Trump's Campaign Finance Law Violations: What We Know

Former US President Donald Trump has been accused of violating campaign finance laws in the US. In April 2023, Trump was indicted on 34 felony charges of falsifying business records in the first degree. The charges centre on false invoices that Trump approved to conceal hush-money payments to two former mistresses, Stormy Daniels and Karen McDougal, during the 2016 election campaign. The payments were made through Trump's former lawyer, Michael Cohen, and amounted to $130,000 for Daniels and an undisclosed sum for McDougal. Cohen pleaded guilty to campaign finance violations in 2018 and served time in prison. Trump has pleaded not guilty to the charges and decried the case as a witch hunt. The case against Trump is the first criminal prosecution of a former US president in the country's history.

Trump's violation of the Federal Election Campaign Act

In 2023, former US President Donald Trump was indicted in Manhattan on 34 felony charges of falsifying business records in the first degree. The charges were related to hush-money payments made to two former mistresses during the 2016 election campaign: Stormy Daniels and Karen McDougal. Trump's former personal attorney, Michael Cohen, paid Daniels $130,000 through a shell company, Essential Consultants LLC, and arranged for the National Enquirer's parent company, AMI, to buy the rights to McDougal's story and not publish it.

These payments constituted a violation of the Federal Election Campaign Act, as they were made to influence the election and were not disclosed as campaign spending. Trump's failure to report these expenses was a breach of the transparency requirements set out in the Act, which was passed in 1974 after the Watergate scandal.

In addition to the initial violation, Trump took further steps to conceal the payments, working with Cohen and executives at the Trump Organization to hide the transactions. Cohen issued fake legal invoices to the Trump Organization, which were paid from business coffers as if they were legitimate legal bills rather than hush-money reimbursements.

The Federal Election Commission (FEC) failed to hold Trump accountable for these violations. Despite recommendations from its nonpartisan professional staff, the Commission, in a party-line split, voted to find only AMI and its CEO, David Pecker, responsible in the McDougal case. Similarly, in the Stormy Daniels case, the Commission did not enforce any penalties against Trump or his associates, again due to a partisan deadlock.

The FEC's inaction led to criticism and legal challenges from watchdog groups, such as Free Speech for People and Common Cause, who filed formal complaints regarding Trump's violations of campaign finance law.

Hush money payments to Stormy Daniels

In 2016, adult film star Stormy Daniels (whose real name is Stephanie Clifford) was paid $130,000 in exchange for her silence about a sexual encounter with Donald Trump at Lake Tahoe, Nevada, in 2006. Trump has denied the encounter.

Twelve days before the 2016 election, Cohen wired the money to Daniels' lawyer using a shell corporation funded through a Manhattan bank. Daniels was paid after indicating she was willing to speak to either the National Enquirer or on television confirming the encounter.

After his 2016 victory, Trump reimbursed Cohen with money from two sources: a trust that held the Trump Organization's assets and from his personal bank account.

In 2018, Cohen pleaded guilty to campaign finance violations over the hush money payments to Daniels and another woman, Karen McDougal. He testified that Trump directed him to make the payments "for the principal purpose of influencing the election."

In March 2023, a grand jury indicted Trump on 34 felony charges of falsifying business records in the first degree. These charges centre on the false invoices that Cohen submitted, with Trump's approval, to the Trump Organization for reimbursement for bogus "legal services" that were actually reimbursements for the payoff to Daniels.

In May 2024, a jury convicted Trump of falsifying records to cover up the payment made to Daniels before the 2016 election.

Trump's use of campaign funds to pay legal fees

Since leaving office, former US President Donald Trump has been involved in a multitude of criminal and civil cases, some related to his time in office and some not. To cover the legal fees, Trump has turned to his political action committees (PACs), using campaign donor money to pay costs for which he would otherwise be personally liable.

Trump has used money from various PACs to pay for his legal fees, including the MAGA PAC, Save America, and MAGA Inc. This is possible due to a loophole in campaign finance law that prohibits candidates from using campaign committee funds for personal expenses but does not apply this ban to PAC funds. Through early 2024, MAGA PAC spent $30 million on Trump's legal expenses, with roughly another $70 million coming from Save America.

