This is the second Comment of the Day on this post, also item #2, regarding the Michael Cohen machinations. The news media is doing a negligent job examining exactly what’s going on so that the average voter with an IQ in three figures has a fighting chance of understanding it. Greg’s comment, like Michael Ejercito’s before him, helps explicate what the politicized and biased profession that we foolishly trust to inform us does not.
Here is Greg’s Comment of the Day on the post, Morning Ethics Catch-Up, 8/22/18: Manafort, Cohen, and Mollie:
I read the plea agreement and was mystified. It has been known for months that the National Enquirer paid Woman #1 (I forget her real name) for the exclusive rights to her story and that Cohen paid Woman #2 (Stormy Daniels) for a non-disclosure agreement. Democrats have been claiming that these hush money payoffs were illegal campaign contributions, but that theory is tenuous.
The mystifying news in the plea agreement was that before the election, Cohen bought the rights to the non-disclosure portion – not the story rights, which the Enquirer kept – of the Enquirer’s agreement by paying the Enquirer’s back their entire cost for the full agreement. Then after the election, Cohen sold the Enquirer the rights to the non-disclosure agreements of both Woman #1 and Stormy Daniels at his own cost, plus a tax gross-up payment that doubled the price to the Enquirer, plus a substantial fee for himself.
Has anybody offered an explanation for this odd series of payments? Why did the Enquirer sell the Woman #1 rights to Cohen in the first place, since buying them back with a tax gross-up made it much more expensive to them than just keeping the rights to the story? Why did they also buy Stormy Daniels’ NDA from him, again along with a tax gross-up? Why did they pay Cohen a big fixer fee for the trivial amount of work that he performed in buying and selling back the NDA rights? I haven’t yet thought of a good reason why they would do that. The plea agreement says that the buybacks were prearranged before the election, which could arguably be a campaign violation, rather than after the election, which certainly would not be a campaign contribution (although of course we have only Cohen’s word for that). But it never offers any purpose for the buybacks were arranged in the first place.
Another odd thing about the plea agreement is that Trump has stated publicly that he paid Cohen back for the Stormy Daniels buyout. Reports that I read back when Cohen was arrested said that Cohen had originally complained to many people that Trump had stiffed him and refused to pay him back, but that ultimately Trump had relented and paid him back. So did Cohen get paid twice for the Stormy Daniels rights, once by Trump and another time by the Enquirer?
In fact, I suspect that Cohen may have been paid three times. Like many people, I have always been suspicious of the fact that the same lawyer represented both women. How did two women who didn’t know anything about each other happen to find their way to the same lawyer, who happens to be a known crook, and who both women claim pocketed more in fees than he disclosed to them? My working theory has been that Cohen had a secret fee-sharing deal with the other lawyer. Cohen found out about the women and then either steered them to the lawyer or steered the lawyer to them so that he and the other lawyer would both make a profit settling the cases. If that’s true, then Cohen got a fee from the other lawyer, a fee from Trump and a fee from the Enquirer, all for the same deal.
I can’t be the only person wondering about these things. Is anybody in the media talking about them? (As I said, I haven’t read or heard anything, so maybe the answers to these questions are known to everybody but me.)
Ethics Alarms 
Here is my question. Did woman 1 and woman2 report the income to the IRS and how did they describe it
Wages, capital gains, royalties, or extortion proceeds?
Add “tips” and you can make it a poll.
It doesn’t matter, for their purposes, whether the theory will stand up to legal scrutiny. In the current situation, it doesn’t have to – all it needs to do is to tie the president to alleged criminal behavior.
Cohen’s case will not be tried, so by pleading guilty to the “crime,” he sets up a situation where Trump can be accused of a conspiracy without any proof, all because Cohen plead guilty to an offense. It’s irrelevant whether or not it is a crime – it credibly became a crime for the purposes of a conspiracy the instant Cohen plead to it.
The rest of your comment does raise troubling questions, ones I’d like to see answered. I hold no hope for it, though. Well done.
Actually, in this post, I messed up the facts. The Enquirer signed a contract to sell the Woman #1 rights to Cohen but then changed their minds and didn’t sell them. They did buy the Stormy Daniels rights with s tax gross-up and fee, paying Cohen $420,000 for rights that had cost him $130,000. I wrote a comment yesterday correcting the facts. But the main point is unchanged: there seems to have clearly been an intention originally for trump to reimburse the Enquirer and Cohen for the $255,000 of hush money that they had paid the two women. The Enquirer and Cohen were supposed to pay nothing. But in the end, according to the plea agreement, the Enquirer paid $545,000, with Cohen receiving a profit of $290,000 for himself — or a profit of 425,000 if Trump is telling the truth When he says that he reimbursed Cohen for then Stormy Daniels payoff. That doesn’t sound like a campaign finance violation as much as it sounds like a swindle by Cohen of the Enquirer and of his own client.
I missed Greg’s correction to his original comment and, seeing it now does not help me understand all the payments going back and forth. I do however have a problem with the idea that making all this a “campaign contribution” or an unauthorized campaign expenditure to the point that it is a criminal offense. People who actually understand these laws have differing opinions.
So how does it come to the point that, with some doubt as to the criminality of the act(s), Cohen would find it in his best interest to enter a plea? And how would his lawyer sign off on it? Maybe he will wake up in the morning and realize he received bad legal advice and get a new attorney – one not part of the Clinton crowd – who can challenge the plea on a basis of ineffective assistance or council.
Presumably, it was in Cohen’s best interest to plead to the campaign finance violation because the prosecutor said something along the lines of, “If you plead guilty to the tax and bank fraud crimes alone, I’ll give you a sentence of x years, but if you plead to the campaign finance violation, too, I’ll reduce your sentence to 1/2 of x.”
Here is a quote from another blog that explains this.
http://reason.com/archives/2018/08/23/trumps-campaign-finance-catch-22#comment_7429766
Congrats on the COTD, Greg.
Trump eating a salad is bad. Trump eating a steak is bad. Trump eating… aha! Now we know what they are complaining about.
They want him dead.