Thread by @Headsnipe011

Michael Cohen Pleads Guilty In Manhattan Federal Court To 8 Counts, Including Criminal Tax Evasion & Campaign Finance Violations

@drawandstrike @ThomasWictor @HNIJohnMiller @catesduane @rising_serpent @_ImperatorRex_ @Debradelai
@GodlessNZ @TheChiIIum

justice.gov/usao-sdny/pr/m…

Plea Follows Filing of Eight Count Criminal Information Alleging Concealment of More Than $4 Million in Unreported Income, $280,000 in Unlawful Campaign Contributions

Robert Khuzami, Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and James D. Robnett,

the Special Agent-in-Charge of the NY Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today the guilty plea of MICHAEL COHEN to charges of tax evasion, making false statements to a federally-insured bank, and campaign finance violations.

The plea was entered followed the filing of an eight-count criminal information, which alleged that COHEN concealed more than $4 million in personal income from the IRS,

made false statements to a federally-insured financial institution in connection with a $500,000 home equity loan, and, in 2016, caused $280,000 in payments to be made to silence two women who otherwise planned to speak publicly about their...

alleged affairs with a presidential candidate, thereby intending to influence the 2016 presidential election. COHEN pled guilty today before U.S. District Judge William H. Pauley III.

Attorney for the United States Robert Khuzami said: “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.

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. said: “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. 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.”

IRS-CI Special Agent-in-Charge James D. Robnett said: “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.

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.”

According to the allegations in the Information unsealed today as well as statements made in Manhattan federal court:

From 2007 through January 2017, COHEN was an attorney and employee of a Manhattan-based real estate company (the “Company”).

COHEN held the title of “Executive Vice President” and “Special Counsel” to the owner of the Company (“Individual-1”). In Jan 2017, COHEN left the Company & began holding himself out as the “personal attorney” to Individual-1, who by that time had become the President of the US.

In addition to working for and earning income from the Organization, at all times relevant to this Information, COHEN owned taxi medallions in New York City and Chicago worth millions of dollars.

COHEN owned these taxi medallions as investments and leased the medallions to operators who paid COHEN a portion of the operating income.

The Tax Evasion Scheme

In late 2013, COHEN retained an accountant (“Accountant-1”) for the purpose of handling COHEN’s personal & entity tax returns. After being retained, Accountant-1 filed amended 2011 and 2012 Form 1040 tax returns with the Internal Revenue Service (“IRS”).

For tax years 2013 through 2016, Accountant-1 prepared individual returns for COHEN and returns for COHEN’s medallion and real estate entities. To confirm he had reviewed and approved these returns, both COHEN and his wife signed a Form 8879 for tax years 2013 through 2016,

and filed manually for tax year 2012. Between 2012 and the end of 2016, COHEN earned more than $2.4 million in income from a series of personal loans made by COHEN to a taxi operator...

to whom COHEN leased certain of his Chicago taxi medallions (“Taxi Operator-1”), none of which he disclosed to the IRS.

As a further part of the scheme to evade paying income taxes, COHEN also concealed more than $1.3 million in income he received from another taxi operator to whom COHEN leased certain of his New York medallions (“Taxi Operator-2”). This income took two forms.

First, COHEN did not report the substantial majority of a bonus payment of at least $870,000, which was made by Taxi Operator-2 in 2012 to induce COHEN to allow Taxi Operator-2 to operate certain of COHEN’s medallions.

Second, between 2012 and 2016, COHEN concealed nearly $1 million in taxable income he received from Taxi Operator-2’s operation of certain of COHEN’s taxi medallions.

To ensure the concealment of this additional operator income, COHEN arranged to receive a portion of the medallion income personally, as opposed to having the income paid to COHEN’s medallion entities.

Paying the medallion entities would have alerted Accountant-1, who prepared the returns for those entities, to the existence of the income such that it would have been included on COHEN’s tax returns.

