Here is the argument that the lawyers for Stormy Daniels should make but have not yet made. It should be a winner.
Courts do not enforce illegal contracts. I learned that in 1958 in my first semester of my Contracts course in law school. Imagine if Alfie contracted with Ben to pay Ben $10,000 to bump off Charlie, and Ben, having been paid the $10,000, reneged. Imagine further that Alfie sued Ben for specific performance, seeking a judicial decree that Ben should complete the murder or, in the alternative, return the proceeds. There is not a court in the land that would not dismiss Alfie’s suit and sanction his lawyer. Both lawyer and litigant would be treated to a rousing from-the-bench chorus of The Closing Song (“Get the fuck out of here”). The same would be true of a suit to enforce a contract to embezzle and share the proceeds, or even a suit to recover the proceeds of a harmless but illegal bet.
This hush-money contract was illegal. It was illegal when entered into as it violated campaign finance laws. Who can doubt that the payment of $130,000 was intended to influence the outcome of the presidential election? No finder of fact would rule that the timing was coincidence. The events sought to be hushed up (the sex) we’re eight years earlier but the election only eight days away.
But most telling is the hush money contract itself: an elaborate and comedic effort to hide the source of the funds; hiding the source of an illegal payment is definitional money laundering. Even Trump’s name is hidden with a silly alias and a juvenile ”side letter.” The money is washed through Essential Consultants, LLC, an entity that Trump lawyer Michael Cohen created for that purpose. Why a Delaware LLC? Because Delaware is unusual in that it does not require public disclosure of who formed or is behind the LLC. It is even unlawful for LLCs to make federal campaign contributions in any amount. It is thus obvious that the very objective of the contract was, from Essential’s and Michael Cohen’s standpoint, to hide and not to report the unlawful campaign contribution, let alone its unlawful source.
Here is the link to the complaint filed on behalf of Stephanie Clifford (better known by her porn star screen name, “Stormy Daniels”) against Donald Trump. documents.latimes.com/… and Michel Cohen’s single-purpose entity, Essential Consultants LLC, formed for the specific purpose of entering into the hush money agreement. Note that the complaint attaches the original agreement between Stormy Daniels, Donald Trump, and Essential Consultants, LLC. We all get to read the original agreement, signed by Ms. Daniels on Haloween, 2016, eight days before the 2016 election. There are, incidentally, some facts we did not know, some insight into why Trump and Cohen were so worried. For starters, this was no one-night stand — it went on for a year while Melanie Trump was post-partum.
For Stormy, the stakes are high. Her lawyers quite appropriately, seek a declaratory judgment of a present and ripe controversy because she cannot risk the consequences of disclosure, because disclosing, then being sued, then losing, would be ruinous. But if she is free to disclose without the threat of money damages, just imagine the bidding wars among HBO, Netflix, and Showtime for the TV rights, and similar opportunities for big-buck book contracts, movie rights, action figures, and more. For Trump, the stakes are higher, not because of the sex scandal but because of ridicule.
Stormy argues that the contract is invalid because Trump did not sign it. This is a decent but probably not a winning argument, because Stormy took the $130,000. There is also a (from Stormy’s vantage point) horrible arbitration clause. Courts love to enforce arbitration clauses, but the way to beat this one is if the contract was illegal and void (as lawyers say), ab initio, meaning “from the instant it was made.” No contract, no arbitration clause.
So please, Stormy’s lawyers, please amend your complaint to argue that the contract was illegal to begin with, ab initio, and that neither courts nor arbitrators may enforce an illegal contract. The court should thus rule the contract unenforceable, and thus rule that Stormy Daniels is free to tell her story.
Isn’t it outrageous that the arbitrator issued a temporary restraining order forbidding Stormy from telling her story — and the dumbass arbitrator did so without even hearing Stormy’s argument. Prior censorship almost always violates the First Amendment, but is that much worse when the side suppressed does not even get to make its arguments.
I must apologize for lack of legal citation. There are 18 inches of snow here in Morris Township, NJ tonight, and it knocked out my WiFi and with it my access to my research tools. I am relegated to my IPad tonight. But I am quite certain that all arguments are correct. I promise to supplement this if there is much interest in this post.
So many side-suspicions of fact occur and should be investigated. Did Cohen cause Essential to take a $130,000 tax deduction that he passed through the LLC to himself? Did the $130,000 or any part of it come from a foreign source? Maybe Russian?
This is not going away very soon.