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Trump-Cohen tape, explained: Karen McDougal hush money discussion

A secretly recorded tape of Trump talking to Michael Cohen, released to CNN Tuesday night, is the most momentous revelation yet from the falling-out between the president and his former lawyer.

In the September 2016 tape, Cohen alludes to a hush-money deal involving former Playboy model Karen McDougal, who claimed she had an affair with Trump a decade earlier. The National Enquirer’s parent company had reached a deal to purchase McDougal’s story. The company, American Media Inc., is run by a friend of Trump, and bought the story specifically so they could prevent it from getting out.

So Cohen suggests creating a shell company to pay AMI, and Trump seems to approve. Cohen says he’s already spoken to the CFO of the Trump Organization about financing the deal. Then, as Trump and Cohen discuss the financing, the recording cuts off. (Trump’s team has denied the deal ended up happening.)

The tape — recorded by Cohen without Trump’s knowledge, and seized by the FBI during raids on Cohen’s residence and office in April — is part of into a larger investigation by the US Attorney’s Office for the Southern District of New York.

The full scope of the investigation is not yet clear, and no one has yet been charged. But it appears to relate to several efforts by Trump’s allies to hush up scandals that could damage him during the campaign — sometimes by paying large sums of money, potentially in violation of campaign finance law. The tape connects Trump to Cohen’s actions directly.

Cohen has appeared to be in serious legal jeopardy since the raids, and his team has repeatedly floated the prospect that he might strike a plea deal with prosecutors and “flip” on Trump. No such deal has yet materialized, but it was Cohen’s own attorney Lanny Davis who provided the tape to CNN and who suggested Cohen would no longer defend Trump, adding that there’s “more to come.”

But the tape is plenty dramatic on its own — and plenty revealing about how Trump and Cohen operated.

It confirms that Trump was well aware of Cohen’s involvement in the McDougal payoff. And since the two men use vague shorthand to describe it, Trump was likely very much in the loop on Cohen’s other legally questionable activities on his behalf as well. The ultimate legal implications, though, remain unclear.

What’s the background to what we hear on the Trump-Cohen tape?

Michael Cohen is a longtime lawyer and employee of Trump who’s called himself Trump’s “fix-it guy” — “If somebody does something Mr. Trump doesn’t like, I do everything in my power to resolve it to Mr. Trump’s benefit,” he’s said. This role included trying to suppress scandalous stories that could damage Trump during the presidential campaign. By the time the tape was recorded, Cohen was already infamous for making profane, violent-sounding threats to reporters and others.

An important ally in this effort was American Media Inc. — the parent company of the National Enquirer, the famed supermarket tabloid, as well as other gossip outlets. The company’s chair, David Pecker, was a longtime personal friend of Trump. Trump himself was a frequent source for Enquirer stories, and the magazine would in return cover him positively — as it did, while savaging his opponents, during the 2016 campaign.

But that’s not all AMI did for Trump. The New Yorker’s Ronan Farrow has reported that the company was known to sometimes use a tabloid industry practice called “catch and kill” for major celebrity scandal stories. They would pay for exclusive rights to a source’s story about a scandal, and deliberately never publish it — as either part of a favor-trading relationship or an effort to gain leverage over the celebrity.

And in November 2015, AMI did that for Trump: the company paid a former Trump Tower doorman $30,000 for exclusive rights to his story that Trump had fathered a child with one of his employees, and never ran it.

Enter Karen McDougal. McDougal has said she had an affair with Trump from about June 2006 to April 2007, which began when they met at a party at the Playboy mansion (she was a Playboy model) and included multiple other encounters. As Trump’s presidential campaign heated up in 2016, McDougal tried to see if she could make some money from her decade-old experience.

A contact in the adult film industry put McDougal in touch with Keith Davidson (the same lawyer who later represented Stormy Daniels for a similar transaction). Davidson then opened discussions with AMI, the National Enquirer’s parent company. Eventually, on August 6, 2016, McDougal signed a contract to sell the exclusive rights to her story about her affair with Trump to AMI, in exchange for $150,000 and the promise of numerous columns and two cover features at AMI magazines. (AMI then, of course, didn’t run the affair story.)

During this process, it turns out that Davidson and AMI were in contact with Trump’s lawyer, Michael Cohen. Davidson, in fact, promptly informed Cohen when the deal was completed — raising some questions about who he was really working for. And, on the September 2016 tape, Cohen discussed the matter with Trump.

So what’s actually on the Trump-Cohen tape?

