Can Trump Organization Executives Be Prosecuted for Money Laundering?

Michael Cohen has painted a target on Trump Organization executives in court and Congress. If prosecutors and grand jurors accept the evidence presented in Cohen’s SDNY sentencing memorandum and congressional testimony, those involved in the ‘hush money’ payments Cohen facilitated for Donald Trump could be prosecuted for a money laundering conspiracy for the way they agreed to handle eleven reimbursement payments to Cohen.

Why didn’t Trump just write out a check to the women at issue — Stephanie Clifford (a/k/a Stormy Daniels) and Karen McDougal — out of one of his multiple personal bank accounts in the days leading up to the election? Why not just pay what they asked for their silence and be done with it? No campaign finance law would have been broken since there are no restrictions on personal campaign contributions by the candidates as long as they are reported.

But, according to Cohen’s account,campaign optics were the critical factor.

By February 2017 Trump’s hush money agreements had held through the election and he had become president in an upset. Cohen, having facilitated the transactions as a straw payor, had to be dealt with carefully. So Trump assured Cohen that reimbursements would be paid in full. According to Cohen’s testimony, Trump orchestrated Cohen’s reimbursements in a way that made them look legitimate — and in a way that Trump and his business could benefit.

According to Cohen’s account, Allen Weisselberg, chief financial officer and decades long employee of the Trump Organization, was tapped to handle the reimbursements to Cohen. He had allegedly also helped Cohen conceal the hush money payments from such interested government agencies as the Federal Election Commission (FEC) and Internal Revenue Service (IRS) and similar state and city authorities in New York.

The reimbursements to Cohen concealed Trump’s personal involvement with the hush money payments while also maintaining a facade of business legitimacy. Simply put, the reimbursements had to be laundered.

The federal money laundering conspiracy statute is Title 18 U.S.C. §  1956. New York State has a money laundering statute that corresponds exactly with the federal statute, which is important when considering whether New York authorities will seek to prosecute Trump (identified in the federal criminal proceedings as Individual-1) for money laundering. Presidential pardons do not reach criminal violations of state laws. However, this article outlines how a federal money laundering prosecution theory might work in the Southern District of New York.

Section 1956 (a)(1) makes it a crime to knowingly conduct, or attempt to conduct, a “financial transaction” with proceeds from a “specified unlawful activity” (SUA) with specific intent to:

  • Promote SUA; or
  • Conceal or disguise the source, origin, nature, ownership, or control of the proceeds; or
  • Evade reporting requirements; or
  • Evade taxes.

Cohen’s evidence exposes Trump Organization executives to the ‘concealment prong’ of the money laundering statute containing the bolded language.

The key transactions are the eleven bank checks mailed via Federal Express to, and deposited by, Cohen according to his testimony. The delivery service and bank deposits satisfy the interstate commerce jurisdictional elements of the offense. Based on Cohen’s evidence:

  • Trump Organization executives entered into an agreement to reimburse Michael Cohen for the hush money payments he was directed by Individual-1 to make to alleged Trump paramours that concealed illegal campaign contributions just prior to the November 2016 Presidential election.
  • Trump Organization executives decided to conceal and disguise the nature of the reimbursement payments to Cohen by making the payments appear to be “legal fees” both on the invoices that Cohen was directed to send the Trump Organization and on the books and accounting of the Trump Organization.
  • In fact, no legal work was provided by Cohen.
  • By making eleven separate reimbursement payments of mostly $35,000 apiece (one check was for double that amount) in something close to a monthly manner to Michael Cohen ESQ., a fiction was entered into and carried out to conceal or disguise the nature of the reimbursement payments, both by directing the submission of false invoices and then by posting false entries with regard to “legal fees” on the corporate accounting.

The agreement to enter into this scheme could constitute a money laundering conspiracy.

Money Laundering Conspiracy

A conspiracy is an unlawful agreement between two or more people to commit a crime. Cohen’s sentencing memorandum corroborates the agreement in question here. Page 14 states “Executives of the Company agreed to reimburse Cohen.”

To charge a conspiracy, there must be at least two participants, not including any undercover government agents or informants. The government has to prove that each defendant joined the conspiracy at some point with knowledge of at least some of its illegal purposes or objectives and with the intent to accomplish them. Here, Cohen’s evidence suggests the parties to this reimbursement scheme had sufficient knowledge that they were trying to conceal the true nature of the payments for an improper purpose.

