When a Manhattan judge sentenced Michael Cohen to three years in prison, the Justice Department issued what appeared to be a standard press release trumpeting the events. The announcement, however, carried an unexpected subhead, stating that the Justice Department had also entered into a nonprosecution agreement with American Media Inc., the parent company of the National Enquirer. The news was a powerful example of the strength of the government’s investigation—making clear the severity of the potential campaign finance case against President Donald Trump and securing an unusual admission of electoral interference by a national corporation. But it also exposed the Justice Department’s weakest quality—its inability to impose significant (or in this case any) penalties on corporations. While its message to Trump is strong, the case tells America’s corporate entities that they can do what they want—they have little to fear from DOJ.
A Sept. 20 letter detailed the nonprosecution agreement between the Justice Department and AMI, which both parties agreed to keep secret until after the November midterm elections. The agreement recounted a yearlong scheme to use AMI’s corporate activity to assist Trump’s election. According to the agreement, AMI’s chairman and CEO, David Pecker, made an August 2015 offer to Cohen and an unnamed campaign official to use AMI to identify and resolve potential negative stories about then-candidate Trump. In June 2016, Pecker did just that when an attorney for Karen McDougal approached Pecker about her allegations of an affair with Trump. That August, AMI purchased McDougal’s limited life rights to the story in an attempt to suppress the news and prevent any damage to Trump’s campaign. Pecker then agreed to assign the rights to McDougal’s story to Cohen for $125,000 and ordered a consultant working for him to create a shell company to facilitate the payment. Pecker sent a signed assignment agreement to Cohen but (for some unknown reason) ended the deal before Cohen made the payment.
The factual details that the government uncovered are remarkable for a number of reasons. First, they show the strength of the prosecutors’ investigation into Trump’s activities, especially when compared with its closest analogue—the campaign finance fraud case against 2008 presidential candidate John Edwards. That case ended in a mistrial when prosecutors failed to convince jurors that payments an Edwards’ donor made to the candidate’s mistress were meant to help his presidential campaign, rather than protect his family from heartache. This cast a shadow on the Justice Department’s campaign finance investigation of Trump. With Trump, prosecutors have left nothing to chance. Cohen, in his plea, swore that he made the payments at Trump’s direction for the purpose of helping Trump’s campaign. With AMI, the government has also secured an admission from the company that it, too, made the payments to help Trump’s campaign, fully knowing they were illegal.
This admission is all the more remarkable because it is being made by a national corporation. While the Justice Department routinely prosecutes campaign finance violations, most illegal donation cases involve instances of excessive donations—situations in which the defendants find ways to financially support a political campaign beyond the legally allowable limit often through the use of conduit donors. The Justice Department has, from time to time, charged defendants with illegal corporate donations, but these instances are rare and often involve obscure companies. AMI, on the other hand, is a national corporation that not only publishes the Enquirer, but also OK!, Star magazine, Men’s Journal, and others. And while companies have regularly made admissions (or half admissions) of illegal interference in foreign governments’ affairs, a confession of domestic campaign finance wrongdoing by such a prominent organization is not only rare, it is not nonexistent.
Yet the resolution with AMI falls short of a just outcome. There are no charges against AMI. The DOJ did not even require that AMI pay a fine. This all speaks to the department’s reluctance to hold corporations to the same standards to which it holds individuals. The government has been gun-shy about charging corporations since its 2002 indictment of Arthur Andersen led to the loss of thousands of jobs. During the decade I spent as a white-collar prosecutor, Arthur Andersen loomed over us. It was a cautionary tale of the unintended consequences of prosecuting corporations—that a criminal charge would inevitably be a corporate death penalty. The government has assiduously tried to avoid this “Andersen effect” in the intervening years. But the Justice Department’s course correction has had its own ill side effects—too many companies have been let off with a simple fine and no criminal charges, even as experts dispute the theory that criminal charges necessarily equate to the destruction of a corporation. Here, AMI played a key role in subverting a free and fair presidential election. The company’s chairman and CEO initiated the offer of assistance to the Trump campaign and—incredibly—he remains in place as the head of the company. In a country where people can lose their job for smoking marijuana, David Pecker admitted to engaging in election fraud in a presidential election but gets to stay in his multimillion dollar position and his company only has to develop new compliance programs.
In fairness, two key factors also complicated any potential case against AMI. First, its role as a media company grants it a special status in criminal investigations. The First Amendment’s speech and press protections are so broad and fundamental to the maintenance of a democratic republic, the Justice Department is loath to ensnare media companies in criminal investigations. Even perfunctory subpoenas—which would be routine when directed at any other corporation—require direct attorney general approval when issued to the press. Bringing charges against a media conglomerate like AMI would subject the Justice Department to a level of scrutiny and criticism that would likely distract from its real targets, no matter how legitimate the case against AMI might be.
Which points to the second factor: that David Pecker is a small fish when compared with Cohen and possibly Trump, the actual candidate who engaged in campaign finance fraud. It is hard to criticize the prosecutors who, along with the investigating agents, have done an incredible job finding and presenting often difficult-to-uncover evidence. The case exposes the many ways wealthy individuals like Trump can leverage their resources to abuse the electoral system. Besides the excessive political spending they made outside of the legitimate campaign finance system, Trump and Cohen employed other staples of white-collar malfeasance like shell companies to hide their expenses and attempted to shield their activity through the invocation of the attorney-client privilege. Exposing these deeds is a significant achievement for the government and, more importantly, the public.
However, while holding Cohen—and perhaps Trump—accountable for those abuses is a key step in curbing them, society does not benefit from giving a free pass to corporations. Even the most sacrosanct privileges—like those accorded to the attorney-client or spousal relationships—melt away when used to engage in criminal activity. Press protections are no different. The Constitution protects the press because of the vital role the press plays in safeguarding a free republic. Of all corporations, a news company should not expect to survive unscathed when it acts illegally to undermine democratic norms and unlawfully tip the electoral scales. The government grants companies the privilege of legal “personhood” so that they can avail themselves of some of the rights that individuals enjoy in this country. But they must also bear the same responsibilities. AMI used its corporate resources to illegally help Trump’s candidacy. It should face more consequences.
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