Bombshell of the Year (So Far): Financial Reports on Trump’s Lawyer Went Missing at the Treasury

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Bombshell of the Year (So Far): Financial Reports on Trump’s Lawyer Went Missing at the Treasury

I’m going to warn you up front that this is a tad bit wonkish. If you’re not familiar with acronyms like FinCEN, some of this may come off as gibberish. However, in order to understand the magnitude of the situation, you just need to know one thing: what happened isn’t supposed to happen. Like, ever. This is a major systems failure.

If you haven’t already, go read Ronan Farrow’s absolute bombshell in The New Yorker. Because this is the internet and we must always cater to the tl;dr crowd, here’s the jist of his report:

Suspicious-activity reports (SARs) concerning transactions going in and out of a bank account belonging to the President of the United States’ lawyer completely disappeared from the database at the Financial Crimes Enforcement Network (FinCEN) at the Treasury (think of them like the Navy Seals of financial spreadsheets). One SAR was leaked by a law enforcement official to Stormy Daniels’ lawyer, and that’s how he was able to catch massive companies like AT&T and Novartis red-handed with their money in the president’s lawyer’s bank account.

Yes, this is reality. I think. The other big takeaway is that Michael Cohen looks like he’s really really really really really screwed.

This report about an opaque subject is so exhaustive that there really is no one paragraph which sums up the entirety of the story, but much of the gravity of the situation is communicated through Farrow’s introduction of this leaker:

That source, a law-enforcement official, is speaking publicly for the first time, to The New Yorker, to explain the motivation: the official had grown alarmed after being unable to find two important reports on Cohen’s financial activity in a government database. The official, worried that the information was being withheld from law enforcement, released the remaining documents.

So let’s walk through this step-by-step.

What Is A Suspicious-Activity Report?

It is not proof of a crime. Before we go any further, let’s internalize that fact. These exist in order to help law enforcement effectively police the banking system. Banks are legally mandated to file a report any time they suspect a transaction(s) could be fraud, money laundering, etc…Not every report that’s filed is damning, and most do not lead to any criminal charges.

All that said, holy moly did Michael Cohen have some suspicious activity tied to his LLC, Essential Consultants (which sounds like a name that George Costanza would make up). Per Farrow:

The payments to Cohen that have emerged in the past week come primarily from a single document, a “suspicious-activity report” filed by First Republic Bank, where Cohen’s shell company, Essential Consultants, L.L.C., maintained an account. The document detailed sums in the hundreds of thousands of dollars paid to Cohen by the pharmaceutical company Novartis, the telecommunications giant A.T. & T., and an investment firm with ties to the Russian oligarch Viktor Vekselberg.

The report also refers to two previous suspicious-activity reports, or SARs, that the bank had filed, which documented even larger flows of questionable money into Cohen’s account. Those two reports detail more than three million dollars in additional transactions—triple the amount in the report released last week. Which individuals or corporations were involved remains a mystery. But, according to the official who leaked the report, these SARs were absent from the database maintained by the Treasury Department’s Financial Crimes Enforcement Network, or FinCEN. The official, who has spent a career in law enforcement, told me, “I have never seen something pulled off the system. . . . That system is a safeguard for the bank. It’s a stockpile of information. When something’s not there that should be, I immediately became concerned.” The official added, “That’s why I came forward.”

SARs around transactions totaling at least three million dollars from unknown sources sent to the president’s lawyer just went *poof*. This is the part where you should be freaked out.

Why Should We Be Freaked Out?

SARs comprise a database which forms the foundation of financial law enforcement. Essentially, we let major finance run roughshod over our legal system just so long as banks deposit these stores of information every time something weird pops up, so we can catch enough bad apples to keep up the fascade that we're effectively policing our banking system. This isn't a database that ever goes away, as the leaker told Ronan Farrow:

“This is a permanent record. They should be there,” the official, who described an exhaustive search for the reports, said. “And there is nothing there.”

There's no reason to doubt the leaker given the massive personal risks they're taking, and the absolutely crazy series of events which preceded this moment buttress their credibility even more, and paint a much fuller picture of a possible large-scale pay to play scheme. Here's a quick recap of the last seven weeks that have now reached a climax proving that Stormy Daniels' lawyer is one of the most powerful people in America—nay, the world—because he really does have major dirt on a man who runs the president's most intimate affairs.

1. #denyit

At the time, we knew of nothing more than Stormy Daniels and Donald Trump. Some speculated that Avenatti was teasing steamy (or streamy) evidence of Trump's sexual deviancy, but after reading Ronan Farrow's report in The New Yorker, I'd bet good money that this is a photo of the leaked SAR.

2. Exactly one week later, Trump denied knowing about the $130,000 payment to Stormy Daniels, saying you'd have to ask his lawyer who made it, Michael Cohen.

3. Four days later, the FBI raided Cohen's entire life. It's difficult to see how Trump's public statement isn't connected to his lawyer's subsequent misfortune, especially given that Avenatti clearly wanted Trump to do what he did and we now know that Avenatti knew (and knows) quite a lot about the bank account that Michael Cohen paid his client from.

