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Presidential Hush Money: Possible Legal Issues Of The Payoff to Stormy Daniels.

Just some very quick thoughts, without much research, of potential legal issues raised by the stunning announcement by Trump attorney Michael Cohen that he personally paid hush money to porn star Stormy Daniels. The money was to keep her quiet about an alleged affair she had with Trump shortly after Melania gave birth to Barron Trump.

Trump’s lawyer rather implausibly (that’s a polite term for it) claims to have made the payments from his own personal money, and get this, without telling Trump or anyone in the Trump Campaign that he did so. For reasons explained below, that’s pretty much impossible. It also just makes no sense. Out of dozens of women making allegations of affairs, and even sexual assaults, Cohen wants us to believe he picked one porn star to drop six figures on out of his own personal account? This proposition defies all reason.

So while staying cynical about these claimed facts, let’s look at some potential legal issues that this might raise.

Campaign Finance Violations.

Cohen’s revelation came about because when the story of the hush money payoff originally came out Common Cause filed a Complaint with the FEC alleging it was an illegal campaign contribution. Cohen had to respond to the Complaint to the FEC and knowing that would eventually come out he released this himself.

Cohen asserts it was not a campaign contribution, but that does not make his denial true. The Federal Election Campaign Act (FECA) broadly defines campaign contribution at 52 U.S.C. 30101(8) as “any gift, subscription, loan, advance, or deposit of money or anything of value made by any person for the purpose of influencing any election for Federal office.” Cohen admits he made the payment to influence the election, stating he sought to avoid the harm the porn star’s allegations might cause the campaign. Cohen told CNN Just because something isn’t true doesn’t mean that it can’t cause you harm or damage. I will always protect Mr. Trump.”

There’s a reasonable case this was a campaign contribution. If so, the Trump Campaign was obligated to report it and didn’t. Further, Mr. Cohen would have an issue because the contribution would exceed the individual contribution limit of $2,700. If Cohen did actually get paid by the campaign, directly or in kind, then that violated laws related to use of campaign funds. Donors to campaign funds are entitled to be confident their donated money will not be used to pay hush money to porn stars.

Taxes.

I also wonder how this was reported on everyone’s taxes. Did Stormy Daniels report it as income? What kind? Did Cohen report it as an expense? What kind?

Attorney Ethical Rules.

If we indulge in the fantasy of believing Cohen’s claim that his payment, and agreement with Stormy Daniels did not involve Trump or the Trump Campaign, then he has some serious attorney ethical issues to contend with. The most obvious of these relate to acting only with his clients informed consent and communicating to his client what he is doing. Getting informed consent for an action requires that the lawyer communicate “adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct.”

Put simply, attorney ethical rules require would require that Cohen communicate to Trump his intent to enter into this settlement agreement on Trump’s behalf. That’s one reason why I say it is not possible for Trump to not have been involved in this.

If the payment is deemed a campaign contribution another problem comes into play. Unsurprisingly, attorney ethical rules mandate that a “lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent.”

Enforceability of the Non-Disclosure Agreement.

If Cohen is correct in stating Trump is not privy to any Non-Disclosure Agreement (NDA) with Daniels, then Trump does not have standing to enforce the agreement. Only Cohen does. A proposition that puts Cohen on difficult legal footing, in potential conflict of interest with his own client, for yet another ethical concern. Further, if Cohen claims standing what harm does he assert he suffers if Daniels breaches the NDA? While the NDA likely contains a “liquidated clause provision” stipulating damages to be paid in the event of breach, courts require such provisions to be at least reasonably related to the party’s actual damages.

As a final point, I think a question can also be raised regarding a general argument that any NDA to deny the American people such information about a candidate for President should be regarded as void for violating public policy or interest. Such information would surely be of interest for any other high executive office when determining whether a person should get a security clearance. The American people ought to be entitled to weigh that concern when they vote. A contract impeding such information about the most important office in the land can be viewed as having “a tendency to be injurious to the public or against the public good.”

This would be particularly true if Trump is a party to the contract after all. The President of the United States puts his signature on a hush money contract with porn star? Wow! Aren’t the American people entitled to know that? Doesn’t the secret agreement alone create a risk that the President can be compromised or blackmailed by a foreign power that finds about it? Shouldn’t the American people be allowed to weigh that risk?

The public interest question this presents certainly challenges the very validity of the contract.

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