An Open-and-Shut Violation of Campaign-Finance Law

The relevant law is favorable to candidates. But it appears Trump still managed to violate it.

Vincent Kessler / Reuters

It is a strange turn of events when a president famous for denouncing “fake news” is discovered to have entered into an agreement with a media organization to finance the concealment of very real but politically unfavorable newsworthy information. The Wall Street Journal reports that Donald Trump entered into an explicit agreement with the chairman of American Media (AMI), David Pecker, to help his campaign by buying off women who claimed to have had affairs with Trump. AMI came through: It paid Karen McDougal $150,000 to “catch and kill” her account of an affair with Trump. She did not know at the time that the background agreement between AMI and Trump existed, but was instead told that in addition to compensation for the exclusive rights to her story and an option for columns on fitness and health, she would be the featured model on two magazine covers.

The deal that Trump reached and executed with AMI violates federal campaign-finance laws. AMI made an illegal corporate in-kind contribution to the Trump campaign, and the campaign and Trump share in the liability by accepting this illegal support. As open-and-shut cases go, this one is high on the list. But this is only part of what makes this a remarkable episode in the history of presidential-campaign lawbreaking.

For a candidate to break corporate-spending rules in a matter like this, involving friendly media organizations and embarrassing details about his personal life, is no mean feat. The relevant law is generally favorable to the candidate. Trump still managed to violate it.

There is, first, the question of what kind of help the candidate was seeking. As the case of the former vice-presidential candidate John Edwards demonstrated, candidates might successfully argue that in drawing on supporters’ funds to help them hide affairs, no political contributions were made or received, because the motive was personal, not political. When news first surfaced about Trump’s payments to the adult-film actress Stormy Daniels, one might have assumed that some similar argument could be available to Trump. Yet according to the direct testimony of those with whom he conspired, the Journal reported, Trump’s concern was political, not personal: He was defending his presidential campaign against potential harm.

Second, for a media organization to make a prohibited corporate contribution to a candidate, it has to depart materially from its performance “in its legitimate press function.” Media companies enjoy wide latitude in the production and dissemination of news stories, commentaries, and editorials. Any questions about legality are typically resolved in favor of the press. So if a media company sympathetic to a political candidate steers away from critical coverage, it may have committed an offense against journalistic ethics, but it is not operating outside of legal boundaries. This affords ample leeway for news editorials and coverage that are coordinated—that is, discussed and even planned—with a candidate.

But when the media duck does not quack like a duck and the actions taken are distinctly not ducklike, those legal protections fall away. An early case on the scope of the media’s exemption from campaign-finance regulation offered the example of “a partisan newspaper [that on Election Day] hired an army of incognito propaganda distributors to stand on street orders denouncing allegedly illegal acts of a candidate and sent sound trucks to the streets blaring the same denunciations, all in a manner unrelated to the sale of his newspapers.” A later court presented a different hypothetical of a press entity not performing a legitimate press function: soliciting donations to fund a political documentary exhorting its audience to vote for a particular candidate. The distinction here is one that separates the editorial page and standard news commentary on one side from clear-cut campaign activity on the other.

So AMI’s Pecker might have directed his tabloids to ignore the claims made by women alleging they had had affairs with Trump and stayed within the range of exempt press activity. But Pecker went much further, the Journal reported. He concluded an arrangement with a candidate to spend funds to quash a story that other media organizations would have chosen, in their legitimate press function, to publish and disseminate. He carried out this plan by lying to a source his company ostensibly paid for the rights to a story it had no intention of running. AMI was not acting as a press entity, but as an arm of the Trump campaign.

AMI has apparently concluded that it has no legal defense, because Pecker and his company have been actively cooperating with the government under an immunity agreement. It is not known whether the same lawyers who blessed the company’s original agreement with McDougal then reassessed and revised their position in the face of an active criminal investigation. If so, while they got it very wrong the first time, they did better later when prosecutors showed up at AMI’s door.

Apparently, when this deal was being considered, AMI lawyers concluded that because the offer made to McDougal included access to cover stories and the opportunity to write health and fitness columns, there was enough of a “business” arrangement to wash away the campaign-related purpose. This was wishful thinking rather than sound legal analysis. It seems clear from the facts the Journal reported that had it not been for the patently political arrangement between Trump and Pecker, the newspaper would not have offered McDougal this “business” opportunity and didn’t see much value in it. In fact, Michael Cohen, the president's lawyer, and Pecker discussed a sale of McDougal's rights to Cohen, who is, of course, not in the media business and did not intend to help McDougal meet any of her professional goals. Business had nothing to do with these machinations. In the end, AMI decided against accepting any payment from Trump.*

In fact, the pretext of a supposed business purpose worsened rather than mitigated AMI’s legal position. It is so evidently a sham that it underscores the intent of the parties to misrepresent to McDougal, and in the formal documentation, their true purpose, which was to fulfill a commitment to Trump to help him in his campaign. The attempt to dress up the deal with McDougal as a business proposition is not even a case of being too clever by half. It’s a clumsy cover-up.

This case has exposed the limits of legal protections for self-proclaimed press entities engaged in blatant electioneering activity. A similar issue arises for the Trump campaign in asserting a First Amendment defense in relation to its relationship to WikiLeaks in the strategic publication and dissemination of stolen emails. On the evidence to date, including emails released by an internal critic of WikiLeaks, that organization shared with Trump and with the Russian government the political objective of defeating Hillary Clinton. Julian Assange’s operation became a vehicle for the indiscriminate dumping onto the public record of whatever private materials, embarrassing or just distracting to the Clinton campaign, the Russians could acquire by hacking. The Trump campaign encouraged the hacking in its public statements and, through agents such as the president’s son, Donald Trump Jr., and Roger Stone, communicated with WikiLeaks. WikiLeaks’ supporting role in this scheme also raises the question of whether it was engaged in a legitimate press function, even generously construed.

The AMI episode has some bearing in one other respect on what we might understand about Trump’s personal complicity in yet another legal problem for the president: the Russian electoral intervention in 2016. In that case, as in the McDougal and Daniels matters, he denied any involvement in legally questionable activity. He specifically disclaimed any knowledge of the Russian government’s offer of help for his campaign that culminated in the June 2016 Trump Tower meeting. He denied knowing of or approving in advance the meeting, or being briefed afterward about the outcome. It was never credible that the candidate who ran the personal fiefdom called the Trump Organization as a one-man-show would be uninformed and uninvolved in a strategically sensitive matter so important to his campaign. The Journal reporting on Trump’s active, detailed engagement in the McDougal and Daniels payoffs confirms that this is not how he operates. It gives powerful additional reason to disbelieve his outright denial of participation in the Russian contacts.

In the meantime, this president, self-appointed scourge of the press, must face the legal consequences of his political deals with at least one—perhaps two—media organization. He might not normally worry too much about causing trouble for the media, except that he has also caused serious legal trouble for himself.

*This story originally said that the sale of McDougal's rights to AMI had been completed. We regret the error.