Specified Unlawful Activity (SUA)

Mail and wire fraud — 18 U.S.C. §§ 1341 and 1343 — could constitute the predicate offenses to provide the necessary SUA for a money laundering prosecution. Mail fraud and wire fraud cover an incredibly broad range of conduct. Simply stated, one commits mail and wire fraud by engaging in any fraudulent scheme to intentionally deprive another of property or honest services by mail or wire communications. In Durland v. United States, the Supreme Court held the mail and wire fraud statutes encompass “everything designed to defraud by representations as to the past or present, or suggestions and promises as to the future.”

According to Cohen’s account, this scheme to conceal the nature of the payments could constitute multiple counts of mail and wire fraud. The misrepresentation on the submitted invoices relative to legal retainer or legal fees is obviously fraudulent considering that no legal work was performed but the mischaracterization provided a basis to draw corporate funds to reimburse Cohen. The invoices were submitted by either mail or email to the corporation and the payments to Cohen were then conveyed by Federal Express according to Cohen’s congressional testimony.

Cohen: “I wanted the full reimbursement in one payment. It was decided to pay me in twelve payments to make it look better.”

Q: ‘Did Trump know this?’

A: “Yes. He knew everything!”

In sum, the Cohen evidence indicates Trump Organization LLC executives conspired with Cohen to concoct a false invoicing scheme to reimburse Cohen under false pretenses in order to advance concealment of hush money payments. Corporate accounting of the Trump Organization LLC was also falsified to extend the fiction of legal fees reimbursement and to provide further cover from the potential prying eyes of government agencies (such as the  FEC and IRS) while also quite possibly providing a tax deduction. Cohen was directed to submit false invoices to executives of the Trump Organization LLC in order to receive his reimbursements. 

It would therefore follow that Donald Trump, Michael Cohen, Allen Weisselberg, Donald Trump Jr., the Trump Organization and the Donald Trump Revocable Trust entered into an unlawful agreement to violate Title 18 Section 1956(h) and Title 18 Section 1956(a)(1)(B)(i) — a money laundering conspiracy — when they devised a scheme to provide Cohen with seemingly legitimate reimbursements for his hush money payments.

In submitting the false invoices to the Trump Organization LLC, Cohen committed mail or wire fraud — a Specified Unlawful Activity. Eleven separate invoices were forwarded via email to an Executive of the Trump Organization and posted to the corporate books individually and falsely as ‘legal fees’ when in fact they were personal expenses in the most personal sense.

Executive-1 (Allen Weisselberg) and Executive-2 (Donald Trump Jr.) of the Trump Organization LLC then approved via email, each of the reimbursement payments to Cohen under the guise of false corporate expense — legal retainer. Cohen then received and deposited eleven bank checks monthly over the course of 2017 via mail for a total of $420,000 from either the Trump Revocable Trust or Donald J. Trump’s personal bank account associated with the Trump Organization. The referenced checks were made out to Michael Cohen ESQ. and paid out monthly furthering the charade of reimbursement of legal fees, and signed by either Donald J. Trump, Allen Weisselberg and/or Donald Trump Jr.

The above noted individuals and entities conducted financial transactions with proceeds from a specified unlawful activity – mail fraud – with specific intent to conceal or disguise the nature of the proceeds in violation of 18 U.S.C. § 1956(a)(1)(B)(i).

The mail fraud, wire fraud, money laundering, and money laundering conspiracy statutes all have a five year statute of limitations. The limitations period would not start to run until the final act in the conspiracy.

So for example, should SDNY wish to pursue money laundering charges against Individual-1, they would have five years from the time check # 002821, signed by Donald J. Trump totaling $35,000 drawn on Trump’s personal account associated with the Trump Organization at Capital One NA, was deposited by Michael Cohen. The date of the check is 08/01/17. Five years from August 2017 brings us to August 2022. (There may exist later dated checks in 2017 but the above check signed by Donald J. Trump is the latest dated check available on the public record at this time.)

At that point, Trump may no longer be in office — and no longer the beneficiary of a Justice Department policy prohibiting indictment of a sitting president.

Money laundering has a maximum statutory criminal exposure of twenty years imprisonment and a $500,000 fine. If found guilty sentencing guidelines will focus on the total amount laundered which at this time, based on Michael Cohen’s testimony would be $385,000. By any calculation President Trump, his son, and his long time CFO could be looking at jail time if the will to prosecute exists at SDNY or the NY State Attorney General’s office, who —  unlike a federal prosecutor — is not bound by the DOJ position on indictability of a sitting president.

Cover-ups have consequences. Just how significant will they be for the above individuals and for the country?

We will see.

Image: Exhibit 5a of Michael Cohen’s testimony before the House Committee on Oversight and Reform.

  

About the Author(s)

Martin J. Sheil

Former Supervisory Special Agent IRS Criminal Investigation. You can contact him at sheil51@protonmail.com.