What Paulson, Bernanke, Geithner and Neil Irwin Don’t Get

The ten year anniversary of the Great Crash is upon us, so we can expect a spate of media reports fighting the wars all over again. Here’s one by the New York Times writer Neil Irwin, discussing the justifications offered by Hank Paulson, the Treasury Secretary under Bush, Timothy Geithner, the Chair of the New York Fed and then Treasury Secretary under Obama, and Ben Bernanke, the Chair of the Fed. One word that doesn’t appear? Crime. Also not mentioned: “foam the runway”.

The justification offered by the Big Three is the same tired explanation we’ve heard over and over. We had to save the financial system, or, as Irwin explains it:

The goal was not to try to reinvent Wall Street on the fly, but to keep the flow of capital coursing through the global economy while minimizing the depth and duration of the recession that the crisis had caused.

They claim success by this standard. But they ignore the fact that tens of thousands of small businesses were cut off from credit, and individual borrowers were pushed to the wall. And, millions of people lost their homes in disgusting foreclosures waved through by judges utterly indifferent to the requirements for proving up mortgage claims. The legal system failed the people it was supposed to protect, and no one was held accountable. But at least Geithner and his allies foamed the runway for the filthy rich and the bankers.

Irwin defends the actions taken in pursuit of the purported goal of “saving the financial system”, saying that they worked. The economy isn’t perfect, but inflation is relatively low, and while job gains were low, the current unemployment rate is 3.9%. Irwin ignores the fact that competent economists expected low inflation, and doesn’t mention that the share of the population with jobs is still down over two points from the peak in 2000 among those aged 25-54, and still not back the pre-Crash levels 10 years later. His glib skimming over the 10-year slow increase in jobs ignores the lost wages, and ignores the low pay and insecurity of the new jobs.

Irwin thinks that the problem was that the trio of leaders did not manage the politics correctly. They did nothing to help homeowners, because, according to Irwin, the political environment was toxic, citing the usual suspects, Rick Santelli and the Tea Party. Bernanke cites long-term trends, “…stagnation in middle-class wages, social dysfunctions, rising mistrust in government and hostility to immigration”, but that has the feel of both-siderism when everyone knows it was driven by the right wing. Irwin accepts this explanation.

Again, nowhere in this piece does Irwin talk about crimes, fraud, cheating, or corporate wrong-doing. I agree that the problem was political. The Obama Administration, specifically Eric Holder and his deputy Lanny Breuer, refused to conduct criminal investigations into the people who lied, cheated and stole from the investing public and the millions of people cheated in mortgage transactions. The pointless and stupid civil cases were slaps on the wrist of banks, and hardly dented the returns to their shareholders. Not a single banker went to jail, despite overwhelming evidence of fraud.

This is not just a political failure. It’s a moral failure. Obama decided to absolve the bankers who committed crimes, and in doing so clarified to the American people that we have a two-tier system of justice. The rich and powerful are coddled. Everyone else is beaten into the dirt by the legal system. It’s not the salvage operation the holy three managed that drives the anger; it’s the lack of accountability. Explaining the salvage operation gets a lot easier when people see a steady stream of guilty pleas and massive fines and forfeitures.

Sure, I’m angry. But I’m not angry about saving the financial system. I’m angry that the bankers stole the money and got away with it.

The Other Thing Kavanaugh and Trump Share: Hidden Money Stories

This week, Senate Judiciary Committee members are releasing their Questions for the Record for Brett Kavanaugh (questions that he won’t be able to answer given the accelerated confirmation process Chuck Grassley has set). Sheldon Whitehouse’s QFRs have already generated considerable notice. Amid questions about predictable legal (prosecuting a president, environmental rulings, Roe, transgender rights, labor, guns) and GOP rat-fuckery (Starr, staff secretary, and other Bush White House policy issues), Whitehouse asked two questions that should have but did not come up in his hearing: about how debt allegedly tied to Washington Nationals season tickets evaporated when he came under consideration for SCOTUS, and the possibility he’s a heavy gambler (as suggested by one of the letters Don McGahn and Bill Burck tried to keep hidden).

But I’m more interested in some of Whitehouse’s other questions about finances. First, after asking about the baseball tickets, Whitehouse asks why the aspiring Justice has declared himself “exempt” from reporting certain gifts and/or reimbursements.

14. On your Financial Disclosure Report dated July 15, 2018 in Section V. Gifts, you did not check the box for no reportable gifts, you simply wrote “Exempt.”

a. Does this response indicate that you received a gift(s) but considered that gift(s) exempt from the reporting requirements?

b. For each gift (if any) you believe is exempt from reporting, please provide a description of the gift, the approximate value, date received, the donor, and the reason you believe the gift was exempt from reporting requirements.

15. On your Financial Disclosure Report dated July 15, 2018, you did not list any reimbursements. Instead you simply wrote “Exempt.”

a. Does this response indicate that you received reimbursement(s) but considered that reimbursement(s) exempt from the reporting requirements?

b. For each reimbursement you believe is exempt from reporting, please provide a description of the costs incurred, reasons for the costs, the date and amount of any reimbursements that you received for these costs, and the reason you believe the reimbursement was exempt from reporting requirements.

If, as he has claimed, the baseball tickets ended up being gifted by someone, they should be declared here. But then, having asked whether Kavanaugh isn’t declaring gifts he should, Whitehouse then asks about some financial details that also might amount to gifts or other income requiring disclosure: A cost of living adjustment he is known to have received as a judge, a big bump in assets in 2008-2009, the unexplained source of money he used to buy his home, and his membership at Chevy Chase Golf Club.

16. In 2014, federal judges received a lump sum equal to the amount of their delayed cost of living adjustments. For you, this was estimated at $150,000. This amount does not appear to be reported anywhere in your financial disclosures. Please explain this discrepancy.

17. Your Bank of America accounts appear to have greatly increased in value between 2008 and 2009. Your Financial Disclosure Report dated May 15, 2009 reflected a value in the range of $15,001 – $50,000. Your Financial Disclosure Report dated May 14, 2010 reflected a value in the range of $100,001 – $250,000. You did not report any increase in Non-Investment Income, nor did you report any gifts during this period. Please explain the source of the funds that accounts for the difference reflected in these accounts between your 2008 and 2009 Financial Disclosure Reports.

18. In 2006, you purchased your primary residence in Chevy Chase, MD for $1,225,000, however, the value of assets reportedly maintained in your “Bank of America Accounts” in the years before, during, and after this purchase never decreased, indicating that funds used to pay the down payment and secure this home did not come from these accounts.

a. Did you receive financial assistance in order to purchase this home? And if so, was the assistance provided in the form of a gift or a personal loan?

b. If you received financial assistance, please provide details surrounding how this assistance was provided, including the amount(s) of the assistance, date(s) on which the assistance was provided, and the individual(s) who provided this assistance.

c. Was this financial assistance disclosed on your income tax returns, financial disclosure forms, or any other reporting document?

19. You have disclosed in your responses to the Senate Judiciary Questionnaire that you are currently a member of the Chevy Chase Club. It has been reported that the initiation fee to join this club is $92,000 and annual dues total more than $9,000.

a. How much was the initiation fee required for you to join the Chevy Chase Club? What are the annual dues to maintain membership and is this the amount that you pay?

b. Did you receive any financial assistance or beneficial reduction in the rate to pay the initiation or annual fees? If so, please describe the circumstances.

c. If you received financial assistance, please disclose the amount of the assistance, the terms, the dates the assistance was provided, and the individual(s) or entity that provided the assistance.

d. To the extent such assistance or rate reduction could be deemed a “gift,” was it reflected on your income tax returns, financial disclosure forms, or any other reporting document?

The beauty of these questions is that — while I fully expect Kavanaugh to just blow off the slew of questions he’s getting this week (given that they’ve broken the rules everywhere else on this nomination, why the fuck not on QFRs?) — he is now on notice that these financial issues have been noted. If he doesn’t fix any non-disclosures now, he will no longer be able to claim that his failure to disclose required items was just a mistake.

And Whitehouse might believe there are more. He asks, first directly, and then at the end of the series of questions Whitehouse poses about the credit card debt, whether Kavanaugh’s in debt to people he hasn’t told us about.

Are there any debts, creditors, or related items that you did not disclose on your FBI disclosures?

Did you have any creditors, private or otherwise, not listed in your Financial Disclosure Reports?

My favorite bit about Whitehouse’s QFRs, however, is that at the end of all these financial questions, the former US Attorney and Attorney General then asks whether lying under oath is an impeachable offense.

