Friday, December 7, 2018

Totally clears the president - Part 2: Cohen sentencing memo


The Government's Sentencing Memorandum in the case of USA v. Michael Cohen


Defendant Michael Cohen is scheduled to be sentenced on December 12, 2018.

Cohen, an attorney and businessman, committed four distinct federal crimes over a period of several years. He was motivated to do so by personal greed, and repeatedly used his power and influence for deceptive ends. Now he seeks extraordinary leniency – a sentence of no jail time – based principally on his rose-colored view of the seriousness of the crimes; his claims to a sympathetic personal history; and his provision of certain information to law enforcement. But the crimes committed by Cohen were more serious than his submission allows and were marked by a pattern of deception that permeated his professional life (and was evidently hidden from the friends and family members who wrote on his behalf).

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To be clear: Cohen does not have a cooperation agreement and is not receiving a Section 5K1.1 letter either from this Office or the SCO, and therefore is not properly described as a “cooperating witness,” as that term is commonly used in this District.

As set forth in the Probation Department’s Presentence Investigation Report (“PSR”), the applicable United States Sentencing Guidelines (“Guidelines”) range is 51 to 63 months’ imprisonment. This range reflects Cohen’s extensive, deliberate, and serious criminal conduct, and this Office submits that a substantial prison term is required to vindicate the purposes and principles of sentencing as set forth in Section 3553(a). And while the Office agrees that Cohen should receive credit for his assistance in the SCO investigation, that credit should not approximate the credit a traditional cooperating witness would receive, given, among other reasons, Cohen’s affirmative decision not to become one. For these reasons, the Office respectfully requests that this Court impose a substantial term of imprisonment, one that reflects a modest downward variance from the applicable Guidelines range. 1

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While Cohen – as his own submission makes clear – already enjoyed a privileged life, his desire for even greater wealth and influence precipitated an extensive course of criminal conduct, described below.

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1. Background

The board of directors of a condominium building in which Cohen lived was attempting to remove from the building the name of the owner (“Individual-1”) of a Manhattan-based real estate company (the “Company”). (PSR ¶ 155.) Cohen intervened, secured the backing of the residents of the building, and was able to remove the entire board of directors, thereby fixing the problem for Individual-1. (Id.) Not long after, Cohen was hired by the Company to the position of “Executive Vice President” and “Special Counsel” to Individual-1. (Id.) He earned approximately $500,000 per year in that position. (Id.) In January 2017, Cohen formally left the Company and began holding himself out as the “personal attorney” to Individual-1, who at that point had become the President of the United States. [...] Cohen also secured a substantial amount of consulting business for himself throughout 2017 by marketing to corporations what he claimed to be unique insights about and access to Individual-1. But while Cohen made millions of dollars from these consulting arrangements, his promises of insight and access proved essentially hollow.

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2. Cohen’s Willful Tax Evasion

Between tax years 2012 and 2016, Cohen evaded taxes by failing to report more than $4 million in income to the Internal Revenue Service (“IRS”), which resulted in the avoidance of more than $1.4 million due to the United States Treasury Department.

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Cohen did not inform his accountant of this arrangement or provide him with documentation in support of these loans and interest payments, and intentionally reported none of that income to the IRS in order to hide it and evade paying taxes.

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Finally, Cohen hid several other sources of income from his accountant and the IRS. For example, in 2014, Cohen received $100,000 for brokering the sale of a piece of property in a private aviation community in Florida. In 2015, Cohen made approximately $30,000 in profit from the sale of a rare and highly valuable French handbag. In 2016, Cohen received more than $200,000 in consulting income from an assisted living company. Cohen reported none of this to the IRS or his accountant.

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Cohen’s submission to the Probation Department asserted that “all relevant bank records were provided annually by Cohen to [his accountant] for the relevant years.” (PSR at 45). Cohen repeats these efforts to blame his accountant in his sentencing submission:
Michael’s case stands out for comparative purposes in that a failure to reasonably identify all income to a tax preparer who received all client-related bank statements is quite different in kind from the sophisticated and complex schemes typical of criminal tax evasion cases.
(Def. Mem. at 15) (emphasis added). Cohen’s assertions are simply false.

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3. Cohen’s False Statements to Financial Institutions

In December 2015, Cohen contacted a bank (“Bank-3”) to apply for a home equity line of credit (“HELOC”). In his application for the HELOC, Cohen made false statements about his net worth and monthly expenses. Specifically, Cohen failed to disclose more than $20 million in debt he owed to another bank (“Bank-2”), and also materially understated his monthly expenses to Bank-3 by omitting at least $70,000 in monthly interest payments due to Bank-2 on that debt. (PSR ¶ 34). These statements were the latest in a series of false statements Cohen made to financial institutions in connection with credit applications.

