In a stark fall from grace for a man once known for his close ties to power, Michael Cohen, a lawyer, has pleaded guilty to a series of federal charges. United States Attorney Robert Khuzami, alongside FBI Assistant Director-in-Charge William F. Sweeney Jr., and IRS-CI Special Agent-in-Charge James D. Robnett, announced the admission of guilt from Cohen, a figure who at one time presented himself as a savvy, even “cracker jack lawyer”. However, the charges reveal a pattern of behavior far removed from legal expertise and ethical conduct, encompassing tax evasion, false statements to a federally-insured bank, and violations of campaign finance law.
The guilty plea, entered in federal court before U.S. District Judge William H. Pauley III, follows an eight-count criminal information detailing Cohen’s elaborate schemes. These schemes, according to the prosecutors, were designed to conceal over $4 million in personal income from the Internal Revenue Service (IRS), mislead a financial institution to secure a $500,000 home equity loan, and illegally influence the 2016 presidential election through hush-money payments totaling $280,000 to two women.
Robert Khuzami, Attorney for the United States, minced no words in his assessment of Cohen’s actions. “Michael Cohen is a lawyer who, rather than setting an example of respect for the law, instead chose to break the law, repeatedly over many years and in a variety of ways,” Khuzami stated. He emphasized the core principle of equal justice under the law, adding, “His day of reckoning serves as a reminder that we are a nation of laws, with one set of rules that applies equally to everyone.”
FBI Assistant Director-in-Charge William F. Sweeney Jr. highlighted the intricate nature of Cohen’s criminal activities. “This investigation uncovered crimes of fraud, deception and evasion, conducted through a string of financial transactions that were carefully constructed and concealed to protect a variety of interests,” Sweeney Jr. explained. He underscored the FBI’s commitment to uncovering the truth, noting, “But as we all know, the truth can only remain hidden for so long before the FBI brings it to light. We are all expected to follow the rule of law, and the public expects us – the FBI – to enforce the law equally. Today, Mr. Cohen has been reminded of this important lesson, as he acknowledged with his guilty plea.”
James D. Robnett, IRS-CI Special Agent-in-Charge, focused on the tax evasion aspect of Cohen’s crimes. “Today’s guilty plea exemplifies IRS Special Agents’ rigorous pursuit of tax evasion and sends the clear message that the tax laws apply to everybody,” Robnett said. He condemned Cohen’s actions as detrimental to honest taxpayers, stating, “Mr. Cohen’s greed to hide his income from the IRS cheats all the honest taxpayers, and we should not expect law abiding citizens to foot the bill for those who circumvent the system to evade paying their fair share.”
The charges against Cohen are multifaceted, painting a picture of calculated and persistent law-breaking over several years.
Tax Evasion: Millions Hidden from the IRS
From 2007 to January 2017, Cohen served as an attorney and executive at a Manhattan-based real estate company, holding titles like “Executive Vice President” and “Special Counsel.” Even after transitioning to become the “personal attorney” to Individual-1, who became President of the United States in January 2017, Cohen’s financial dealings continued to attract scrutiny. Adding to his income streams, Cohen possessed a valuable portfolio of taxi medallions in New York City and Chicago, generating revenue through leases to operators.
However, it was in the management of this income that Cohen embarked on a scheme to defraud the IRS. Between 2012 and 2016, he allegedly concealed over $2.4 million earned from personal loans to a Chicago taxi operator and more than $1.3 million from a New York taxi operator. This concealed income included a substantial bonus payment and ongoing operational income from the medallions. To further obscure these earnings, Cohen reportedly arranged for personal payments, bypassing his medallion entities, which would have alerted his accountant and led to proper tax reporting.
Beyond the taxi medallion income, Cohen is accused of hiding additional income sources from his accountant and the IRS, including:
- A $100,000 payment for brokering a property sale in Florida in 2014.
- Approximately $30,000 profit from brokering the sale of a rare Birkin Bag in 2014.
- Over $200,000 in consulting income in 2016 from an assisted living company, purportedly for real estate and other projects.
In total, Cohen is charged with failing to report over $4 million in income, resulting in tax avoidance exceeding $1.4 million.
False Statements to a Bank: Securing a Loan Under False Pretenses
Cohen’s financial misrepresentations extended to his dealings with banks. Starting in 2010, he engaged in a series of loans and credit lines secured by his taxi medallions. By 2013, his personal medallion liabilities at Bank-1 had ballooned to over $20 million. In November 2014, he refinanced this debt with Bank-2 and a credit union.
However, in 2013 and again in 2015, when applying for mortgages and financing from Bank-3, Cohen allegedly concealed a $14 million line of credit he held with Bank-1. He falsely claimed the line of credit was undrawn and would be closed, even though it had been effectively replaced by a larger loan. In a December 2015 application for a $500,000 home equity line of credit (HELOC) from Bank-3, Cohen again misrepresented his financial situation, omitting the $14 million medallion debt and understating his monthly expenses. These misrepresentations, prosecutors argue, fraudulently secured the HELOC approval from Bank-3.
Campaign Finance Violations: Silencing Stories to Influence an Election
The charges also encompass serious violations of campaign finance law. In 2015, as Individual-1 began his presidential campaign, Cohen, though not formally titled within the campaign, played an advisory role and made media appearances. According to court documents, Cohen, in coordination with the Chairman of a media company (“Corporation-1”), engaged in a scheme to suppress negative stories about Individual-1’s relationships with women.
This scheme involved purchasing the silence of two women. First, in June 2016, a model and actress (“Woman-1”) sought to sell her story of an alleged affair with Individual-1. Cohen, through Corporation-1, arranged a $150,000 payment to acquire her “limited life rights” to the story, effectively silencing her before the election.
Second, in October 2016, an adult film actress (“Woman-2”) threatened to go public with her claims of an affair. Cohen negotiated a $130,000 payment to secure her silence. To execute this payment, Cohen established a shell corporation, Essential Consultants LLC, and used funds from the fraudulently obtained HELOC. He falsely labeled the purpose of the wire transfer as “retainer.”
Prosecutors assert that these payments, totaling $280,000, were made to influence the 2016 presidential election and were coordinated with the campaign. These actions constitute illegal campaign contributions, as they exceeded individual contribution limits and involved corporate contributions. Furthermore, Cohen sought reimbursement for these election-related expenses from the Company, falsely invoicing for “legal services” under a non-existent retainer agreement, and receiving $420,000 in total.
Michael Cohen, 51, of New York, New York, now faces sentencing on December 12. He has pleaded guilty to five counts of tax evasion, one count of making false statements to a bank, one count of causing an unlawful corporate contribution, and one count of making an excessive campaign contribution. The potential penalties are significant, with decades in prison possible across all counts, although the actual sentence will be determined by the judge.
This case, prosecuted by Assistant U.S. Attorneys Andrea M. Griswold, Rachel Maimin, Thomas McKay, and Nicolas Roos, serves as a stark reminder that legal professionals, even those once considered “cracker jack lawyers,” are not above the law. The guilty plea of Michael Cohen underscores the commitment of law enforcement agencies like the FBI and IRS to upholding the principles of justice and accountability for all.