As a further part of his scheme to evade taxes, COHEN also hid the following additional sources of income from Accountant-1 and the IRS:

A $100,000 payment received, in 2014, for brokering the sale of a piece of property in a private aviation community in Ocala, Florida.

Approximately $30,000 in profit made, in 2014, for brokering the sale of a Birkin Bag, a highly coveted French handbag that retails for between $11,900 to $300,000, depending on the type of leather or animal skin used.

More than $200,000 in consulting income earned in 2016 from an assisted living company purportedly for COHEN’s “consulting” on real estate and other projects.

In total, COHEN failed to report more than $4 million in income, resulting in the avoidance of taxes of more than $1.4 million due to the IRS.

False Statements to a Bank

In 2010, COHEN, through companies he controlled, executed a $6.4 million promissory note with a bank (“Bank-1”), collateralized by COHEN’s taxi medallions and personally guaranteed by COHEN.

A year later, in 2011, COHEN personally obtained a $6 million line of credit from Bank-1 (the “Line of Credit”), also collateralized by his taxi medallions. By February 2013, COHEN had increased the Line of Credit from $6 million to $14 million,

thereby increasing COHEN’s personal medallion liabilities at Bank-1 to more than $20 million.

In November 2014, COHEN refinanced his medallion debt at Bank-1 with another bank (“Bank-2”), who shared the debt with a New York-based credit union (the “Credit Union”).

The transaction was structured as a package of individual loans to the entities that owned COHEN’s New York medallions. Following the loans’ closing,

COHEN’s medallion debt at Bank-1 was paid off with funds from Bank-2 and the Credit Union, and the Line of Credit with Bank-1 was closed.

In 2013, in connection with a successful application for a mortgage from another Bank (“Bank-3”) for his Park Avenue condominium (the “2013 Application”), COHEN disclosed only the $6.4 million medallion loan he had with Bank-1 at the time.

As noted above, COHEN also had a larger, $14 million Line of Credit with Bank-1 secured by his medallions, which COHEN did not disclose in the 2013 Application.

In February 2015, COHEN, in an attempt to secure financing from Bank-3 to purchase a summer home for approximately $8.5 million, again concealed the $14 million Line of Credit.

Specifically, in connection with this proposed transaction, Bank-3 obtained a 2014 personal financial statement COHEN had provided to Bank-2 while refinancing his medallion debt.

Bank-3 questioned COHEN about the $14 million Line of Credit reflected on that personal financial statement, because COHEN had omitted that debt from the 2013 Application to Bank-3. COHEN misled Bank-3, stating, in writing,

that the $14 million Line of Credit was undrawn and that he would close it. In truth and in fact, COHEN had effectively overdrawn the Line of Credit, having swapped it out for a fully drawn, larger loan shared by Bank-2 and the Credit Union upon refinancing his medallion debt.

When Bank-3 informed COHEN that it would only provide financing if COHEN closed the Line of Credit, COHEN lied again, misleadingly stating in an email: “The medallion line was closed in the middle of November 2014.”

In December 2015, COHEN contacted Bank-3 to apply for a home equity line of credit (“HELOC”). In so doing, COHEN again significantly understated his medallion debt. Specifically, in the HELOC application, COHEN, together with his wife,

represented a positive net worth of more than $40 million, again omitting the $14 million in medallion debt with Bank-2 and the Credit Union. Because COHEN had previously confirmed in writing to Bank-3 that the $14 million Line of Credit had been closed,

Bank-3 had no reason to question COHEN about the omission of this liability on the HELOC application. In addition, in seeking the HELOC, COHEN substantially and materially understated his monthly expenses to Bank-3...

by omitting at least $70,000 in monthly interest payments due to Bank-2 on the true amount of his medallion debt.

In April 2016, Bank-3 approved COHEN for a $500,000 HELOC. By fraudulently concealing truthful information about his financial condition, COHEN obtained a HELOC that Bank-3 would otherwise not have approved.

