Michael Cohen's $130K Payment to Stormy Daniels: What's Next at the FEC
Trump Organization lawyer Michael Cohen's $130,000 payment to adult actress Stephanie Clifford—Stormy Daniels on stage—is the subject of a complaint at the FEC. Here's what to know about the review process.
March 08, 2018 at 07:30 PM
6 minute read
The original version of this story was published on National Law Journal
Federal Election Commission in Washington, D.C.
An adult film actress. An allegation of an extramarital affair with Donald Trump. A $130,000 payment, made days before the presidential election.
And that's just what was known in January, when The Wall Street Journal first reported news that Trump Organization lawyer Michael Cohen facilitated a $130,000 payment to Stephanie Clifford, the actress known professionally as Stormy Daniels.
Michael CohenScrutiny has ramped up considerably in the weeks since then, as the public interest group Common Cause pushes for an investigation by the Federal Election Commission and U.S. Justice Department into whether the Trump campaign broke any election laws by not disclosing the payment.
Cohen has publicly defended the October 2016 payment, saying he used personal funds and that it was “not a campaign contribution or a campaign expenditure by anyone.” A lawyer for Cohen, Stephen Ryan of McDermott Will & Emery, wasn't reached for comment Thursday.
Here are some considerations as the dispute over the $130,000 payment plays out.
Fuel for the Common Cause complaint?
On Tuesday, Clifford, represented by Newport Beach, California, lawyer Michael Avenatti, sued Trump and Essential Consultants, the private company Cohen established to make the $130,000 payment. She argued her nondisclosure agreement never took effect because Trump did not sign it. Common Cause said the lawsuit provided fodder for the group's allegations that Cohen's payment was an unreported and illegal in-kind campaign contribution.
Paul S. Ryan, vice president of policy and litigation at Common Cause, said Thursday the group was drafting an amendment to its original complaint to note at least two claims that Clifford made in her lawsuit: Trump had a direct and personal involvement in the payment and that it was meant to help him win the presidential race.
“After discovering Ms. Clifford's plans” to reveal the past affair, Clifford's lawsuit in California states, “Mr. Trump, with the assistance of his attorney Mr. Cohen, aggressively sought to silence Ms. Clifford as part of an effort to avoid her telling the truth, thus helping to ensure he won the presidential election.”
The FEC's general counsel makes the first move.
Common Cause's complaint, filed Jan. 22, set off an automatic review by the FEC general counsel's office, which is tasked with recommending whether the commission should open an investigation.
Under the process, the FEC had five days to notify the subjects of the complaint—the Trump campaign and Trump Organization. In February, when Cohen first acknowledged the payment and defended it as lawful, he told The New York Times that he had provided a statement to the FEC.
Lisa Stevenson, the commission's general counsel for law, has served as acting general counsel since September 2016. She joined the FEC in 2012 from Zuckerman Spaeder, where she was a partner.
In 2015, after the FEC went more than two years without appointing a permanent general counsel, the Center for Public Integrity reported that “lawyers aren't exactly clamoring to be hired by an agency deemed by its own leader to be 'worse than dysfunctional.'” (That leader, Ann Ravel, left the FEC last year.)
Common Cause could turn to the courts if—after 120 days—the FEC hasn't taken any action on the complaint.
Wiley Rein partner Carol Laham said she would be surprised if the FEC voted within the 120-day mark on whether to open an investigation.
“That would be warp speed, because the counsel's office needs to research the legal issues,” Laham, a former FEC attorney, said Thursday. “And then they need to take into account what the respondents have said, and they draft a report up to the FEC's commissioners. None of that happens very quickly.”
The FEC is shorthanded, and that means they need every vote.
The six-seat commission is down to four members—two Democrats and two Republicans. It's a state of short-handedness that might have been exacerbated had the chair, Matthew Petersen, not withdrawn his name from a federal judgeship consideration. Petersen had been nominated for a seat on the U.S. District Court for the District of Columbia.
Trump last year nominated James “Trey” Trainor—an Akerman partner in Austin, Texas—for one of the vacant seats at the FEC. If the FEC still has only four sitting commissioners when the time comes for a vote, it would take a unanimous decision to approve any investigation into the $130,000 payment. FEC rules require at least four votes to take any official action.
“It's very likely, I think, that the campaign will argue that there's no legal violation here because it's not a campaign issue, it's a personal issue,” Laham said. “And that as a result, there haven't been allegations of anything for which to find a violation.”
After any investigation, the FEC would vote on whether to find there was a violation. “Possible outcomes,” according to the FEC, “can range from a letter reiterating compliance obligations to a conciliation agreement, which may include a monetary civil penalty.”
And what about the Justice Department?
Many election law experts have drawn comparisons between the $130,000 payment to Cliffords and the nearly $1 million in payments supporters of former U.S. Sen. John Edwards made to support his pregnant mistress during the 2008 presidential campaign.
The Justice Department brought charges against Edwards over the payments, which funded private jets, luxury hotels and housing for his mistress but never passed through campaign accounts. Under the Justice Department's theory, the payments amounted to donations because they were used to hide his extramarital affair and stave off damage to his presidential campaign. The Justice Department in 2012 dismissed the charges after a jury deadlocked on five felony counts and acquitted him on one charge.
Common Cause sent a copy of its complaint to Deputy Attorney General Rod Rosenstein and urged the Justice Department to open its own investigation.
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