Podcast: Cohen, Trump, and Campaign Finance Law
Jeffrey Rosen: [00:00:07] I'm Jeffrey Rosen president and CEO of the National Constitution Center. Welcome to We The People, a weekly show of constitutional debate. The National Constitution Center is a nonpartisan nonprofit chartered by Congress to increase awareness and understanding of the constitution among the American people. Recently President Trump's former attorney Michael Cohen was sentenced to three years in prison for pleading guilty to several crimes including violations of campaign finance laws. On today's podcast we're going to discuss those campaign finance violations and their possible implications for President Trump. Joining us are two of America's leading election law and campaign finance experts, great friends of the We The People podcast, and I'm so honored to welcome both of you back. Rick Hasen is Chancellor's Professor of Law and Political Science at the University of California Irvine. He was the founding co-editor of the Election Law Journal and blogs at the Election Law Blog. Rick thank you so much for joining.
Rick Hasen: [00:01:08] Great to be with you.
Rosen: [00:01:09] Bradley Smith is chairman and founder of the Institute for free speech. The Josiah H. Blackmore II/Shirley M. Nault designated Professor of Law at Capital University Law School and chairman of the Center for Competitive Politics. He served on the Federal Election Commission from 2000 to 2005. Brad welcome back.
Brad Smith: [00:01:30] Thanks Jeff. Pleasure.
Rosen: [00:01:31] OK. Let's jump right in. Rick, Cohen recently pled guilty to violating the Federal Election Campaign Act of 1971. Tell us what he pled guilty to and what the implications are for President Trump's liability for similar charges.
Hasen: [00:01:51] Sure. Well first it's important to note that he pled guilty to a number of different crimes. Only a couple of them related to campaign finance and so he was sentenced to 36 months for the sum total of the criminal activity that he engaged in. In relation to campaign finance, according to the documents that had been filed including a sentencing memo from the prosecutors in the Southern District of New York. And I should say parenthetically here that Cohen was sentenced for charges brought by the Muller team, the special counsel, related to information- related to covering up information related to contacts between the Trump Organization and Russia, but the campaign finance charges came from the Southern District of New York; they were not part of the special counsel. And basically, the Cohen campaign finance problems involved paying off two women who allegedly had sexual encounters with Donald Trump. One of the payments was facilitated through the National Enquirer, a tabloid magazine which made a payment to a woman named Karen McDougal to get her to sell her story exclusively to The National Enquirer and it was this idea of catch and kill. They would pay for the story and then never run it and she would have an exclusive and never be able to run it again. Cohen had assured the editor at The National Enquirer that they would be reimbursed for these payments. Then there was a separate payment to Stormy Daniels. This is the one that's probably gotten more attention for a long time. Daniels had been seeking payment to keep quiet. Cohen didn't agree to make any payments. But then October 25th, 2016, just days before the election, when Stormy Daniels' lawyer indicated that she was about to give an exclusive interview to a media outlet, Cohen agreed to a payment, took out a loan against the against his home, created a Limited Liability Corporation which paid about one hundred thirty thousand dollars to Daniels for her silence, and then billed the Trump Organization eventually to get this money back along with a commission for legal and technical services in payment structured - monthly payments of I think thirty five thousand dollars a month. Now both of these were found to be campaign related payments, that is, payments that would not have been made but for the campaign. Under those circumstances when you have someone making a payment for a campaign, in coordination with the campaign, and the sentencing documents say that this was done at the direction of and cooperation with Donald Trump and with the campaign, that would be an illegal in kind contribution from Cohen. You could only give twenty seven hundred dollars to a campaign. This was much more than that, just looking at the Stormy Daniels payment, that was a hundred thirty thousand dollars. Then you look at the fact that it was not a reported contribution. You look at the fact that a corporation may have been making the payments which would be an illegal corporate contribution. You've got both excessive in kind contributions, corporate contributions as well as unreported contributions and expenditures. These were never reported by the campaign in any sense, I think even through today. And so that's the basis for the violations. When they're willful violations, when you willfully violate the campaign laws rather than simply inadvertently doing it as campaigns do all the time, by forgetting to file something on time or making a slight paperwork error, those are handled civilly. But when you willfully evade the campaign finance laws that can subject to criminal liability and that's the- part of the reason that Cohen was sentenced to serve prison time for his activities.