24. Is lying under oath an impeachable offense for an Article III judge?

You see, we can argue Kavanaugh lied under oath in his confirmation until we’re blue in the face. Kavanaugh, each time, will offer a well practiced lawyer’s parse about how his transparently dishonest comments don’t amount to perjury, and he’ll get away with that.

But finances are a different issue. Whitehouse has put Kavanaugh on notice that not disclosing certain things — like who paid for his house or paid off his season ticket debt — will amount to lying.

So Kavanaugh may blow off these questions. But that may come back to haunt him.

Update: Here are Kavanaugh’s answers on finances — basically, he says he has followed disclosure guidelines on all of this, which may necessarily mean that the big ticket items, including the down payment for his home, came from Daddy. The one thing not addressed here are big gifts from family.

I have truthfully provided financial information in conjunction with this nomination process and my service in the judicial and executive branches. Since I graduated from law school in 1990, I have worked in public service for 25 of those 28 years. For most of her years of paid employment, my wife likewise has been a federal, state, or local government worker.

During that time, I have filed regular financial disclosure reports as required by law. The Federal Government’s required financial disclosure reports list broad ranges for one’s assets and debt as of one day or period in time.

At this time, my wife and I have no debts other than our home mortgage. We have the following assets:

(1) A house minus the mortgage;

(2) Two Federal Government Thrift Savings Plan retirement accounts (largely accessible to us beginning in 2024), as well as a Texas employees’ retirement account;

(3) A bank account;

(4) A car that we own and a car that we lease; and

(5) Ordinary personal furniture, clothing, and belongings.

Since our marriage in 2004, we have not owned stocks, bonds, mutual funds, or other similar financial investments outside of our retirement accounts.

Our annual income includes my income as a federal judge, my income from teaching law each year, and now also my wife’s income from being Town Manager of Section 5 of Chevy Chase, Maryland. Our annual income and financial worth substantially increased in the last few years as a result of a significant annual salary increase for federal judges; a substantial back pay award in the wake of class litigation over pay for the Federal Judiciary; and my wife’s return to the paid workforce following the many years that she took off from paid work in order to stay with and care for our daughters. The back pay award was excluded from disclosure on my previous financial disclosure report based on the Filing Instructions for Judicial Officers and Employees, which excludes income from the Federal Government. We have not received financial gifts other than from our family which are excluded from disclosure in judicial financial disclosure reports. Nor have we received other kinds of gifts from anyone outside of our family, apart from ordinary non-reportable gifts related to, for example, birthdays, Christmas, or personal hospitality. On the 2018 financial disclosure report, I correctly listed “exempt” for gifts and reimbursements because those are the explicit instructions in the 2018 Filing Instructions for Judicial Officers and Employees.

At this time, we have no debts other than our home mortgage. Over the years, we carried some personal debt. That debt was not close to the top of the ranges listed on the financial disclosure reports. Over the years, we have sunk a decent amount of money into our home for sometimes unanticipated repairs and improvements. As many homeowners probably appreciate, the list sometimes seems to never end, and for us it has included over the years: replacing the heating and air conditioning system and air conditioning units, replacing the water heater, painting and repairing the full exterior of the house, painting the interior of the house, replacing the porch flooring on the front and side porches with composite wood, gutter repairs, roof repairs, new refrigerator, new oven, ceiling leaks, ongoing flooding in the basement, waterproofing the basement, mold removal in the basement, drainage work because of excess water outside the house that was running into the neighbor’s property, fence repair, and so on. Maintaining a house, especially an old house like ours, can be expensive. I have not had gambling debts or participated in “fantasy” leagues.

The Thrift Savings Plan loan that appears on certain disclosure reports was a Federal Government loan to help with the down payment on our house in 2006. That government loan program is available for federal government workers to help with the purchase of their first house. In our case, that loan was paid back primarily by regular deductions from my paycheck, in the same way that taxes and insurance premiums are deducted from my paycheck. That loan has been paid off in full. I am a huge sports fan. When the Nationals came to D.C. in 2005, I purchased four season tickets in my name every season from 2005 through 2017. I also purchased playoff packages for the four years that the Nationals made the playoffs (2012, 2014, 2016 and 2017.) I have attended all 11 Nationals’ home playoff games in their history. (We are 3-8 in those games.) I have attended a couple of hundred regular season games. As is typical with baseball season tickets, I had a group of old friends who would split games with me. We would usually divide the tickets in a “ticket draft” at my house. Everyone in the group paid me for their tickets based on the cost of the tickets, to the dollar. No one overpaid or underpaid me for tickets. No loans were given in either direction.

My wife and I spend money on our daughters and sports, including as members of the Chevy Chase Club, which we joined in recent years. We paid the full price of the club’s entry fee, and we pay regular dues in the same amount that other members pay. We did not and do not receive any discounts. The club is a minute’s drive from our house, and there is an outdoor ice hockey rink and a very good youth ice hockey program. We joined primarily because of the ice hockey program that my younger daughter participates in, as well as because of the gym.

Finally, it bears repeating that financial disclosure reports are not meant to provide one’s overall net worth or overall financial situation. They are meant to identify conflicts of interest. Therefore, they are not good tools for assessing one’s net worth or financial situation. Here, by providing all of this additional information, I hope that I have helped the Committee.

He refused to answer Whitehouse’s question about whether lying under oath is cause for impeachment.

The Oligarch “Peace” of the Pie Plan

I keep coming back to this post I wrote a year ago, arguing that the policy payoff phase of the Russian investigation appears to have as much to do with remapping the Middle East in exchange for personal enrichment as anything else (what I call ConFraudUs for foreign policy).

Kushner’s “peace plan” is not so much a plan for peace. It’s a plan for a complete remapping of the Middle East according to a vision the Israelis and Saudis have long been espousing (and note the multiple nods on Trump’s trip to the growing alliance between the two, including Trump’s flight directly from Riyadh to Tel Aviv and Bibi’s comment on “common dangers are turning former enemies into partners”). It’s a vision for still more oppression (a view that Trump supports globally, in any case).

Yes, it’d probably all be accomplished with corrupt self-enrichment on the part of all players.

Since then, Erin Banco (who first confirmed that Erik Prince had met with Kirill Dmitriev) revealed that Mueller is investigating several other meetings in the Seychelles, on top of the one involving Prince.

Special counsel Robert Mueller’s team is examining a series of previously unreported meetings that took place in 2017 in the Seychelles, an archipelago in the Indian Ocean, as part of its broader investigation into Russian meddling in the 2016 presidential election, according to two sources briefed on the investigation.

The sources said several of those meetings took place around the same time as another meeting in the Seychelles between Erik Prince, founder of the security company Blackwater, Kirill Dmitriev, the director of one of Russia’s sovereign wealth funds, and Crown Prince Mohammed Bin Zayed Al-Nahyan, the effective ruler of the United Arab Emirates (also known as “MBZ”). Details of that earlier meetingwere first reported by the Washington Post last year.

[snip]

Individuals connected to the Saudi financial system, including the Saudi Arabian Monetary Agency and the Arab National Bank, flew into the island the second week of January 2017, as did an aircraft purportedly owned by the former deputy minister of defense, Prince Khaled bin Sultan bin Abdulaziz, fight records show. Other individuals on those aircraft held passports from Egypt and Singapore.

Dmitriev flew into the Seychelles Jan. 11, 2017 with his wife Natalia Popova and another woman with the last name Boldovskaia. Six other Russian individuals flew to the island just a few days after Dmitriev. The aircraft’s ownership is unclear but it flew between Russia, Geneva and Cyprus in 2017.

Others on the island included Alexander Mashkevitch, an alleged financier of Bayrock, an investment vehicle linked to Trump, and Sheikh Abdulrahman Khalid BinMahfouz, according to flight records. BinMahfouz’s father, before his death, was a billionaire and the former chairman of Saudi Arabia’s first private bank.

Today, ABC has a report that not just Tom Barrack (who was interviewed last year), but several others have been interviewed about foreign inauguration donations.

Barrack, a real estate investor, has long been described as a Trump “whisperer” whose close friendship with the president landed him a prime appearance during the GOP convention the night Trump accepted his party’s nomination.

The billionaire runs a fund with hundreds of millions in real estate and private equity holdings in the Middle East. Barrack oversaw the largest inaugural fundraising effort in U.S. history, bringing in $107 million – more than double what President Barack Obama raised for his first swearing-in festivities.