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In April 2016, Bank-3 approved Cohen for a $500,000 HELOC, which it would not have approved but for Cohen’s concealment of truthful information about his financial condition.

Notably, each of the foregoing false statements involved Cohen overstating his assets or understating his liabilities, as in these instances it served his purposes to appear to have a higher net worth. In contrast, when it served Cohen’s purposes to understate his net worth to financial institutions, he did so by concealing income and assets from his creditors.

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4. Cohen’s Illegal Campaign Contributions

On approximately June 16, 2015, Individual-1, for whom Cohen worked at the time, began an ultimately successful campaign for President of the United States. Cohen had no formal title with the campaign, but had a campaign email address, and, at various times advised the campaign, including on matters of interest to the press. Cohen also made media appearances as a surrogate and supporter of Individual-1.

During the campaign, Cohen played a central role in two similar schemes to purchase the rights to stories – each from women who claimed to have had an affair with Individual-1 – so as to suppress the stories and thereby prevent them from influencing the election. With respect to both payments, Cohen acted with the intent to influence the 2016 presidential election. Cohen coordinated his actions with one or more members of the campaign, including through meetings and phone calls, about the fact, nature, and timing of the payments. [...] In particular, and as Cohen himself has now admitted, with respect to both payments, he acted in coordination with and at the direction of Individual-1. [...] As a result of Cohen’s actions, neither woman spoke to the press prior to the election.

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After the election, Cohen sought reimbursement for election-related expenses, including the $130,000 payment he had made to Woman-2. Cohen presented an executive of the Company with a copy of a bank statement reflecting the $130,000 wire transfer. Cohen also requested reimbursement of an additional $50,000, which represented a claimed payment for campaignrelated “tech services.” Executives of the Company agreed to reimburse Cohen by adding $130,000 and $50,000, “grossing up” that amount to $360,000 for tax purposes, and adding a $60,000 bonus, such that Cohen would be paid $420,000 in total.

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5. Cohen’s False Statements to Congress

Cohen also deliberately made false statements to the Congress.

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As set forth in the submission being filed by the SCO in 18 Cr. 850 (WHP), this Office understands that the information provided by Cohen to the SCO was ultimately credible and useful to its ongoing investigation.

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Cohen repeatedly declined to provide full information about the scope of any additional criminal conduct in which he may have engaged or had knowledge. However, this Office acknowledges and agrees that Cohen’s provision of information to the SCO in connection with its investigation is a mitigating factor that the Court should consider in imposing sentence.

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While Cohen’s provision of information to the SCO merits credit, his description of his actions as arising solely from some “personal resolve” – as opposed to arising from the pendency of criminal charges and the desire for leniency – ignores that Cohen first reached out to meet with the SCO at a time when he knew he was under imminent threat of indictment in this District. As such, any suggestion by Cohen that his meetings with law enforcement reflect a selfless and unprompted about-face are overstated.

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He did provide what could have been useful information about matters relating to ongoing investigations being carried out by this Office. But as Cohen partially acknowledges, it was his decision not to pursue full cooperation, and his professed willingness to continue to provide information at some later unspecified time is of limited value to this Office, both because he is under no obligation to do so, and because the Office’s inability to fully vet his criminal history and reliability impact his utility as a witness.

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Cohen further declined to meet with the Office about other areas of investigative interest. As the Court is undoubtedly aware, in order to successfully cooperate with this Office, witnesses must undergo full debriefings that encompass their entire criminal history, as well as any and all information they possess about crimes committed by both themselves and others. This process permits the Office to fully assess the candor, culpability, and complications attendant to any potential cooperator, and results in cooperating witnesses who, having accepted full responsibility for any and all misconduct, are credible to law enforcement and, hopefully, to judges and juries. Cohen affirmatively chose not to pursue this process. Cohen’s efforts thus fell well short of cooperation, as that term is properly used in this District.

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Within the confines of the SCO investigation itself, the Office does not dispute that Cohen’s assistance to the SCO was significant. But because Cohen elected not to pursue more fulsome cooperation with this Office, including on other subjects and on his own history, the Office cannot assess the overall level of Cohen’s cooperation to be significant.

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Cohen managed to commit a panoply of serious crimes, all while holding himself out as a licensed attorney and upstanding member of the bar. His offenses strike at several pillars of our society and system of government: the payment of taxes; transparent and fair elections; and truthfulness before government and in business.

