The Mystery of the McDougal Payments.
How Did The Parent Company of the National Enquirer Profit From the Deal?
One of the common misperceptions of the Trump hush money payments to porn star Stormy Daniels and Playmate Karen McDougal is that Trump paid them out of his “private funds.” While this misunderstanding has certainly been encouraged by Trump and his surrogates, it is not true.
Cohen paid Daniels out of his own money, borrowed from a bank under false pretenses, and that got him convicted for bank fraud. The payment also violated campaign financing law as an illegal contribution/loan to the Trump Campaign in excess of individual limits. Trump did not pay Cohen back out of his “personal funds” but rather out of campaign funds. Cohen invoiced the campaign under a sham “retainer agreement.” The campaign, with knowledge of the true purpose, paid the invoices, committing yet another violation of campaign financing law.
The McDougal payment, however, is different, more interesting, and presents an intriguing mystery. We are still not being told something, which may suggest even greater misconduct. There are three court filed documents that serve as my sources:
- The Statement of Charges filed against Michael Cohen on August 21, 2018, detailing the Unites States Attorneys Office (USAO) for the Southern District of New York (SDNY) allegations against him.
- The Sentencing Memorandum submitted by Cohen’s attorneys on November 30, 2018, pleading for leniency from the sentencing judge.
- The Sentencing Memorandum submitted by the SDNY USAO on December 7, 2018, stating the government’s position on how Cohen’s sentencing.
When reading these documents it helps to have a cheat sheet of the euphemisms or aliases used to describe the key players. All three documents use the same aliases.
Corporation-1:= AMI (America Media Inc), the parent company of the National Enquirer.
Chairman-1= David Pecker, the CEO of AMI and longtime friend of Donald Trump.
Woman-1= Karen McDougal, a Playboy Model who claims to have had a nine month affair with Trump starting in 2006.
Woman-2 = Stormy Daniels, a porn star who claims to have had a one night stand affair with Trump in 2006.
Individual-1= The now-infamous euphemism for President Trump.
THE CONSPIRACY WAS PLANNED WELL IN ADVANCE
David Pecker contacted Cohen, stating he expected the National Enquirer would get advance notice of potential scandals against then-Candidate Trump. Pecker offered to contact Cohen if that happened so they could work out a means to suppress embarrassing stories against Trump.
Pursuant to that understanding, Pecker contacted Cohen about both Karen McDougal and Stormy Daniels with their pending stories. Together, and with the advance knowledge and direction of Trump, they arranged payments to the women aimed at silencing them. Since the payments were, by Cohen’s admission, aimed at influencing the election, they were illegal contributions to the Trump Campaign.
I’ll quote first from the Statement of Charges, substituting the alias names with actual names to make it more understandable.
In or about August 2015, David Pecker, in coordination with MICHAEL COHEN, the defendant, and one or more members of the campaign, offered to help deal with negative stories about Donald Trump’s relationships with women by, among other things, assisting the campaign in identifying such stories so they could be purchased and their publication avoided. David Pecker agreed to keep COHEN apprised of any such negative stories.
For the record, this preplanned, deliberate conspiracy is what separates this issue from the inadvertent reporting errors in the Obama Campaign that the FEC treated as a civil matter. Trump attempts to argue his misconduct was similar to Obama’s. It is not. The preplanned, deliberate and intentional nature of these acts, going so far as to create shell corporations to conceal them, is what moves this from civil negligence to criminal intent.
With the conspiracy formed, it only awaited execution. The Statement of Charges continues:
Consistent with the agreement described above, AMI advised MICHAEL COHEN, the defendant, of negative stories during the course of the campaign, and COHEN, with the assistance of AMI, was able to arrange for the purchase of two stories so as to suppress them and prevent them from influencing the election.
First, in or about June 2016, a model and actress Karen McDougal began attempting to sell her story of her alleged extramarital affair with Donald Trump that had taken place in 2006 and 2007, knowing the story would be of considerable value because of the election . . .
AMI PAYS MCDOUGAL AND BILLS COHEN
Quoting now from the SDNY’s sentencing memo filed on December 7th:
Between August 2016 and September 2016, Cohen agreed with David Pecker to assign the rights to the non-disclosure portion of AMI’s agreement with Karen McDougal to Cohen for $125,000. Cohen then incorporated a shell entity called “Resolution Consultants LLC” to be used in the transaction. Both David Pecker and Cohen ultimately signed the agreement, and a consultant for AMI, using his own shell entity, provided Cohen with an invoice for the payment of $125,000.
The payment by AMI violated campaign financing law because corporations are not permitted to donate to Presidential campaigns. To be clear about this, AMI paid McDougal under an agreement with Cohen to be paid back. AMI went so far as to invoice Cohen to get its money back. What happens next is the mystery.
AMI IS NEVER PAID BACK
The SDNY’s sentencing memo then says the invoiced payment was never completed. It provides no hint as to what happened next and instead jumps to discussing the payment to Stormy Daniels. So AMI paid McDougal pursuant to an understanding it would get paid back, then invoiced Cohen $125,000 to get paid back, but never was actually paid back. How can that be?
YET SOMEHOW AMI PROFITED?
For a hint at what happened, we next turn to the sentencing memo prepared by Cohen’s attorneys. It says something very enigmatic and interesting.
Michael himself did not make the payment to Karen McDougal called for by the agreement reached between AMI and Karen McDougal, but participated in planning discussions with President Trump and the Chairman and CEO of AMI relating to the payment made by AMI, including obtaining the commitment of President Trump to repay AMI. As the matter unfolded, the contract was profitable for AMI, and President Trump's failure to reimburse AMI was ultimately not contested by AMI.
That is all that is said about this in Cohen’s sentencing memo. Then it too moves on the Stormy Daniels issue.
Cohen obtained Trump’s commitment to repay AMI and AMI invoiced Cohen to get paid. However, the invoice was never paid and Trump failed to repay. Yet somehow “as the matter unfolded, the contract was profitable for AMI.” Just what did unfold? How was it profitable?
Clearly AMI received some sort of consideration from Trump that we are not being told about. What was it? More importantly, why aren’t we being told?
We do know that David Pecker talked to SDNY prosecutors under an immunity deal. Immunity would normally only be sought if Pecker’s testimony might implicate him in criminal acts, and the USAO believed Pecker had valuable testimony to offer regarding illegal conduct by others.
The reason AMI did not seek repayment for its payment to Karen McDougal is being hidden from us for a reason. How AMI profited from this is being hidden from us for a reason. That reason could be very big, to include potential bribery charges against the President of the United States, an offense specifically listed by the Constitution as a basis for impeachment.