Franklin, Andrews, Kramer & Edelstein

[scion]

Clinics, and Questions

https://www.nytimes.com/2018/05/05/business/michael-cohen-lawyer-trump.html

After he had built a taxi operation and a personal injury legal practice, there was another element to Mr. Cohen’s business dealings, this one involving doctors and companies that operated on the fringes of the medical field.

Starting in 2000, Mr. Cohen set up a series of companies in New York City. There were two medical practices, an acupuncture office, two medical billing companies, two management companies and a transportation company.

The ventures were noteworthy, in part, because they were created at a time when countless phony companies were cropping up to exploit so-called no-fault auto insurance laws in New York and other states. Hundreds of doctors, businesses owners and others would eventually be criminally charged or accused of fraud by insurance companies.

There is no evidence that Mr. Cohen or the companies he created were part of such schemes. Nor is there evidence that Mr. Cohen did anything other than register the companies with state authorities.

The no-fault insurance schemes, which were often masterminded by organized crime figures from the former Soviet Union, all followed a basic template. Staged or exaggerated car accidents were used to generate a tidal wave of “patients.” Transportation companies then took the patients — often low-level criminals — to what in many instances were sham medical clinics, diagnostic testing offices, and acupuncture and physical therapy offices. Billing companies were created to collect money from insurers, and management companies then siphoned the funds out to the scheme’s operators. Some operators were so bold that they sued insurers that had stopped paying after they realized they were being defrauded.

Mr. Cohen’s role, if any, in the operation of the companies he helped set up was unclear. The only people listed in the incorporation papers as having roles in the businesses are the two doctors, Aleksandr Martirosov and Zhanna Kanevsky, who were each affiliated with a medical practice.

But both of those doctors were accused of insurance fraud in connection with different medical practices they operated.

Dr. Martirosov was arrested and charged with insurance fraud and grand larceny in 2003. A little more than a year earlier, Mr. Cohen had registered Avex Medical Care in Dr. Martirosov’s name.

In 2005, Dr. Kanevsky was indicted on state racketeering charges, the result of a lengthy wiretap investigation into phony accidents and medical claims. Mr. Cohen had registered Life Quality Medical Care on Dr. Kanevsky’s behalf in April 2002.

Dr. Kanevsky pleaded guilty to scheming to defraud in the second degree. A man who answered two phone numbers listed in her name said “no comment” and hung up.

The charges against Dr. Martirosov were later dropped. He did not respond to calls for comment or a message left at his home. The same year he was arrested, Dr. Martirosov was named in a civil racketeering lawsuit brought by the insurance company Allstate, in connection with his work for another medical business. The suit accused dozens of doctors and business owners of trying to defraud insurers. Dr. Martirosov denied wrongdoing.

Avex Medical Care continued to operate after Dr. Martirosov’s arrest. The company later sued insurers at a frenetic pace that averaged almost one lawsuit a week from 2003 to 2008. The suits targeted insurers that had balked at paying for treatments for accident victims.

In the late 1990s and early 2000s, Mr. Cohen’s personal injury practice filed hundreds of lawsuits largely stemming from auto accidents. For part of that time, a bustling bullpen of clerks and paralegals worked the phones at his Long Island City office. They sought settlements with insurers and churned out suits on behalf of clients, many of whom were referred to clinics that were later caught up in no-fault insurance fraud investigations.

One of the personal injury lawsuits that Mr. Cohen filed was in connection to a 1999 auto accident in the Sheepshead Bay neighborhood of Brooklyn. Both his client and the defendant were later indicted on insurance fraud charges related to the accident, Rolling Stone recently reported. The lawsuit filed by Mr. Cohen was dropped.

A Minor Baron

During his time working at the Trump Organization, Mr. Cohen became a minor real estate baron in his own right.

While his business is dwarfed by Mr. Trump’s assemblage of properties, it is not insignificant. From 2011 to 2015, limited liability companies connected to Mr. Cohen purchased at least five buildings in Manhattan, public records show.

Like many of Mr. Cohen’s business dealings, the transactions were unconventional. His companies would buy a building, often in cash. Soon after, they would flip the building in another all-cash deal for four or five times the previous purchase price. The buyer was generally another limited liability company.

In October 2011, for example, a limited liability company listing as its address Mr. Cohen’s apartment at Trump Park Avenue purchased a building on Rivington Street on Manhattan’s Lower East Side for $2.1 million. In 2014, Mr. Cohen sold the building for $10 million in cash — nearly five times what he paid three years earlier.

That same day, Mr. Cohen sold three other Manhattan buildings, also entirely for cash. In total, the four buildings sold for $32 million — nearly triple what Mr. Cohen had paid for them in the span of no more than three years.

It is not known who owns the limited liability companies that purchased the properties from Mr. Cohen or why they agreed to pay such rich prices. Mr. Cohen told McClatchy, which first reported the transactions, that the sales were in cash to help the buyers defer taxes in other transactions.

Richard K. Gordon, director of the Financial Integrity Institute at Case Western Reserve University’s law school, said that such real estate transactions — large profits, achieved quickly, involving cash purchases by L.L.C.s — should raise red flags.

“If I were the bank, I’d either refuse his business up front or rate him extra high risk,” said Mr. Gordon, who once led anti-money-laundering efforts for the International Monetary Fund.

Mr. Trump is closely monitoring the investigations into his longtime counselor. In recent weeks, he has moved to simultaneously embrace Mr. Cohen and keep him at arm’s length.

“Most people will flip if the Government lets them out of trouble,” Mr. Trump wrote on Twitter last month. “Sorry, I don’t see Michael doing that.”

A few days later, Mr. Trump asserted that the investigation was unrelated to Mr. Cohen’s work for him.

“From what I understand, they’re looking at his businesses,” Mr. Trump said. “I’ve been told I’m not involved.”

The president added: “I hope he’s in great shape.”

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Susan C. Beachy contributed reporting and research, Doris Burke contributed research, and Ben Protess and Zach Wichter contributed reporting.

A version of this article appears in print on May 6, 2018 of the New York edition with the headline: How Trump’s Fixer Built Shadowy Business Empire. Order Reprints | Today’s Paper | Subscribe

https://www.nytimes.com/2018/05/05/business/michael-cohen-lawyer-trump.html

How Trump’s Lawyer Built a Business Empire in the Shadows

By WILLIAM K. RASHBAUM, DANNY HAKIM, BRIAN M. ROSENTHAL, EMILY FLITTER and JESSE DRUCKER 2:30 PM ET
https://www.nytimes.com/2018/05/05/business/michael-cohen-lawyer-trump.html