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Full audio: Presidential candidate Trump is heard on tape discussing with his attorney Michael Cohen how they would buy the rights to a Playboy model’s story about an alleged affair Trump had with her years earlier, according to the audio recording “https://t.co/YmC0QuDqTx pic.twitter.com/fBbq7r1Lq9

— Cuomo Prime Time (@CuomoPrimeTime) July 25, 2018

The two-minute tape (for which the Washington Post made an annotated transcript) begins when we hear Trump’s side of a phone conversation with an unknown person (who some think is Florida Attorney General Pam Bondi). After Trump hangs up, he and Cohen briefly chat about several topics:

  • A “great poll” that just came out
  • A controversy around Mark Burns, a black pastor who supported Trump (initially there’s some confusion about whether Trump means Pastor Darrell Scott, another black pastor who supported Trump)
  • A lawsuit from the New York Times to try to get Donald and Ivana Trump’s divorce papers unsealed. “They should never be able to get that,” Trump says. “You have a woman that doesn’t want them unsealed. Who you’ve been handling.” “Yes,” Cohen answers. (The papers reportedly include some very nasty allegations, but ultimately, they weren’t unsealed.)
  • Cohen then says, “Told you about Charleston.” (Trump had just mentioned “the Charleston thing” on the phone. It’s not clear what this is, though it could be just a campaign event.)

Then the most important, and legally problematic, part of the exchange begins.

COHEN: Um, I need to open up a company for the transfer of all of that info regarding our friend, David, you know, so that — I’m going to do that right away. I’ve actually come up and I’ve spoken —

“Our friend David” is David Pecker, who chairs AMI and oversees the National Enquirer. “The transfer of all of that info” refers to Karen McDougal’s affair story, which AMI bought the rights to. Cohen wants to set up a new company to, it seems, send money to AMI.

TRUMP: Give it to me and get me a [UNINTELLIGIBLE].

COHEN: And, I’ve spoken to Allen Weisselberg about how to set the whole thing up with…

Allen Weisselberg is the CFO of the Trump Organization, which implies that Trump’s company was involved in Cohen’s hush money efforts.

TRUMP: So, what do we got to pay for this? One-fifty?

AMI paid McDougal $150,000 for her story, a fact Trump appears to remember without prompting. Here Trump seems to be discussing paying AMI back for it.

COHEN: … Funding . . . Yes. Um, and it’s all the stuff.

TRUMP: Yeah, I was thinking about that.

COHEN: All the stuff. Because — here, you never know where that company — you never know what he’s —

TRUMP: Maybe he gets hit by a truck.

COHEN: Correct.

Here Cohen alludes to buying “all the stuff” from AMI — which appears to mean that the company has other negative stories about Trump they’ve bought and buried, that Cohen wants to buy the rights to.

Cohen says this would be a good idea because you never know what might happen with that company. Trump agrees, saying his friend David Pecker could get “hit by a truck” one day, meaning somebody else would be in charge of all the Trump dirt.

Then there’s an exchange that’s a bit difficult to parse and has been disputed. Here’s the Post’s version of the transcript:

COHEN: So, I’m all over that. And, I spoke to Allen about it, when it comes time for the financing, which will be —

TRUMP: Wait a sec, what financing?

COHEN: Well, I’ll have to pay him something.

TRUMP: [UNINTELLIGIBLE] pay with cash.

COHEN: No, no, no, no, no. I got it.

TRUMP: …check.

Cohen’s allies now claim Trump was saying that he should “pay with cash.” Trump’s allies dispute that and say the recording’s not clear there and in any case wouldn’t refer to actual stacks of cash, but rather a fully-paid cash transaction like a real estate deal.

But that dispute seems a minor matter — the bigger picture is that Trump and his lawyer were discussing a very large payment to try to keep a scandalous story about him from coming out during the campaign.

The recording then ends abruptly, even though the conversation doesn’t seem to be over. (Trump claims the rest of the tape would exonerate him.)

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What kind of a lawyer would tape a client? So sad! Is this a first, never heard of it before? Why was the tape so abruptly terminated (cut) while I was presumably saying positive things? I hear there are other clients and many reporters that are taped – can this be so? Too bad!

— Donald J. Trump (@realDonaldTrump) July 25, 2018

What happened after the tape concluded?

No evidence has emerged that Trump and Cohen ended up striking a deal to pay AMI, or to buy the scandalous stories about Trump from the company.

In October 2016, however, McDougal’s lawyer Keith Davidson found a new client with another sex story about TrumpStormy Daniels. This time, he went to Cohen directly to cut a deal rather than going through AMI. Cohen started a new company, Essential Consultants LLC, for the transaction, and agreed to pay Daniels $130,000 in exchange for her silence.

Meanwhile, news of AMI’s payment for McDougal’s story actually broke a few days before the election, on November 4, 2016, in the Wall Street Journal. But it got little attention at the time — Trump’s team denied knowing anything about it, and AMI denied paying to bury stories for Trump.

It took more than another year, until the January 2018 Journal report revealing Cohen’s payment to Stormy Daniels, for the story to really explode. Then, in March, McDougal sued to be released from her deal with AMI, arguing that she had been misled — and got AMI to let her out of the contract.

