Michael Avenatti, Stormy Daniels’s attorney, published a memo last week that he said detailed Michael Cohen’s financial transactions. The “Project Sunlight” memo revealed Cohen’s firm Essential Consultants LLC had received hundreds of thousands of dollars from major corporations, including a $500,000 payment from a company with ties to a Russian oligarch.
Various companies that paid Cohen, Donald Trump’s personal attorney, for amorphous consulting services — AT&T and Novartis among them — confirmed the payments. The admissions corroborated Avenatti’s revelations.
But questions arose about how Avenatti had obtained the confidential information, especially as he referenced “3 Suspicious Activity Reports” related to Cohen’s dealings and teased more significant disclosures to come. The Treasury Department launched an inquiry into the potential leak.
Reporting by the New Yorker’s Ronan Farrow answers that question. A law enforcement official leaked the documents, the official told Farrow, after becoming concerned that two reports on Cohen’s suspicious financial activity could not be found in a government database. Both of those reports, according to the New Yorker, detail even more substantial financial transactions — about $3 million, three times the amount of last week’s disclosures.
This is an extraordinary allegation. This whistleblower is claiming the documents went missing from the database, the more sinister — but so far unverifiable — implication being that they were purposely being withheld.
The documents this law enforcement official said they could not find are not easily misplaced bureaucratic paperwork. Suspicious activity reports, or SARs, are reports that banks and other financial institutions file if they have an inkling that someone might be engaging in money laundering or another illicit activity. They are filed with the Financial Crimes Enforcement Network (FinCEN), which maintains a database for government and law enforcement officials. A suspicious activity report is not proof of any crime, just a red flag, and can help authorities establish patterns.
“I have never seen something pulled off the system. ... That system is a safeguard for the bank,” the source told the New Yorker. “It’s a stockpile of information. When something’s not there that should be, I immediately became concerned.”
Some former government officials suggested to the New Yorker that it’s possible (though it would be unusual) that access is restricted because of the extremely sensitive nature of the SARs, given that Cohen is under federal investigation by the Manhattan US attorney’s office. That investigation, while apparently separate from special counsel Robert Mueller’s probe into Russian interference in the 2016 election, was referred to federal prosecutors in New York by Mueller’s office.
A FinCEN spokesperson confirmed Thursday to the Wall Street Journal that the agency does limit access to SARs at the request of law enforcement if there’s an open investigation.
New statement from FinCEN spox - it does limit access to SARs in ongoing investigations pic.twitter.com/aoeAwggB34— Aruna Viswanatha (@aviswanatha) May 17, 2018
The statement from FinCEN seems to clamp down on the more alarming possibility of foul play while underscoring how delicate the matter into Cohen might be. FinCEN also reiterated that the Treasury inspector general is still investigating the disclosure of the one SAR document, which is a federal criminal offense.
What we know — and don’t know — about these reports on Cohen
There are reportedly three SARs related to Cohen filed by First Republic Bank by January 2018, where Cohen opened an account for Essential Consultants.
Cohen set up Essential Consultants to pay Stormy Daniels $130,000 in hush money days before the 2016 election to silence her about a 2006 affair she says she had with Trump. Avenatti’s disclosure last week revealed that Cohen had also been busy selling himself as an essential consultant in the Trump era, peddling his services to major corporations, including AT&T, Novartis, and a Korean aerospace firm, which took him up on his offer, and Ford and Uber, which did not. Among those payments was a $500,000 transaction from Columbus Nova, which has ties to a company belonging to Russian oligarch Viktor Vekselberg.
The information in that disclosure covers one of the SARs, from September 2017 to January 2018. The other two reports, which total $3 million, are the ones that the official allegedly couldn’t find in the database.
A lot of that money ended up in Cohen’s personal coffers, which was flagged in a separate suspicious activity report by Morgan Stanley Smith Barney. Cohen deposited checks with the institution — two in the amount of $250,000 and one in the amount of $500,005. According to the New Yorker, “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).’”
First Republic also seemed to think Cohen’s description of Essential Consultants didn’t match up with the financial transactions. As the New Yorker reports:
In paperwork filed with the bank, he said that the company would be devoted to using “his experience in real estate to consult on commercial and residential” deals. Cohen told the bank that his transactions would be modest, and based within the United States. In fact, the compliance officers wrote, “a significant portion of the target account deposits continue to originate from entities that have no apparent connection to real estate or apparent need to engage Cohen as a real estate consultant.” Likewise, “a significant portion of the deposits continues to be derived from foreign entities.”
The implications of the SARs — both the one released and the two others that reportedly exist — reveal, at best, that Cohen still has a lot of explaining to do.
Mueller reportedly reached out to AT&T, Novartis, Ford, and other companies to ask questions last year about their relationship with Cohen. On Wednesday, the Washington Post confirmed that the FBI investigated payments Korea Aerospace Industries paid to Cohen, asking questions of its representatives “a few weeks ago.” It’s unclear if Mueller’s team or federal prosecutors in Manhattan followed up on those payments.
Update: This post has been updated with a statement from FinCen.