According to a source who has sat with the Mueller team for interviews in recent weeks, the special counsel is examining donors who have either business or personal connections in Russia, Saudi Arabia, the United Arab Emirates and Qatar.

[snip]

Special counsel investigators have also asked witnesses about specific inauguration donors, including American businessmen Leonard Blavatnik, and Andrew Intrater, according to sources familiar with the Mueller sessions.

Blavatnik has been funding not just Trump, but Republicans generally, including (especially) Mitch McConnell.

An example is Len Blavatnik, a dual U.S.-U.K. citizen and one of the largest donors to GOP political action committees in the 2015-16 election cycle. Blavatnik’s family emigrated to the U.S. in the late ’70s from the U.S.S.R. and he returned to Russia when the Soviet Union began to collapse in the late ’80s.

Data from the Federal Election Commission show that Blavatnik’s campaign contributions dating back to 2009-10 were fairly balanced across party lines and relatively modest for a billionaire. During that season he contributed $53,400. His contributions increased to $135,552 in 2011-12 and to $273,600 in 2013-14, still bipartisan.

In 2015-16, everything changed. Blavatnik’s political contributions soared and made a hard right turn as he pumped $6.35 million into GOP political action committees, with millions of dollars going to top Republican leaders including Sens. Mitch McConnell, Marco Rubio and Lindsey Graham.

Also note that all the Cohen side clients revealed by Michael Avenatti had some kind of tie to inauguration donations.

And remember that the leftover inauguration donations, which were supposed to be donated to charity, have simply disappeared (though Mueller, with subpoena power, may well know precisely where it went).

This all seems like an effort by a bunch of oligarchs to take remap the world in their self-interest.

The Trump Organization Really Doesn’t Want FBI to Have the Michael Cohen Files

In this post yesterday, I noted how hard the Trump Organization has tried to withhold (or claw back documents) from both the Mueller team and SDNY (here’s the government filing these quotes come from).

SDNY fact checks the Cohen claim, backed by his lawyer’s sworn declaration, that he hadn’t fully cooperated with Mueller’s investigation because Mueller asked for everything.

Cohen also states that the SCO “had requested that the Trump Organization produce all of Mr. Cohen’s communications that were within the Trump Organization’s custody, possession, or control,” and that Cohen objected “on the grounds that [the request] called for production of privileged communications, among other things.” (Br. 8-9). Although in the ordinary course, the USAO-SDNY would not comment on investigative requests or demands made to third parties, particularly those from a separate office undertaking its own, independent investigation, in light of the representations made by Cohen’s counsel, USAO-SDNY contacted the SCO about these representations and understands they are not accurate. In particular, the SCO did not request that the Trump Organization produce “all communications” by Cohen in the Trump Organization’s possession or control irrespective of subject matter or privilege. Indeed, the request made by the SCO was considerably narrower, and specifically omitted, among other things, any documents that were protected by privilege or of a purely personal nature. Cohen nonetheless objected to that request for documents and, after discussions between Cohen’s counsel and the SCO, the SCO decided not to seek production at that time. That Cohen sought to preclude the Trump Organization from producing these third party communications belies both (i) his general assertion of cooperation, and (ii) his stated principal interest in protecting attorney-client communications. Indeed, a careful review of Cohen’s motion papers reveals that he does not purport to have personally produced any documents to the SCO.

The intransigence pertaining to Cohen’s documents involving the Trump Organization continued over to last week’s response. While the Trump Organization (which I suspect is really who hired Hendon) did not request to be party to this fight, they did send SDNY a letter last week demanding that it return every document involving Cohen and the Trump Organization.

USAO-SDNY has already received correspondence from counsel for the Trump Organization (Cohen’s former employer), which referenced the searches conducted of Cohen’s premises and claimed:

We consider each and every communication by, between or amongst Mr. Cohen and the Trump Organization and each of its officers, directors and employees, to be subject to and protected by the attorney-client privilege and/or the work-product privilege.

As a reminder: in March, Mueller subpoenaed the Trump Organization for documents, including but not limited to Russia. That’s one reason, I suspect, that Cohen believes this raid is partly about supporting Mueller’s investigation (I wonder whether Trump Org is the entity that has started destroyed documents?).

I also pointed to this passage that suggested someone had started destroying documents.

While we have no way of knowing who or what this redacted passage refers to, we do know that the Trump Organization has recently been destroying documents — in its Panama property, in advance of the majority owner kicking them out.

Two people familiar with Fintiklis’s account said that, after his arrival, hotel employees barricaded office doors with furniture, and they added that documents were shredded. The two people said Trump Organization employees — including an executive who flew down from New York City — also blocked access to a control room that houses servers and surveillance-camera monitors.

It turns out that Trump Organization had a lawyer at yesterday’s hearing.

Early in the hearing, prosecutor Thomas McCay noted that Cohen had not (in briefs, anyway) addressed any materials seized from the Trump Organization.

McKay: Cohen “does not state whether he has retained any material from the Trump Organization when he left over one year ago.” “The silence from the Trump Organization is telling,” he adds later.

Later, Cohen’s lawyer Stephen Ryan mentioned documents pertaining to the Trump Organization — but it seems like he’s more concerned about matters involving Trump personally.

With all due respect, all of use started on Monday with a completely different matter. I want to say, there are five paragraphs in that attachment A that deal directly with seeking the papers of the President of the United States in possession of my client. It is not what the government has represented is about my client’s personal life. There are five paragraphs there. This case is that. And we spent the weekend, frankly, narrowing the issues, taking issues off the table.

Here is what I can tell you. I know that materials for TO, for the Trump Organization, are in the materials that have been seized, so there are some materials for the Trump Organization. But the key here is a priority. The Court can order a prioritization of where a special master is needed and it’s needed with respect to the papers that may contain privileged information about the President of the United States.

It seems like Judge Kimba Wood might appoint a special master for some of the seized files — perhaps those involving Trump personally — but let the taint team proceed with the rest. It’s unclear whether Trump Organization would be included or excluded if Wood gave special master treatment to Trump materials.

One other note. While I don’t think it’d be among the five paragraphs pertaining to Trump in the SDNY seizure (because the SDNY is supposed to be attenuated from the Mueller investigation), Buzzfeed reported that Michael Cohen actually continued to pursue the Trump Tower Moscow deal far later into 2016 than previously revealed, in part working with a former GRU colonel, only canceling a trip to St. Petersburg, which was held from June 16-18, 2016, at the last minute.

Sater hoped to push the deal forward by attending the St. Petersburg International Economic Forum with Cohen in June 2016. Considered the most important economic gathering in Russia, the forum is regularly attended by business executives and top politicians, including President Vladimir Putin. The former Russian intelligence officer helped arrange an invitation to the conference for both Sater and Cohen, the sources said.

But neither Cohen nor Sater attended. Sources said Cohen canceled at the last minute and put the Moscow deal on hold until after the Republican National Convention. After Trump won the presidential election, the Trump Organization announced it would no longer be working on international deals, and Sater stopped working on the project.

Last year, after Sater, Cohen, and the Trump Organization turned over emails and documents to congressional and special counsel investigators, details leaked about the Trump Moscow deal and the attempt to get VTB to finance it.

Buzzfeed notes that Sater’s emails include details of these later negotiations. And SDNY has already obtained Cohen’s emails.

(Side note: if Cohen really was planning on going to St. Petersburg on anything but a 3-day cruise vacation, but canceled at the last minute, he would have had to have gone through the effort of getting a visa, which would be in …a  passport. And yet no visa for Russia was in the passport Cohen shared with Buzzfeed last year.)

In my piece yesterday, I noted that Cohen and Trump seem very concerned about policing responsiveness, keeping the SDNY review within the scope of the warrants with which the material got seized (and frankly, that’s an issue that even the most ardent Trump hater ought to support, some efforts to prevent a fishing expedition). But now that SDNY has secured the materials and prevented them from being destroyed like Trump Organization’s Panama documents were, Mueller could certainly obtain his own warrant for some of the seized materials.

Update: According to Axios, not even the Trump Organization knows what Cohen might have done on behalf of the Trump Organization.

  • Cohen knows more about some elements of Trump’s life than anyone else — because some stuff, Ivanka doesn’t want to know.

[snip]

People at the Trump Organization don’t even really know everything he does. It’s all side deals and off-the-books stuff. Trump doesn’t even fully know; he knows some but not everything.”

SDNY Will Be Forced to Talk about Crimes Involving the President Today

At 2PM today, in a court room in southern Manhattan, a lawyer someone hired last Wednesday to represent Donald Trump, Joanna Hendon, will push prosecutors from the Southern District of New York to explain that they have probable cause to believe crimes involving the president have been committed. Here’s why.

