Will Cohen cooperate? Finances may provide crucial clues
WASHINGTON: In the two weeks since federal agents seized the files of Michael Cohen, President Donald Trump’s personal attorney and fixer, a question has hovered: Will Cohen cooperate with investigators?
His decision could depend in part on whether he can readily shoulder the enormous legal fees required to fight a federal probe of this magnitude.
At first blush, Mr Cohen looks like a pretty rich man. He drives a white Rolls Royce, sports a US$50,000 watch and owns a fair amount of Manhattan real estate.
But just as his loyalty to Mr Trump is coming under scrutiny, a more tenuous financial picture is emerging. A taxi business he and his wife built is deeply in debt and losing money daily, his commercial real estate is throwing off only modest income, and his legal and consulting work is on hold while he remains under investigation.
The owners of 32 New York City taxi licenses — known as medallions — he and his wife, Laura, took out at least 16 loans based on their once-soaring value, liens show. With the rise of Uber and Lyft, the price of a medallion has fallen from more than $1 million to around $163,000 in the past four years. Income from the taxi business has plummeted, and millions of dollars of the Cohens’ loans went under water. Their bank said in a November public filing that it had loans out to three taxi borrowers, and all were at high risk of default.
Unpaid taxes and fines have piled up at the Cohen taxi companies, triggering a suspension of about half of the medallions, city records show, squeezing cash flow.
The taxi business isn’t the only part of Mr Cohen’s empire that’s suffering. The law firm Squire Patton Boggs said it ended its “strategic alliance” with Mr Cohen after law enforcement raided his offices, and the rest of his legal work could decline for the same reason. Mr Cohen, 51, makes others’ ugly problems disappear, a practice that was previously lucrative. Essential Consultants LLC, a company affiliated with Mr Cohen, was paid $250,000 after he negotiated a $1.6 million payment to a former Playboy model on behalf of Republican National Committee official Elliott Broidy, according to a Wall Street Journal report.
Mr Cohen has said in court that he had only three legal clients during the past year: Mr Broidy, Mr Trump and talk-show host Sean Hannity. He gave seven others “strategic advice and business consulting.”
In a Thursday morning appearance on Fox & Friends, Mr Trump distanced himself from Mr Cohen, saying he did only “a tiny, tiny little fraction” of Mr Trump’s legal work, but it included representation “on this crazy Stormy Daniels deal”.
Mr Cohen is under investigation for bank fraud and violating campaign-finance law. But his decade at Mr Trump’s side as his lawyer and enforcer could yield information he might trade to investigators looking into the Trump campaign and Russia’s interference in the US election.
Still, if he chooses to defend himself, Mr Cohen does have assets. Companies he signs for own two investment properties purchased in 2015. The larger one, with 92 units on New York’s Upper East Side, is 38% owned by Mr Cohen’s companies. The businesses also appear to be the sole owner of a downtown building with 20 units.
Mr Cohen’s current business partners are a family of New York real estate lawyers headed by Herbert Chaves. The family, having just sold a plot of Brooklyn land to a partnership including the family company of Jared Kushner, were looking to reinvest their gains when they bought Mr Cohen’s Lower Manhattan buildings in 2014. Months later, they partnered with Mr Cohen to buy the Upper East Side property, 330 East 63rd Street. Guarino, a broker on the deal, says he dealt only with Mr Cohen, who served as a representative for the investor group even though the Chaves family companies hold the majority stake.
One property that may prove harder to extract cash from: Mr Cohen’s palatial Park Avenue home. Purchased for $5 million in 2005, the sprawling 10th-floor unit used to be three separate apartments and has four bedrooms. It could be worth $8 million or more, based on comparable sales.
In late 2015, the Cohens moved the property into a type of trust designed to limit tax exposure when transferring property to heirs. The trust structure has tax consequences for typical mortgages, but those could be dodged if the Cohens took out an interest-only loan.
There are also Cohen’s in-laws, who may pitch in to a legal-defence effort. Fima and Ania Shusterman emigrated from Ukraine and built their own taxi empire over decades while helping Mr Cohen expand his across New York and Chicago. They own three units in Trump World Tower. In an indication of their willingness to help those close to them, the couple have lent $20 million to another Ukranian couple in the taxi business, Semyon and Yasya Shtayner and their companies.