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First, 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 any 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 have made public their alleged extramarital affairs with Individual-1. In the process, Cohen deceived the voting public by hiding alleged facts that he believed would have had a substantial effect on the election.

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Cohen’s submission suggests that this was but a brief error in judgment. Not so. Cohen knew exactly where the line was, and he chose deliberately and repeatedly to cross it. [...] In fact, Cohen publicly and privately took credit for Individual-1’s political success, claiming – in a conversation that he secretly recorded – that he “started the whole thing . . . started the whole campaign” in 2012 when Individual-1 expressed an interest in running for President. Moreover, not only was Cohen well aware of what he was doing, but he used sophisticated tactics to conceal his misconduct.

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Cohen was driven by a desire to further ingratiate himself with a potential future President—for whose political success Cohen himself claimed credit—and arranged for the payments in an attempt to increase his power and influence. Indeed, after Cohen caused the media company to make an illegal expenditure, in a secretly recorded meeting Cohen took credit for the payment and assured Individual-1 that he was “all over” the transaction.

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Second, Cohen undertook similar acts of deception in his private life. He concealed significant amounts of income from the IRS, and lied about his financial status in his dealings with banks. These offenses warrant significant punishment.

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Third, Cohen similarly flouted his obligation to be truthful in business when seeking financing.

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Finally, Cohen has pled guilty to making false statements to Congress in connection with a congressional investigation.

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Certainly, Cohen has no prior convictions, and is well-educated and professionally successful. Generally, such characteristics suggest that a defendant is unlikely to re-offend in the future. But where, as here, the nature, multitude, and temporal span of criminal behavior betray a man whose outlook on life was often to cheat – an outlook that succeeded for some time – his professional history and lack of prior convictions are not a significant mitigating factor.

For much the same reasons, the time-served sentence that Cohen seeks would send precisely the wrong message to the public. General deterrence is a significant factor here. Campaign finance crimes, because they are committed in secret and hidden from the victims, are difficult to identify and prosecute. Nonetheless, they have tremendous social cost, described above, as they erode faith in elections and perpetuate political corruption. [...] Particularly in light of the public interest in this case, the Court’s sentence may indeed have a cognizable impact on that problem by deterring future candidates, and their “fixers,” all of whom are sure to be aware of the Court’s sentence here, from violating campaign finance laws.

Additionally, a significant sentence of imprisonment would also generally deter tax evasion and other financial crimes by sending the important message that even powerful individuals cannot cheat on their taxes and lie to financial institutions with impunity, because they will be subject to serious federal penalties.

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While Cohen has submitted letters describing his good nature, the evidence collected and witnesses interviewed in this investigation paint a decidedly different picture – a picture of someone who was threatening and abusive when he wanted to get his way. For instance, in 2015, Cohen threatened a journalist for investigating a negative story about Individual-1, telling him:
I will make sure that you and I meet one day while we’re in the courthouse. And I will take you for every penny you still don’t have. And I will come after your [employer] and everybody else that you possibly know. . . . So I’m warning you, tread very fucking lightly, because what I’m going to do to you is going to be fucking disgusting. You understand me?
On another call – which Cohen secretly recorded – with bankers from Bank-2 with whom Cohen was seeking to renegotiate his medallion debt on terms more favorable to him, Cohen threatened:
I’m gonna teach [the bank and its government conservator] a lesson they’ve never seen before in their life. Because I’m gonna hit everybody up with a lawsuit that’s gonna spin everyone’s head. And I’m looking forward to that, by the way. And I’m not saying it as a threat. It’s a fact.
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These are just a few of the many examples of Cohen’s abuse of both his standing as an attorney and his relationship to a powerful individual – examples of the type of conduct that is repugnant from anyone, let alone an attorney of the bar.

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Finally, Cohen’s further assertion that he is deserving of leniency because he “could have fought the government and continued to hold the party line, positioning himself for a pardon or clemency” reflects a continuation of his mindset that, at his own option, he is above the laws reflected in his crimes of conviction.

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For the reasons set forth above, the Office respectfully requests that this Court impose a substantial term of imprisonment, one that reflects a modest variance from the applicable Guidelines range. The Office also requests that the Court impose forfeiture in the amount of $500,000, and a fine.

Dated: December 7, 2018
New York, New York
Respectfully submitted,
ROBERT KHUZAMI
Acting United States Attorney


Ed: The secret tapes are my favorite part.  Trump should be shitting his pants.

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