Experts: Leaking Michael Cohen’s Bank Records Could Be Illegal
Stormy Daniels’ lawyer isn’t revealing how he got access to records for Michael Cohen’s shell company—but experts say if the documents were leaked, the penalties could be serious.
When Stormy Daniels’ lawyer released a dossier on corporate payments allegedly made to President Trump’s personal attorney after the election, many observers questioned how he got access to the confidential bank records.
The porn star’s counsel, Michael Avenatti, has declined to reveal where he received his intel on the financial transactions of Michael Cohen’s shell company. The company, Essential Consultants, was also used to wire Daniels $130,000 in exchange for her silence on her alleged Lake Tahoe romp with Trump in 2006.
On Tuesday evening, Avenatti released a report alleging Cohen received $500,000 from a New York investment firm connected to Russian oligarch Viktor Vekselberg. Titled “Project Sunlight,” Avenatti’s report also alleged Cohen received $200,000 from AT&T and nearly $400,000 from pharmaceutical giant Novartis, in 2017 and early 2018.
By the end of Wednesday, Novartis said it paid Cohen’s law firm $100,000 a month—or $1.2 million—for “health-care policy matters.” And AT&T was reported to have paid Cohen closer to $600,000. Both companies said special counsel Robert Mueller, who is investigating Russian interference in the election, contacted them late last year about Cohen.
“We are just getting started…,” Avenatti tweeted after dumping his report, which suggested Cohen had perhaps promised access to the Trump administration for a price.
The next day, the Treasury Department’s inspector general launched an investigation into whether Cohen’s private bank records were leaked. Attorneys for Cohen filed court papers hours later, questioning the veracity of Avenatti’s report and how he came to obtain details of the banking transactions.
A spokesman for the Office of the Inspector General told ABC News that investigators are probing whether Suspicious Activity Report information “has been improperly disseminated.” The IG investigation arose from a New York Times report that apparently included the same information Avenatti released, according to ABC News.
Under federal law, banks are required to file Suspicious Activity Reports (SARs) with the Treasury Department if they suspect money laundering or fraud. In early April, Avenatti sent a letter to the secretary of the Treasury, asking the agency to release a SAR report relating to Daniels’ $130,000 payday.
Still, tax lawyers interviewed by The Daily Beast say they’re puzzled that Avenatti would have access to Cohen’s banking info—especially after Daniels’ civil case was put on hold, and because the feds are still investigating Cohen. They said it’s highly unusual for SARs, which are confidential and not to be made public, to be leaked.
Experts told The Daily Beast the level of detail in Avenatti’s report suggests he obtained Treasury documents that only the agency’s Financial Crimes Enforcement Network (FinCEN) had access to or which were requested by law enforcement—such as the U.S. Attorney’s Office for the Southern District of New York, which has been investigating Cohen for months, reportedly eyeing the Trump stalwart for possible bank fraud, wire fraud, and campaign-finance violations.
“I think somebody from the SDNY is leaking,” said Robert Barnes, a Las Vegas-based trial attorney who’s taken Avenatti to task on Twitter. “The degree to which Avenatti had details implicates them badly.”
Barnes pointed out that Avenatti was reportedly spotted dining with former Manhattan U.S. Attorney Preet Bharara in late March. He added that Cohen could potentially sue Avenatti for invasion of privacy by illegal disclosure of banking information.
Cohen has been under fire for months, after his role in silencing Daniels was exposed by The Wall Street Journal. In early March, Daniels sued Trump and Cohen to void the “hush agreement” she inked weeks before Election Day. The adult actress—born Stephanie Clifford—argues the nondisclosure agreement is invalid because Trump never signed it, because Cohen publicly discussed it, and because it allegedly violates public policy.
Last month, the FBI raided Cohen’s home, office, and hotel room for records relating to the Daniels payoff. Agents were also reportedly searching for documents on alleged Trump paramour Karen McDougal, a former Playboy model whose story was bought and buried by the National Enquirer’s parent company.
After the raid, Cohen filed for a temporary restraining order in U.S. District Court to stop the feds from reviewing his attorney-client communications.
On Wednesday, Cohen’s attorney, Stephen M. Ryan, wrote the federal judge to dispute the findings in Avenatti’s “sunlight” report and to oppose his pending application to intervene in the search-warrant case.
Ryan said Avenatti published incorrect statements on Cohen, obtained and published information from Cohen’s bank records, and “has no lawful basis to possess those materials.” Avenatti has made the supposedly false claims “in an attempt to prejudice and discredit” Cohen in the pending criminal probe, Ryan added.
“Mr. Avenatti’s conduct in somehow obtaining random bank records and publishing them without proper concern for their accuracy is extremely troubling for the parties in this case, the court, and the public,” Ryan wrote.
Avenatti published details on the identities of and payments from Cohen’s “business clients” AT&T and Novartis, Ryan stated. The defense attorney denied Columbus Nova, the firm connected to the Russian oligarch, routed funds to Cohen on behalf of Vekselberg and his cousin Andrew Intrater.
Federal investigators have Cohen’s bank records as a result of the April raids, Ryan said, adding, “but we are not aware of any lawful attempts by Mr. Avenatti to obtain these records.”
If Avenatti wants to intervene in the Cohen criminal case, “he should be required to explain to this court how he came to possess and release this information,” Ryan wrote.
Ryan added that Avenatti’s report erroneously included transactions from different Michael Cohens in Canada and Israel. The former wrote Avenatti an email with the subject line, “No connection with Michael Cohen, Donald Trump’s lawyer.”
Avenatti wasted no time bashing Ryan on Twitter, calling his filing “baseless, improper, and sanctionable.” Cohen’s team also “effectively concede the receipt of the $500,000 from those with Russian ties,” Avenatti said.
Meanwhile, Martin Sheil, a retired branch chief of the IRS Criminal Investigation division, told The Daily Beast that whoever leaked the SARs to Avenatti could face criminal penalties.
“That person has to be either bank connected and therefore knowledgeable as to the confidentiality provisions of the SAR process, or this person could be law-enforcement related,” Sheil said. He added, “Every law-enforcement person who has access to the FinCEN database containing SARs must take an online course that goes over the confidentiality provisions of the Bank Secrecy Act and FinCEN protocols.”
SARs contain warnings not to disseminate, Sheil added. If convicted for disclosing a SAR, someone could face a maximum five years behind bars and/or a $250,000 fine.
“So there is a fine line for bankers to tread,” Sheil said. “Avenatti may not know about the confidentiality protections afforded SARs. But I think he should receive a stern warning from the USAO-SDNY and/or a representative of the U.S. Treasury.”
Gerald W. Kelly, a Maryland-based tax attorney, agrees that it appears a SAR was leaked and that it’s a crime to do so. He said SARs are typically only a starting point in a criminal investigation and are not incredibly detailed.
“I can tell you from defending clients that I’ve never been given the SAR by investigators or assistant U.S. attorneys,” Kelly told The Daily Beast. “I’ve been told they exist and that’s how the investigation started. But I haven’t been given even the level of detail that’s in the press now about Mr. Cohen’s transactions.”
Avenatti’s crusade to make Cohen’s SARs public makes little sense; if released, the government would violate its own regulations, as well as federal statutes relating to the confidentiality of tax information, Kelly said. “Whoever the leaker is, it seems like there’s more detail than would just be contained in those forms,” he added.
“Someone is feeding Stormy Daniels’ attorney information that they shouldn’t be,” Kelly added. “There’s no exception for it in the regulation.”