Rosen: [00:06:21] Thank you very much for that clear and very helpful introduction. So Brad, Rick has said that potential crimes to which Cohen has pled guilty include unlawful contributions, failure to report transactions, and unlawful corporate contributions. To what extent might the president be liable for similar offenses? He has tweeted that it was a simple private transaction, lawyer's liability if he made a mistake, not me. Rick suggests that if the violations were willful they might raise criminal liability. Walk us through the arguments for and against liability for President Trump on any of these issues.
Smith: [00:07:02] Sure. I mean the basic simple argument is that if Cohen did these things with Trump's knowledge and at his direction which is what he's pled to, then Trump would be involved in the same knowing and willful violations of the law potentially subject to criminal penalties. You have got a whole [other] issue: whether you can indict a sitting president, so I'd just talk about campaign finance violations. However I will say that my view is that none of these things are in fact campaign finance violations and there's a fairly simple reason for that. They're not campaign expenses. I think intuitively you know if we ask most people, do you think that paying hush money to a former mistress is a campaign expense? They would say no but there's actually a basis for this in the statute that is the correct basis of the statute. The prosecutor or the U.S. attorneys rely very heavily on language in the statute that says anything that's done for the purpose of influencing an election is an expenditure and therefore subject to all of these rules. But in fact we know that that language is not to be taken literally. That is, all kinds of things are done for the purpose of influencing elections that are not campaign expenditures, so they go down to the most mundane things. When the candidate gets up in the morning and puts on his suit so he looks good on the campaign trail, that suit is not a campaign expenditure. When he drives into his office, his gas is not a campaign expenditure. And we can get into more serious things, for example, if a business man has many lawsuits pending against his businesses or him personally and that's- that's not uncommon, or say a candidate is in divorce proceedings. And let's take the business example. He says, look I think these cases have no merit but I don't want them out there; I don't want the press jumping on them while I'm running for office and saying I'm a cold hearted tycoon. So he tells his lawyer, settle those cases. Those payments are not campaign finance expenditures. They are not campaign expenditures. If they were they'd have to be paid with campaign money. And that's exactly what we don't want happening which is somebody using campaign funds to pay for personal expenses that arise from things outside of the campaign. And that's the same thing with for example the payments to Daniels, and the dual obligations arise from outside of the campaign, not in the campaign. They both were for events occurring far in advance. Now people say, yeah but he only paid them because he was near the campaign. That really doesn't matter. First we don't know exactly why he paid them. But beyond that the lawsuit says that it has to be the obligation would exist irrespective of the campaign. And it's not a campaign expenditure. This is another part of the law that the U.S. attorney seems to want to ignore. So in this case you know to the extent Trump has an obligation to pay this, it arises from things that occurred long before the campaign. The definition the laws intended is to get at the things we think of as campaigning: buying television ads, paying for bumper stickers, office space, hiring a campaign manager, getting phones for your staff, and that sort of thing. So I don't think there's anything there. When the FEC considered this, implementing regulations for this part of the law, it specifically rejected language that would have held that an expenditure that was primarily for the campaign was a campaign expenditure. It said no it has to exist only because of the campaign. So again the underlying events here are not campaign related and thus I don't think there's any campaign liability here at all. I do stress I'm not talking about whether Michael Cohen had legal ethical duties as a lawyer, whether there's abuses of corporate trust but there might be ethical laws that are violated, and also disclosure laws for political candidates, but purely from a campaign finance standpoint, I don't see it. And I think that in the past the FEC has not interpreted this way. The John Edwards case some years ago; John Edwards had supporters who paid a mistress of his for her silence. He was not convicted in court although he was indicted but he was not convicted in court. And I know at that time two former- two other former FEC chairs Scott Thomas and Don Lenhard testified much with the understanding I'm offering today, that this is simply maybe unseemly but it's not an illegal campaign expenditure.
Rosen: [00:11:16] Thank you very much for that. Rick, your response to Brad's two points, first that the statute does not consider campaign expenses obligations that exist independently of the campaign, and secondly the relevance of the Edwards case.