Last Monday, the FBI served Michael Cohen warrants listing crimes known to pertain to his taxi medallion businesses and his efforts to suppress information about Trump’s embarrassing sexual behavior, though the warrants themselves probably listed bank fraud, wire fraud, and campaign finance violations as the crimes. “[T]he riders to the search warrants – copies of which have been provided to Cohen – identify the federal criminal statutes under which Cohen is being investigated,” the government emphasized in its memo.

The taxi medallion stuff has no known tie to Trump. The hush arrangements clearly do, but at least in the case of Stormy Daniels, Trump and Cohen have both publicly denied an attorney-client role, which the government pointed out. “President Trump has publicly denied knowing that Cohen paid Clifford, and suggested to reporters that they had to ‘ask Michael’ about the payment.” It’s certainly possible Cohen has claimed to have firewalled Trump in other hush payments in the same effort to avoid campaign finance violations; to the extent that Trump has not been a formal party in those agreements, he may have likewise waived privilege.

And then there’s the crime-fraud exception to privilege, which the government invokes four times in its response to Cohen, describing how an investigative team can legally access such materials without approval from Cohen or his client if a judge okays it.

[T]he Filter Team will review them to determine whether the material is: (1) not privileged, (2) potentially privileged, (3) requires redaction, and/or (4) potentially meets an applicable exception (for example, the crime-fraud exception). To be clear, under no circumstances will a potentially privileged document or a document potentially subject to the crime-fraud exception be provided to or described to the Investigative Team without the consent of the privilege holder or his/her counsel, or the court’s approval. If the Filter Team is unable to clarify a document’s category, or if there is an exception to the privilege that applies to particular material, such as the crime-fraud exception, or any waiver of the privilege – the Filter Team will (1) confer with counsel for the privilege holder at the appropriate time and before any such material is shared with the Investigative Team and, if no agreement can be reached, submit the material under seal to an appropriate court for a determination as to whether the material is privileged;

[snip]

In the face of inaccurate and/or overbroad claims of privilege, the USAO-SDNY would be seriously prejudiced if it were not able, through a Filter Team, to evaluate the validity of such claims. As Judge Barbara Jones explained in permitting review by a filter team, “[w]ithout the benefit of such a review, the privilege team would likely be unable to argue, for example, that no attorney-client privilege attached to the communication because of the crime-fraud exception, or that a document should be available for use at trial, regardless of work-product contents, because of necessity and unavailability by other means.” [my emphasis]

Even though the FBI informed Cohen he was raided as the subject of an investigation pertaining to his own business, he fought the memo by invoking the part of the US Attorney’s Manual pertaining to witnesses, not subjects, which SDNY corrected.

Cohen’s reliance on the USAM misplaced, but he invokes the wrong section. Cohen cites to section 9-19.220 of the USAM, which, as Cohen points out, applies to “attorneys who are not suspects” of a criminal investigations. See Br. at 22; USAM § 9-19.220 (noting the procedure to be followed when privileged materials are sought from a “disinterested third party”). Cohen, however, is not the disinterested third party contemplated by the USAM. The applicable provision is that which applies when the attorney is a “suspect, subject or target” of the investigation.

And even though he was told he was being investigated for crimes unrelated to it, his lawyers nevertheless treated the raid as part of the Mueller investigation. Their description of communications with SDNY, for example, begins this way, followed by several redacted lines.

On April 9, 2018, Mr. Cohen’s legal counsel was advised in a telephone call by an Assistant United States Attorney from the Southern District of New York, that the Office of Special Counsel (Robert Mueller) had “referred a portion of” the subject matter of the warrants to the U.S. Attorney’s Office for the Southern District of New York. Id. ¶ 31. Each page of the attachments to the search warrants contains a footer with the date “2017.08.02” (August 2, 2017)—that happens to be the same date that the Office of Special Counsel’s jurisdiction was amended by the Deputy Attorney General. One obvious and credible explanation is that the attachments listing the subject matter of the warrant used by the U.S. Attorney’s Office were drafted by the Office of Special Counsel as earlier as that date. [three lines redacted]

The government, in addition to mocking Cohen’s assumption based off the footer metadata, reveals what that redaction hides: Cohen speculated, “see Br. at 10, that the SCO drafted the search warrants.”

Nevertheless, both sides treat Cohen’s attempt to treat this as a question of the Russia investigation seriously. The government provides three pieces of evidence to describe why Cohen couldn’t be trusted to turn these materials over pursuant to a subpoena — because the crimes themselves involve fraud and deception, because he had, by Friday, already invoked the Fifth in the Stormy Daniels civil suit suggesting he’d withhold documents here as well, and because a tantalizingly redacted passage that suggests Cohen or someone else has already started destroying evidence…

In addition, however, the government does contest Cohen’s claim that he fully cooperated with any of the three Russia investigation his lawyer addresses at length in his declaration, which (having treated this raid as part of the Mueller investigation rather than pertaining to separate crimes) he uses to argue that Cohen could be trusted to turn over documents willingly. For example, the government notes that Cohen himself has said he didn’t cooperate with the Congressional investigations (and wasn’t treated as a target).

It appears that Cohen was not a target of those investigations. Additionally, while Cohen claims in his motion to have been cooperative, he offers no support for this assertion. Publicly, Cohen suggested the opposite, telling Time Magazine that he declined a voluntary request from Congress because it was “too broad.”

Even better, and critically important to the Trump filing submitted last night, is where SDNY fact checks the Cohen claim, backed by his lawyer’s sworn declaration, that he hadn’t fully cooperated with Mueller’s investigation because Mueller asked for everything.

Cohen also states that the SCO “had requested that the Trump Organization produce all of Mr. Cohen’s communications that were within the Trump Organization’s custody, possession, or control,” and that Cohen objected “on the grounds that [the request] called for production of privileged communications, among other things.” (Br. 8-9). Although in the ordinary course, the USAO-SDNY would not comment on investigative requests or demands made to third parties, particularly those from a separate office undertaking its own, independent investigation, in light of the representations made by Cohen’s counsel, USAO-SDNY contacted the SCO about these representations and understands they are not accurate. In particular, the SCO did not request that the Trump Organization produce “all communications” by Cohen in the Trump Organization’s possession or control irrespective of subject matter or privilege. Indeed, the request made by the SCO was considerably narrower, and specifically omitted, among other things, any documents that were protected by privilege or of a purely personal nature. Cohen nonetheless objected to that request for documents and, after discussions between Cohen’s counsel and the SCO, the SCO decided not to seek production at that time. That Cohen sought to preclude the Trump Organization from producing these third party communications belies both (i) his general assertion of cooperation, and (ii) his stated principal interest in protecting attorney-client communications. Indeed, a careful review of Cohen’s motion papers reveals that he does not purport to have personally produced any documents to the SCO.

The intransigence pertaining to Cohen’s documents involving the Trump Organization continued over to last week’s response. While the Trump Organization (which I suspect is really who hired Hendon) did not request to be party to this fight, they did send SDNY a letter last week demanding that it return every document involving Cohen and the Trump Organization.

USAO-SDNY has already received correspondence from counsel for the Trump Organization (Cohen’s former employer), which referenced the searches conducted of Cohen’s premises and claimed:

We consider each and every communication by, between or amongst Mr. Cohen and the Trump Organization and each of its officers, directors and employees, to be subject to and protected by the attorney-client privilege and/or the work-product privilege.

As a reminder: in March, Mueller subpoenaed the Trump Organization for documents, including but not limited to Russia. That’s one reason, I suspect, that Cohen believes this raid is partly about supporting Mueller’s investigation (I wonder whether Trump Org is the entity that has started destroyed documents?). And that’s one reason, I suspect, that Cohen’s team made a bid to review the seized documents for responsiveness (they use the word 13 times in their filing) before SDNY’s taint team gets the documents.

That is, in addition to whatever other crimes Cohen has facilitated for the Trump Organization, he wants to make sure that the government can’t use materials seized in this raid to investigate other crimes, such as those Cohen might be suspected of in relation to the Mueller investigation.

Having failed to cooperate with both the congressional and Mueller investigations, which is one reason SDNY cites for having used a warrant rather than a subpoena, Cohen now wants to reset the clock so he can treat this raid as a subpoena rather than a warrant so he gets to decide what is responsive to the crimes he is being investigated for or even to the demands of the Russia investigation.

