Publications
Partners
Donald Trump has warned Special Counsel Robert Mueller to steer clear of his personal business empire in his Russian meddling investigation. But now that a guilty plea by the president’s ex-lawyer has implicated the Trump Organization, federal, state and local prosecutors are circling.
Manhattan District Attorney Cyrus Vance Jr. is weighing whether to pursue criminal charges against the company and two top officials, a person familiar with the matter said. Lawyers say former Trump fixer Michael Cohen opened Trump Organization to an array of probes when he pleaded guilty to campaign finance-related charges.
The US attorney’s office in Manhattan referred to - but didn’t charge - the Trump Organization this week in its case against Cohen, suggesting federal prosecutors have already stepped past what the president has said is a red line for him.
Allen Weisselberg, the chief financial officer for the Trump Organization, was granted immunity by federal prosecutors for providing information about Cohen, the Wall Street Journal reported Friday. Trump turned over control of his company to two of his sons and Weisselberg before he was inaugurated.
Revelations in the Cohen charging documents - that the Trump Organization made sham payments to Cohen to reimburse him for buying the silence of porn actress Stephanie Clifford, also known as Stormy Daniels - suggest US prosecutors are laying the legal groundwork for further scrutiny.
Plus, the president is contending with the US attorney’s office in Manhattan, which is known not just for taking on aggressive cases but also for its expertise in financial crimes.
Look hard
“It’s not my experience that federal prosecutors in Manhattan would leave open questions and not pursue them when there clearly are others who might be implicated in crimes,” said Noah Bookbinder, executive director at Citizens for Responsibility and Ethics in Washington, or CREW. “They should look hard at all of them.”
Cohen’s plea also gives state and local authorities a toehold to launch probes of the business’s financial statements and tax records, said Paul S. Ryan, vice president for policy and litigation at Common Cause, a Washington-based government oversight group.
That possibility raises the stakes significantly for Trump, threatening not just his political future but his wealth. And Trump’s sensitivity to questions about his business extends to his personal income, which he has steadfastly refused to detail by breaking from tradition and shielding his tax returns from public view.
On top of that, the moves pose a different kind of peril for Trump than the investigation by Mueller for its ties to Russia. Unlike in federal cases, Trump has no power to pardon crimes charged by state prosecutors and no authority to shut down a state investigation into his business.
In his plea Tuesday, Cohen admitted that Trump directed him to pay hush money to Clifford shortly before the 2016 election in violation of campaign finance law. The Trump Organization approved paying Cohen $420 000 early last year based on sham invoices he submitted to recoup the $130 000 he paid to Clifford, according to court documents.
One Trump Organization executive instructed an employee to incorrectly record the first of Cohen’s payments in the company’s books as a “retainer” for the months of January and February 2017, the documents show. But prosecutors said that there was no retainer.
Three employees
The company paid Cohen more than double what he claimed he ultimately spent for Trump’s campaign. At least three Trump Organization employees were involved in the effort, according to court records. According to Ryan, the reimbursement exposes the company to laws banning so-called straw donors.
New York state laws could also come into play. The bogus invoices Cohen submitted to the Trump Organization for reimbursement could open the company to claims it falsified business records, according to Mark A. Bederow, a Manhattan criminal defense attorney.
New York Attorney General Barbara Underwood has already sought a referral from the New York Department of Taxation and Finance to launch a criminal tax probe of Cohen’s activities, according to a person familiar with the matter.
It’s clear that Cohen’s bills and the way Trump’s company accounted for them “were intended to conceal the truth,” Bederow said, adding that such conduct would be a Class E felony in New York.
Sham invoices clearly are falsified documents, said Alfredo F. Mendez, a former chief of financial crimes for the New York Attorney General’s office who’s now a partner at law firm Abrams Fensterman Fensterman Eisman Formato Ferrara Wolf & Carone. But to rise to the level of a felony charge state or local prosecutors would have to determine whether Trump Organization executives knew the documents were bogus and if they were created to cover up other crimes.
In Manhattan, Vance’s office is weighing whether to investigate the company and the individuals for possible books and records violations, one of the people said. If Vance proceeds, it is expected that he will coordinate his investigation with federal prosecutors to make sure his office is not duplicating or interfering with their efforts, the person said.
Jenny Johnson Ware, a Chicago criminal tax defense attorney, said the details of the Cohen case raise tax questions. The Trump Organization recorded some of the payments to Cohen as tax-deductible legal expenses.
“The only reason to do that would be to hide the nature of the payment and to make it tax deductible,” Ware said. “You know the saying, ‘where there’s smoke, there’s fire’?,” Ware said. “Well, this is lots and lots and lots of billowing smoke.”
* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER
