Current events have favored us with another rash of ethics questions. These are more difficult analytically than they are from the standpoint of plain old common sense, but they bear examining if only to explode, hopefully once and for all, the persistent and pernicious myth that legal ethics is a dry and abstract endeavor. I shall not sleep (at least not well) until you share my appreciation for this glorious subject. (H/T Above the Law (here and here) which beat me to the punch on some of these questions.)
The setup: Porn star Stormy Daniels, née Stephanie Clifford, is rumored to have had an affair with Donald Trump in 2006, around the time his third (and for the time being current) wife, Melania, gave birth to their son, Barron. The affair was first aired publicly in 2011 on an internet celebrity website named (appropriately enough) “The Dirty.” The Dirty took down its post under threat of legal action by a lawyer claiming to represent Ms. Daniels. The lawyer’s demand letter reportedly objected to the website’s purportedly commercial use of Daniels’ name and likeness, but did not contend that the story was false.
The story next resurfaced in The Smoking Gun shortly before the 2016 Presidential election. At that point, a longtime lawyer for Donald Trump and the Trump Organization, Michael Cohen, used a Delaware LLC he had just formed to pay Ms. Daniels $130,000. The Wall Street Journal reported in January of this year that the payment was made and accepted as part of a written nondisclosure agreement forbidding Ms. Daniels from discussing the issue further. (The Journal also reported that both Mr. Trump and Mr. Cohen denied that Trump had had sexual relations with Ms. Daniels, and that Cohen reportedly sent the Journal “a two-paragraph statement by email addressed ‘TO WHOM IT MAY CONCERN’ and signed by ‘Stormy Daniels’ denying that she had a ‘sexual and/or romantic affair’ with Mr. Trump,” and further denying “[r]umors that I have received hush money from Donald Trump.” With characteristic deadpan, the Journal further reported that after it had published its first story on the issue a few days before, “several media organizations said Ms. Clifford or her manager discussed the alleged sexual encounter with them in the weeks before the 2016 election.”)
Then, responding to a complaint filed by Common Cause, the Federal Election Commission began investigating whether Ms. Daniels was illegally paid with Trump Campaign money. And the mainstream press began wondering if the President had paid hush money on the eve of a hotly contested election to hide a tryst with a porn star undertaken while his wife was shortly post-partum. Ugly.
This week, Mr. Cohen has favored us with reassurances that nothing was amiss, because he had given Ms. Daniels $130,000 of his own money in the “transaction” (to use his word) that bought her silence. Cohen was quoted in the New York Times insisting that “[n]either the Trump Organization nor the Trump campaign was a party to the transaction with Ms. Clifford, and neither reimbursed me for the payment, either directly or indirectly.” (The lawyerly reader will observe that this artful phrasing does not specifically deny that Mr. Trump personally or a Trump supporter provided the money, nor is it inconsistent with anyone having promised to make the payment up to Cohen in some way in the future, nor does it deny that Trump advised, directed, or requested the transaction.) Cohen reportedly refused to say why he had made the payment, whether or not Trump knew he had done so at the time, or whether Cohen had also made similar payments to others.
And now to top it all off, Ms. Daniels’ manager announced on February 14 that Cohen’s public statements appearing in the Times, as well as reports Cohen is “shopping a book” that touches on the story, have terminated the nondisclosure agreement, so “[e]verything is off now, and Stormy is going to tell her story.”
But let’s remember, my friends, that this is a legal ethics story, so let’s get to the juicy parts. That will require us to consider some criminal and election law as well. A good deal is not yet known factually, and we can only hope that the truth will out, and soon. In the meantime let’s hypothesize based on what we do know. We'll do that after the jump.
If—consistent with Cohen’s statement—Cohen personally, or Trump or one of his friends or supporters (which Cohen’s statement doesn’t deny, but doesn’t admit either) directly or indirectly (e.g., by reimbursement or promise of reimbursement) provided Daniels hush money to help Trump in the election, that would be an illegal campaign contribution violating federal election law. Those who provided the money (even if that’s just Cohen himself) would have made campaign contributions in excess of legal limits, and by making them indirectly frustrated their proper disclosure. Those who arranged, requested or assisted the payments—potentially including Trump himself—could be guilty of conspiring to violate campaign contribution or disclosure laws. There are plenty of reasons to believe that someone involved in providing the money did so to help Trump in the then-impending election. Stormy Daniels re-emerged contemporaneously with the infamous and damaging Access Hollywood tape, in which Trump bragged about repeatedly committing sexual assault, just a few weeks before the election. The campaign was smarting badly when Daniels reportedly started talking to media organizations about going public with her story. Cohen shut Daniels down in a big hurry, apparently within 24 hours after the story in The Smoking Gun.
