Criminal investigation into Trump lawyer's business dealings began months ago

Friday , April 13, 2018 - 2:30 PM

Philip Bump and Devlin Barrett

(c) 2018, The Washington Post.

NEW YORK - President Donald Trump’s personal attorney Michael D. Cohen has been under criminal investigation for months by federal prosecutors who empaneled a grand jury to probe his business dealings beyond his law practice, according to a new court filing.

Prosecutors revealed the new details about the Cohen probe after his lawyer appeared in court Friday seeking to temporarily halt prosecutors from reviewing documents that FBI agents seized in a search earlier this week of Cohen’s office, home and hotel room.

The 22-page filing states that the recent searches are the result of a “months-long investigation into Cohen, and seek evidence of crimes, many of which have nothing to do with his work as an attorney, but rather relate to Cohen’s own business dealings.”

The government’s motion also reveals prosecutors searched a safety deposit box used by Cohen - carrying out the searches in part because they feared evidence might be destroyed if they had simply served him with a subpoena. Officials redacted a section in the document explaining why they thought they could not trust Cohen to turn over records willingly.

The filing, signed by acting U.S. attorney Robert Khuzami, also says that while the current investigation was referred by special counsel Robert S. Mueller III, the New York investigation “has proceeded independent” of Mueller’s work.

Federal prosecutors in Manhattan are investigating whether any crimes were committed as part of an effort by Cohen to squelch damaging stories about Trump when he was a presidential candidate, according to a person familiar with the matter.

Among the material sought by investigators in the search were records related to payments made to adult-film star Stormy Daniels and former Playboy model Karen McDougal, two women who allegedly had sexual liaisons with Trump years ago.

Prosecutors also say that the president’s own statement that he did not know Cohen paid Clifford may negate any claim of attorney-client privilege on that matter. Authorities also revealed that they have already searched a number of email accounts used by Cohen.

“The results of that review . . . indicate that Cohen is in fact performing little to no legal work, and that zero emails were exchanged with President Trump,” the filing states.

Todd Harrison, an attorney for Cohen, urged U.S. District Court Judge Kimba Wood to issue a temporary restraining order to let either Cohen’s lawyers or a court-appointed special master review the material seized by FBI agents.

The unusual, high-stakes court hearing Friday featured an appearance by an attorney representing Trump, Joanna Hendon. She argued that material obtained from Cohen had to be handled carefully because some could relate to a sitting president.

While Trump had the “utmost interest” in ensuring that the process of preserving attorney-client privilege was respected, so did the public - and anyone who has ever sought legal counsel, Hendon said.

Whatever the judge decided, Hendon noted, would have to “withstand scrutiny for all time.” Her client, the president “as the privilege-holder, has an acute interest in this issue.”

She added she worried about the “appearance of fairness,” given the stakes. “He is the president of the United States,” she emphasized at one point.

Assistant U.S. Attorney Thomas McKay said the legal issues at stake were no different than other cases involving lawyers’ records.

Referring to Trump, McKay said: “His attorney-client privilege is no stronger than anyone else who seeks legal advice.”

Friday’s court hearing was marked by multiple private conversations between the lawyers and the judge. Wood said the court would reconvene in the afternoon to discuss how to release transcripts of those discussions that redacted the names of people described as “innocent individuals.”

Another lawyer also sought to make his case during the later hearing: Daniels’ attorney Michael Avenatti. When he introduced himself to the judge in order to ask to be heard, Wood seemed to indicate that she was already aware of his identity.

In an interview after the morning session, Avenatti said he wants to make sure “that the integrity of the documents, whatever was seized, is maintained.”

“We want to ensure the documents do not disappear or that there’s a control set that’s maintained regardless of who reviews the documents,” he added. Avenatti said he thinks that some of the documents obtained from the Cohen search relate to his client.

Stephen Ryan, an attorney for Cohen, said in a statement earlier this week that the searches of Cohen’s office and residences were unnecessary and the material seized is protected by the attorney-client privilege.

Searches of lawyers’ offices are rare but not unheard of, and prosecutors use what’s called a separate “taint team” to review the material and exclude any documents that are covered by the attorney-client privilege.

If they find material that does not involve legal advice between a lawyer and a client, or is exempted from the attorney-client privilege because it contains evidence of a crime, that material can be turned over to investigators.

Cohen is being investigated for possible bank fraud, wire fraud and violations of campaign laws, according to people familiar with the matter.

In their search Monday, investigators also sought to obtain records relating to Cohen’s ownership of taxi medallions - high-value assets that are often used as collateral for loans, according to people familiar with the matter.

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Rosalind S. Helderman contributed to this report.

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