FBI Probing Possible Banking Fraud by Trump Lawyer Michael Cohen: Report

May 5, 2018, 6:19 PM UTC

As his client Donald Trump steamrolled political opponents in early 2016, lawyer Michael Cohen engineered access to as much as $774,000 in new credit. The FBI and federal prosecutors are reportedly investigating whether Cohen may have committed bank fraud in obtaining the credit lines, which some speculate may have been opened in anticipation of hush-money payments to protect Trump. Fraud charges could be used to compel Cohen’s cooperation in the ongoing Mueller investigation into Russian campaign meddling, or in criminal investigations targeting Trump.

Cohen obtained new credit lines starting in February of 2016, according to the Wall Street Journal. Two separate lines of credit were secured against New York real estate, including a condominium in Trump World Tower owned by Cohen’s wife’s parents. According to the Journal, investigators are probing whether Cohen might have committed fraud either by inflating the stated value of the assets that backed the loans, or by misrepresenting how the funds would be used.

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The loan investigation adds a new wrinkle to an ongoing inquiry into whether Cohen broke the law in his role as a “fixer” for Trump. In October of 2016, just ahead of the presidential election, Cohen paid $130,000 to porn star Stephanie Clifford, a.k.a. Stormy Daniels, as part of a deal intended to prevent her from discussing an alleged sexual encounter with Trump. Investigators are digging into the source of those funds.

Adam Schuman, a former federal prosecutor in Brooklyn, told the Journal that the timeline suggests Cohen expanded his credit access in anticipation of high-dollar payoffs to defend Trump. “If he didn’t anticipate using these funds to assist with these types of third-party payments,” Schuman asked rhetorically, “then why did he still have the funds to pay Stormy Daniels if they were intended for some earlier, innocuous purpose?” Taking out the loans without telling creditors they were intended to be used as hush money could constitute fraud, according to Journal sources.

Trump and his team have maintained that the Daniels payoff was purely personal rather than political, theoretically shielding Cohen from campaign finance laws that limit direct or in-kind personal contributions to $5,400. The disclosure this week that Trump later reimbursed Cohen was apparently also intended to limit Cohen’s exposure to campaign finance violations, perhaps to reduce the possibility that Cohen could be pressured to cooperate with the Robert Mueller-led investigation of the Trump campaign’s possible cooperation with Russian state agents. Separate fraud charges could provide investigators another way to force Cohen’s cooperation.

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