Michael Avenatti’s bombshell disclosure of banking records associated with President Donald Trump’s former attorney and his references to Suspicious Activity Reports (SARs) has put him in a precarious situation and put the source of the leak in jeopardy of prosecution, according to numerous sources who spoke to his reporter. The Department of Treasury’s Inspector General has initiated an investigation into the leaks and on Wednesday, The New Yorker published an article revealing an unnamed law enforcement official, who claims to be a “whistleblower” because they were concerned that Suspicious Activity Reports on Cohen were missing from the system.
“There certainly is a vitally important role in our system for a true whistleblower, but that clearly is not this situation”
Avenatti, who represents adult film actress Stephanie Clifford, whose stage name is Stormy Daniels, shared this month what he dubbed an “executive summary” allegedly containing carefully guarded and private information related to New York Attorney Michael Cohen’s banking records. However, by the end of last week, it was discovered that some of the information he shared actually belonged to several other men named Michael Cohen, one an Israeli national and the other a Canadian living in Tanzania, according to news reports.
David Schoen, a criminal and civil rights attorney said The New Yorker article made it clear that the information came from Suspicious Activity Reports.
“There certainly is a vitally important role in our system for a true whistleblower, but that clearly is not his situation,” said Schoen.
Schoen noted that New Yorker article acknowledges that there might have been “fully legitimate, law enforcement reasons for the absence of the reports at issue from the database the leaking official checked.”
“Secondly, the underlying matter is the subject of a full blown ongoing investigation which undoubtedly will examine all relevant SARs and the database at issue would not have been the only repository for the ones in question and this certainly was not time-senstive information of pressing national security interest or anything of the sort…if the official’s motivation truly were to ensure that the underlying information was not withheld from law enforcement, there were back door channels open to him or her to ensure that the appropriate law enforcement officials got it; but here the information the official unilaterally decided to make public was given to several news outlets and somehow and for some reason to “Stormy Daniels,” attorney who promptly trumpeted it out all over the media and who threatened to disclose more.”
The Department of Treasury’s Inspector General opened an investigation after the information was disclosed into whether Cohen’s SARs records, along with the other Michael Cohen records, were illegally obtained in violation of the Bank Secrecy Act. According to the records released, Cohen allegedly used his connections to President Trump to make money from AT&T and the drug-maker Novartis. Cohen is under investigation by the U.S. Attorney in the Southern District of New York, on referral from Special Counsel Robert Mueller’s office.
Avenatti told this reporter he is in no way responsible for the information he obtained.
“I’m not at all concerned about the Treasury investigation,” said Avenatti, in a phone interview Tuesday. “There is no evidence what-so-ever that I’m under any investigation and any suggestion otherwise is baseless.”
Last week, Avenatti refused to say on MSNBC’s Rachael Maddow show how he obtained the information regarding Cohen’s banking history. Avenatti also threatened to sue the Hollywood Reporter and The Daily Caller over their reporting.
Avenatti referred to a 2015 JPMorgan Chase Bank case, which states that although the Banking Secrecy Act “expressly forbids disclosure only by reporting financial institutions and their officers and agents, and by government entities, officials, and agents on the receiving end of SARs…it would appear that neither the Act nor the regulations restrict third parties—that is, parties on neither the financial-institution side nor the government side of a SAR exchange—from disclosing the existence or non-existence of a particular SAR.”
The confusion over the various Michael Cohen bank records is revealing because it eliminates the possibility that Avenatti has Cohen’s actual bank records, said Robert Barnes, a Civil and Criminal Tax attorney, whose firm is based in Los Angeles.
“Federal law makes it a crime to aid and abet another’s crime,” said Barnes. “If Avenatti aided and abetted the disclosure of a SAR from FinCEN or bank records protected by the Bank Secrecy Act, then he is as liable for the crime as the person who leaked the information to him.”
Barnes noted that the “law only requires the government prove Avenatti acted in some affirmative manner designed to get the leaked information. Given Avenatti’s legal history and his high-profile role in leaking this information publicly, he would be a primary target of any federal criminal investigation.”
Barnes said that obtaining SARs, even on cases with his own clients, is extremely difficult.
“The government considers them that confidential and obtaining one can only be directly related to a currency structure case,” he said. “They can’t have lawyers doing what Avenatti did by leaking these reports. He could neither elicit it or solicit the reports. Further, he can’t give someone the motivation to do it or give them an incentive or reward for leaking it.”
