For a time last week we were all enraptured by the drama unfolding between Mar-a-Lago and the Manhattan District Attorney. While Donald Trump wasn’t handcuffed and we got no official shot of his mug, his indictment was unsealed and the case against him by Manhattan District Attorney Alvin Bragg was unveiled—sort of. Through some tea-leaf reading and squinting, though, a pretty compelling argument can be made that if the payment to Stormy Daniels was indeed a hush money payment, and the reimbursement structure to Michael Cohen was as it has been suggested, then the scheme fraudulently induced tax authorities into becoming unwilling alibis to Donald Trump’s deception.
To be clear, the indictment did not outline what underlying crime was being furthered when Trump and his associates allegedly falsified business records. Said underlying crime is a necessary component if the falsification of business records, a misdemeanor, is going to rise to the level of felony. The statement of facts attached to the indictment suggest the secondary crime may be a tax crime.
In the absence of a clear answer from the Manhattan DA, one potential crime that has been floated in the absence of a clear answer is that, in furtherance of obfuscating Michael Cohen’s reimbursement for having paid off Stormy Daniels, the payments to Cohen were characterized as for services rendered and taken from a retainer. This would mean those payments, actually a reimbursement, would technically be income for Cohen. Thus, Trump paid an additional amount to cover that income and make Cohen whole for the entire hush money payment plus taxes owed.
If you’re following along, you’ve likely arrived at the counterargument some political pundits have made: wouldn’t that mean this “tax fraud” actually resulted in the state being paid income tax on income that wasn’t really income? Where is the fraud if the scheme resulted in too much tax being paid?
Fraud Need Not Result in a Money Loss
When we think of fraud, we usually envision something like selling students on a school that is a sham and can’t really confer degrees, or inflating the valuation on property for financial gain, stuff like that. Fraud is more than just a one-trick pony, though, and it doesn’t always come for your money – it need only lay claim to a victim’s legal right to something for the expected personal gain of the perpetrator.
Let’s come at it from another angle as it may be clearer. What benefit was Donald Trump, if he did as is alleged, hoping to gain from paying Michael Cohen, in reimbursement, more money than Michael Cohen paid Stormy Daniels? He is purchasing the assurances that redound to him that Michael Cohen will be willing and able to claim the reimbursement payments as plain old income for services rendered. In so doing he will be placing the final piece in the hush money puzzle, completing the image that he, Donald Trump, never paid Stormy Daniels a dime for anything. He merely compensated his attorney … Read the rest