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Criminal investigation into Trump lawyer’s business dealings began months ago

Michael Cohen, President Trump’s personal attorney, is under federal investigation. The Washington Post’s Tom Hamburger explains what you need to know. (Video: Bastien Inzaurralde/The Washington Post, Photo: Jabin Botsford/The Washington Post)

NEW YORK — President Trump’s personal attorney Michael Cohen has been under criminal investigation for months by federal prosecutors who empaneled a grand jury to probe his business dealings beyond his law practice, according to a new court filing.

Prosecutors revealed the new details about the Cohen investigation after his lawyer appeared in court seeking to temporarily bar prosecutors from reviewing materials that FBI agents seized in a search this week of Cohen’s office, home and hotel room.

After three separate hearings on the matter Friday, U.S. District Court Judge Kimba Wood indicated that she did not have enough information to issue any ruling on that request. She ordered the lawyers — including Cohen personally — to return to court Monday afternoon with more details, including a list of Cohen’s clients.

The Justice Department’s 22-page filing states that the recent searches resulted from a “months-long investigation into Cohen, and seek evidence of crimes, many of which have nothing to do with his work as an attorney, but rather relate to Cohen’s own business dealings.”

The government’s motion also reveals that prosecutors examined a safe-deposit box used by Cohen — carrying out the searches in part because they feared evidence might be destroyed if they had simply served him with a subpoena. Officials redacted a section in the document explaining why they thought they could not trust Cohen to turn over records willingly.

The filing, signed by acting U.S. Attorney Robert Khuzami in the Southern District of New York, also says that while the current investigation was referred by special counsel Robert S. Mueller III, the New York investigation “has proceeded independent” of Mueller’s work.

Federal prosecutors in Manhattan are investigating whether any crimes were committed as part of an effort by Cohen to squelch damaging stories about Trump when Trump was a presidential candidate, according to a person familiar with the matter.

Among the materials sought by investigators in the search were records relating to payments made to adult-film star Stephanie Clifford, also known as Stormy Daniels, and former Playboy model Karen McDougal, two women who allegedly had sexual liaisons with Trump years ago.

Prosecutors also say that the president’s own statement that he did not know Cohen had paid Clifford may negate any claim of attorney-client privilege on that matter. Authorities revealed that they searched a number of email accounts used by Cohen.

“The results of that review . . . indicate that Cohen is in fact performing little to no legal work, and that zero emails were exchanged with President Trump,” the filing states.

The president does not use email, according to associates.

Todd Harrison, an attorney for Cohen, urged the judge to issue a temporary restraining order to let either Cohen’s lawyers or a court-appointed special master review the materials seized by FBI agents.

But Cohen’s lawyers could not immediately say how many clients — or how many documents covered by attorney-client privilege — were at stake, and prosecutors accused Cohen of trying to stall the investigation.

“This has clearly been a delay tactic from the outset,” said Assistant U.S. Attorney Thomas McKay. Cohen’s team, he said, was “delaying a government investigation because they can’t come up with the facts to justify their case.”

Harrison’s assertion that Cohen’s documents included privileged communications involving Cohen as both an attorney and a client did not, McKay argued, validate that claim. “He’s walking back those assertions which were the premise of their motion,” McKay said.

Wood declined to dismiss Cohen’s attorneys’ request.

“I expect that in return,” she said, “there will be a good-faith effort on counsel’s part to answer the court’s questions.”

She told Cohen’s lawyer to be able to give her by Monday morning a list of Cohen’s clients and evidence of their lawyer-client relationships.

“You need to be prepared to substantiate that the relationship was an attorney-client relationship,” she said.

The unusual, high-stakes court hearings Friday also featured an appearance by an attorney representing Trump, Joanna Hendon. She argued that materials obtained from Cohen had to be handled carefully because some could relate to a sitting president.

While Trump had the “utmost interest” in ensuring that the process of preserving attorney-client privilege was respected, so did the public — and anyone who has ever sought legal counsel, Hendon said.

Whatever the judge decided, Hendon said, would have to “withstand scrutiny for all time.” Her client, the president, “as the privilege-holder, has an acute interest in this issue,” she said.

She added that she was worried about the “appearance of fairness,” given the stakes. “He is the president of the United States,” she emphasized at one point.

McKay replied that the president’s attorney-client privilege “is no stronger than anyone else who seeks legal advice.”

Trump’s allies worry that federal investigators may have seized recordings made by his attorney

Friday’s court hearing was marked by multiple private conversations between the lawyers and the judge. Wood also heard arguments on how to keep the names of “innocent individuals” out of the public legal fight.

Another lawyer also sought to make his case during the later hearing: Clifford’s attorney Michael Avenatti.

In an interview after the morning session, Avenatti said he wants to make sure “that the integrity of the documents, whatever was seized, is maintained.”

“We want to ensure the documents do not disappear or that there’s a control set that’s maintained regardless of who reviews the documents,” he added. Avenatti said he thinks that some of the documents obtained from the Cohen search relate to his client.

Stephen Ryan, an attorney for Cohen, said in a statement this week that the searches of Cohen’s office and residences were unnecessary and that the materials seized are protected by the attorney-client privilege.

Searches of lawyers’ offices are rare but not unheard of, and prosecutors use what is called a “taint team” to review the material and exclude any documents that are covered by the attorney-client privilege.

If they find material that does not involve legal advice between a lawyer and a client, or is exempted from attorney-client privilege because it contains evidence of a crime, that material can be turned over to investigators.

Cohen is being investigated for possible bank fraud, wire fraud and violations of campaign finance laws, according to people familiar with the matter.

In their search Monday, investigators also sought to obtain records relating to Cohen’s ownership of taxi medallions — high-value assets that are often used as collateral for loans, according to people familiar with the matter.

Rosalind S. Helderman contributed to this report.