Witching Hour for Trump as Fixer Flips and Campaign Boss Convicted

The “veterans of the Trump campaign who are now felons” club accepted two new members Tuesday. Michael Cohen, pleading guilty in a Manhattan courtroom to eight counts of tax evasion, filing false statements, and violating federal election law, said Donald Trump was his co-conspirator in those violations. Paul Manafort, the president’s former campaign chairman, was convicted by a Virginia jury of eight counts of tax and bank fraud.

Welcome to Rabbit Hole.

Trump in trouble: For those who haven’t quite grasped the implication of Cohen’s plea, it’s a showstopper: Federal prosecutors believe the president of the United States of America directed an underling to commit a felony campaign-finance violation in order to influence the 2016 election that won him that office. Just after Cohen’s plea, his lawyer, Lanny Davis, tweeted to ask the obvious question:

Stormy and Karen: The unavoidable implication is that the illegal contributions were intended to shut up Stormy Daniels and Karen McDougal, the porn star and former Playboy Playmate, respectively, who nearly went public with their alleged affairs with Trump during the 2016 campaign. Daniels got a $130,000 payment from Cohen’s now-infamous Essential Consultants LLC. Both he and Trump swore the latter had no knowledge of or contribution to the payoff. Cohen even showed off his home-equity account to CNN in an effort to prove the money came only from his pocket. But now Trump’s former lawyer says he was secretly reimbursed for the $130,000 payoff by submitting phony invoices for nonexistent services to the Trump campaign.   

AMI shifts uncomfortably in its chair: That corporate contribution appears to be a reference to American Media Inc. (AMI), and could spell legal trouble for its chairman, David Pecker, a close friend of Trump’s referred to in the charges as “Chairman-1.” The feds say Pecker pre-emptively “offered to help deal with negative stories about [Trump’s] relationships with women by, among other things, assisting the campaign in identifying such stories so they could be purchased and their publication avoided.” When former Playmate Karen McDougal surfaced with a story about a Trump affair, AMI sprang into action. “At COHEN’s urging and subject to COHEN’s promise that Corporation-1 would be reimbursed, Editor-1 ultimately began negotiating for the purchase of the story.”

That claim is at least in part backed up by the tape that Cohen’s lawyer released to CNN. In it, Cohen can be heard telling Trump that “I need to open up a company for the transfer of all of that info regarding our friend David,” he told Trump.

Activist groups have complained that AMI’s $150,000 payment to Trump amounted to an illegal campaign contribution by the company and prosecutors appear to agree with them. There’s no charges against AMI yet and it has denied any wrongdoing, The company, which released McDougal from her nondisclosure contract, appears to be acting as though it still remains legitimately interested in her fitness and lifestyle advice per the terms of its original 2016 agreement. Just this month, AMI gave her the cover of its flagship magazine, Men’s Journal.

Hoarders: It wasn’t just Cohen’s habit of recording his clients and his conversations that did him in. He also wasn’t great at cleaning up paper evidence. When McDougal first came to AMI, the plan was for the company to buy the rights to her affair story and then hand them over to a shell company controlled by Cohen for $125,000. That deal never came together and Pecker told Cohen he “should tear up the assignment agreement.” Cohen didn’t take that advice, and the provisional agreement “was later found during a judicially authorized search of his office."

More stilettos to drop? Paragraph 27 of the charges against Cohen has two very interesting plurals regarding the efforts of “Chairman-1” and “Corporation-1” to keep a lid on “negative stories” about the candidate’s “relationships with women.” In other words, at least in the minds of two of Trump’s close friends, it was possible that was more than one woman and more than one damaging affair story.

Manafort convicted: Elsewhere at the intersection of bank fraud, tax fraud, and the Trump campaign, the president’s former campaign Chairman Paul Manafort was convicted in the Eastern District of Virginia. The jury found him guilty on eight out of 18 counts. On the remaining 10 counts, the jury declared itself deadlocked and Judge T.S. Ellis III declared a mistrial. It’s unclear whether the government will take up those remaining 10 charges again. That may depend on just how many jurors had a problem buying that Manafort was guilty of them. Whatever happens to those charges, the 69-year-old now faces over a decade in prison when he’s sentenced later this year.

Charges breakdown: Last week, Rabbit Hole noted that there were plenty of counts to reflect any ambivalence in the jury and that the tax fraud charges were the strongest against him. Sure enough, Mueller’s team had a clean sweep of all five tax fraud counts. On the failure to file foreign bank account reports, the jury found him guilty in only one of the four years he was charged with.

Bank fraud: Manafort was convicted on only two of the nine charges related to bank fraud. The government hit him with a substantive bank fraud charge and a bank fraud conspiracy charge for each of the banks mentioned in the indictment—two each for Federal Savings Bank and an additional conspiracy charge for Citizens Bank. The jury didn’t convict on any of the conspiracy charges, but did convict on two of the fraud charges, one each for Citizens Bank and the Banc of California.

Trump ally dodges a bullet: The most Trump-adjacent subject matter in the Manafort trial had to do with the Federal Savings Bank and its CEO, Steve Calk. Prosecutors alleged that Manafort used his position as Trump campaign chairman in 2016 to get Calk to ram through loans worth $16 million despite obvious red flags about his creditworthiness. The jury, however, didn’t buy the charge unanimously. The prosecution had suggested that Calk was a “co-conspirator” in the alleged scheme and could face his own “criminal liability.” But with trouble convicting the main conspirator, the odds of charges for Calk just went way down.   

Whither Gates? Manafort’s former employee Rick Gates was supposed to be the prosecution’s star witness but Mueller’s team practically tried to sweep him under the rug in closing arguments after he crumbled a bit on cross examination. The fact that the jury didn’t go for any of the conspiracy counts may suggest they didn’t quite buy his story. Gates is the co-conspirator in each of those counts and his testimony would’ve been key to selling them. Why does it matter? The government is not done with Manafort. He’s got another trial in Washington, D.C. next month for failing to register as a foreign agent for the government of Ukrainian President Viktor Yanukovych. Will Gates’ poor performance in this trial lead the prosecution to rely on him less in that case?

Pardon tee up? The mistrial allows his lawyers to tee up the argument to President Trump, however implausible, that Manafort is the hapless victim of an overzealous prosecutor. Not that Trump has ever needed much of a veneer of deservedness for any of his pardons so far, but every little bit helps. In any case, Trump already seems inclined. Late Tuesday he said that he feels “very badly for Paul Manafort” and that the prosecution is “a witch hunt and it’s a disgrace.” Trump already seems inclined.