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How Citizens United Greased Trump’s Payoffs to Stormy Daniels and Karen McDougal

If the Supreme Court hadn’t ruled that corporations are people, Trump would be a lot easier to prosecute.

Jabin Botsford/Getty Images

I don’t have an opinion about the Trump indictment because I haven’t seen it. You haven’t seen it either; neither has anyone among the cast of thousands who beat their gums about it all weekend long. The thing won’t be unsealed until April 4.

I do have an opinion about how this sordid business of a candidate paying off a porn actress and a Playboy model in the middle of a presidential campaign would have fared before the Supreme Court’s 2010 ruling in Citizens United v. FEC, which gave corporations the First Amendment right to spend money on political campaigns. It would have been a lot harder for Trump to proffer this hush money.

The great fear when the Citizens United decision was handed down was that S&P 500 corporations would use it to seize control of American politics. That didn’t happen (or, if it did, it didn’t happen as a result of S&P 500 corporations spending money on elections). What happened instead, as I explained in The New Republic in 2012, was that smaller companies that were either owned or controlled by fantastically rich cranks (I called them “crankocrats”) started meddling like mad in politics, usually on behalf of Republicans. In the 2022 cycle, 54 percent of all spending by SuperPACs, the biggest-money venue for corporate and individual donors, went to the GOP.

What does this have to do with Trump’s indictment? The case is about the payment of hush money to two women with whom Trump cheated on his wife, Melania, in 2006, shortly after she bore him a son. The case will turn, at least indirectly, on whether these payments constituted undisclosed campaign contributions. Michael Cohen, Trump’s former attorney, has already done jail time based largely on the presumption that they were.

Trump disputes that he had carnal knowledge of the two women in question, Stormy Daniels and Karen McDougal. Not even Trump’s allies believe him. The assignations, according to Daniels and McDougal, occurred—with McDougal for the first time and with Daniel for the only time—at the same celebrity golf tournament in Lake Tahoe in July 2006. Most of the rest of the facts are uncontested, and the most interesting of these is that both payoffs were made by corporations, not individuals: the Trump Organization, in one instance, and American Media, Inc., in the other.

That Daniels and McDougal got paid off by corporations distinguishes the Trump case from the similar entanglement in which former Democratic presidential candidate John Edwards was embroiled some years ago (who, awkwardly for prosecutors in the Trump case, was acquitted). Edwards was charged with secretly funneling, while chasing the 2008 presidential nomination, nearly $1 million to his mistress, Rielle Hunter, who bore him a child. As with Trump, these payments were judged by prosecutors to be illegal secret campaign contributions. Edwards’s payments came from Rachel Lambert “Bunny” Mellon, elderly widow of Paul Mellon, and Fred Baron, a wealthy trial lawyer and Edwards’s former campaign finance chairman.

By the time of Edwards’s trial in 2012, Baron was dead and Mellon, at 101, was too old to testify, a lucky break legally for Edwards and a setback for the prosecution. Still, the payments would have been much easier to disguise had they originated with or been funneled through corporations, as they were in Trump’s case. Before Citizens United, that was too risky.

Here’s how the money trail worked with Stormy Daniels. Daniels threatened to go public in the final days of Trump’s campaign, just as Trump was reeling from the Access Hollywood tape (“When you’re a star they let you do it. You can do anything. Grab ’em by the pussy”). Cohen took out a home equity loan at the insistence, Cohen writes in his 2020 memoir, of Alan Weisselberg, then chief financial officer at the Trump Organization (now serving a five-month sentence for tax fraud at Rikers Island). Cohen then created a shell corporation called Essential Consultants, put $130,000 into its bank account, and wired the money to Daniels’s lawyer. Then Cohen arranged with the Trump Organization to reimburse him in monthly amounts of $35,000. The company characterized these as legal expenses. One or more of these checks was signed in the White House by Trump himself, but that was still essentially a corporate payment because while he was president a Trump Organization trust allowed Trump at any time to draw money from the business.

In buying Stormy Daniels’s silence (until January 2018, when she blabbed about it to The Wall Street Journal’s Michael Rothfeld), Trump stands accused of making a secret, and therefore illegal, campaign contribution. But had this happened prior to the Citizens United ruling, he and Cohen would be accused also of making this contribution from illegal sources: Essential Consultants and the Trump Organization. Or, more likely, Trump and Cohen would have had to use another, more conspicuous method to get the money to Daniels.

