Trump, Cohen and the Hush Money Explained

The guilty plea of President Donald Trump’s long-time fixer, attorney, and confidant Michael Cohen revealed the inner-workings of a complex scheme to keep damaging stories of Mr. Trump’s extramarital affairs under wraps. It involved a web of shell companies, a supermarket tabloid and, if Mr. Cohen is to be believed, the blessing of Mr. Trump himself.

Among other things, Mr. Cohen pled guilty to violating federal campaign laws when he made payments to keep the embarrassing details of Mr. Trump’s extramarital affairs with a Playboy model and a porn star from becoming public and damaging his campaign for President. Mr. Cohen also said that he did this at Mr. Trump’s direction and with his full knowledge. At the center of all of it, was Mr. Trump’s close friend David Pecker. Pecker is chairman and CEO of American Media Incorporated (AMI), the parent company of the National Enquirer.

According to prosecutors in the Michael Cohen case, months after Mr. Trump declared his campaign for president, Mr. Pecker offered to help Mr. Trump’s campaign by identifying negative stories about his relationships with women and brokering deals to keep them quiet. Under the arrangement, AMI and it’s supermarket tabloid National Enquirer acted as an early warning system for the Trump team, alerting Mr. Cohen to negative stories and then working with him to keep them quiet.

The Former Playboy Model

In June of 2016, Keith Davidson, an attorney for Karen McDougal, a former Playboy model with whom Mr. Trump had an affair a decade earlier, approached National Inquirer to sell her story. McDougal had decided to go public after rumors about her affair with Trump began appearing on social media, preferring to tell her story on her own terms. What Ms. McDougal and her lawyer didn’t realize was that the National Enquirer was actively working with Mr. Cohen to suppress stories like hers.

Soon after Mr. Davidson approached the National Enquirer, Mr. Pecker reached out to Mr. Cohen to inform him of the story. Mr. Cohen urged Mr. Pecker to acquire the rights to it and promised to reimburse AMI for the cost of doing so.

In August 2016, AMI paid Ms. McDougal $150,000 for the lifetime rights to the story of her relationship with “any then-married man,” which was code for Mr. Trump. Under the deal, AMI also promised to feature Ms. McDougal on magazine covers and publish fitness columns authored by her — which, for the most part, never materialized.

The real purpose of the agreement, according to the criminal information accompanying Mr. Cohen’s guilty plea, was to prevent Ms. McDougal’s story from becoming public to avoid damaging Mr. Trump’s election chances.

A few weeks later, Mr. Cohen struck a deal with AMI to purchase the rights to the story about Ms. McDougal’s affair with Mr. Trump for $125,000. Mr. Cohen set up a shell company called “Resolution Consultants, Inc.” for the purpose of the transaction, but Mr. Pecker called it off before the transaction actually took place.

While that transaction was never completed, prosecutors charged that AMI’s payment to Ms. McDougal was an illegal campaign contribution because the payment was made in coordination with Mr. Cohen, who promised to reimburse AMI, to avoid the publication of a damaging story that would impact the election. As a corporation, AMI is legally barred from contributing to campaigns.

The Porn Star

The National Inquirer early warning system also played into another payoff Mr. Cohen engineered, this time to Stephanie Clifford, a porn star going by the stage name Stormy Daniels who, like Ms. McDougal, planned to go public with a claim to have had an affair with Mr. Trump.

Prosecutors said that in early October of 2016, Ms. Clifford’s agent reached out to Enquirer editor-in-chief Dylan Howard to inform him that Daniels was willing to go public about her affair with Mr. Trump.

Mr. Howard and his boss Mr. Pecker contacted Mr. Cohen to let him know about Ms. Clifford’s plans. They then connected Mr. Cohen with Mr. Davidson, the same lawyer that represented Ms. McDougal. Mr. Cohen quickly struck a deal to pay Ms. Clifford $130,000 in exchange for her silence. Ms. Clifford signed the non-disclosure agreement.

But, by late October, Mr. Cohen still hadn’t made the promised payment to Ms. Clifford nor had he executed the non-disclosure agreement.

After hearing from Mr. Davidson that Ms. Clifford was preparing to sell her story elsewhere, according to prosecutors, Mr. Howard texted Mr. Cohen that “we have to coordinate something on the matter [Mr. Davidson] is calling you about or it could look bad for everyone.” He and Mr. Pecker called Mr. Cohen over an encrypted messaging app and convinced Mr. Cohen to complete the payment.

Mr. Cohen made arrangements with Mr. Davidson to make the promised payment with $130,000 that he borrowed using a home equity line of credit through the bank account of a shell company he created to do the deal called “Essential Consultants LLC. He recorded the payoff as a “retainer” fee.

Mr. Cohen expected Mr. Trump to reimburse him for the expenses and hammered out an arrangement with Trump Organization CFO Allen Weisselberg for the company to pay him 12 monthly installments of $35,000, which it recorded in its books as “legal fees,” obscuring the true nature of the payments. Mr. Cohen pled guilty to the prosecutors’ charge that the payment was an illegal campaign contribution that exceeded the $2,700 contribution limit.

What Trump Knew

Mr. Trump and his aides have long denied that he had any knowledge of this. Back in April, when Mr. Trump was asked whether he knew about the payment to Ms. Clifford, aka Stormy Daniels, he answered emphatically, “no.”  A few month earlier, in January, Michael Cohen called the allegations “outlandish.” Both were lying.

Mr. Cohen has now pled guilty to making those same outlandish payments, and Trump has now acknowledged that he not only knew about them, but in the case of the payment to Ms. Clifford, reimbursed Cohen for it. alleges that Mr. Trump knew about the payments all along. Recently, Mr. Cohen’s attorneys produced a tape-recorded conversation of Mr. Cohen and Mr. Trump discussing the deal to buy McDougal’s story from AMI, which backs up at least part of the story.

In spite of the tape, Mr. Trump and his defenders still insist that Mr. Cohen is a liar and that Mr. Trump only knew about these payments after the fact.

But Mr. Pecker confirmed Mr. Trump’s knowledge of the payments as well. Mr. Pecker has also struck a deal with prosecutors to cooperate in exchange for immunity to prosecution. Which means, it isn’t just Cohen’s word against Trump.

What it Means for Trump

Mr. Trump arguably has legal jeopardy, but it’s not clear cut. If he directed Mr. Cohen to commit crimes on his behalf, as Mr. Cohen has already sworn under oath that he did, Mr. Trump could be criminally liable for them as well.

But, that doesn’t mean Trump will face criminal charges. Nor does it mean that a jury would convict Mr. Trump. The jury hung in a similar case involving John Edwards’ payoff to a mistress during his Presidential campaign. Edwards argued that the payments were intended to avoid his dying wife from learning about the affair rather than to influence the election. Mr. Trump might argue the same. The language of the statute is ambiguous enough that this might be enough to establish reasonable doubt.

But, that’s probably an academic question. As a sitting President, it’s generally understood that Mr. Trump would be immune from criminal prosecution while in office. Congress could impeach him, but at least as long as Republicans control the House of Representatives, the case against him based on these charges alone probably wouldn’t be strong enough for them to take that extraordinary step.

Which brings us to the irony in all this. Mr. Trump arose to power promising to drain the swamp of a lawless Washington elite whose crimes he claimed went unpunished by virtue of their office. If the allegations against Mr. Trump are true, he may have proven his own point.

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