Michael Cohen was a man in a bind.
For years, the longtime lawyer for Donald Trump had been taking out larger and larger loans, using his taxicab business as collateral even as it dropped in value — at least once using one loan to pay off another.
At the same time, he was pocketing money from various financial deals, such as sales of a property in Florida and a luxury Birkin handbag, and hiding the income from the IRS.
Federal prosecutors had collected more than a million documents about his financial dealings and his efforts to suppress negative stories about Trump and were threatening to charge him with crimes that could result in a decade or more in prison.
Meanwhile, Cohen felt he had been abandoned by the president for whom he had once said he would take a bullet.
So it was just a matter of weeks before Cohen signed on to a plea deal, with the agreement coming together unusually quickly, according to people familiar with the negotiations. They said it was the combination of financial pressures and concern for the impact of the investigation on his family that drove Cohen to agree to plead guilty Tuesday to eight felonies that carry a recommended sentence of four to five years in prison.
As he acknowledged his crimes under oath in federal court in Manhattan, Cohen directly implicated the president in his efforts to silence two women who alleged affairs with Trump.
His claims marked Cohen’s transformation from Trump’s loyal guard dog to outspoken accuser — raising the prospect that he could leverage Trump’s secrets to threaten the president, his family and his private company.
Rudolph W. Giuliani, an attorney for Trump, dismissed the idea that Cohen could hurt the president, saying that he is not a credible witness. “The deputy U.S. attorney came out in a press conference and called him a liar,” Giuliani said in an interview.
But Lanny Davis, an attorney and spokesman for Cohen, went on a media blitz in the wake of Cohen’s guilty plea, repeatedly floating the idea that Cohen is willing to be a witness against Trump and his associates in state and federal investigations, including the special counsel probe into Russian interference in the 2016 campaign .
New York’s state tax-collecting agency took Davis up on that. On Wednesday, a spokesman for the agency said it had issued a subpoena to Cohen for information related to an investigation of Trump’s charitable foundation.
Cohen immediately responded by personally calling the agency to see how he could help, according to an official in Democratic Gov. Andrew M. Cuomo’s administration familiar with his call.
In June, New York Attorney General Barbara Underwood filed suit against Trump and his three eldest children, alleging “persistently illegal conduct” at the president’s personal charity. She also sent letters to the Internal Revenue Service and the Federal Election Commission in which she identified what she called “possible violations” of tax law and federal campaign law by Trump’s foundation.
Cohen had no formal role at the foundation, but he had wide knowledge of the president’s and his family’s affairs. He also played one known role in a Trump Foundation matter: arranging for a Ukranian steel magnate, Victor Pinchuk, to donate $150,000 to Trump’s foundation in 2015.
Potentially more significant, Davis repeatedly said Cohen would be willing to assist special counsel Robert S. Mueller III in his investigation into whether the Trump campaign coordinated with Russia to influence the election and suggested that Cohen may be able to tell Mueller that Trump had advance knowledge of the hacking of Democratic emails.
“I believe that Mr. Cohen has direct knowledge that would be of interest to Mr. Mueller that suggests — I’m not sure it proves — that Mr. Trump was aware of Russian government agents hacking illegally, committing computer crimes, to the detriment of the candidate who he was running against, Hillary Clinton,” Davis told PBS’s “NewsHour” Wednesday.
However, a person familiar with Cohen’s testimony to the Senate Intelligence Committee in October 2017 said Cohen was interviewed extensively about the Russian interference campaign but did not provide any information to suggest Trump had advanced warning about hacking.
Mueller’s team has examined Cohen’s role in at least two episodes involving Russian interests, according to people familiar with that probe.
However, special counsel investigators have indicated to federal law enforcement officials that the office does not require Cohen’s cooperation for its inquiry, according to two people familiar with their work.
Cohen’s new willingness to expose the president comes as Trump and his company face a variety of legal challenges. In addition to the suit over Trump’s private foundation, another accuses Trump and his company of violating the Constitution by continuing to do business with foreign governments.
Cohen has special insight into Trump’s world in part because of the president’s decision to carry over a habit from private life — treating his businesses, his family and even his charity as parts of the same operation — into the more rigidly regulated worlds of campaigns and governing.
According to court documents, two Trump Organization executives and an employee of the company were involved with approving and disbursing $420,000 in payments to Cohen in 2017. The money included $130,000 to reimburse Cohen for paying off adult film actress Stormy Daniels and $50,000 for unspecified “tech services” that he solicited for the campaign, according to filings.
A person familiar with the Trump Organization said Cohen explained the $130,000 expense as a settlement “of a personal nature.”
Trump Organization officials signed off on the reimbursements and decided Cohen should be paid more than he sought, prosecutors said. The executives “grossed up” the total reimbursement for tax purposes to $360,000 and tacked on a $60,000 bonus, inaccurately accounting for the payments as legal expenses, according to court filings.
It is unclear how much knowledge company officials had about the expenditures.
Trump Organization officials declined to comment.
Stephen Spaulding, chief of strategy for the watchdog group Common Cause, said the invoices could pose legal jeopardy for the company and the executives involved.
“You have to follow the money and figure out who was in on the decisions and who wasn’t in on the decisions. We don’t have the answers to that,” he said. “It sounds like it wasn’t just Donald Trump and Michael Cohen sitting in a room together.”
Legal experts noted that Cohen’s plea deal did not include language explicitly requiring him to cooperate in ongoing investigations or promising that prosecutors would credit his cooperation at his sentencing.
Nevertheless, his deal indicated that he may have already laid out key facts to which he would testify if called upon by the government, even without such a promise of leniency.
New York University law professor Stephen Gillers said the government probably has the ability to get what it needs from Cohen without a formal cooperation deal, including by issuing him a subpoena to testify and by reviewing audio and documents it has seized from him.
People familiar with Cohen’s thinking said the intensifying pressure in recent weeks made him feel he had to plead guilty, even without a clause promising him leniency in exchange for cooperation.
Cohen’s own actions may have also ratcheted up the investigation.
On July 24, Davis released a secret recording Cohen made of a conversation with then-candidate Trump.
In the September 2016 recording, Cohen can be heard discussing the need for Trump to purchase the rights to Playboy centerfold Karen McDougal’s story of an affair with Trump. In their conversation, Cohen told Trump that he had discussed buying the rights to McDougal’s story with Allen Weisselberg, chief financial officer of the Trump Organization.
Shortly after the recording’s release, federal prosecutors in the Southern District of New York investigating Cohen subpoenaed Weisselberg to appear before a grand jury.
Cohen’s negotiations with prosecutors about a plea deal began sometime after that, according to people familiar with the case.
One possible pressure point on Cohen: the chance that prosecutors could seek to charge his wife, Laura, who has been involved with Cohen’s taxicab business.
Court documents note that the couple filed taxes jointly in each of the five years in which Cohen admitted that he had broken the law by underreporting his income. The documents show that they both signed forms affirming under penalties of perjury that the returns listed all of their income for the year.
Laura Cohen also signed an application for a home equity line of credit in December 2015 with her husband that Cohen has acknowledged included criminal false statements.
Cohen later used the $500,000 loan to pay hush money to Daniels the day before the election.
Devlin Barrett, Robert Costa, Josh Dawsey, Tom Hamburger, Shane Harris, Jonathan O’Connell and Felicia Sonmez contributed to this report.