Lion of the Blogosphere

Released details of Michael Cohen warrant show bogusness of it

According to the NY Times:

The April 8, 2018, search warrant said that the F.B.I. and Manhattan federal prosecutors were investigating Mr. Cohen for a range of crimes, including defrauding several banks dating back to 2016 and a scheme “to make an illegal campaign contribution in October 2016 to then-presidential candidate Donald Trump.” The warrant also indicated they were investigating him for wire fraud and conspiracy.

“Wire fraud” and “conspiracy” mean nothing, they are just ways to add more jail time for underlying crimes.

And the alleged underlying crimes are bogus.

The “illegal campaign contribution” is based on the assertion that Michael Cohen paying Stormi Daniels with his own money is actually a contribution to Donald Trump’s campaign. The purpose of campaign finance laws is to prevent rich donors from owning politicians and influencing legislation. But Michael Cohen is Trump’s employee and not a rich donor. His apparent goal was to keep his number one client happy, and Cohen doing this sort of stuff appears to be his business-as-usually working relationship with Trump that predates Trump’s campaign for President.

“Defrauding several banks” is based on the assertion that Cohen used money borrowed from home equity loans to pay Stormi Daniels, and that when Cohen opened the home equity lines of credit, he never told the banks he would use the money to pay hush money to porn stars, and therefore it’s bank fraud. But no banks actually lost any money or complained to the FBI about Cohen. It’s generally expected that people can use home equity lines of credit for whatever they want (because the loans are guaranteed by the value of a home). And this is actually a legitimate business expense for Cohen. As I’ve pointed out before, it’s not illegal to pay hush money. There was no intent by Cohen not to pay back the loan, nor any evidence that Cohen was under financial distress at the time (he might be now because of the Mueller investigation financially ruining him), he was just using the home equity lines of credit for liquidity purposes.

Written by Lion of the Blogosphere

March 19, 2019 at EDT pm

Posted in Law

9 Responses

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  1. I think Michael Cohen was in a lot of financial distress before his legal troubles started. He was in the taxi medallion business. He owned taxi medallions which he leased out to taxi companies to use. In NYC a medallion had been valued over $1 million but the value has fallen drastically because of Uber and Lyft. Cohen had borrowed money from banks using the medallions as collateral. The medallions are probably no longer worth the amount of the loans.

    One of crimes Cohen was eventually charged with was tax fraud. He was apparently reporting the medallion lease fees paid to him as loans so he did not have to pay income tax on that money. That was probably not on the search warrant and they may have only discovered that later.

    While you have said many times that the Stormy Daniels bribe should not be treated as a crime, remember that in 2011 John Edwards was charged with a crime for a similar contribution to his mistress. The jury found him not guilty on one charge and there was a hung jury on the other charges. The justice department dropped the case after that.

    MikeCA

    March 19, 2019 at EDT pm

    • Cohen’s alleged tax fraud was not in the warrant. It’s what they were fishing for.

      John Edward’s donations came from rich donors who wanted to influence his policy, not from his own long-time employee.

      Lion of the Blogosphere

      March 19, 2019 at EDT pm

    • The medallion prices had skyrocketed between the time that he bought and the time that Uber and Lyft drove prices back down. So he wasn’t in the hole on that. Regardless, wikipedia says he bought an apartment building for $58M AFTER the medallion prices had declined. That doesn’t sound like “financial distress”.

      destructure

      March 19, 2019 at EDT pm

    • The Justice Department charged him after the FEC ruled it wasn’t a violation, so that was bogus too. But you have to remember that in the Edwards case it was two wealthy Democratic Donors making the payments and they were never paid back. That seemed to violate the spirit if not the letter of the law, while Trump’s scenario, it was Trump himself ultimately paying her off (with his own employee merely serving as middle man) which violates neither the spirit nor the letter of the law.

      PerezHBD

      March 19, 2019 at EDT pm

    • This is completely incorrect. The campaign finance laws define what is or is not a campaign contribution. You cannot use campaign funds to pay off a mistress. You can use your own money if you have a history of making such payments and would have made them in you were not a candidate.

      That is what got John Edwards pinched.

      As for the bank fraud, since when does a bank rely upon the word of a borrower when determining the value of collateral? They due their own due diligence. If those medallions turn out to be worth less over time then that is not Cohen’s fault.

      map

      March 20, 2019 at EDT am

  2. “he was just using the home equity lines of credit for liquidity purposes.”

    Taking out a loan rather than selling off real and financial assets was smart not crooked. It’s what I would have done.

    destructure

    March 19, 2019 at EDT pm

  3. How is Cohen Trumps employee? I thought he was a lawyer and independent contractor.

    If you mean agent then sure but you know the difference.

    Mrs Stitch

    March 19, 2019 at EDT pm

  4. Pretty sure banks only ask about the HELOC purpose as a due diligence check-box. Also, I think by stating you’re using it to improve your home, it makes it tax-deductible, subject to income limits, which probably excluded Cohen anyway. Strange that as a lawyer he couldn’t tell them a vague enough answer that it would withstand nearly any future scrutiny, unless it was for the tax deduction. LOL.

    I do know that on a refi you don’t even have to tell them the purpose. I called and checked on that prior to doing a cash-out refi back in the day. When I actually applied for the loan the guy asked purpose for the loan and I said, “my understanding is that is doesn’t matter and I don’t have to answer.” It was amazing. I was doing this over the phone and his tone completely changed. He went from being like my best buddy at work and someone who’d go have beers and wings together, to like a cop interrogating me for having run a red light fishing for additional charges. I held my ground about not answering and he said they are allowed to check whether I’m using it to purchase more property, as that would have carrying costs effecting my ratios yada, yada, yada. I said, no. He hesitated a long time (it was 6 figures cash-out), then said, OK.

    Loan went through, fwiw.

    Portlander

    March 20, 2019 at EDT am

  5. Whatever the paper thin narrative is, this all amounts to institutional petty harassment of a politician, by way of his camp, that a range of people deep in the system had prior expressed their political disapproval of.

    Its a form of institutional political intimidation.

    This nation is in a lot of trouble.

    To state the obvious.

    Dan

    March 23, 2019 at EDT pm


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