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Feds Seek Stormy Daniels Documents From Trump Organization

Request comes in connection with FBI raids of lawyer Michael Cohen

By Michael Rothfeld and Joe Palazzolo Updated April 10, 2018 3:13 p.m. ET
https://www.wsj.com/articles/feds-seek-stormy-daniels-documents-tied-to-trump-organization-1523379888

Federal prosecutors in New York asked the Trump Organization, President Donald Trump’s flagship company, for records relating to a $130,000 payment to a former adult-film actress as part of an investigation into Mr. Trump’s personal lawyer, according to a person familiar with the matter.

The request came in connection with raids by the Federal Bureau of Investigation Monday on the office, hotel room and home of Trump lawyer Michael Cohen. Mr. Cohen made the payment to Stephanie Clifford, a former porn star known professionally as Stormy Daniels, less than two weeks before the 2016 presidential election.

The payment was in exchange for Ms. Clifford’s signing a nondisclosure agreement about an alleged sexual encounter with Mr. Trump in 2006.

As previously reported in The Wall Street Journal, arbitration documents marked “HIGHLY CONFIDENTIAL PROCEEDING” tied the Trump Organization to a continuing effort to silence Ms. Clifford about the alleged sexual encounter with Mr. Trump.

A search warrant relating to Mr. Cohen also sought information about associates of his in the taxi industry, a person familiar with the matter said. Mr. Cohen has been a longtime owner of New York City taxi medallions, which allow cabs to pick up passengers on the street, in addition to working until early 2017 as a top lawyer at the Trump Organization. Mr. Cohen currently serves as Mr. Trump’s personal attorney.

The search warrant for Mr. Cohen’s records also sought information about a $150,000 payment by American Media Inc., publisher of the National Enquirer, to former Playboy model Karen McDougal, according to a person familiar with the matter.

That payment, three months before Mr. Trump’s election, was in exchange for the rights to her story of an alleged affair with Mr. Trump. AMI, run by Trump friend David Pecker, quashed the story. The Journal first reported the payment to Ms. McDougal, in November 2016, and that such a practice is known in the tabloid world as “catch and kill.”

AMI previously told the Journal that deal wasn’t a “catch and kill” pact but rather was in exchange for her appearing on magazine covers and writing fitness columns. AMI has denied paying people to kill damaging stories about Mr. Trump.

An AMI spokesman said the company would continue to comply with requests that don’t violate its sources or materials according to the First Amendment.

Ms. McDougal has alleged in a lawsuit against AMI that her Los Angeles-based lawyer at the time, Keith Davidson, and the publisher misrepresented? the deal, which AMI also denies. Ms. McDougal’s current lawyer, Peter Stris, said he had no comment on the FBI raid. Dave Wedge, a spokesman for Mr. Davidson, had no immediate comment.

The New York Times earlier reported that prosecutors were seeking records related to the McDougal payment.

Mr. Cohen and his lawyer, Stephen Ryan, couldn’t immediately be reached for comment.

Mr. Ryan on Monday called the use of search warrants in Monday’s raids “completely inappropriate and unnecessary” and said it had “resulted in the unnecessary seizure of protected attorney-client communications between a lawyer and his clients.” He added: “These government tactics are also wrong because Mr. Cohen has cooperated completely with all government entities, including providing thousands of nonprivileged documents to the Congress and sitting for depositions under oath.”

A Trump Organization representative said, “We do not generally comment on such matters, but have and will continue to comply with inquiries from proper authorities.”

A spokesman for the Manhattan U.S. attorney’s office declined to comment.

The federal investigation into Mr. Cohen’s activities relates broadly to his personal business dealings in addition to the payment to Ms. Clifford, according to people familiar with the matter.

Mr. Cohen and White House representatives have denied any sexual encounter took place between Mr. Trump and Ms. Clifford. Mr. Trump said publicly last week he was unaware of the deal Mr. Cohen made with her, and that he didn’t know where the money came from.

The request for documents from the Trump Organization could establish more links between the company and the 2016 hush agreement with Ms. Clifford and legal efforts to enforce it.

A Trump Organization lawyer, Jill A. Martin, was listed as counsel in an arbitration demand for Essential Consultants LLC, a Delaware company formed by Mr. Cohen and used to make the $130,000 payment to Ms. Clifford in exchange for her silence, according to Feb. 22 arbitration documents filed in Orange County, Calif.

Messrs. Cohen and Trump are in a legal battle with Ms. Clifford, who is seeking to invalidate the nondisclosure agreement, in part because Mr. Trump didn’t sign it. Ms. Clifford is seeking to have the matter decided in court. Lawyers for Messrs. Trump and Cohen and Essential Consultants have asked a court to order her to resolve the dispute in a closed arbitration proceeding.

Ms. Martin previously told the Journal that she facilitated the initial arbitration filing “in her individual capacity” until a New York-based lawyer gained approval to practice in California. “The company has had no involvement in the matter,” Ms. Martin said in a statement on behalf of the Trump Organization.

Meanwhile, the search warrant authorized investigators to seize records relating to Mr. Cohen’s involvement and associates in the taxi business. His ownership of taxi medallions and work in the industry predates his joining the Trump Organization in 2007.

Mr. Cohen had handled dozens of small-time auto-accident cases from offices inside a taxi garage in Queens owned by a Ukrainian-born business partner, according to court records and interviews. He continued to own taxi medallions, but they became managed by a separate Russian-born taxicab executive who was indicted last year on tax-fraud allegations and has pleaded not guilty.

The Queens taxi garage where Mr. Cohen practiced law until a few years before he joined the Trump Organization has a controversial history. Two lawyers listed in court records as practicing auto-accident cases at that address around the same time lost their legal licenses, one of them in disbarment proceedings.

The building had several windowless offices where Mr. Cohen and others worked, adjacent to a taxi front office that was “dirty, with boxes piled up, like a warehouse,” recalls Julia Esipova, who worked in the building.

Yvette Dorset was waiting for an ambulance in 2000 after her car was smashed by a hit-and-run driver in Brooklyn, when a stranger came up and handed her cards for Mr. Cohen’s firm and for a physical therapist. She said she hired Mr. Cohen and in 2001 received a settlement of less than $3,000.

“I can’t believe it’s the same guy” who’s now Mr. Trump’s personal attorney, said Steven Saporta, whose auto-accident case in 2000 was listed in court records as handled by Mr. Cohen. Mr. Saporta said he found Mr. Cohen through a collision garage where his car had been towed after the accident.

—Erica Orden, Mark Maremont and Alexandra Berzon contributed to this article.

Write to Michael Rothfeld at [e-mail] and Joe Palazzolo at [e-mail]

https://www.wsj.com/articles/feds-seek-stormy-daniels-documents-tied-to-trump-organization-1523379888