If on the other hand Cohen is lying about whose money is ultimately at stake, then it becomes a lot harder to deny that the motivation for the payment was electoral, and his ticket to the Big House gets easier to obtain. (Plus he may well have committed false statement or obstruction felonies along the way by lying to the FBI, FEC or IRS.)
Whether Cohen is telling the truth or lying about the ultimate source of the funds, if this was a disguised campaign contribution the dishonesty and deceit involved (Rule 8.4(c)), as well as the felonies that likely result (Rule 8.4(b)), are grounds for his disbarment. Among other things.
This is all strikingly similar to the charges on which John Edwards was indicted and tried—that Edwards solicited money from third parties to support, and keep quiet, the mother of a child he fathered during his campaign while his wife was dying of breast cancer, and because those donated funds were intended to bolster his election chances, they amounted to illegal indirect campaign contributions. Edwards was acquitted on one count and the jury hung on the rest, with Edwards arguing that he and his rich friends were showing kindness to his mistress and child, not to his campaign (and that they did not understand that what they were doing might be forbidden by federal election law). Perhaps Cohen, and Trump, will make the same argument. The evidence may play to the jury somewhat differently this time given that the beneficiary of the payment is porn star and opportunist Stormy Daniels rather than an impecunious single mother, but I guess we’ll see.
So even if Cohen is telling the truth about the payment being his and only his money, he may have committed a crime (an excessive and undisclosed campaign contribution). And even if he were to argue that his motivations were devoid of any desire to improve Trump’s election prospects, it is not hard to perceive his action as providing his clients—Trump and the Trump Organization—with financial assistance in connection with pending or contemplated litigation. (Trump regularly threatens to sue people who say inconvenient things about him; for example, he threatened to sue the 19 women who came forward to accuse him of sexual misconduct after the publication of the Access Hollywood tape. We haven't seen them yet, but it's easy to imagine that Cohen's communications with Daniels and her lawyer leading to the nondisclosure agreement could include threats of suit.) That would violate Rule of Professional Conduct 1.8(e).
It gets weirder. To date, Cohen has refused to say whether Trump or his representatives even knew what Cohen was doing back in October 2016. Of course, it beggars understanding to imagine Cohen buying Stormy Daniels’ silence for a six-figure sum without having consulted someone at the Trump Campaign or Trump Organization, quite possibly Trump himself. (Imagine what those conversations, whether they were with Trump, or Bannon, or Ivanka, or some Trump Organization factotum, must have been like in the wake of the Access Hollywood tape. No, really—pause for a moment and imagine.) But if Cohen did consult someone, it becomes more difficult to claim that he wasn’t acting on behalf and for the benefit of the campaign, of Trump, or of the Trump Organization (or all three), not as an independent actor.
To thread this labyrinth, Cohen has to argue that he bought Stormy Daniels’ silence as an unaffiliated independent actor, working solely in his personal capacity rather than as a lawyer or agent for anyone else, and blinded to the electoral significance of his acts. Did that happen? Did Cohen, on the eve of the election, for no reason other than intoxication on the milk of human kindness, give his longtime client’s former mistress $130,000 of his own personal funds in transactional hush money with no benefit to himself, and no action or knowledge on behalf of the longtime client, without regard to the lawyer-client relationship between them, just because he and the client were supposedly friends? You be the judge. And if Cohen denies that he was acting as anybody’s lawyer, then none of the communications he may have had with any of those folks on this issue is privileged. Let the subpoenas fly. (We’re not even going to consider at this point the gift and gift-tax implications of this rather rarified view of the facts.)
But wait; there’s more. We haven’t even begun to talk about the ethical implications of Cohen’s actions this week. Remember, the Wall Street Journal reported on Cohen’s negotiated purchase of Daniels’ silence almost a month ago. Do you think Cohen consulted with anyone at the Trump Organization or the White House before holding his press conference earlier this week? If he did, then it becomes easier to conclude he did what he did last October with Ms. Daniels on behalf and for the benefit of Trump, the Trump Organization, or the Trump Campaign. Which makes it even more likely that Cohen committed disciplinary violations and crimes in the process. (And if anyone at the Trump Organization or in government urged him to be untruthful about the facts or conceal the source of the money, that might lead to false statement or obstruction charges for them.) Once again, if Cohen denies he was acting as anyone’s lawyer, no communications on this subject are privileged. And even if he claims he was, he has the crime-fraud exception to the attorney-client privilege to confront.
This story is not going away anytime soon. Cohen’s exceptionally implausible protestations make a protracted investigation more likely than ever. While this will create much rich and rewarding work for various professionals in New York and Washington, it’s no good for the profession at large. The only silver lining I see—and it’s mighty thin—is that all these events are the best reminder of the importance of legal ethics since Watergate.
--Bernie
Got to look at the positives here: She got paid and he didn't demand to get spanked with a Highlights magazine.
Posted by: Deep State Special Legal Counsel | February 16, 2018 at 02:23 PM