Frankly, to the extent that Mueller might use Cohen’s own crimes as an excuse to search his documents (which the FBI seems to have sorted, even to the level of describe specific checks on the search warrant returns) and his devices (which they seized) to find materials relating to the Russian investigation, I’m sympathetic to Cohen’s case. Sure, Mueller can and may already be working on obtaining warrants to search for materials he might use now that the devices are in the government’s possession. But given how advanced the Mueller investigation is, it seems the government should be expected to obtain separate probable cause warrants rather than rely on plain view doctrine to search for materials on Cohen’s devices relating to Russia.

All of which brings us to the letter Hendon submitted last night on behalf of Trump personally. Herndon actually goes several steps further than Cohen’s team did (while he asked to do the first review, he made a concerted case to appoint a Special Master to do it), asking that Cohen get copies of the seized materials, after which Cohen will decide what pertains to Trump, which Trump will then get to review to decide whether he will assert privilege, only after which SDNY will be permitted to object.

1. Enjoining the government from using a taint team to conduct an initial privilege review;

2. Directing the government to provide Mr. Cohen and his counsel with a copy of the materials seized from Mr. Cohen by the government on April 9, 2018;

3. Directing Mr. Cohen and his counsel, after the government provides Mr. Cohen and his counsel with a copy of the seized materials, to identify to the President all seized materials that relate to him in any way and to provide a copy of those materials to him and his counsel;

4. Directing the President and his counsel, after they review the materials provided by Mr. Cohen, to identify for the government’s taint team all materials over which the President asserts privilege;

5. Authorizing the government’s taint team to raise any objections to the President’s assertions of privilege with the Court; and

6. Prohibiting the government’s taint team from providing the Investigation Team with (a) any materials over which the President asserts a privilege without objection from the taint team, and (b) any materials that the Court rules are privileged over the taint team’s objection.

This effectively flips the process on its head, turning the seizure back into a subpoena situation. And while Herndon doesn’t make this as obvious as Cohen’s team did, they intend the Cohen and Trump reviews to include a review of responsiveness as well as privilege.

The level of protection provided to the privilege-holder in the familiar context of a grand jury subpoena duces tecum should be accorded to the President here. When a grand jury subpoena for documents is served, the recipient, with the advice of his counsel, reviews the documents in his possession and produces the responsive documents, with one critical exception: with notice to the government, the recipient withholds all responsive documents that he and his counsel conclude are subject to a privilege, identifying such documents in some fashion without disclosing the privileged contents, often by means of a privilege log. [my emphasis]

Curiously, Herndon doesn’t contest that the government has good reason to believe materials have gotten destroyed, but says that now that the government has obtained the documents, any risk of destruction is gone. Here’s the entirety of the section where Herndon addresses the government’s need to seize these documents.

Of course, here, the government chose not to serve a grand jury subpoena, but instead to execute search warrants on an attorney’s office, residences, and effects. The government asserts that this truly extraordinary measure was necessary to prevent the destruction of evidence. (Gov’t Opp. at 14.) But even if that is true, the exigency has dissipated entirely, as the seized materials are now in the government’s control, beyond any of the potential misuses of the materials that motivated the seizure in the first place. Therefore, the fact that the government seized privileged documents rather than subpoenaing them is now irrelevant – except for the profoundly important privilege issues that the government’s unilateral and peremptory action has raised.

The government insists that it is “entitled” to the seized materials. (Id. at 2, 19.) However, to the extent the government seized privileged information, it is not entitled to have that information, much less review it. See, e.g., von Bulow, 828 F.2d at 99 (recognizing the “urgent” “need for timely protection [from disclosure] … where the discovery sought is … blanketed by the absolute attorney-client privilege”). It simply cannot be the case that by acting in such an aggressive, intrusive, and unorthodox manner, the government has somehow created an entitlement on its own part to eliminate the President’s right to a full assertion of every privilege argument available to him. Indeed, if the Court were to endorse the use of a taint team under these circumstances, raids of law offices would likely become more commonplace, as they would permit the government to wrest from the privilege-holder the ability, in the first instance, to assert privilege over documents and rightfully withhold them.

The government has done what it has done, and it has thereby protected against every notional evil it could have articulated in favor of its action. It no longer has any cognizable interest in proceeding by any procedure other than that which is typically employed to ensure that the attorney-client privilege is fully protected.

Note what has fallen out of the discussion of exigency? The crime-fraud exception, which SDNY had made clear it expected to find ample evidence of.

Elsewhere, Herndon does mention SDNY’s expectations of finding materials that fall under the crime-fraud exception, but she suggests that a taint team cannot be trusted to access the documents first because it might provide the investigative team documents that are clearly not privileged, a non sequitur to the point of crime-fraud exception documents.

The government has assured the Court that “under no circumstances will a potentially privileged document or a document potentially subject to the crime-fraud exception be provided to or described to the Investigative Team without the consent of the privilege-holder or his/her counsel, or the court’s approval.” (Gov’t Opp. at 6.) Presumably the government intends by those words to comfort the Court, but the government simply cannot make that guarantee. See, e.g., Lek, 2018 WL 417596, at *1-3. As discussed above, under the government’s proposal, the taint team will turn over to the Investigative Team all materials that the taint team itself deems not privileged. If such materials contain any privileged information that the taint team failed to identify, the President’s privilege will be irremediably violated. The President, the public, and the government have a vital interest in ensuring the integrity of the privilege review process, and the taint team procedure is plainly inadequate to the task. [my emphasis]

Remarkably, Herndon suggests that the public (!!!) has an interest in letting criminal suspect Michael Cohen, who has already proven uncooperative with valid investigations, sort through his materials to decide whether the government should have documents that prove he abused his position as a lawyer to commit fraud on behalf of a client.

As the government has said, it’s not clear Cohen has any clients besides Donald Trump.

Which is why I suspect SDNY is going to provide details in court today of the crimes that it has probable cause to believe were committed. Because, in the face of an otherwise compelling claim that this is an exceptional case, what SDNY is investigating is still that Cohen served not to provide legal advice to Donald Trump, but to provide legal cover for fraud.

I have no idea what Kimba Wood will do in response (and I suspect SDNY will challenge the legal precedents Herndon has invoked).

But I suspect we’re going to hear a lot more about how SDNY has reason to believe that Michael Cohen hasn’t been serving as a lawyer for Trump, he has been serving as a fixer for him.

And Stormy Daniels will be looking on as evidence of that fact.

Update: In their filing laying out the scope of what Michael Cohen considers privileged this morning, his lawyers make their concerns about plain view doctrine even more explicit.

The choice here is between allowing the Government to make an end run around the Fourth Amendment by scooping up and viewing all of the communications seized in the search of a lawyer’s office (in this case, all of the documents and data of the President’s personal attorney) regardless of whether the documents seized were the subject of the judge’s original probable cause determination, or appointing a neutral third party to conduct that review. If the government can obtain a search warrant for particular items but then seize and review everything in an attorney’s office, the protections of the Fourth Amendment are meaningless.

[snip]

In addition, a Special Master should be appointed in the interest of the administration of justice to ensure that the Government does not have access to materials for which they have not yet shown would be obtained through a valid search warrant through a showing of probable cause. In obtaining the search warrant, the Government had to make a showing of probable cause that Mr. Cohen is in possession of evidence of a crime. The search warrant is designed to allow the Government to obtain that material – and that material only.

And they again invite SDNY to lay out evidence that this stuff isn’t covered under the crime-fraud exception.

Moreover, without proffering any evidence of its applicability, the government referred to the “crime-fraud” exception in its opposition brief, (Gov’t Opp. Br. at 6, 10), and during oral argument. 4/13/18 Tr. at 28. The government also referred to its search warrant application – which we have never seen – as including “evidence for the crimes that were set forth in [a] detailed affidavit.” 4/13/18 Tr. at 60. Since there is, according to the government, an “ongoing grand jury investigation” (which is required to remain secret), it would most certainly be embarrassing and “detrimental” to Mr. Cohen’s clients if he were to reveal their identities publicly.

SDNY Doesn’t Think Michael Cohen Is Much of a Lawyer

In this post, I noted that a bunch of what got seized in a raid of Michael Cohen’s home and office on Monday wouldn’t be privileged.

But boy oh boy was I being nice compared to the way the prosecutors from Southern District of New York dismissed the notion that Cohen was much of a lawyer in this filing opposing Cohen (and Trump’s) efforts to prevent FBI from going through Cohen’s seized documents.

