U.S. Probes Cohen Over Cash He Built Up During Campaign

U.S. Probes Cohen Over Cash He Built Up During Campaign

Michael Cohen, President Donald Trump’s personal lawyer, gained access to as much as $774,000 through two financial transactions during the 2016 presidential campaign as he sought to fix problems for his boss, public records show.

Those transactions could factor into a broad investigation of Mr. Cohen’s business affairs being conducted by Manhattan federal prosecutors and the Federal Bureau of Investigation, who are examining whether Mr. Cohen violated any laws in his efforts to raise cash and conceal negative information about Mr. Trump, according to people familiar with the matter. Those include transactions tied to his credit line and his ownership of real estate and taxi medallions, the people said.

In February 2016, as Mr. Trump’s fortunes as a presidential candidate rose, Mr. Cohen nearly doubled the amount he could use on a bank credit line tied to his Manhattan apartment, increasing his ability to borrow by $245,000, according to real-estate records.

Three months earlier, he gained potential access to another $529,000, through a new mortgage that he and his wife cosigned on a condominium owned by her parents at Trump World Tower, a Trump building in New York, separate real-estate records show.

Mr. Cohen and his lead attorney didn’t respond to a request for comment.

Mr. Cohen, who has described himself as Mr. Trump’s fixer, has said he used his home-equity line of credit to make a $130,000 payment to former adult-film actress Stephanie Clifford—known professionally as Stormy Daniels—in exchange for her agreeing less than two weeks before the presidential election to stay silent about an alleged sexual encounter with Mr. Trump.

Mr. Trump’s lawyer Rudy Giuliani said this week that Mr. Cohen resolved other problems similarly for Mr. Trump, although he didn’t specify what they were or the source of funds that were used.

As part of a broad effort to determine how Mr. Cohen got access to cash and what he did with it, federal prosecutors and the FBI are examining whether Mr. Cohen committed bank fraud by making false statements inflating the value of his assets to obtain loans or by misstating the intended purpose of the loans, these people said.

Investigators also are examining whether he violated federal election law by making unreported campaign contributions exceeding the federal limit of $5,400 to Mr. Trump in that election cycle, as well as possible other crimes stemming from his payments to cover up problems, the people said.

Prosecutors will want to document “every penny” flowing through Mr. Cohen’s accounts during the presidential campaign, said Alex Little, a former federal prosecutor in Washington who is now a defense lawyer and has no firsthand knowledge of the Cohen investigation.

Mr. Cohen opened a home-equity line of credit for $500,000 at First Republic Bank on Feb. 24, 2016, tied to a condominium at Trump Park Avenue in Manhattan that he and his wife own through trusts, the real-estate records show. The loan documents were signed by Mr. Cohen’s wife, Laura, as trustee for the trusts in their names that own the apartment, the records show.

A few weeks later, the Cohens closed out an old home-equity line for $255,000 with TD Bank N.A. tied to the same unit, the records show. Both First Republic and TD Bank declined to comment.

The new, higher equity line gave Mr. Cohen the ability to borrow at least $245,000 more than before against his home during the campaign, the records show.

It isn’t clear whether Mr. Cohen tapped the credit line to settle problems for Mr. Trump other than Ms. Clifford or for personal reasons.

As Mr. Cohen increased his credit, Mr. Trump, a political novice, maintained a strong lead in polls over veteran politicians in a crowded field and was heading into the primary season while debating his rivals. He lost the Iowa caucuses on Feb. 1 but won the New Hampshire primary on Feb. 9. Mr. Trump won the Nevada caucuses on Feb. 23, the day before Mr. Cohen secured the new loan.

Mr. Cohen’s near-doubling of his credit line in February 2016, as Mr. Trump’s chances seemed to be improving, “could become an incredibly important date in a case of this type,” Mr. Little said. Prosecutors will want to develop facts around the credit line to determine why Mr. Cohen needed the money, he said.

A search warrant obtained by federal investigators for an April 9 raid of Mr. Cohen’s home, hotel room and law office authorized seizure of documents related to Ms. Clifford and the $130,000 payment in October 2016; a former Playboy model paid $150,000 by the National Enquirer publisher in an August 2016 deal preventing her from discussing an alleged affair with Mr. Trump; and Mr. Cohen’s taxi medallions, the people familiar with the matter said.

Mr. Trump and his representatives have denied he had sexual encounters with Ms. Clifford or the Playboy model, Karen McDougal.

Mr. Giuliani this week said the president had reimbursed Mr. Cohen for the Clifford payment through a $35,000-a-month retainer, and indicated Mr. Trump reimbursed Mr. Cohen for other matters as well. Mr. Giuliani also suggested on Fox News this week that the payment was related to the campaign. On Friday, he said it would have been done whether the campaign was under way or not.

The president confirmed the retainer in tweets on Thursday. But on Friday, he appeared to dispute his lawyer’s statements, telling reporters that “virtually everything said has been said incorrectly,” and that Mr. Giuliani, who only recently joined his legal team, would soon “get his facts straight.”

The nine-month gap between the time Mr. Cohen obtained his new credit line and the payment to Ms. Clifford could work against him, said Adam Schuman, a former federal prosecutor in Brooklyn.

“If he didn’t anticipate using these funds to assist with these types of third-party payments, then why did he still have the funds to pay Stormy Daniels if they were intended for some earlier, innocuous purpose?” Mr. Schuman said.

Three months before he increased the home-equity line, Mr. Cohen gained potential access to another $529,000 in cash, through the fresh mortgage on the condominium owned by his wife’s parents, Fima and Ania Shusterman.

The Shustermans didn’t immediately return messages left at mobile phone numbers listed in a commercial database.

Mr. Cohen and his wife cosigned the $2 million mortgage on the condo in November 2015, New York real-estate records show, although they hadn’t signed prior mortgages on the property.

The borrowers took out $529,000 in cash, in addition to refinancing existing debt on the condo, which the Shustermans bought in 2004 and used as their primary New York residence. It isn’t clear whether or how the money was spent.

Write to Michael Rothfeld at [email protected], Rebecca Davis O’Brien at [email protected], Mark Maremont at [email protected] and Joe Palazzolo at [email protected]

Appeared in the May 5, 2018, print edition.


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Publish date : 2018-05-05 00:04:00
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