Hasen: [00:11:32] Sure. So I do think that the Edwards case is an important precedent here because we do know that these same kinds of arguments were made before the trial in the Edwards case. And the court rejected them. The court said that in fact these payments were being made because of, think of kind of a but for test as we use in tort law; would you have made these payments but for the campaign? Then these should be treated as campaign related. So even though the jury hung on the question of whether or not that was the factual case in the Edwards case, whether or not these payments were made for campaign reasons rather than to protect Edwards' personal reputation, the court accepted the idea that in certain circumstances such payments can count in this way. And of course Cohen's lawyers and Cohen agreed to plead guilty to this, and we know that the federal district court accepted this. If this were an illegitimate theory then that the court presumably would not have accepted these kinds of arguments as a basis for a campaign violation. And we know that at least from what Cohen has pled guilty to, that if you look at the timing of the Stormy Daniels payment there was no interest in making payments to her until it was close to the election. The election was very, a very tight election at that point, October 25th, 2016, you know just days before the presidential election, Stormy Daniels threatens to go on TV and talk about this and now the payment's going to be made. And we know that not only had Donald Trump had extramarital affairs before and bragged about them and didn't seem to really care about his general reputation. All of a sudden these payments are being made at the time before the election. I'm not saying that if Trump were ever indicted that he would necessarily be found guilty. As Brad mentioned you need to prove a willful violation and just because Cohen agreed to plead guilty to this doesn't prove that Trump did it, but I certainly think there would be enough here to go to a jury on this question of whether or not these were payments that would have been made irrespective of the campaign. And I think there's pretty good evidence that that they would not have been. And so then the question is what do we do about that? Is Trump really an unindicted co-conspirator here? Is the Southern District of New York going to potentially bring charges against him? We don't know where this goes next. We do know that the National Enquirer which was involved in this and the- I think it's the owner or the publisher, David Pecker, was given immunity in relation to this, so it could be that there's going to be more that comes out and it could be that for reasons unrelated to campaign finance law, that a sitting president wouldn't be indicted. But certainly there seems to be enough here. And I just point to one other example of something that's just completely unrelated just to show you how this would be handled in the normal course of things. There is a person who was elected to Congress, a Republican from Florida by the name of Ross Spano, and he received one hundred and eighty thousand dollars in loans, personal loans from friends to help run his campaign. And now he is facing criminal liability for failing to report those loans. So we know that these things are taken very seriously by both the Federal Election Commission and by prosecutors. And so I think if this were not the president, this would not be a difficult case. There would certainly be enough here to move forward and then the question be what would a jury think about this?
Rosen: [00:15:31] Thanks so much for that. Brad, if you were to evaluate the Edwards and Trump cases, which is stronger? In the Edwards case, the payments to the mistress took place as he was ending his candidacy. The payments to Trump's alleged mistresses came ahead of the election. Prosecutors in Edwards had little corroboration; here Cohen's corroborated. Would a potential case against Trump be stronger or weaker? And also what are your thoughts about the Spano case which Rick mentioned as well?
Smith: [00:16:01] You know I really can't say which case is stronger. I mean there are some differences. For the most part though they're very similar cases in which there doesn't seem to be much denial of the basic fact that people were paying money in order to help a candidate be a stronger candidate in the future for the purpose of influencing the election. But I do think- I want to respond a little bit to- Rick made the point that obviously the district court here let Cohen plea to this, and the district court in the Edwards case let the case go to a jury. On the other hand what's very important to note is that we've never had an appellate ruling on this specific issue in interpreting the contribution to a campaign. But what we have had are a number of appellate rulings interpreting the 'for the purpose of influencing' language in other contexts under the law, and then the court has always struck down broad interpretations. It says no, 'for the purpose of influencing an election' cannot literally mean anything for the purpose of influencing an election. And it's taken a very narrow view. For example if you do expenditures to the public, for those to count they have to not only include express advocacy, words of 'vote for' 'vote against' 'support' 'defeat.' Very, very precise in order to get there, and the court has done that in- the Supreme Court has done that in a number of cases as have the appellate courts. So you know I keep going back here. I mean I think- to me one of the real problems here is a lot of people are very convinced that Donald Trump is a uniquely bad person and a unique threat to American democracy who needs to be removed from office however possible. But you know my basic view is that the real threat comes from stretching laws in ways they are not intended to be used to try to get somebody simply because we see that person as uniquely bad.