Housekeeping

Before I get into that, a few clarifications on questions we’ve had. First, the filing makes it clear that the referral from Mueller’s office came months ago. SDNY has their own taint team.

The FBI agents who seized materials pursuant to the search warrants were filter agents who are not part of the investigative team and have been walled off from those AUSAs or FBI personnel assigned to the investigation (the “Investigative Team”).

The venue in SDNY is primary. Indeed, they mock Cohen’s representation that Mueller’s team wrote this warrant application by pointing out his misunderstood the metadata of it.

Although Cohen accurately states that the Special Counsel’s Office (“SCO”) referred this investigation to the USAO-SDNY, the investigation has proceeded independent from the SCO’s investigation. Cohen’s speculation, see Br. at 10, that the SCO drafted the search warrants is unfounded. The date in the bottom corner of the attachments is the date that the USAO-SDNY’s standard form search warrant rider was most recently updated for use by the office.

Given that Mueller handed off this part of the investigation entirely, then, it’s highly unlikely Mueller thinks there’s evidence of coordination between Wikileaks and the Access Hollywood video, as I laid out here (which is not to say Mueller isn’t happy that SDNY has raided Cohen).

In addition, the filing makes it clear that Geoffrey Berman has recused, with Robert Khuzami acting as US Attorney for this investigation.

The filing also reveals the scope of the search: “Michael Cohen’s residence, hotel room, office, safety deposit box, and electronic devices,” even while noting that they limited their search to certain categories of documents.

Not much of a lawyer

The lawyers from the famously self-important SDNY spend much of their brief not just demonstrating that Cohen was not serving as an attorney in the seized materials, but that he’s not much of a lawyer in any case.

The repeatedly note he has few if any clients besides Trump.

Based on information gathered in the investigation to date, the USAO-SDNY and FBI have reason to believe that Cohen has exceedingly few clients and a low volume of potentially privileged communications.

In a long passage arguing — as I did — that much of what was seized would not be protected by privilege, they sniff about how Cohen differs from a “traditional law office,” mocking the idea that he “holds himself out as a practicing attorney.”

Although Cohen is an attorney, he also has several other business interests and sources of income. The searches are the result of a months-long investigation into Cohen, and seek evidence of crimes, many of which have nothing to do with his work as an attorney, but rather relate to Cohen’s own business dealings. As set forth below, unlike a search of a traditional law office, the information gathered thus far in the investigation suggests that the overwhelming majority of evidence seized during the searches will not be privileged material, but rather will relate to Cohen’s business dealings.

Nevertheless, because Cohen holds himself out as a practicing attorney, each of the search warrants contains the following provision: Additionally, review of the items described in this Attachment shall be conducted pursuant to established procedures designed to collect evidence in a manner reasonably designed to protect any attorney-client or other applicable privilege.

When appropriate, the procedures shall include use of a designated “filter team,” separate and apart from the investigative team, in order to address potential privileges.

In one redaction, they suggest something about Cohen’s recent behavior suggests he couldn’t be practicing much law.

Cohen’s discussion in his own memo of the Strategic Partnership between him and Patton Boggs is entirely redacted (it may be included in the significant redaction on page 3), but in the government’s memo much of it remains unredacted. Which means this redaction might state, in more damning terms, what is described elsewhere — that they cut him off on March 2, in part because he had brought in only 5 clients for the $500,000 a year he got paid.

SDNY goes on at more length about how weak Cohen’s claim that his marketing relationship with Patton Boggs creates a great risk of privilege in the materials that got seized.

Second, Cohen’s claim to have privileged communicatons through a law firm that he describes as “Law Firm-1” omits facts about his relationship with Law Firm-1 that render it unlikely that a significant volume of attorney-client privileged material – if any – was seized in connection with Cohen’s relationship with that law firm. Specifically, on or about March 1, 2017, Cohen—through his wholly-owned entity, Michael D. Cohen & Associates P.C.—entered into a “Strategic Alliance Agreement” with the law firm (the “Agreement”).6 Among other things, the Agreement provided that Cohen would receive a $500,000 annual “strategic alliance fee” from the law firm. Under certain circumstances, Cohen would also receive a percentage of the fees charged by the law firm for clients introduced to the law firm by Cohen. The Agreement also spelled out other aspects of the relationship between Cohen and the law firm, including: (1) Cohen would be given an office at the law firm; (2) Cohen would maintain his own computer server system not connected to the law firm’s computer server system; and (3) the law firm would not have a key to Cohen’s office. In addition, based upon conversations with a representative of the law firm, the USAO-SDNY understands as follows, in substance and in part: (1) Cohen did not have an email address associated with the firm; (2) Cohen did not have access to the firm’s shared drives or document systems—and vice versa; (3) Cohen’s documents were to be kept in a locked filing cabinet; and (4) Cohen did not have access to any of the firm’s client files.

What is left (and what I’ll deal with in a follow-up) is the way Cohen wields his relationship with the President to try to shield his files.

Earlier in the Week, Trump May Have Looked Presidential; on Friday, He Looked Like a Criminal Suspect


Sarah Huckabee Sanders tweeted out this image last night, stating,

Last night the President put our adversaries on notice: when he draws a red line he enforces it. (Inside the Situation Room as President is briefed on Syria – Official WH photos by Shealah Craighead)

While she didn’t actually make the claim but implied it, the photo couldn’t have been taken “last night” (that is, Friday, just before the decision to bomb Syria), because Mike Pence was in Peru on Friday. My guess, given that Mike Pompeo is not in the frame, is it may have been taken on Thursday during the CIA Director’s confirmation hearing before the Senate Foreign Relations Committee.

In any case, the significance of Sanders using this dated photo to show Trump looking presidential has little to do with Pence. Rather, it has to do with Trump.

The White House, presumably, doesn’t have a picture of Trump looking presidential on Friday to offer (Sanders would have been better tweeting out Trump’s Friday speech).

And there’s a likely reason for that. Rather than acting presidential on Friday, Trump was acting like a criminal suspect, calling his consigliere, Michael Cohen, while he was blowing off a court hearing to hang out with mobbed up friends, to try to understand the full impact of a FBI raid on the two of them.

As his lawyers went to court in New York on Friday to try to block prosecutors from reading files that were seized from the personal lawyer, Michael D. Cohen, this week, Mr. Trump found himself increasingly isolated in mounting a response. He continued to struggle to hire a new criminal lawyer, and some of his own aides were reluctant to advise him about a response for fear of being dragged into a criminal investigation themselves.

The raids on Mr. Cohen came as part of a monthslong federal investigation based in New York, court records show, and were sweeping in their breadth. In addition to searching his home, office and hotel room, F.B.I. agents seized material from Mr. Cohen’s cellphones, tablet, laptop and safe deposit box, according to people briefed on the warrants. Prosecutors revealed in court documents that they had already secretly obtained many of Mr. Cohen’s emails.

Mr. Trump called Mr. Cohen on Friday to “check in,” according to two people briefed on the call. Depending on what else was discussed, the call could be problematic, as lawyers typically advise their clients against discussing investigations.

Reports are that Trump sees more risk from this investigation than he does from the Mueller one (I’ll post later why I think that’s not quite right, but a lot depends on what happens tomorrow in court). Whichever investigation will end up getting Trump, I agree with Adam Davidson (though he, like virtually all journalists, gets NYT’s self-appointed red line wrong) that if the FBI is able to go through Cohen’s files thoroughly, it will bring Trump’s presidency to an end.

There are lots of details and surprises to come, but the endgame of this Presidency seems as clear now as those of Iraq and the financial crisis did months before they unfolded. Last week, federal investigators raided the offices of Michael Cohen, the man who has been closer than anybody to Trump’s most problematic business and personal relationships. This week, we learned that Cohen has been under criminal investigation for months—his e-mails have been read, presumably his phones have been tapped, and his meetings have been monitored. Trump has long declared a red line: Robert Mueller must not investigate his businesses, and must only look at any possible collusion with Russia. That red line is now crossed and, for Trump, in the most troubling of ways. Even if he were to fire Deputy Attorney General Rod Rosenstein and then had Mueller and his investigation put on ice, and even if—as is disturbingly possible—Congress did nothing, the Cohen prosecution would continue. Even if Trump pardons Cohen, the information the Feds have on him can become the basis for charges against others in the Trump Organization.