Trump's use of PAC money to cover legal expenses, even for personal matters, is likely to continue due to loopholes in the law and lacklustre enforcement by the FEC. Experts argue that the use of campaign funds to pay for his Mar-a-Lago classified documents case would violate personal use rules, as the alleged crimes occurred after Trump's presidency. However, it is easier to justify the use of campaign funds for litigation involving Trump as a candidate contesting the 2020 election results.

In addition to using PAC money, Trump has also been accused of using an intermediary firm, Red Curve, to conceal payments of $7.2 million in legal fees. Red Curve, run by the treasurer for the Trump campaign and four related political committees, does not appear to offer legal services, leading watchdog groups to accuse Trump's campaign of violating campaign finance law by concealing payments.

The involvement of the Trump Organization

The Trump Organization was central to the campaign finance law violations that former US President Donald Trump was accused of. The organization's personnel and resources were used to facilitate the hush-money payments to two former mistresses, Stormy Daniels and Karen McDougal, in the run-up to the 2016 election.

Trump, through his former personal attorney and fixer, Michael Cohen, arranged for these payments to be made to prevent potential damage to his presidential campaign from the revelation of extramarital affairs. Cohen paid Daniels $130,000 through a shell company he set up, Essential Consultants LLC. In McDougal's case, Cohen arranged for the corporation that owns the National Enquirer, AMI, to buy the rights to McDougal's story and then bury it.

To conceal these transactions, Cohen submitted false invoices to the Trump Organization, which reimbursed him from business coffers as if they were legal bills rather than hush-money payments. Trump personally signed at least one of these checks. The involvement of the Trump Organization's personnel in processing these payments and invoices was a key aspect of the case.

The Manhattan District Attorney's Office indicted Trump on 34 felony charges of falsifying business records in the first degree. These charges centered on the false invoices that Cohen submitted, with Trump's approval, to the Trump Organization for reimbursement for bogus "legal services" that were actually reimbursements for the payoffs to Daniels and McDougal.

The Trump Organization's role in processing the payments and invoices, with the approval of its chief financial officer, Allen Weisselberg, was a key piece of evidence supporting the felony charges. The organization's personnel handled the transactions and invoices, even though the payments were made from Trump's personal accounts or a Trump family trust. This involvement brought the case within the scope of New York's corporate record-keeping law, which requires the falsification of records of "an enterprise."

The Trump Organization's role in the scheme also highlighted the failure of federal authorities to hold Trump accountable for campaign finance violations. Federal prosecutors in the Southern District of New York showed interest in the hush money payments, but they did not charge Trump. The Federal Election Commission (FEC) received complaints about the payments but failed to take decisive action due to partisan deadlock.

As a result, it was left to the Manhattan District Attorney to pursue justice, leading to the indictment and criminal trial of a former US president, an unprecedented event in American history.

The role of intermediaries in concealing payments

The intermediaries involved in these transactions played a crucial role in facilitating the alleged concealment of payments. In the case of Stormy Daniels, Trump's former attorney, Michael Cohen, set up a shell company called Essential Consultants LLC to facilitate the $130,000 payment. Cohen then created fake legal invoices, which were paid by the Trump Organization as if they were legitimate legal bills rather than hush-money payments.

In the case of Karen McDougal, Cohen arranged for AMI, the corporation that owns the National Enquirer, to buy the rights to McDougal's story and not publish it. This involved coordination with AMI's CEO, David Pecker, a close ally of Trump, who was also implicated in the Federal Election Commission's findings.

In addition to Cohen and Pecker, Bradley Crate, the treasurer for the Trump campaign and related political committees, has also been implicated in facilitating concealed payments. A watchdog group, the Campaign Legal Center, filed a complaint accusing Trump's political committees of using Crate's company, Red Curve, "as a conduit to conceal payments" for legal services totalling $7.2 million. The complaint alleges that Red Curve did not appear to offer legal services, and that the payments violated the reporting requirements of the Federal Election Campaign Act.

The use of intermediaries and shell companies by Trump and his associates has been a key tactic in allegedly concealing payments and obscuring the true nature of transactions. These complex financial arrangements have made it challenging to establish clear evidence of campaign finance law violations, and Trump has denied any wrongdoing. However, the involvement of intermediaries has been a central thread in the investigations and legal proceedings related to Trump's alleged violations.

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