The Weekend Wrap: May 5, 2024

"What have we done?"

Welcome to the Weekend Wrap! Other than Trump’s New York trial, things have been relatively quiet after the firehose of news in recent weeks.

Here are the week’s white collar highlights:

Trump Prosecutions

New York State Case - Hush Money/False Business Records

The second week of trial testimony is in the books.

A brief reminder of what the actual criminal charges are in this case: Trump is charged with 34 counts of falsifying business records of the Trump organization. Prosecutors allege that those records (ledger entries, invoices, and checks) falsely reflected monthly payments to Michael Cohen for legal services that were not provided, pursuant to a purported retainer agreement that did not exist. In reality, they charge, the payments were to reimburse Cohen for a hush money payment to Story Daniels just prior to the 2016 presidential election, and the records were falsified to conceal that payment.

That reminder may be necessary because in two weeks of testimony we’ve heard nothing at all so far about the basis for the actual criminal charges - the allegedly false documents. Prosecutors have been setting the stage to explain why the documents were falsified. They’ve been telling the story of the campaign, the frantic desire to avoid more bad news after the release of the “Access Hollywood” tape in early October, and the “catch and kill” scheme that Cohen arranged to buy the rights to Daniels’s story to keep her from going public.

That it’s taking so long to get to the actual charges highlights one of my criticisms of this prosecution: it’s really a relatively trivial bookkeeping offense that prosecutors have tried to dress up as an election fraud case.

We will get to the actual false documents eventually. When that happens, we will see how prosecutors deal with challenges including:

• how does their “election interference” argument hold up as to these particular documents, which were created after the election was already over and which voters had no right to see?

• how do they prove “intent to defraud” (required for both a misdemeanor and a felony charge) based on these purely internal documents?

• what is the underlying crime that falsifying these documents was supposed to conceal or promote (as required to make the charge a felony)?

• how do they prove Trump’s involvement and intent when it comes to falsifying the records, as opposed to his knowledge about the hush money scheme itself?

These are the potential pitfalls for the prosecution that I see, as I’ve discussed here before. I’ll be watching to see how they address them.

Trump Goes to Trial

Contempt of Court: On Tuesday Judge Merchan found Trump guilty of nine counts of contempt for violating the gag order that prohibits him from making out of court statements about jurors, witnesses, or court staff. The judge agreed with prosecutors that nine of Trump’s post on Truth Social and his campaign website violated the order; he found that a tenth alleged violation was ambiguous.

Prosecutors were not seeking jail time but had requested the maximum fine of $1,000 per violation. The judge agreed and fined Trump a total of $9,000 and ordered him to take down the posts. The judge noted that for someone of Trump’s wealth this fine is not much of a deterrent, but that his hands were tied and he did not have the legal authority to impose a greater fine. In light of that, he warned, a sentence of incarceration might be required in the future if the violations continue.

The judge also fired a shot across the bow for witnesses like Michael Cohen and Stormy Daniels, who have posted negative comments about Trump on social media. He said it is of utmost importance that the gag order “not be used as a sword instead of a shield by potential witnesses.” In other words, he won’t allow protected witnesses to freely attack the defendant knowing that he is unable to respond. He said he will take this into account when considering any future contempt motions.

On Thursday the judge held a brief hearing on four other instances where prosecutors are seeking to have Trump held in contempt. Prosecutors brought these to the judge’s attention at the end of the prior week, before he had ruled on the first contempt motion. The new alleged violations involve two posts about Michael Cohen, one about David Pecker, and one about the jury. The judge has yet to rule on these new alleged violations; however, since Trump made the posts prior to the judge’s warning about possible incarceration, he is unlikely to jail Trump for these. Prosecutors again are not seeking jail time, saying they don’t want to hold up the proceedings.

Trial Testimony: The two key witnesses this week were Keith Davidson and Hope Hicks.

Keith Davidson

Keith Davidson: Davidson is a California attorney who represented both Karen McDougal and Stormy Daniels, who received hush money payments prior to the election. McDougal’s story was purchased by AMI, the media company run by David Pecker that publishes the National Enquirer, and Daniels was paid off by Trump attorney Michael Cohen.

Davidson specializes in cases involving people who have “dirt” on well-known individuals. He testified he has worked on similar cases involving people with damaging information on celebrities including Charlie Sheen, Hulk Hogan, and others. His testimony revealed the seedy underbelly of a pretty shady business.

Davidson explained how he negotiated the deals for McDougal and Daniels that ended up being so-called “catch and kill” schemes to keep their stories quiet. The defense went at him pretty hard on cross examination, seeking to portray him as little more than a shakedown artist and Trump as a victim of borderline extortion.

Davidson provided all the details of the Stormy Daniels payment that he negotiated with Michael Cohen. He admitted he never dealt with or spoke to Trump personally but said he never had any doubt that Cohen was working on behalf of Trump. Trump also did not sign any of the paperwork related to the deal (which used pseudonyms to refer to Daniels and Trump).

One powerful moment during Davidson’s testimony involved evidence of a text message exchange he had with National Enquirer editor Dylan Howard. On election night, when Trump appeared victorious, Davidson texted Howard: “What have we done?” Howard replied, “Oh my God.” Davidson testified this “gallows humor” reflected their belief that their suppression of the Stormy Daniels and McDougal stories may have helped Trump win the election — highlighting again the importance of the hush money scheme to the campaign.

The defense hammered Davidson for having said at the time that he and Daniels would lose all their "leverage" if they didn't get Trump to pay for the story before the election. This was meant to suggest that Daniels and Davidson were extorting Trump and Trump was a victim. But it ended up bolstering one of the prosecution's key arguments: that the purpose of the payoff was to influence the election. Everyone involved recognized that suppressing the story only had value to Trump prior to the election; after that he wouldn't care and wouldn't pay.

The purpose of the hush money was not to avoid public embarrassment or keep the story from Melania (which could be done at any time) -- it was to influence the election. That is the prosecution's primary theory of the case, and the defense cross of Davidson helped reinforce it.

It’s always a little unfair to second-guess someone’s trial strategy. But it seemed to me that Davidson’s cross could have been three questions:

• “You never met with Donald Trump, did you?” “No.”

• “You never spoke to Donald Trump, did you?” “No.”

• “And Trump did not sign any of the paperwork related to this deal, did he?” “No.”

“Thank you very much” - and sit down.

This would establish the key points for the defense: that Davidson can provide no evidence of Trump’s involvement in anything. And it would signal to the jury that you don’t think the witness hurt you and he is not very important. As a matter of trial tactics, I think that would have made sense here.

Some attorneys seem to feel it’s mandatory to try to beat a witness up on cross examination. I don’t think the aggressive cross trying to portray Davidson as a shady extortionist really helped the defense. Instead, they could have briefly made the key point — that he didn’t have any direct dealings with Trump — and saved the rest for closing argument. But considering who their client is, I expect the defense attorneys are under a lot of pressure to be constantly on the attack.