Campaign Finance Violations

The Federal Election Campaign Act of 1971, as amended, Title 52, United States Code, Section 30101, et seq., (the “Election Act”), regulates the influence of money on politics.

At all relevant times, the Election Act set certain limitations and prohibitions, among them: (a) individual contributions to any presidential candidate, including expenditures coordinated with a candidate or his political committee, were limited to $2,700 per election,

and presidential candidates and their committees were prohibited from accepting contributions from individuals in excess of this limit; and (b) Corporations were prohibited from making contributions directly to presidential candidates,

including expenditures coordinated with candidates or their committees, and candidates were prohibited from accepting corporate contributions.

On June 16, 2015, Individual-1 began his presidential campaign. While COHEN continued to work at the Company and did not have a formal title with the campaign,

he had a campaign email address and, at various times, advised the campaign, including on matters of interest to the press, and made televised and media appearances on behalf of the campaign.

In August 2015, the Chairman and Chief Executive of Corporation-1, a media company that owns, among other things, a popular tabloid magazine (“Chairman-1” and “Magazine-1,” respectively”), in coordination with COHEN and one or more members of the campaign,

offered to help deal with negative stories about Individual-1’s relationships with women by, among other things, assisting the campaign in identifying such stories so they could be purchased and their publication avoided.

Chairman-1 agreed to keep COHEN apprised of any such negative stories.

Consistent with the agreement described above, Corporation-1 advised COHEN of negative stories during the course of the campaign, and COHEN, with the assistance of Corporation-1,

was able to arrange for the purchase of two stories so as to suppress them and prevent them from influencing the election.

First, in June 2016, a model and actress (“Woman-1”) began attempting to sell her story of her alleged extramarital affair with Individual-1 that had taken place in 2006 and 2007, knowing the story would be of considerable value because of the election.

Woman-1 retained an attorney (“Attorney-1”), who in turn contacted the editor-in-chief of Magazine-1 (“Editor-1”), and offered to sell Woman-1’s story to Magazine-1. Chairman-1 and Editor-1 informed COHEN of the story.

At COHEN’s urging and subject to COHEN’s promise that Corporation-1 would be reimbursed, Editor-1 ultimately began negotiating for the purchase of the story.

On August 5, 2016, Corporation-1 entered into an agreement with Woman-1 to acquire her “limited life rights” to the story of her relationship with “any then-married man,” in exchange for...

$150,000 and a commitment to feature her on two magazine covers and publish more than 100 magazine articles authored by her. Despite the cover and article features to the agreement,

its principal purpose, as understood by those involved, including COHEN, was to suppress Woman-1’s story so as to prevent it from influencing the election.

Between late August 2016 and September 2016, COHEN agreed with Chairman-1 to assign the rights to the non-disclosure portion of Corporation-1’s agreement with Woman-1 to COHEN for $125,000.

COHEN incorporated a shell entity called “Resolution Consultants LLC” for use in the transaction. Both Chairman-1 and COHEN ultimately signed the agreement, & a consultant for Corporation-1, using his own shell entity, provided COHEN with an invoice for the payment of $125,000.

However, in early October 2016, after the assignment agreement was signed but before COHEN had paid the $125,000, Chairman-1 contacted COHEN and told him, in substance, that the deal was off and that COHEN should tear up the assignment agreement.

Second, on October 8, 2016, an agent for an adult film actress (“Woman-2”) informed Editor-1 that Woman-2 was willing to make public statements and confirm on the record her alleged past affair with Individual-1.

Chairman-1 and Editor-1 then contacted COHEN and put him in touch with Attorney-1, who was also representing Woman-2. Over the course of the next few days, COHEN negotiated a $130,000 agreement with Attorney-1 to himself purchase Woman-2’s silence,

and received a signed confidential settlement agreement and a separate side letter agreement from Attorney-1.

