Government

Michael Cohen And The Case Of The Missing Paperwork

Check out the update to the story.

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(Photo by Yana Paskova/Getty Images)

The recent revelation that Trump attorney and all-around fixer Michael Cohen had a shell company called Essential Consultants and that, despite not being a registered lobbyist, he appeared to be selling access and influence to the President of the United States has been reverberating in legal and political circles. The financial documentation for the payments that are known came from Stormy Daniels’s attorney, Michael Avenatti.

Avenatti has come right out and said that if you had financial dealings with Cohen he will find out about them and make them public, but the question of where he got the information in the first instance has been troubling. In a fantastic exposé in the New Yorker, Ronan Farrow reports that the financial details were leaked by a law enforcement official and his reasons for doing so are even more explosive.

The financial dealings were pulled from confidential bank records called Suspicious Activity Reports (SARs), and here’s the kicker — the law enforcement official only leaked the materials because two additional SARs related to Essential Consultants had been pulled from the Treasury Department’s Financial Crimes Enforcement Network (FINCEN). The official found the most recent SAR (details of which are now public) and it references two additional SARs, but those are nowhere to be found in FINCEN. The first of the missing reports is believed to detail over a million dollars in suspicious activity, and the other tops two million dollars in transactions.

Needless to say these missing reports are highly unusual, and were in fact the motivating factor in the leak:

The official, who has spent a career in law enforcement, told me, “I have never seen something pulled off the system. . . . That system is a safeguard for the bank. It’s a stockpile of information. When something’s not there that should be, I immediately became concerned.” The official added, “That’s why I came forward.”

Farrow also spoke with other government and financial experts, and they confirmed how highly unusual this all is, and offered some potential reasons why the records may have disappeared:

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Seven former government officials and other experts familiar with the Treasury Department’s FINCEN database expressed varying levels of concern about the missing reports. Some speculated that FINCEN may have restricted access to the reports due to the sensitivity of their content, which they said would be nearly unprecedented. One called the possibility “explosive.” A record-retention policy on FINCEN’s Web site notes that false documents or those “deemed highly sensitive” and “requiring strict limitations on access” may be transferred out of its master file. Nevertheless, a former prosecutor who spent years working with the FINCEN database said that she knew of no mechanism for restricting access to SARs. She speculated that FINCEN may have taken the extraordinary step of restricting access “because of the highly sensitive nature of a potential investigation. It may be that someone reached out to FINCEN to ask to limit disclosure of certain SARs related to an investigation, whether it was the special counsel or the Southern District of New York.”

Also revealed by Farrow is the existence of additional SARs on Cohen’s personal accounts into which he deposited checks from the Essential Consultants account that totaled over a million dollars:

Morgan Stanley Smith Barney marked those transactions, which added up to more than a million dollars, as possible signs of “bribery or gratuity” and “suspicious use of third-party transactors (straw-man).”

As anyone whose work has ever involved dealing with SARs knows, the reports are highly confidential, and there aren’t really any safe harbor provisions for their disclosure. Disclosing the report is a federal offense —  one that carries penalties of fines of up to two hundred and fifty thousand dollars and imprisonment for up to five years. The leaker says he is “terrified right now” but that removing the reports was such a “grave concern” he felt compelled to act:

The official who released the suspicious-activity reports was aware of the risks, but said fears that the missing reports might be suppressed compelled the disclosure. “We’ve accepted this as normal, and this is not normal,” the official said. “Things that stand out as abnormal, like documents being removed from a system, are of grave concern to me.” Of the potential for legal consequences, the official said, “To say that I am terrified right now would be an understatement.” But, referring to the released report, as well as the potential contents of the missing reports, the official also added, “This is a terrifying time to be an American, to be in this situation, and to watch all of this unfold.”

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If/when the additional SARs ever see the light of day it will be interesting to see what other entities are caught in the scandal.

UPDATE May 17th 3:17 p.m.: A FINCEN spokesperson has made the following statement about access to SARs:

headshotKathryn Rubino is an editor at Above the Law. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

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