Avenatti said on Twitter that journalists should seek out and demand the three Suspicious Activity Reports on Cohen from the Treasury Department. Those reports, however, are kept carefully guarded in the Department’s Financial Crimes Enforcement Network system, also known by its acronym FinCEN, which is only accessible to law enforcement and government officials for investigation purposes.
Why is no media outlet doing a story on the refusal of the Treasury Department to release to the public the 3 Suspicious Activity Reports that were filed concerning Essential Consultants, LLC's bank account? This deserves immediate attention. The SARs should be released now.
— Michael Avenatti (@MichaelAvenatti) May 9, 2018
Steve Hudak, the chief of FinCEN’s public affairs office, told this reporter that SARs are generated to help combat money laundering and terrorist financing. He noted that FinCEN makes the records accessible to other government agencies but the reports are considered “confidential, not to be disclosed to the public, and not available under FOIA (Freedom of Information Act).”
“FinCEN protects this confidentiality as part of its mission, and in order to protect both filers and potentially named individuals,” Hudak added. “Unlawful disclosure of a SAR can trigger significant criminal penalties. FinCEN neither confirms nor denies the existence of purported SARs in response to particular inquiries.”
The Justice Department’s guidelines for charging a person with “aiding & abetting” is significant, particularly because Avenatti, as a lawyer, would be aware of the depth of the law. For example, the DOJ elements of assisting “may be of a relatively slight moment” yet a person be guilty of the crime, said Barnes.
Avenatti has also come under fire recently. The Seattle Times wrote an expose saying Avenatti faced allegations of bad business dealings after his investment firm purchased a bankrupt Tully’s Coffee for $9.15 million. The Seattle Times noted that Avenatti’s company has been named in more than 50 state and federal legal complaints. Those complaints include “commercial lawsuits, breach of lease actions and warrants for unpaid taxes, court records show,” according to the article. The article also linked to a complaint submitted to the California State Bar Association. The complaint, filed by Bellevue attorney David Nold, alleges Avenatti was behind “a ‘pump and dump’ scheme through his Washington state-registered Tully’s ownership firm, Global Baristas US, LLC.”
“The Seattle Times story is complete bullshit,” said Avenatti, but he declined to expand on any of the allegations in the story. Fox News recently disclosed a California Bar investigation into Avenatti for unpaid taxes.
A former law enforcement official, with knowledge of the FinCEN system, said narrowing the field of players who had access to Cohen’s information is easy to ascertain and the person who leaked the reports will more than likely be caught.
“If they want to find out who leaked the reports it will not be difficult,” the former law enforcement official said. “FinCEN tracks everyone who logs into the system to access reports. It tracks to the terminal from where the report was generated and can track it to somebody’s password and user login.”
Even if Avenatti is not a target of the investigation because he’s not covered under the Banking Secrecy Act prohibition, he more than likely caused the exposure of his source who then undoubtedly will be prosecuted for violating the act, the law enforcement official said.
As in the case of Cohen, the Treasury Department’s Inspector General investigators can track who had access to Cohen’s report from the date that the suspicious activity report was entered into the system until the date it was leaked to Avenatti, the law enforcement official said.
“Take those people who logged in and interview them, polygraph them if you have to, ” said a former senior law enforcement official, with knowledge of how the system works. “If someone accessed it you can see if they sent it from their account, downloaded it to another form of Digital media, or if they printed it and that’s how the system protects itself.”
“That is unless someone got a picture of it on their cell phone,” the law enforcement official said.
According to the Bank Secrecy Act Advisory Group, on the FinCEN website, the unauthorized disclosure of information from Suspicious Activity Reports “is not only a violation of federal criminal law, but it undermines the very purpose for which the suspicious activity reporting system was created – the protection of our financial system through the prevention, detection, and prosecution of financial crimes and terrorist financing.”
According to FinCEN the “unauthorized disclosure of Suspicious Activity Reports can compromise the national security of the United States as well as threaten the safety and security of those institutions and individuals who file such reports. The laws safeguarding SARs ensures “that anyone who makes an intentional, unauthorized disclosure of a Suspicious Activity Report is brought to justice, whether that person is inside or outside of the Government.”
Last week Avenatti attempted to address the mix up regarding the different Michael Cohen information he released to the public. He went to Twitter again and stated that those who criticize him “fail to address, let alone contradict, 99% of the statements in what we released. Among other things, they effectively concede the receipt of the $500,000 from those with Russian ties.”
Avenatti alleged that Cohen had received payments after the 2016 election. He said the company is linked to Viktor Vekselberg, a Russian oligarch with close ties to Moscow.