IRS analyst in S.F. accused of leaking Cohen’s records

An Internal Revenue Service analyst in San Francisco was the source of government records showing that Michael Cohen, when he was President Trump’s personal lawyer, funneled millions of dollars from foreign companies, as well as an alleged hush-money payment, into Cohen’s illegal shell company, federal prosecutors charged Thursday.

John C. Fry, 54, of San Francisco was accused of unlawfully obtaining five “suspicious-activity reports” from a Treasury Department database last May and disclosing them to Michael Avenatti, a Newport Beach (Orange County) attorney, and later to a New Yorker magazine reporter.

Avenatti represents porn film star Stormy Daniels, one of two women who said Trump paid them to keep silent before the 2016 election about their past sexual relationships. One of the payments Fry disclosed to Avenatti was an October 2016 transfer of $130,000 to a bank account controlled by Cohen, who said he paid that sum to Daniels.

Cohen pleaded guilty in August to charges that

included violating campaign finance laws by handling payments to influence the presidential election, and said he did so at Trump’s direction. Trump has denied it. Cohen has been sentenced to three years in prison and is due to testify to two congressional committees next week.

But Fry is charged with leaking much more than a report of a single bank deposit. As reported by the Washington Post, in a story based on information from Avenatti, and by the New Yorker from conversations with Fry, Cohen transferred at least $3 million into one or more accounts of Essential Services, a company he controlled, between 2016 and 2018.

One was a $500,000 deposit from Columbus Nova, a company affiliated with a Russian oligarch, which also donated to Trump‘s inauguration fund in January 2017, prosecutors said. The New Yorker said Fry, whom the magazine identified as an anonymous source, described deposits of hundreds of thousands of dollars from companies seeking access to the Trump administration, including AT&T and drug manufacturer Novartis.

In addition, the magazine said, Fry reported that Cohen had falsely told one bank he was using his account for real estate services from U.S. clients, for modest sums, when he actually was receiving large amounts from foreign entities.

Fry met with federal agents in November and admitted providing the restricted information to Avenatti and the New Yorker reporter, according to an affidavit by Treasury Department agent Linda Cieslak.

Suspicious-activity reports, from banks and other sources, are kept by the Treasury Department in a confidential file, and are supposed to be inaccessible even to IRS employees like Fry who are not involved in the investigation.

The New Yorker reporter, Ronan Farrow, said Fry explained that he revealed the clandestine information after discovering that some of it had been withheld from federal investigators.

“This is a permanent record,” Farrow quoted Fry as saying. “They should be there, and there is nothing there.”

Cieslak’s affidavit said Fry illegally accessed five reports using the Financial Crimes Enforcement Network and Palantir.

Fry then called Avenatti, and continued searching for other incriminating reports using Cohen’s driver’s license and Social Security numbers, according to court documents.

After hearing from Fry, Avenatti tweeted a dossier with the information in May, commenting that “Mr. Trump and Mr. Cohen have a lot of explaining to do.” Reports detailing Cohen’s transactions were published the same day in the Washington Post, and eight days later in the New Yorker, prosecutors said.

Fry faces a sentence of up to five years in prison and a $250,000 fine if convicted of all charges. He appeared before a federal magistrate Thursday and was released on $50,000 bond until his next court appearance March 13. His lawyer, Gail Shifman, did not reply to requests for comment.