This is the week we know, with increasing certainty, that we are entering the last phase of the Trump Presidency. This doesn’t feel like a prophecy; it feels like a simple statement of the apparent truth. I know dozens of reporters and other investigators who have studied Donald Trump and his business and political ties. Some have been skeptical of the idea that President Trump himself knowingly colluded with Russian officials. It seems not at all Trumpian to participate in a complex plan with a long-term, uncertain payoff. Collusion is an imprecise word, but it does seem close to certain that his son Donald, Jr., and several people who worked for him colluded with people close to the Kremlin; it is up to prosecutors and then the courts to figure out if this was illegal or merely deceitful. We may have a hard time finding out what President Trump himself knew and approved.

However, I am unaware of anybody who has taken a serious look at Trump’s business who doesn’t believe that there is a high likelihood of rampant criminality.

As well as Davidson describes this moment, I think the photo does so even better. A White House concerned first and foremost about the president’s image has no photo of him looking presidential before “he” made the decision to make an illegal military strike. And the reason for that may well be that he was far more occupied with his legal jeopardy than with doing his job.

Stormy Weather Ahead

As you may have heard, there is an interview on CBS 60 Minutes tonight of former Trump paramour Stormy Daniels. In the last 48 hours, there have been a slew of Stormy biographies. From the New York Times, the Washington Post, and CNN. All worth a check if you are interested, but all paint a similar picture.

It is a picture of a modern empowered and self assured woman. She is no slouch, she is bright and ready. It was been all too casual for the press to early on slough her off and characterize her as a “porn star” like that automatically makes some throw away bimbo. Clearly, nothing is further from the case.

The picture that emerges on closer inspection is far different. She is an informed and savvy woman in full. She is a mother and businesswoman, and one who understands and worries about the conflicts between the two. Karen McDougal, in her Thursday interview on CNN came off as genuine and honest, even if somewhat lost in why she is here with all of the public now. Daniels has none of that. And her story is, within the salacious category Trump brings us to consider, far more compelling.

The stories of Daniels and McDougall were literally concurrent, starting with a golf tournament tete a tete at the Tahoe Pro Am. But McDougall presents as a jilted woman once in love, Daniels is flat out a smarter woman who knew then, and knows now, what was up, then and now, and just isn’t going to stand for the rank hypocrisy and lying by Trump and his goons like Michael Cohen.

The rushed out bios linked above largely track each other, but to my eye, the New York Times is the best:

Those who know her well have registered the moment differently. Ms. Clifford has subsisted amid the seamier elements of a business often rife with exploitation and unruly fare; more than a few of her film titles are unprintable. But for most of her professional life, Ms. Clifford has been a woman in control of her own narrative in a field where that can be uncommon. With an instinct for self-promotion, she evolved from “kindergarten circuit” stripper to star actress and director, and occasional mainstream success, by her late 20s. Why would a piece of paper and an executive legal team set her back?
….
“She was a very serious businesswoman and a filmmaker and had taken the reins of her career,” said Judd Apatow, who directed her cameos in the R-rated comedies “Knocked Up” and “The 40-Year-Old Virgin.” “She is not someone to be underestimated.”
….
She has a daughter, a third husband and an expensive hobby: equestrian shows. “She blends right in,” said Packy McGaughan, a trainer on the competition circuit.
….
“Just as these misguided arbiters of the mainstream view an adult entertainment star as an anathema to the political process,” she said, when she eventually decided against a bid, “so too do they view the dishwasher, the cashier or the bus driver.”

This woman is real. Please go read at least the NY Times story, if not the others linked. She is everything you think she is, and far, far, more. And she has no fear. Not of her career, and not of Trump. That has to terrify Trump.

Here is the other thing that is different: Stormy Daniels has Michael Avenatti as her lawyer. Never met or talked to Avenatti before, but I have heard of him in cases (and from auto racing things), and from friends, for several years. He is good.

After three years at O’Melveny, he joined Greene Broillet & Wheeler, a Los Angeles boutique litigation firm. While there, Michael spearheaded many high-profile cases, including a $10 million defamation case against Paris Hilton; a successful idea theft lawsuit involving the reality show The Apprentice and its producer, Mark Burnett, as well as Donald Trump; and a large corporate multi-national embezzlement case involving in excess of $42,000,000.

In 2007, Michael formed the law firm Eagan Avenatti, LLP (fka Eagan O’Malley & Avenatti, LLP), with offices in Newport Beach, Los Angeles and San Francisco. Since co-founding the firm, Michael has been responsible for securing a number of large verdicts and settlements as lead counsel, including an April 2017 $454 Million verdict after a jury trial in Federal Court in Los Angeles in a fraud case against Kimberly-Clark (NYSE: KMB) and Halyard Health (NYSE: HYH) that was featured on 60 Minutes (won every jury question as to every defendant); a $80.5 million class action settlement against Service Corporation International (NYSE: SCI) in another case featured on 60 Minutes and in the international press (settlement reached in the middle of trial); a $41 million jury verdict after a nearly five-week trial in New Jersey; a $39 million settlement in a case involving the alleged theft of trade secrets; and a $13 million plus verdict after a six week jury trial in Palm Beach, Florida (won every jury question as to every defendant). In 2015, Michael prevailed against the National Football League after a two-week jury trial in Federal District Court in Dallas, Texas after obtaining a court order requiring Jerry Jones to attend trial and be cross-examined.

I had heard of him before, but really first watched Avenatti when he took on the National Football League and Jerry Jones. Because of some sports law friends, some of whom were closer to that story, I paid attention. Avenatti is seriously that good, and he has the extra bonus of knowing how to be a good trial lawyer AND play the PR game, personally, well. There are not many such lawyers, and ones tending to the PR more than the law are routinely panned mercilessly here at this blog. For good reason.

If you don’t have a winning strategy with the press, don’t talk to the press. Even if you think you do, think twice and thrice before doing so. Or, by my book, just don’t do it. But Avenatti has a really special combination of savvy, and has proven it long before Stormy Daniels.

Nobody knows how it all ends up, and playing the press is a risky game even for those genuinely good at it. But, so far, Avenatti and Stormy have played Trump and the press like a Stradivarius.

And, if as Trump is reportedly contemplating, Trump decides to get personally aggressive, watch out. He may well have met his match with Ms. Daniels and Michael Avenatti. By my guess, they are almost making bank Trump will try that ill advised tact. Let it be. Please, let it be.

The Very Globalized Forces Manipulating the Anti-Globalist President

I want to consider three stories related to the conspiracies that got Trump elected and have influenced his policy decisions.

Cambridge Analytica and Facebook privatizes intelligence sources and methods behind “democratic” elections

First, there’s the Cambridge Analytica scandal. Here are some of the most scandalous tidbits:

Likelihood Facebook failed to abide by a 2011 FTC consent decree and certainty that Cambridge Analytica and Facebook failed to abide by British and EU privacy law, respectively. While Facebook and other big tech companies have sometimes publicly bowed to the onerous restrictions of more repressive regimes and have secretly bowed to the invasive demands of American spies, the public efforts to rein in big tech have had limited success in Europe and virtually none in the US.

In the US in particular, weak government agencies have done little more than ask consumers to trust big tech.

As privacy advocates have long argued, big tech can’t be trusted. Nor can big tech regulate itself.

Cambridge Analytica used legally suspect means — the same kind of illegal means intelligence agencies employ — to help its customers. Channel 4 reported that Cambridge Analytica at least promised they could set honey traps and other means to compromise politicians. The Guardian reported that Cambridge Analytica acted as a cut-out to share hacked emails in Nigerian and a Nevis/St. Kitts elections. Thus far, the most problematic claim made about Cambridge Analytica’s activities in the US are the aforementioned illegal use of data shared for research purposes, visa fraud to allow foreign (British) citizens to work on US elections, and possibly the illegal coordination between Rebekah Mercer’s PAC with the campaign.

Internet Research Agency used the same kind of methods advertising and marketing firms use, but to create grassroots. The IRA indictment laid out how a private company in Russia used Facebook (and other tech giants’) networking and advertising services to create fake grassroots enthusiasm here in the US.

All of these means undermine the democratic process. They’re all means nation-state intelligence services use. By privatizing them, such services became available to foreign agents and oligarchical interests more easily, with easy ways (many, but not all, broadly acceptable corporate accounting methods) to hide the financial trail.

Russia buys the network behind Joseph Mifsud

Then there’s the Beeb piece advancing the story of Joseph Mifsud (ignore the repetitive annoying music and John Schindler presence). It provides details on the role played by German born Swiss financier and lawyer Stephan Roh. Roh has three ties to Mifsud. In 2014, Roe started lecturing at the London Academy of Diplomacy where Misfud worked. In the same year, he bought the Roman institution Misfud helped manage. And then, in 2016, when George Papadopoulos was being targeted, Roh was on a panel with Papadopoulos’ two handlers.

