Published by The Lawfare Institute
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Through the thick fog of inconsistent and peculiar explanations, it is close to impossible to penetrate to the truth behind the payments by President Trump’s personal lawyer Michael Cohen to Stormy Daniels, now apparently reimbursed by Trump. Rudy Giuliani, now a member of the president’s legal team, announced that Trump chose to repay Cohen in order to ”negate” any campaign finance issues. But this reasoning is muddled and unconvincing, and we may discover in time that this dubious explanation of the reimbursements masks concerns more serious in the long run than an illegal contribution to the Trump campaign.
Giuliani’s assertion in his Fox and Washington Post interviews that Trump and his lawyers intended the reimbursements to put to rest any question of a campaign finance issue makes little sense. To begin with, Giuliani’s argument is hard to follow. On the one hand, he insists that the objective of securing the non-disclosure agreement was purely “a personal thing,” to put an end to alleged harassment of Trump by Daniels—but on the other, he says the repayments to Cohen for the Daniels agreement was one of “a few other situations that might have been considered campaign expenses.” He also stated:
It was a contribution by Cohen that was over the campaign finance limit that would get Cohen in trouble ... But we know under these circumstances and the way in which they exaggerate things, they’d make it more than that. But then that’s totally negated by the repayment by the president, personally, as a private citizen.
So it is fair to understand Giuliani to mean that, to be on the safe side and remove all doubt about an illegal contribution, Trump reimbursed Cohen. The law provides that where a third party—in this case, Cohen—pays what would otherwise be a candidate’s personal expense, the expenditure would have to be treated as a contribution to her campaign, except in circumstances where the payment would have been made “irrespective of” the candidacy. If Cohen payments did not fit within the exception, then the $130,000 paid to Stormy Daniels was a massive illegal and unreported contribution to the Trump campaign. Whether it was or was not illegal turns on the question of whether Cohen could have paid the expense “irrespective of” the campaign.. But Trump and his lawyers contend that Trump needed only to replace Cohen’s money with his own to close out the matter because the expense in question is one that, under the law, a candidate can clearly make from his own funds.
What is mysterious about the Giuliani explanation is that the president’s belated reimbursement does little to help with the legal issue. Either Cohen’s payment to Ms. Daniel was campaign-related, tied tightly to the candidacy and not paid “irrespective of [the campaign],” or it was not. If it constituted a campaign contribution, then late reimbursement does not fix the problem; at best, it only mitigates the violation (and on these facts, even that is unlikely). Cohen was making a large unreported contribution in excess of the legal limit, and the reimbursement only limits the period over which the violation was left unaddressed. Moreover, if Trump’s plan was to cure or significantly mitigate a violation, it is odd that he paid it in installments, leaving pieces of the unlawful contribution outstanding for months at a time until the full amount was paid off.
If Cohen’s original payment was not campaign-related, then Trump’s reimbursement does not matter one way or the other for purposes of the campaign finance laws. That is apparently the Trump position—that this was an expense that would have been paid “irrespective” of candidacy—and so it is not clear why, now, Trump has suddenly authorized and contributed to a complicated explanation about reimbursements. One could argue that these late reimbursements only made matters worse, muddying the otherwise clear stand that Trump and Cohen might have taken that the payments to Daniels were lawful at the time and no quasi-remedial measures were required.
As noted, it is curious that Trump did not reimburse all at once, but only in serial payments, which included “incidental” expenses and a return of profit. In a tweet the morning after Giuliani’s interview with the Post, Trump characterized the payments as part of a “retainer” arrangement. Supposedly Cohen could decide to pay off claims as he saw fit, in Trump’s interests, and draw on these “retainers”—but Giuliani described the arrangement differently, as special reimbursements made specifically to deal with the campaign finance issue, with extra to cover incidentals and a “fee” for Cohen’s services.
While he was not consistent on the question of timing, Giuliani told the Post that the reimbursements may have come late—with payment in full only by the end of 2017, or as late as 2018. Cohen’s reported complaints about not being paid as of mid-2017 may have been a factor. Or, depending on timing, Trump may have been motivated by Cohen’s legal difficulties. He might have thought it timely to show his concern for Cohen or to remove with these late repayments what might have been a source of friction between them.
So, on these facts, with much still be known, we have at least the president making payments perhaps as recently as this year to someone close to him, who knows a great deal about his business and personal matters, in the thick of the Mueller investigation. The suggestion of a regular “retainer” arrangement is on the whole the better story for Trump: It suggests that Cohen’s advance of funding and his reimbursement by installment payments were somehow the usual way they did business. But the story conflicts with the Giuliani version about the Daniels reimbursements, and the discrepancy raises questions.
Moreover, the arrangement with Cohen as described by Trump and Giuliani is at best unusual. It is not how lawyers normally represent their clients: “I will spend a ‘retainer’ for your benefit when I think I should, but won’t let you know when or why. But you can decide when to pay me the money: no rush.” What was the nature of the matters Cohen could decide on his own initiative to fund, without the president’s knowledge but to his benefit, and subject to eventual reimbursement? Again, the Trump and Giuliani accounts invite further inquiry.
So an intriguing question is why this story and why now. Is the campaign finance issue the answer or is it a feint? One possibility: The prosecutors have the financial and other business records and the Trump camp was back on its heels. Needing a narrative, the president’s team spun the complicated campaign finance chronicle. While anything is possible, there is good reason to doubt that this story is primarily, or at all, about campaign finance.