Rosen: [00:17:54] Thank you so much for that. Rick response to the argument that the interpretation of laws should be narrow rather than strict. Which way might the Supreme Court go on this hypothetically? In the McDougal case they argued for a rather strict definition of corruption and then, put on the table please the case of Donald Trump Jr. and what his potential liability to campaign finance violations might be.
Hasen: [00:18:20] Sure. So I do think that there are reasons under the First Amendment for example, for reading certain campaign finance provisions in a narrow way to make sure that we can have rigorous competitive elections. But I do think that given that we have the precedent of the Edwards prosecution which Trump himself had commented on at the time on Twitter and elsewhere, it was pretty well established that these kinds of payments could be campaign related in appropriate circumstances and I don't think it would require a huge stretch of the law to say that if these payments were made only but for the campaign, that they are expenses that would be reportable as campaign expenses and that you could not make an excessive contribution or illegal personal loan to pay for them. Now the Don Jr. situation which has been out of the news recently but may come back up to the extent that the Mueller investigation goes there. This relates to a meeting that took place during the campaign at the Trump Tower where, we don't know everything, but supposedly dirt was being offered, information was being offered from representatives of the Russian government to the campaign. And the question there would be whether the provision of this information would count as a thing of value being given by a foreign entity to a campaign. That would be an illegal foreign contribution to the campaign. It could potentially be an illegal foreign expenditure that Don Jr. and maybe Manafort and some others helped to facilitate there. I think we don't have all the facts there. I think there's a more serious First Amendment question as to whether treating information as a thing of value would run into First Amendment problems. And I think you know that's something that has not been fully tested. I remember when this issue hit back last summer I was looking at some old Federal Election Commission rulings and there was one involving the provision of polling data when one candidate was running against another candidate. That first candidate drops out has polling data and offers it to the Other Campaign and the court said well that information is a thing of value that needs to be subject to the reporting rules and the contribution rules. But I think this is going to be the next big issue to the extent that the special counsel or another federal prosecutor goes after Don Jr. I think it's going to be a big question as to whether or not the provision of this information could be considered a thing of value that a foreign government could not contribute to or expand its resources on in relation to the 2016 presidential election.
Rosen: [00:21:20] Thanks very much for that. Brad, your thoughts on the possibility that the provision of information from Russia could be considered a thing of value in violation of the campaign finance laws. Is that a strong or a weak argument?
Smith: [00:21:33] Well a thing of value of course is a broad term and can mean a great many things. Certainly polling data is something that goes stale quickly and we need to remember here- and Rick basically was saying yes I think it could be considered a thing of value. But it's going to depend on the circumstances. The other thing that needs to be remembered here though are there are a number of allegations swirling about did they solicit foreign contributions and so on. I think the first thing is you have to actually solicit, so just taking a meeting with someone to find out what they have, what they're offering, it's not a violation of the law. And note that for example it's not a violation to pay a foreign entity to obtain information. That, for example, remember the Clinton campaign paid a British citizen, the spy Steele to go out and gather dirt on Trump, so you can pay foreign citizens for information that they might give you. So at least that's where that case is really going to hinge is whether solicitations and were delivered that were of value and not really so much whether specific items such as polling data might be considered a thing of value. One of the problems here I do want to mention again. In referring to Cohen, Rick mentioned, he said, if these contributions were made solely for the campaign they could count. Yeah I think that's wrong. I think that's wrong as a matter of reading the statute. But I do think that even if we were to read the statute that way and say that it had to do with the intent of the spender or the donor rather than a more objective test. I should note that Cohen in his testimony, in his sentencing memo, he says that the reason he made the payments were to prevent the election narrative before the election, and, and he puts an emphasis on this in the original, and because they would cause personal embarrassment to client one and his family and that takes us back to this key point here that you know we're looking for things that exist because you're running for office. We're not- the campaign finance laws are not a catchall to pry into the lives of candidates and force them to reveal everything about their finances and what they spend money on. They're about people who are paying for campaigns, polling, ads, office space, staff; the kinds of things that if you ask the person why would you give that candidate money? He would say I gave them money to pay for those things. And so again I really dislike this notion that you know maybe we can make this fit and some person we feel is uniquely bad, we're going to go get him. I think we need to remember he the admonition from Thomas Moore; you don't want to do this because one day the law is going to be turned around and used against somebody who you don't think is quite such a bad person.
