Rudy Giuliani trots out yet another Trump story in signal to Michael Cohen to not flip

Back in early April, in his first public statement about the “hush money” his personal lawyer Michael Cohen paid to porn actress Stormy Daniels, Donald Trump denied having any knowledge of the matter. Trump: I don’t know anything about the $130,000 my lawyer paid Stormy Daniels:

Trump’s denial was the first time he’s made a public statement about the money given to Daniels ahead of the 2016 election to keep her silent about her alleged 2006 affair with Trump.

Trump replied “no” when asked if he had had knowledge about the payment to Daniels. A reporter then asked if he knew why Cohen made the payment.

“You’ll have to ask Michael Cohen. Michael Cohen is my attorney,” Trump said, according to the pool report. “You’ll have to ask Michael.”

Trump also denied knowing where the money to pay Daniels came from and ignored another question on whether he had ever set up a fund that Cohen could use to make such a payment.

Last week Trump called into his team of advisors on Fox & Friends on Trump TV, and in a bizarre half-hour rant, Trump says for first time that Cohen represented him in Stormy Daniels case:

[I]n an interview with Fox News on Thursday morning, Trump appeared to reveal that he had knowledge of Cohen’s payment to Daniels.

“Michael represents me, like with this crazy Stormy Daniels deal, he represented me,” Trump said. “And from what I’ve seen, he did absolutely nothing wrong. There were no campaign funds going into this.”

And asked how much of his legal work Cohen is responsible for, Trump said: “As a percentage of my overall legal work, a tiny, tiny fraction.”

Then last night, Rudy Giuliani, a recent addition to Trump’s legal team, spoke to Trump’s Minister of Propaganda at Trump TV, Sean Hannity, and completely reversed Trump’s earlier positions, exposing them as lies.

Steve Benen  reports, In Stormy Daniels case, Giuliani just made Trump’s life much more difficult:

Rudy Giuliani, a recent addition to the president’s legal defense team, shed some additional light on the subject last night, and in the process, made Trump’s life vastly more difficult.

President Donald Trump repaid his attorney Michael Cohen the $130,000 Cohen paid porn star Stormy Daniels shortly before the 2016 election for her silence about her alleged affair with Trump in 2006, the president’s new lawyer, Rudolph Giuliani, said Wednesday night.

Appearing on Fox News Channel’s “Hannity,” Giuliani, the former mayor of New York and former U.S. attorney for Manhattan whom Trump hired to join his personal legal team last month, revealed for the first time that Trump had paid back the money to Cohen, who had said previously that he had paid Daniels with his own funds and without Trump’s knowledge.

Giuliani prefaced his comments by telling the Fox News host, “I’m giving you a fact now that you don’t know.” The presidential lawyer then explained that Trump didn’t know all of the specific details of the payoff to the adult-film actress, “but he did know about the general arrangement.”

There was an awkward pause from Sean Hannity, who had spent weeks selling Trump’s earlier lies, before he gulped “I did not know that.”

Giuliani went on to say, “[T]he president reimbursed that over the period of several months.”

He stressed that no campaign funds were used in the transaction – a point Trump also emphasized in a trio of tweets this morning that he obviously did not write – which in Giuliani’s mind, means the hush-money payoff was “perfectly legal” and couldn’t be a campaign-finance violation.

After the Fox News appearance, Giuliani spoke to the New York Times, adding that Trump reimbursed Cohen “out of his personal family account” in $35,000 monthly increments. In all, Cohen reportedly received $460,000 or $470,000.

Giuliani also talked to the Washington Post, and said he’d spoken to the president about last night’s comments and Trump was “very pleased.”

He shouldn’t be. For one thing, Giuliani’s on-air comments suggest the president lied to the public about buying a porn star’s silence during his campaign. (It’s possible, of course, that the lawyer is lying, but the former mayor doesn’t have an incentive to go on national television and make false claims about the conduct of his own client.)

For another, Giuliani’s understanding of campaign-finance law is alarmingly limited: he believes that if campaign money wasn’t used to pay off Stormy Daniels, the hush money was necessarily legal, but that’s plainly inaccurate, as Philip Bump of the Washington Post explains:

It’s not entirely clear what Giuliani is claiming happened. Over the course of the interview, he told Hannity that Trump repaid Cohen through a monthly $35,000 retainer over several months “when he was doing no work for the president,” an amount that Giuliani said included “a little profit and a little margin for paying taxes for Michael.” Later, he speculated that the money might have been paid out of “law firm funds.” Regardless, Giuliani said, it didn’t matter for legal purposes.

According to Lawrence Noble, senior director and general counsel at the Campaign Legal Center, that’s true: How the payment was made doesn’t affect the legality.

There was still almost certainly a campaign finance violation.

“We still have the same question: What was the purpose of this,” Noble said when we spoke by phone Wednesday evening. We’ve noted in the past that the question of whether the payment was meant to aid Trump’s candidacy is central to campaign finance considerations — and that it’s hard to argue that this payment wasn’t related to the campaign.

“If the purpose of this was to stop [Daniels] from hurting the campaign,” Noble continued, “then what you have is Cohen made a loan to the campaign. And it was an excessive loan because lending the campaign money is a contribution. It was an excessive contribution until it’s repaid.”