But the true game-changer was the FBI’s raids on Michael Cohen’s residence and office in April 2018, which revealed there was a very serious investigation into these topics — and has ended up turning Trump and Cohen against each other.

What is the Michael Cohen investigation about?

It’s not yet completely clear. No one has been indicted in relation to this probe yet, and the Justice Department hasn’t explained what it’s about or whether Cohen is even the main target. We do, however, know a few things.

First off, the information that initiated this was originally found in special counsel Robert Mueller’s Russia investigation. But even though Mueller is continuing to investigate Cohen, this investigation was handed off to the US Attorney’s Office for the Southern District of New York (SDNY) instead, for unknown reasons. (Perhaps Mueller and/or Rosenstein decided the topic was too far afield from Russia, or perhaps it was a question of resources and manpower, or of making it harder for Trump to retaliate with firings.)

Second, the Cohen investigation is being run out of SDNY’s “Public Corruption Unit,” which investigates crimes committed by public officials as well as individuals or companies doing business with the government.

Additionally, the warrant that used for the Cohen raids listed several things the government was seeking:

Except for the taxi stuff, all of these are about efforts to hush up scandals for Trump before the election, some of which involved big payouts. The warrant specifically named bank fraud, wire fraud, and campaign finance laws as the potential crimes being investigated. Finally, AMI executives were subpoenaed this spring for the probe.

Putting all this together, it seems that the investigation focuses on a major, off-the-books, potentially illegal operation aimed at making problems for Donald Trump’s campaign go away — with Cohen and AMI, and perhaps the Trump Organization and even Trump himself under scrutiny.

Does the tape put Cohen or Trump in legal jeopardy?

Rather than a smoking gun, the tape is probably most significant as a piece of a larger puzzle about an apparent hush money and scandal suppression operation for Trump. What we learned specifically from the tape is Trump was well aware of Cohen’s involvement with AMI and David Pecker in hushing up McDougal.

The specific thing Trump and Cohen discuss doing in the tape is themselves paying AMI. There’s no evidence yet that they actually ended up doing this. So if the tape was in fact merely a brief hypothetical discussion for something that didn’t happen, it could be difficult to charge someone.

One problem looming over all this, though, is that money spent to help a candidate for federal office is supposed to be reported under campaign finance law.

None of these payments — from Cohen to Daniels, AMI to McDougal, or AMI to others — were reported. That puts all parties involved in legal jeopardy. The Trump Organization, too, could be in trouble, since Cohen explains that its CFO, Allen Weisselberg, was helping him out.

Trump allies’ best chance of defending themselves is probably to argue that the payments weren’t truly campaign-related. Trump, for instance, could argue that he is a celebrity and that such payments are common among celebrities dealing with the tabloids. AMI, too, could try to argue that this was a standard practice for them in their celebrity coverage. But the evidence could well contradict these claims.

Did Cohen make more tapes?

The Washington Post reported in April that Cohen was known in Trumpworld to have a habit of taping some of his conversations with people and then playing the tapes for others — apparently as an effort to brag that he “had something” on them.

Court filings have made clear that several other Cohen tapes were seized by the government in the raids, but it’s not clear who they’re about or how important they are, or how many involve Trump.

Cohen’s lawyer Lanny Davis told Axios that “there are more tapes” but added, “I’m not saying there are more tapes as telling as [this] one.”

Is Cohen going to flip on Trump?

Almost immediately after the raids, intense speculation began over whether Cohen would “flip” on Trump, and provide damaging information to prosecutors as part of a plea deal.

Instead, Cohen filed a lawsuit attempting to assert attorney-client privilege over as much of the seized material as possible, and prevent the government from seeing it. The Trump Organization joined the suit too, in an attempt to assert its own privilege. A federal judge in New York appointed a special master to adjudicate these claims.

After months, that process is now winding down, and the result has been that the government is getting the vast majority of the material the FBI seized from Cohen — out of more than 4 million files seized, around 3,000 have been deemed privileged or partially privileged by the special master so far.

Cohen’s allies, meanwhile, have been repeatedly dropping hints in the press that he’s thinking of cutting a deal with prosecutors rather than fighting expected charges against him. He publicly implied that in an interview with ABC, and then hired Lanny Davis, a longtime ally of the Clintons, to join his legal team (and manage his PR strategy).

There have also been a few hints that Cohen’s true desire was for Trump to agree to pay his expensive legal bills (or perhaps, to get a pardon) — though if that was the case, it does not seem to be working.

Still, there’s been no word of Cohen actually entering into talks with prosecutors about a plea deal just yet. But both sides may have been waiting for the special master’s review to conclude, to get a better idea of what the government actually had on Cohen.

In any case, Cohen certainly appears to be more antagonistic to Trump than ever, as seen in not just his leak of the tape but his leak of to CNN — the network so loathed by the president. So expect more revelations to come.

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