Rosen: [00:24:17] Thanks for that. Rick, thoughts on what we've understood from this excellent discussion that it might be a close case if it went to a jury but Brad said that the provision should be read narrowly rather than broadly. What's your thoughts about that and then let's put on the table if we can a related case but which brings us to a different topic. That is the challenge to the federal law that bans foreign involvement in U.S. elections. It's being challenged by Ravi Singh, an Illinois based political consultant who says that it's unconstitutional and Congress can't regulate the role played by non-citizens in state and local elections. And some say that that's a threat to a law seen as the backbone of Mueller's probe of Russian election interference.
Hasen: [00:25:03] Sure so I think I've made my points and I think Brad and I are not going to get any further on this question of whether or not the law can be read to cover these kind of payments in appropriate circumstances. And you know I certainly politically was much closer to John Edwards than to Donald Trump. But I thought that the prosecution made sense to the extent that they could actually make their case. The problem in that case was that one of the donors was dead and the other one was I think over 100 years old and wasn't available to testify. So you know there's a problem of proof in that case. here we don't know exactly what the proof is on the foreign question. I don't think that the case that the Ninth Circuit is now considering out of San Diego is one that would really threaten the Mueller probe which involves money that is being- the Mueller probe involves money that is being spent to influence or information being given to influence federal elections. In the other case that you just referenced, the question is whether or not federal prosecutors can go after someone for making- for illegal foreign contributions in state and local elections. That raises a federalism question. The argument's really under the 10th Amendment and whether the federal government has the power to make these things crimes. I think it probably does. But that's really a question of Congress's power to criminalize activity in state and local elections. I know that there is a Federal Election Commission ruling which construed the federal foreign spending ban not to apply to ballot measure elections out here in California. So there might be something to that. But I really do think that regardless of what the Ninth Circuit or what the Supreme Court might do in that case it would have no impact on the kinds of campaign finance questions that have come up in the Mueller probe and in the related probe that the Southern District of New York has brought against Michael Cohen.
Rosen: [00:27:14] Thanks for that. Brad, your thoughts on the Singh case, whether or not you think that the constitutional challenge to the law banning interference by non-state citizens in state and local elections has constitutional merit regardless of its relevance to the Mueller probe, and then if you want to put on the table any other constitutional challenges to campaign finance laws that might be relevant to the Trump investigations.
Smith: [00:27:40] I think that I would agree with Rick's analysis on the case in the 9th Circuit. I think that the court is likely to uphold the statute but even if it didn't, that decision would probably follow on federalism grounds which would not affect the Mueller probe or the Southern District action here. So they'll probably be able to make that- that probably won't affect this case. I think that generally speaking you know we're going to- what we're seeing here in essence is sort of a breakdown of, the kind of absurdity of some of the law. When we're trying to use campaign finance law so that we can learn about whether a candidate had prior affairs, which is something a candidate does not have a legal obligation to disclose, you know we're starting to get off the reservation, and we're doing it again in an area that has a lot of First Amendment implications, a lot of democracy implications, that people have, you know, they vote for candidates, and we don't want to be relitigating the elections by coming up with all kinds of campaign finance theories. There are serious issues in elections I think and we're seeing them in the aftermath of 2018 as we do almost every year, where we've got some very serious allegations of election fraud in North Carolina. We have issues around the country pertaining to the efficiency of election administration and so you know I continue to go back Jeff, I said to you earlier, as much as some people want to get Trump, and this seems to be the legal means to get him, everything else is kind of squeezed, but this year is the one legal thing you can tie into it. It's a dangerous business to start trying to use laws in that way and interpret them in ways that are outside of their ordinary normal interpretations.
