity, the Journal reported Thursday.

What about Mr. Trump?

Mr. Cohen's assertion that Mr. Trump directed him to break the law would seem to put the president in the legal hot seat. But Justice Department policy is that a sitting president cannot be indicted.

And if prosecutors pursued a case against Mr. Trump, perhaps after he left office, they would have to prove that he "knowingly and willfully" broke the law -- a tough case, most campaign finance lawyers acknowledge.

President Trump says he paid Mr. Cohen back with his own money. Would that change anything for Mr. Cohen?

"They came from me," Mr. Trump told Fox News this week about the payments to the women. A trust that holds Mr. Trump's Trump Organization paid Mr. Cohen $420,000 last year to cover his expenses related to Ms. Clifford, prosecutors said.

There is no evidence that Mr. Trump repaid AMI for its payment to Ms. McDougal. Mr. Cohen had originally planned to do so with an agreement for $125,000, but he didn't follow through on that, prosecutors said.

But whether Mr. Trump footed the bills doesn't matter. The payments by AMI and Mr. Cohen occurred during the campaign, making them illegal, prosecutors said.

Mr. Trump spent more than $18 million of his own money on his campaign, according to Federal Election Commission reports. Had his campaign paid the women instead of using Mr. Cohen's money and properly noted the payments in its FEC reports, there may not have been any violations, some campaign finance attorneys said.

Is there precedent for a case like this?

John Edwards, a 2008 Democratic presidential candidate, was brought to trial over $900,000 that two of his donors allegedly spent to conceal an extramarital affair he had with a campaign worker.

He faced six counts related to hiding payments two donors made to his pregnant mistress, which prosecutors alleged were illegal campaign contributions that Mr. Edwards didn't report to the FEC. At his 2012 trial, he was acquitted on one count, and the jury deadlocked on the others.

Jurors later said they weren't convinced that the payments were made because Mr. Edwards was a presidential candidate, or simply because he was trying to hide the affair from his sick wife. The Justice Department decided not to retry Mr. Edwards.

One vocal opponent of charging Mr. Edwards was Melanie Sloan, then director of the watchdog group Citizens for Responsibility and Ethics in Washington. She frequently called it "a lousy case."

But Ms. Sloan, now an adviser to American Oversight, a group with the goal of "exposing unethical conduct" in the Trump administration, sees the Michael Cohen case differently.

"It's complicated, and I did have a very clear position on John Edwards, " she said. "In the past, I wasn't so sure whether these payments were just trying to hide conduct from Trump's wife, Melania. But that's not what the evidence shows now."

She said Mr. Cohen's admission under oath that the payments were related to the campaign, and other evidence referenced in the charging documents, makes this a stronger case than what prosecutors had against Mr. Edwards.

Wait, so paying off a mistress is a legitimate campaign expense?

This is a question raised by Bradley Smith, a Republican former chairman of the FEC. In an interview Tuesday, he challenged people to think about whether a mistress payoff would have been deemed an illegal "personal use" of campaign funds had it been noted in Mr. Trump's campaign filings.

The FEC gives this guidance: "If the expense would exist even in the absence of the candidacy or even if the officeholder were not in office, then the personal use ban applies."

Mr. Smith expanded on his views in a Thursday column in the Washington Post:

"If a candidate for public office decided to settle a private lawsuit to get it out of the news before Election Day, would that be a campaign expenditure? If a business owner ran for political office and decided to pay bonuses to his employees, in the hope that he would get good press and boost his stock as a candidate, would that be a campaign expenditure, payable from campaign funds?

"Under the theory that then-candidate Donald Trump's personal attorney Michael Cohen violated campaign finance laws by arranging hush-money payments to women accusing Trump of affairs, the answer would seem to be yes. We should probably think twice before accepting that answer."

Trevor Potter, another Republican former chairman of the FEC, countered Mr. Smith in an interview: "The problem with his argument that this is inherently personal and should not be considered to have anything to do with the campaign is that it depends on the facts. Here we have sworn testimony in court by the lawyer involved in making it all happen that it was done expressly for the purpose of influencing the election."

He added that other evidence, such as the timing of the payments a decade after the alleged affairs, and just weeks or days before the election, provides more support that campaign-finance violations occurred.

Write to Julie Bykowicz at julie.bykowicz@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
VALUE8 0.36% 5.56 Delayed Quote.17.30%
share with twitter share with LinkedIn share with facebook
share via e-mail
Latest news "Economy & Forex"
02:56aStocks wobble on trade, earnings anxiety; U.S. Treasury yields fall
02:53aStocks wobble on trade, earnings anxiety; U.S. Treasury yields fall
02:50aWHAT'S NEWS : Business & Finance -- WSJ
02:50aWHAT'S NEWS : World-Wide
02:39aECB to cut rates in September, QE 2.0 still on the cards - Reuters poll
02:36aVolvo Cars to cut costs as trade war dents profits
02:35aAPPEA AUSTRALIAN PETROLEUM PRODUCTION & EXPLORAT : Switch to natural gas reducing global emissions
02:34aEU is 'unimpressed' by threats of no-deal Brexit - BBC
02:16aChina's debt tops 300% of GDP, now 15% of global total - IIF
Latest news "Economy & Forex"