In the Daniels payoff, the crankocrat and the candidate were embodied in the same person, Trump. In the McDougal case the crankocrat was David Pecker, then the longtime chairman of American Media, Inc., or AMI, which owned the National Enquirer. (Pecker left in August 2020, and the Enquirer got sold last month to VVIP Ventures.) The Enquirer had a long history of dabbling in politics, but until Trump it had done so more conventionally by publishing stories rather than by suppressing them. (It was the Enquirer, ironically, that broke the news of Edwards’s affair.)

The Enquirer also has a long history of engaging in a practice known as “catch and kill,” wherein you acquire a juicy story about a famous celebrity and then don’t publish it in exchange for the celebrity feeding you a steady stream of tips. The Enquirer had such an arrangement with Trump before he entered politics, killing 10 stories about him, according to a former AMI senior editor, Jerry George, quoted in Ronan Farrow’s 2019 book Catch and Kill: Lies, Spies, and a Conspiracy to Protect Predators. The Enquirer had also played “catch and kill” with Harvey Weinstein, which is what led Farrow to the Trump story.

Campaign finance law makes “catch and kill” potentially illegal when you pay money to suppress a story about a political candidate, because that might make the money a political contribution. (The Enquirer, unlike the mainstream press, will pay sources for stories.) Before Citizens United, a political catch and kill would have been riskier still. American Media might have gotten nailed not only for making a secret contribution to Trump’s campaign but also for making a corporate contribution. In the event, American Media avoided prosecution altogether in the Cohen case through energetic cooperation with the authorities that continued as recently as last week, when Pecker testified for a second time before the Trump grand jury in Manhattan. That would have been harder to pull off before Citizens United.

Here’s how the money trail worked with McDougal. In June 2016, McDougal approached the Enquirer to sell the story of her affair with Trump. Pecker informed Cohen, who promised to reimburse Pecker if Pecker caught and killed the story. American Media paid McDougal off with $150,000 and an agreement to publish some stories by her (though none about sex with Trump). Cohen set up a shell corporation called Resolution Consultants (so much consulting!), and American Media, through yet another shell corporation, submitted an invoice to Cohen for $125,000; that was the portion of the McDougal payment judged to be straight-up hush money. But Pecker got cold feet (I’m guessing he mentioned the arrangement to a company lawyer) and canceled the reimbursement in October 2016, before Cohen made any payments. Pecker told Cohen to tear up their agreement, but he didn’t, and eventually it fell into the hands of federal prosecutors.

The fact that Pecker never received reimbursement from Cohen probably helped him avoid prosecution, but it didn’t spare American Media having to pay a civil fine of $187,500 to the Federal Election Commission in June 2021. The agreement required Pecker (as federal prosecutors had not) “not to contest” that the McDougal payment, made “in consultation with an agent of Donald J. Trump and for the purposes of influencing the election, constituted a prohibited in-kind contribution.” That fine would almost certainly have been higher had Pecker caught and killed McDougal’s story before Citizens United.

None of the foregoing speaks to the trickiest part of Manhattan District Attorney Alvin Bragg’s case against Trump, which reportedly will require him to demonstrate falsification of company documents in violation of New York law to avoid detection of federal campaign law violations. Since Pecker is now on record conceding that American Media’s payments to McDougal were unacknowledged in-kind campaign contributions, and since American Media was headquartered in Manhattan, Pecker may perhaps get indicted too. Alternatively, if Pecker ever discussed the matter with his good friend Donald Trump, Bragg may hold the threat of indictment over Pecker to get him to tell what he knows. This is all, of course, sheer speculation on my part—some might call it gum-beating— to pass the time as we await Tuesday’s Great Unsealing.

I’m not going to pretend that this whole squalid narrative wouldn’t have unfolded if Trump had run for president before Citizens United. Squalor and Trump go together like macaroni and cheese. But in the pre-Citizens United world, the parties might have shown greater restraint or, alternatively, they might have been easier to bring to justice. That’s yet another reason to rue the day the Supreme Court decided that corporations are people.