Rosen: [00:29:47] Thank you for that. Well it is time for closing arguments in this excellent discussion. And Rick, the first one is to you. How serious are the allegations of campaign finance violations against President Trump and how seriously should We the People listeners be concerned about them?
Hasen: [00:30:08] Well I as I said earlier, I certainly think that if Trump were not the president and there weren't these complicating political and legal factors, that he would be subject to indictment for what he's done and the question would be one that would be left to a jury in terms of how significant it is. I think I would leave the last word to the Southern District of New York prosecutors. I just want to read very briefly what they wrote about Cohen's activities in their sentencing memo. They said: Cohen's commission of two campaign finance crimes on the eve of the 2016 election for president of the United States struck a blow to one of the core goals of the federal campaign finance laws: transparency. While many Americans who desired a particular outcome to the election knocked on doors, toiled at phone banks or found a number of other legal ways to make their voices heard, Cohen sought to influence the election from the shadows. He did so by orchestrating secret and illegal payments to silence two women who otherwise would not have made public their extramarital affairs with Individual-1 (that's Trump). In the process Cohen deceived the voting public by hiding alleged facts that he believed would have had a substantial effect on the election. And I think that's really what's at stake here and why this really does matter. And it's not just a witch hunt, as the president might say.
Rosen: [00:31:24] Thank you very much for that. Brad, last word to you. How serious are the campaign finance violation allegations against President Trump and how seriously should We the People listeners be concerned about them?
Smith: [00:31:37] First, I've indicated as a campaign finance matter, I think there's nothing there. It's worth noting here again that for example had President Trump paid these expenditures out of his campaign funds and as the Clinton's paid the British spy Steele, they just paid their legal company and called it legal fees, Trump probably could have done that, used campaign and paid it as legal fees. That to me would be what much worse. We don't want the president using his campaign funds to pay hush money for mistresses, and had he done so, many people who are now arguing he violated the campaign law and this is very serious, would be arguing that he had violated campaign finance law by diverting campaign funds to his personal use and that if he wanted to pay hush money to his mistresses he should have arranged to pay it with non campaign funds which wouldn't have been reportable and wouldn't have been subject to any limits. So I think that you know there's this little bit of a gotcha coming when we gotcha going but we're going to getcha attitude. And again I think that's very dangerous for the rule of law. Nothing in the law requires presidents to reveal their prior extramarital affairs. The press can dig them up. That's great. But that's not what these laws are for and not what we want to try to be doing in this particular case. So we have to say you know there may be lots of reasons to vote against Trump or maybe other things that he has done that would be impeachable offenses or violate the law. But I think we need to be very careful when we get really enthusiastic about getting somebody [when we've] decided that this person is particularly bad, that we start using them misusing the law in ways that it's not intended to be used.
Rosen: [00:33:14] Thank you so much, Rick Hasen and Brad Smith for an illuminating, subtle, and educational discussion of the technical but important campaign finance laws and their consequences for President Trump. Rick, Brad thank you so much for joining us.
Smith: [00:33:32] Thank you Jeff. Thank you Rick.
Hasen: [00:33:33] Always a pleasure.
Rosen: [00:33:35] Today's show was engineered by Kevin Kilbourne and produced by Jackie McDermott. Research was provided by Lana Ulrich and Jackie McDermott. Please remember to rate review and subscribe to We the People on Apple podcasts or wherever you listen, and check out our companion podcast, Live at America's Town Hall. That's the feed of all of our phenomenal town hall programs at the National Constitution Center and around the country that spread so much light about the constitutional issues at the center of national debate. And always dear We the People listeners remember, as you wake and as you sleep, that the National Constitution Center is a private nonprofit. We receive little government support and all of this incredible important work that we do spreading light about the Constitution, inspiring people to learn about it, and educating people to converge around this great document of human freedom is made possible only because of the support of people around the country who share our mission and are part of our common work, so go to the Web. Click the membership form and join the National Constitution Center. We're all so honored as the holiday seasons approach to work at the National Constitution Center. My colleagues and I are so excited about the really important work of constitutional education to be done in the year ahead and so grateful that you dear We the People listeners are a core part of our crucially important mission. So happy holidays and on behalf of the National Constitution Center, I'm Jeffrey Rosen.