On “Fox and Friends” on Thursday morning, Giuliani bolstered the argument that the payment was linked to the campaign.

“If we had to defend this as not being a campaign contribution, I think we could do that. This was for personal reasons. The president had been hurt personally, not politically, personally so much and the first lady by the false allegations,” Giuliani said.

But then he undercut that claim substantially.

“However. Imagine if that came out on October 15, 2016, in the middle of the last debate with Hillary Clinton,” he said. “Cohen didn’t even ask. Cohen made it go away. He did his job.”

Trump, Noble said, could make contributions of any size to his own campaign. (Giuliani alluded to this, too.) But the campaign can’t just take loans of any size from anyone without reporting them as long as Trump pays them back later. If that were legal, there would be no point in having campaign finance laws: Candidates could accept giant loans, not report them, and pay them back after the election. (The Wall Street Journal reports that the repayment occurred after the campaign.) By not reporting a loan from Cohen meant to aid Trump’s election, the campaign would have violated the law. Had Cohen not been repaid, the violation was his own, as an agent of the campaign making a contribution to it of that size.

When asked by reporters, Trump claimed not to be familiar with the payment to Daniels. Had Giuliani argued that Trump repaid Cohen only after he learned about it, it might bolster the argument that the payment had nothing to do with the campaign, Noble said. But Giuliani said that the repayment took place over months in the form of a payment for services not rendered.

What’s more, even if the loan didn’t have anything to do with the campaign — again, a questionable premise — Trump may have had to report the loan on his ethics forms as a federal officeholder.

In an interview with The Post’s Robert Costa, Giuliani went further.

“The repayments took place over a period of time, probably in 2017, probably all paid back by the end of 2017,” Giuliani said. “That and probably a few other situations that might have been considered campaign expenses.” Here he’s trying to say that the Daniels payment was different from campaign expenses — but he also admits that Cohen lent the campaign money in the form of expenses that Trump later repaid. Cohen isn’t listed in the campaign’s contribution or expenditure disclosures.

All of that aside, there’s another issue. We learned from NBC in March that Cohen had finalized the payment to Daniels from his Trump Organization email address. In other words, he used corporate resources to engineer a contribution to Trump’s campaign — violating a prohibition against corporations “facilitating the making of contributions to candidates or political committees.”

It gets worse.

“Giuliani suggesting it was funneled through the firm as legal fees,” Noble said, “is evidence of an intent to hide the source, which could make it knowing and willful, which is criminal.” There could also be tax violations, he added.

* * *

As to Giuliani’s central thesis — that the repayment meant that no campaign finance laws were broken — the law is fairly clear. If Cohen lent Trump $130,000 by making the payment to Daniels so that her story wouldn’t come out before the election, that loan would have had to have been reported.

And it would have been reported before Election Day.

I am more interested in Giuliani’s assertion that the payment to Stormy Daniels was “funneled” through a law firm as legal fees (Cohen established an LLC shell company for this purpose), and Trump made structured payments to Cohen “out of his personal family account” in $35,000 monthly increments to reimburse hiis loan. (Cohen claims to have taken out a home equity loan for the Daniels payment). In all, Cohen reportedly received $460,000 or $470,000.

This structuring of payments raises red flags for making bank transactions in a specific pattern, calculated to avoid triggering financial institutions to file reports required by law, such as the United States’ Bank Secrecy Act (BSA),  i.e., currency transaction reports (CTRs), and Internal Revenue Code section 6050I (relating to the requirement to file Form 8300). The filing of Form 8300 is required under Internal Revenue Code section 6050I.

Financial institutions suspecting deposit structuring with intent to avoid the law are required to file a suspicious activity report (SAR). “Structuring” appears in federal indictments related to money laundering, fraud, and other financial crimes.

There is also Giuliani’s assertion that Cohen was paid $460,000 or $470,000, far more than the repayment of his $130,000 loan to pay off Stormy Daniels.

Cohen was doing a lot more than just fixing Trump’s illicit sexual affairs. As Martin Longman at the Political Animal blog suggests, Giuliani Has to Incriminate the President in Order to Save Him?

In this case, his brief tryst with Stormy Daniels may end his presidency for a reason he never anticipated, which is that it gave the Feds a rationale for getting a warrant to seize Michael Cohen’s legal and business records. Trump can sustain the fallout from his lying about extramarital affairs, just as Bill Clinton survived despite lying under oath. But can he survive scrutiny of Michael Cohen’s other activities?

To me, that’s doubtful.

It’s hard to assess how much of Rudy Giuliani’s behavior can be considered legal cluelessness and how much of it can be considered an example of taking a bullet to the leg in order to prevent a bullet to the heart. Presumably, they know that the old lies about the Stormy Daniels payment cannot be sustained now that the Feds have Cohen’s records. They can no longer defend against a campaign finance violation so there’s no point in trying. Their main concern is trying to prevent Cohen from becoming a cooperating witness, so Rudy says, “Cohen made it go away. He did his job.”

Exactly! New York Times reporter Michael Schmidt says Trump, Cohen Keep Lawyers In Dark On Contents Of Seized Documents (video). The records seized by the U.S. Attorney’s office in executing a search warrant on Michael Cohen contain much more than Trump paying off a porn star. And Trump needs to keep his consigliere from becoming a canary singing to the U.S. Attorney or Special Counsel.

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