Trump denies wrongdoing, says lawyer's tape 'perhaps illegal'

[July 23, 2018]  By David Brunnstrom and Karen Freifeld

WASHINGTON (Reuters) - U.S. President Donald Trump on Saturday denied any wrongdoing a day after reports that his onetime attorney Michael Cohen had recorded them both discussing buying the rights to a story by a woman who said she had an affair with Trump.

The president said in a tweet it was "perhaps illegal" for a lawyer to record a client. An attorney for Cohen called Trump's statement "false."

"Inconceivable that the government would break into a lawyer’s office (early in the morning) - almost unheard of," Trump tweeted, in an apparent reference to an FBI raid on Cohen in April.

"Even more inconceivable that a lawyer would tape a client - totally unheard of & perhaps illegal. The good news is that your favorite President did nothing wrong!" Trump added.

Trump lawyer Rudy Giuliani told Reuters on Friday Cohen recorded a conversation with Trump in September, two months before the 2016 election, in which they discussed buying the rights to a story by a former Playboy model, Karen McDougal, who said she had an affair with Trump.

On Saturday, Giuliani told Reuters the conversation was held at Trump’s office in Trump Tower and that Cohen used a hidden device to record the conversation. In New York state, it is legal to record a conversation if one party consents.

Giuliani said no campaign funding was involved in the discussion between Trump and Cohen, who has distanced himself from Trump in recent months as the FBI investigates Cohen's business dealings. If campaign funds were used, that could run afoul of federal election law, legal experts say.

In a tweet on Saturday, a lawyer for Cohen, Lanny Davis called Trump and Giuliani's strategy "flawed" and the president's Twitter statement against Cohen "false."

"Rudy claims the tape is 'exculpatory.' Why so angry?" Davis added.

Before the election, the Trump campaign denied any knowledge of payment to McDougal, but the taped conversation could undermine those denials.

The existence of the audio recording was first reported by the New York Times, which said Trump and Cohen discussed a potential payment to McDougal.

Giuliani said the conversation involved reimbursing the parent company of the National Enquirer tabloid for McDougal's story rights. The payment was never made, he said.

"It's pretty clear from the tape, it's the first time Trump is finding out ... AMI had bought the rights from McDougal," Giuliani said in a short interview on Saturday.

AMI, American Media Inc., is the parent company of the National Enquirer. Giuliani added that Cohen was speaking with Trump to tell him that information and Cohen recommended Trump buy the rights from AMI.

Giuliani had earlier denied Trump had an affair with McDougal. He said the tape would show that Trump makes clear that if there is going to be a payment, it should be done by check, which would be easily traced.

President Donald Trump participates in a cabinet meeting at the White House in Washington, U.S., July 18, 2018. REUTERS/Leah Millis

Speaking on Friday, Giuliani said the FBI seized the recording this year during a raid on Cohen's office.

The FBI investigation stemmed in part from a referral by the U.S. special counsel's office, which is looking into possible coordination during the election campaign between Trump's aides and Russian officials. Moscow denies U.S. allegations that it interfered in the election and Trump denies any campaign ties to Russian officials.

A representative for McDougal has not responded to requests for comment. The White House had also declined comment.

McDougal has said she began a nearly year-long affair with Trump in 2006 shortly after his wife, Melania, gave birth.

She sold her story for $150,000 in August 2016 but it was never published by the National Enquirer, a practice known as "catch and kill" to prevent a potentially damaging story from becoming public. David Pecker, the chairman of parent company American Media Inc (AMI), is Trump's friend.

Giuliani said the discussion of payment did not mean McDougal’s claim of an affair was true and characterized it as an attempt to resolve false allegations that were "personally damaging" to Trump.

Under U.S. election law, presidential candidates must disclose campaign contributions, which are defined as things of value given to a campaign in order to influence an election.

Giuliani said the proposed payment was a personal matter and not subject to campaign finance law.

The New Yorker magazine reported in February that Trump had an affair with McDougal at the same time he had a relationship with porn star Stormy Daniels and that the National Enquirer prevented McDougal's story being made public.

The White House has said Trump denies having sex with Daniels.

Federal prosecutors in New York are investigating Cohen for possible bank and tax fraud, and for possible campaign law violations linked to a $130,000 payment to Daniels and other matters related to Trump's campaign, a person familiar with the investigation has told Reuters. Cohen has not been charged with any crime.

(Reporting by Andrew Heavens, David Brunnstrom and Karen Freifeld; additional reporting by Roberta Rampton; Editing by Nick Zieminski)

[© 2018 Thomson Reuters. All rights reserved.]

Copyright 2018 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.