COHEN did not immediately execute the agreement, nor did he pay Woman-2. On the evening of October 25, 2016, with no deal with Woman-2 finalized, Attorney-1 told Editor-1 that Woman-2 was close to completing a deal with another outlet to make her story public.

Editor-1, in turn, texted COHEN that “[w]e have to coordinate something on the matter [Attorney-1 is] calling you about or it could look awfully bad for everyone.”

Chairman-1 and Editor-1 then called COHEN through an encrypted telephone application. COHEN agreed to make the payment, and then called Attorney-1 to finalize the deal.

The next day, on October 26, 2016, COHEN emailed an incorporating service to obtain the corporate formation documents for another shell corporation, Essential Consultants LLC, which COHEN had incorporated a few days prior.

Later that afternoon, COHEN drew down $131,000 from the fraudulently obtained HELOC and requested that it be deposited into a bank account COHEN had just opened in the name of Essential Consultants.

The next morning, on October 27, 2016, COHEN went to Bank-3 and wired approximately $130,000 from Essential Consultants to Attorney-1. On the bank form to complete the wire, COHEN falsely indicated that the “purpose of wire being sent” was “retainer.”

On November 1, 2016, COHEN received from Attorney-1 copies of the final, signed confidential settlement agreement and side letter agreement.

COHEN caused and made the payments described herein in order to influence the 2016 presidential election.

In so doing, he coordinated with one or more members of the campaign, including through meetings and phone calls, about the fact, nature, and timing of the payments.

As a result of the payments solicited and made by COHEN, neither Woman-1 nor Woman-2 spoke to the press prior to the election.

In January 2017, COHEN in seeking reimbursement for election-related expenses, presented executives of the Company with a copy of a bank statement from the Essential Consultants bank account,

which reflected the $130,000 payment COHEN had made to the bank account of Attorney-1 in order to keep Woman-2 silent in advance of the election, plus a $35 wire fee, adding, in handwriting, an additional “$50,000.”

The $50,000 represented a claimed payment for “tech services,” which in fact related to work COHEN had solicited from a technology company during and in connection with the campaign. COHEN added these amounts to a sum of $180,035.

After receiving this document, executives of the Company “grossed up” for tax purposes COHEN’s requested reimbursement of $180,000 to $360,000, and then added a bonus of $60,000 so that COHEN would be paid $420,000 in total.

Executives of the Company also determined that the $420,000 would be paid to COHEN in monthly amounts of $35,000 over the course of 12 months, and that COHEN should send invoices for these payments.

On February 14, 2017, COHEN sent an executive of the Company (“Executive-1”) the first of his monthly invoices, requesting “[p]ursuant to [a] retainer agreement, . . . payment for services rendered for the months of January and February, 2017.”

The invoice listed $35,000 for each of those two months. Executive-1 forwarded the invoice to another executive of the Company (“Executive-2”) the same day by email, and it was approved.

Executive-1 forwarded that email to another employee at the Company, stating: “Please pay from the Trust. Post to legal expenses. Put ‘retainer for the months of January and February 2017’ in the description.”

Throughout 2017, COHEN sent to one or more representatives of the Company monthly invoices, which stated, “Pursuant to the retainer agreement, kindly remit payment for services rendered for” the relevant month in 2017, and sought $35,000 per month.

The Company accounted for these payments as legal expenses. In truth and in fact, there was no such retainer agreement, and the monthly invoices COHEN submitted were not in connection with any legal services he had provided in 2017.

During 2017, pursuant to the invoices described above, COHEN received monthly $35,000 reimbursement checks, totaling $420,000.

* * *

COHEN, 51, of NEW YORK, NEW YORK, pleaded guilty to five counts of willful tax evasion; one count of making false statements to a bank; one count of causing an unlawful campaign contribution; and one count of making an excessive campaign contribution.

COHEN’S sentencing is scheduled for December 12 at 11 a.m.

***There is a chart with maximum penalties listed on top link. Not mobile friendly.***