Where money, power and politics collide.

Donald J. Trump was never very good at paying his vendors on time – or at all.

But he seemed to have loyal foot soldiers just the same. Trump’s personal lawyer and self-proclaimed “fix-it guy,” Michael Cohen, took out a loan against his own house and used the funds to pay $130,000 to Stephanie Clifford, an adult film star who went by the name Stormy Daniels, to keep her silent about her claims of an affair with Trump in the run-up to the 2016 presidential election. Trump has denied the affair, but not the payment.

After Trump won, he did something very un-Trump-like: He paid Cohen back. Had he not, the events of this week may have never come to pass.

As is often the case, it is not the original sin – paying for the silence of Daniels to bury her story, which she was threatening to take public ahead of the election – but the way in which it is covered up that causes the greatest turbulence.

On Tuesday, Trump plead not guilty to all 34 counts of falsifying business records and conspiracy in the first degree in a wide-ranging scheme meant to prevent a sex scandal. But the details of exactly how Cohen’s reimbursements were accounted for and what Trump knew about Cohen’s arrangements – and when – will be central to whether the case against him will be successful. Each count against Trump is a felony, carrying up to four years in prison.

After the proceedings, Trump did not speak to journalists before flying back home to Florida, but did dash off some posts and a video to his online channel Truth Social to denounce the charges, saying “This is massive ELECTION INTERFERENCE on a scale that we have never seen in this Country!”

The charges against him involved only the hush money paid to Daniels and the alleged falsification of business records 34 times from February to December 2017. But prosecutors described other payments for silence, including one made to a doorman alleging Trump had a child out of wedlock and, separately, to Playboy’s 1998 Playmate of the Year, Karen McDougal, who claimed an affair with Trump and wanted to sell her story during his presidential campaign. The National Enquirer, allied closely with Trump, paid her $150,000 for the story in 2016, then buried it.

“If this case survives a motion to dismiss and goes forward, there are a lot of gaps in the information I would like to see filled,” says Joe Palazzolo, one of the two Wall Street Journal reporters who broke the story of the original hush money payments to Daniels. “I worked on this story for five years of my life and I did not expect this turn of events, but here we are.”

One of the biggest gaps will be proving that Trump personally stage-managed the payment to Daniels and the alleged falsification of business records around Cohen’s reimbursements, which were billed as legal expenses by the Trump Organization under a “retainer agreement” with Cohen that prosecutors say was a “sham,” because neither expenses nor a retainer agreement ever existed. 

In testimony while Trump was still president, Cohen told Congress “Mr. Trump directed me to use my own personal funds from a home equity line of credit to avoid any money being traced back to him that could negatively impact his campaign.”

“We got the ball rolling on this a long time ago, but now a lot of other people have worked on it,” Palazzolo told Power Corridor, adding that he will be looking to see if the proceedings will shed any more light.

On the strength of a tip, Palazzolo and his co-author, Michael Rothfeld, began tracking the hush money payments made during Trump’s first presidential run, eventually uncovering how Cohen set up a Delaware shell company, Essential Consultants LLC, to arrange the payment to silence Daniels in October 2016, just days before the election.

“We just poured through tens of thousands of shell companies – there are around 15,000 shell companies a day set up in Delaware – before we found the one used for the Stormy Daniels payment,” says Rothfeld. “The state of Delaware emailed us the underlying documents and it ended up that Michael Cohen had put his name on it.”

From there, Rothfeld and Palazzolo asked Cohen to comment, and he did not deny his involvement. They backed up the story through a number of independent sources, as well as confirmed the size of the Daniels payment. They also went to Trump’s camp for comment where they received, in Rothfeld’s words, “a lot of non-denial denials.” Trump’s representatives insisted Trump never slept with Daniels, but would not say she wasn’t paid.

When Palazzolo and Rothfeld ran with the story, they knew it was solid, but it was still nerve-wracking. “We were very nervous, we were saying the president’s lawyer paid money to a porn star, but we were convinced it was correct,” Rothfeld says. The story won the 2019 Pulitzer Prize in National Reporting, spurring calls for criminal inquiries and Trump’s impeachment.

Just days after it came out, Common Cause, a Washington-based watchdog group, filed complaints with the U.S. Department of Justice and the Federal Election Commission alleging the $130,000 payment to Daniels amounted to an unreported, illegal in-kind contribution to the Trump campaign for the purpose of influencing the outcome of the 2016 presidential election, made in coordination with Cohen.

At the time Common Cause did not know it was Cohen himself who had made the in-kind payment, but later amended the complaints to account for Cohen’s claims, which the group noted exceeded the legal limit for campaign gifts by $127,000. 

No charges would be filed against Trump while he was still a sitting president, as is the custom rather than settled law, though Cohen did go to prison after pleading guilty to tax evasion and violating campaign-finance laws.

“The federal prosecutors in Manhattan wrote the charges against Cohen in a way where they could charge Trump, but then nothing happened,” Rothfeld recalls. “I was surprised, frankly, when they picked it back up.”

Rothfeld, who is now an investigative reporter at The New York Times, co-wrote a book with Palazzolo on what they uncovered together, “The Fixers: The Bottom-Feeders, Crooked Lawyers, Gossip Mongers and Porn Stars Who Created the 45th President.” 

“We knew the story could result in Trump being charged,” Rothfeld says. “When Michael Cohen’s offices were raided by the FBI it was our first inkling that there could be more of a significant impact – then it snowballed.”

*Power Corridor is the newest publication from The Daily Upside. Delivered twice weekly, Lead Editor Leah McGrath Goodman gives readers a unique view into the interplay between Wall Street and Washington. Sign up for free here.*

Investing in the Gateway Cities to the American Dream

Demand destruction is a fallacy. Demand hasn’t evaporated, it has simply transformed.
Read More
Deep Dives more
(Photo by Adolfo Félix via Unsplash)

New Jersey’s Labor Mismatch is a Cautionary Tale for Rest of the US

Online Luxury Shopping Just Isn’t Cool Anymore

Recent News

Visa’s Blockchain Efforts Could Give The Tech Better Reputation

Big Tobacco’s Big Problem: The US Isn’t Lighting Up

Google’s Liveliness Detectors Aims to Combat Deepfakes

Washington Wants More Rules, Bankers Have Concerns