4. Another four days later, Michael Avenatti hinted to Morning Joe that the New York Times' report about $1.6 million being paid by an RNC official to a Playboy playmate for an abortion was actually connected to the Trump Organization. Farrow's report has more on this topic:

One [SAR], filed by City National Bank, follows money paid to Cohen by Elliott Broidy, at the time the deputy finance chairman for the Republican National Committee. The report notes, “Broidy also owns a private security company, Circinus, which provides services to the U.S. and other governments. The company has hundreds of millions of dollars in contracts with the U.A.E.” Broidy has said that Cohen and another lawyer, Keith Davidson, worked out a deal in which Broidy would pay $1.6 million to a former Playboy model he had impregnated. Broidy appears to have paid both lawyers for arranging the deal. The City National report shows that Broidy funnelled the payments through Real Estate Attorneys' Group, a legal corporation. Broidy seems to have paid Davidson two hundred thousand dollars, and to have sent three payments, of $62,500 each, to Cohen—one to the Essential Consultants account and two to the account of Michael D. Cohen and Associates.

A representative for Broidy said that this description of the payments was “not correct,” and that “Mr. Broidy is not going to detail his payments for legal services to Mr. Cohen.” The representative added, “Mr. Broidy did not pay Mr. Davidson.” However, the City National report shows that on November 30, 2017, a wire of two hundred thousand dollars was received by the Real Estate Attorneys' Group from Broidy. Then, on December 5, 2017, two hundred thousand dollars were transferred from Real Estate Attorneys' Group to an account belonging to Keith M. Davidson and Associates.

5. Two weeks ago, Rudy Guiliani stumbled across Fox News with his foot in his mouth, and put Trump in serious legal jeopardy by claiming Trump repaid Cohen the $130k (which may violate FEC law). The husband of senior Trump advisor, Kellyanne Conway, was quite helpful in letting the internet know which law Trump may have violated.

6. Later that week, a few major corporations were revealed to have paid money into this same account that Cohen used to pay off Stormy Daniels (do not let all this madness distract you from how flabbergastingly stupid Michael Cohen is). One company that Cohen took money from is directly connected to Viktor Vekselberg, a Russian oligarch close to Putin. Basically, in a single week, the emoluments, Russia and Stormy Daniels scandals all melded into one.

7. Fast-forward to the end of last week, where AT&T's CEO apologized for putting a giant sack of money on Michael Cohen's doorstep.

8. Yesterday, pharmaceutical giant Novartis provided an even more ridiculous explanation for how $1.2 million of their dollars were found in Michael Cohen's pocket. Their actual defense can be summed up thusly: “we agreed to give Cohen $1.2 million for 'insights' even though he's never ever worked in health care and actually, we only had one fruitless meeting with him anyway where he didn't bring what he promised us…but we still couldn't break the contract for cause. Oh, and by the way, our top lawyer is retiring in connection with the $1.2 million in definitely not sketchy payments.”

If those are AT&T and Novartis' public excuses, what's the truth?

The Michael Avenatti saga made no sense from the outset. How did a lawyer who has yet to go through discovery obtain SARs on Michael Cohen's bank account? Especially since these SARs had nothing to do with the payment his client received. It was beyond bizarre, and now we know why: they were leaked to him. Ronan Farrow's report went on to describe a harrowing scenario as to why they were leaked. A law enforcement official was so alarmed at what they found (or couldn't find) that they saw no other choice than to risk up to five years in prison and a six-figure fine in order to help the rest of us figure out what the hell is going on in our nation's capital. AT&T? Novartis? Russian oligarchs? How much of our country is for sale?

And ultimately, that's why you should be scared. Because several gigantic, uncomfortable questions about the very foundation of our democracy have revealed themselves with these unimpeachable facts, and three clear answers as to who is the cause behind the SARs disappearance are beginning to emerge—none being anything to smile about.

The Three Clear Answers

So if these reports at the Department of the Treasury never go missing…but they did go missing, then that means someone with an extraordinary amount of power removed them. That logic has a nice way of whittling down the possible field, and there are three likely actors that this political science major can think of (that's not a brag or a slam on myself, I'm just trying to provide context to my “expertise” here on a topic that real experts have admitted is going over their heads).

The Department of Justice

This is the most likely cause and it's the one we should all be rooting for. It's difficult to really say why someone like Robert Mueller or the Southern District of New York would approach the DOJ with a request to pull records off the shelf like this, but it's certainly because the answer to that question is unprecedented. Someone has proof of a crime so sensitive that it must be removed from any forum not completely controlled by ongoing investigators.

Incompetence

When it comes to humans, every inexplicable scenario should be accompanied by the very real possibility of an oopsie. These records are designed to not be deleted, and I nor most humans alive have the technical know-how to even go about doing it, but in our digital age, it's always a possibility that fat finger syndrome could have expunged these records from the database.

The Treasury Department

Steven Mnuchin was not implicated whatsoever in Ronan Farrow's story, but since he's the head of the Treasury, it would likely require someone with power similar to his to remove these records—if he can remove them at all. Again, the reason we know about all of this is because a law enforcement officer specializing in this stuff couldn't figure it out, so if you're looking for definitive answers, your premise is wrong. The best I can do is present plausible scenarios, and this is the worst-case scenario.

This would mean that Trump got someone with serious power in the Treasury to destroy evidence of his financial crimes (another similar, but seemingly far more remote possibility, is that a hacker deleted them). If that’s the case, then I was wrong when I wrote that Trump’s capitulation to China over ZTE sanctions was his most corrupt act yet. This clearly would be. Hell, given that Robert Mueller is at least a few months ahead of us on this mess, it may already be, and we just can’t quite see the whole picture yet.

Jacob Weindling is a staff writer for Paste politics. Follow him on Twitter at @Jakeweindling.

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