That same month, Mifsud was in Moscow on a panel run by the Kremlin-backed Valdai Club with Timofeev and the third man, Dr Stephan Roh, a German multi-millionaire.

Mifsud and Roh interlock: in 2014, Roh became a visiting lecturer at the London Academy of Diplomacy. Roh bought Link Campus University, a private institution in Rome where Mifsud was part of the management and Mifsud became a consultant at Roh’s legal firm.

The Beeb piece goes on to describe how Roh bought a British nuclear consultancy too. When the British scientist behind it balked at cozying up to Russia, he was fired, but it appears to still be used as a cut-out.

Again, none of this is new: Russia just spent a lot of money to set up some fronts. The amount of money floating around and the ability to buy into a title by buying an old castle do make it easier, however.

George Nader purchases US foreign policy for the Saudis and Emirates

Then there’s NYT’s confirmation of something that was obvious from the first reports that the FBI whisked George Nader away from Dulles Airport before he could meet Donald Trump at Mar a Lago earlier this year. Nader got an immunity deal and has been cooperating with Mueller’s team to describe how he brokered US foreign policy decisions (most notably, and anti-Qatari stance). He did so by cultivating GOP fundraiser Elliott Broidy, turning him into both an asset and front for foreign influence. Those activities included:

  • Securing hundreds of millions of dollars of contracts for Broidy’s private security firm, Circinus, with the Saudis and Emirates, and offering several times more.
  • Working with Broidy to scuttle the nomination of Anne Patterson to DOD and to orchestrate the firing, last week, of Rex Tillerson, in both cases because they were deemed too supportive of diplomacy towards Iran.
  • Offering financial support for a $12.7 million Washington lobbying and public relations campaign, drafted by a third party, targeting both Qatar and the Muslim Brotherhood.
  • Paying Broidy $2.7 million to fund conferences at both Hudson Institute and the Foundation for Defense of Democracies attacking Qatar and the Muslim Brotherhood; Broidy provided a necessary American cut-out for the two think tanks because their fundraising rules prohibit donations from undemocratic regimes or foreign countries, respectively. The payment was laundered through an “Emirati-based company [Nader] controlled, GS Investments, to an obscure firm based in Vancouver, British Columbia, controlled by Mr. Broidy, Xieman International.”
  • Unsuccessfully pitching a private meeting, away from the White House, between Trump and Emirates Crown Prince Mohammed bin Zayed.
  • Obtaining a picture of Nader with Trump, effectively showing the president in the company of a foreign agent and convicted pedophile.

Effectively, Nader provides Mueller what Mueller has been getting from Rick Gates: details of how a foreign country purchased American policy support via cutouts in our easily manipulated campaign finance system.

Nader brings two more elements of what I pointed to last May: what is ultimately a Jared Kushner backed “peace” “plan” that is instead the money laundered wish of a bunch of foreign interests. While we’ve seen the Russian, Saudi, and Emirate money behind this plan, we’re still missing full details on how Mueller is obtaining the Israeli side, though I’m sure he’s getting that too.

Note, Broidy has claimed the details behind his work with Nader were hacked by Qatari hackers. That may be the case; there have also been a slew of presumably hacked documents from Emirates Ambassador to the US, Yousef al Otaiba, floating around. So while this is important reporting, it relies on the same kind of illicitly obtained intelligence that was used against Hillary in 2016.

Importantly, the Nader story generalizes this. Nader has worked with both the Clinton and the Dick Cheney Administrations, and the laundering of foreign funds to US think tanks has long been tolerated (in some cases, such as Brookings, the think tank doesn’t even bother with the money laundering and accepts the foreign money directly). Democrats are not immune from this kind of influence peddling, in the least. It’s just that Trump, because of his greater narcissism, his ignorance of real foreign policy doctrine, and his debt and multinational business make Trump far more vulnerable to such cultivation. Given Cheney’s ties to Halliburton and the Clinton Foundation, it’s a matter of degree and competence, not principle.

Globalism is just another word for fighting over which oligarchs will benefit from globalization

Which brings us to Trump’s claim (orchestrated by Steven Bannon, paid for by the Mercers) to oppose “globalists,” a racialized term to demonize the downsides of globalization without actually addressing the forces of globalization in an effective way. Little Trump is doing (up to and including the trade war with China he’s rolling out today) will help the white people who made him president (the demonization of immigrants will have benefits and drawbacks).

What it will do is foster greater authoritarianism in this country, making it easier both to make Trump’s white voters less secure even while channeling the resultant anger by making racism even more of an official policy.

And it will also shift somewhat which oligarchs — both traditionally well-loved ones, like the Sauds, and adversaries, like the Russians — will benefit as a result.

Importantly, it is being accomplished using the tools of globalization, from poorly overseen global tech companies, easily manipulated global finance system, and a global network of influence peddling that can also easily be bought and paid for.

Two Other Trump Tweet Innovations: “Fraudulent Activities” and “Conflicts of Interest”

Much was made over the weekend of Trump, for the first time (though he once RTed this Tweet mentioning the special counsel), invoking Robert Mueller’s name in his Twitter rants. (As a reminder, this searchable archive of his Tweets is genius.)

But I want to look at another innovation in the Tweet. This is also the first time Trump has claimed the investigation itself is based on “fraudulent activities.” During the campaign, he once used the term “fraudulent activity” to accuse Hillary of “fraudulent activity.” And he’s a fan of the word “fraudulent,” having used it 17 times — to describe the Steele dossier, Ted Cruz’s IA victory, Obama’s claims about ObamaCare, and Liberian Ebola patient Thomas Duncan. He most often uses it to describe critical reporting or other claims (such as in advertisements) made about himself.

Then, this morning, Trump for the first time accused the Mueller investigation (this time without using Bobby Three Sticks’ name) of having “conflicts of interest,” a term Trump has actually only used in two other Tweets (one, two), both describing Hillary.

While it’s always fraught to try to understand Trump’s feverish little brain, it is fairly clear his Tweets serve as a mirror of things he’s seeing, most often, but by no means exclusively, Fox and Friends.

So I want to consider what these two innovations in his attacks on the Mueller investigation might suggest.

It may be nothing: just a reflection of his defensiveness.

It might mean his rat-fucking buddies are planning some new conspiracy theory they plan to use to try to undermine the Mueller inquiry; Roger Stone has been working the press this weekend. Or maybe it’s an old one: last summer Trump’s considered challenging Mueller’s appointment because his past history with Jim Comey amounted to a conflict.

But there’s another possibility.

In NYT’s first coverage of Trump and John Dowd’s increasing aggressiveness against Mueller, they tied it to two related events: the ongoing negotiations over a Mueller interview of Trump (which Axios claims  still focuses on the Comey and Flynn firings).

Mueller is said to have sent questions to Mr. Trump’s legal team as part of negotiations over an interview with the president. Mr. Mueller is seeking the interview, according to two people close to the White House, in order to ask follow-up questions, but put forward the list as a start.

They also tie it to (their own report) that Mueller subpoenaed the Trump Organization, which they in turn tie to increased unease among Trump’s legal team.

To keep the president at bay, the lawyers — led by the White House lawyer Ty Cobb — told him that Mr. Mueller’s investigation would be over by last December and that they would ask Mr. Mueller to put out a statement saying the president was not a target of the investigation.

But instead, Mr. Trump was livid anew this week over the Times report that Mr. Mueller had subpoenaed his corporate records, including those related to Russia, according to one person close to the White House.

The president’s lawyers appear to be feeling increasingly uneasy about where they stand. This month, Mr. Trump met with a veteran Washington lawyer, Emmet T. Flood, to discuss coming on board to take over the president’s dealings with Mr. Mueller’s office and possibly replacing Donald F. McGahn II as White House counsel. The president’s personal lawyers, Mr. Dowd and Jay Sekulow, did not know about the meeting, prompting concerns that they could be pushed aside, and potentially making them less resistant to Mr. Trump’s whims about handling the inquiry.

While the other possibilities are admittedly more likely (that is, that these two innovations reflect nothing more than Trump’s natural projection), imagine what would happen if Mueller asked Trump to account for his own conflicts and fraudulent activities, both key to his business model.

Yes, accusing Robert Mueller (or his predecessors) of committing fraudulent activities and having conflicts of interest is an attack squarely within the norm for Trump, those terms are also the perfect mirror for the President’s own business.

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