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From: Richard Kahn [ ii
Sent: 4/27/2018 8:25:30 PM
To: jeffrey E. [jeevacation@gmail.com]
Subject: Will Cohen Cooperate? Tenuous Finances May Provide Crucial Clues
Importance: High
shockingly it appears he has some money in real estate deals_
Will Cohen Cooperate? Tenuous Finances May Provide Crucial Clues
2018-04-27 08:00:00.2 GMT
By Shahien Nasiripour and Caleb Melby
(Bloomberg) -- In the two weeks since federal agents seized
the files of Michael Cohen, President Donald Trump's personal
attorney and fixer, a question has hovered: Will Cohen cooperate
with investigators?
His decision could depend in part on whether he can readily
shoulder the enormous legal fees required to fight a federal
probe of this magnitude.
At first blush, Cohen looks like a pretty rich man. He
drives a white Rolls Royce, sports a $50,000 watch and owns a
fair amount of Manhattan real estate.
But just as his loyalty to Trump is coming under scrutiny,
a more tenuous financial picture is emerging. A taxi business he
and his wife built is deeply in debt and losing money daily, his
commercial real estate is throwing off only modest income, and
his legal and consulting work is on hold while he remains under
investigation.
Cohen declined repeated requests to comment.
The owners of 32 New York City taxi licenses -- known as
medallions -- he and his wife, Laura, took out at least 16 loans
based on their once-soaring value, liens show. With the rise of
Uber and Lyft, the price of a medallion has fallen from more
than $1 million to around $163,000 in the past four years.
Income from the taxi business has plummeted, and millions of
dollars of the Cohens' loans went under water. Their bank said
in a November public filing that it had loans out to three taxi
borrowers, and all were at high risk of default.
Suspended Medallions
Unpaid taxes and fines have piled up at the Cohen taxi
companies, triggering a suspension of about half of the
medallions, city records show, squeezing cash flow.
Whatever monthly income the cabs once produced almost
certainly fell well short of the debt payments owed to Sterling
National Bank, their Montebello, New York-based lender. Sterling
has foreclosed on operators in similar situations and sued them
but appears to be taking a less-confrontational approach with
the Cohens. On Tuesday, the bank agreed to new loans for their
companies and to Cohen personally, public filings show. Sterling
declined to comment.
The taxi business isn't the only part of Cohen's empire
that's suffering. The law firm Squire Patton Boggs said it ended
its "strategic alliance" with Cohen after law enforcement raided
his offices, and the rest of his legal work could decline for
the same reason. Cohen, 51, makes others' ugly problems
disappear, a practice that was previously lucrative. Essential
Consultants LLC, a company affiliated with Cohen, was paid
$250,000 after he negotiated a $1.6 million payment to a former
Playboy model on behalf of Republican National Committee
official Elliott Broidy, according to a Wall Street Journal
report.
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Sean Hannity
Cohen has said in court that he had only three legal
clients during the past year: Broidy, Trump and talk-show host
Sean Hannity. He gave seven others "strategic advice and
business consulting."
Last month Cohen said he borrowed from his home-equity
credit line to make a $130,000 payment in October 2016 to Stormy
Daniels, an adult-film star who says she had sex with Trump.
In a Thursday morning appearance on "Fox & Friends," Trump
distanced himself from Cohen, saying he did only "a tiny, tiny
little fraction" of Trump's legal work, but it included
representation "on this crazy Stormy Daniels deal."
Russian Interference
Cohen is under investigation for bank fraud and violating
campaign-finance law. But his decade at Trump's side as his
lawyer and enforcer could yield information he might trade to
investigators looking into the Trump campaign and Russia's
interference in the U.S. election.
Still, if he chooses to defend himself, Cohen does have
assets. Companies he signs for own two investment properties
purchased in 2015. The larger one, with 92 units on New York's
Upper East Side, is 38 percent owned by Cohen's companies. The
businesses also appear to be the sole owner of a downtown
building with 20 units.
Together they likely generate less than $1 million in
annual net income for Cohen's companies after accounting for
partner interests, expenses and financing costs, data compiled
by Bloomberg show. Debt against the buildings is low, meaning
that Cohen could tap them for cash. Last October, the Cohens
sold a unit at Trump World Tower, near the United Nations, for
$3.3 million.
Cohen has been a savvy property investor. He previously
owned four buildings in need of repairs in Lower Manhattan,
rehabilitated them and sold them for $32 million in 2014, more
than doubling his initial investment.
'Cautious, Methodical'
Richard Guarino, a partner at Friedman-Roth Realty, has
worked with Cohen on a handful of deals, including the purchase
of his Upper East Side building. As a real estate investor,
Cohen is "cautious, methodical, smart and, I think,
conservative," Guarino says.
Cohen's current business partners are a family of New York
real estate lawyers headed by Herbert Chaves. The family, having
just sold a plot of Brooklyn land to a partnership including the
family company of Jared Kushner, were looking to reinvest their
gains when they bought Cohen's Lower Manhattan buildings in
2014. Months later, they partnered with Cohen to buy the Upper
East Side property, 330 East 63rd Street. Guarino, a broker on
the deal, says he dealt only with Cohen, who served as a
representative for the investor group even though the Chaves
family companies hold the majority stake.
Purchased for $58 million, the squat, brown-brick seven-
story building has only a $17 million mortgage, meaning Cohen's
share has at least $15 million of equity he could borrow against
if his partners allowed him to do so. Another property at 133
Avenue D, not previously reported to be owned by Cohen, has at
least $5 million of equity not tapped by a mortgage. But more
debt means more risk and could hurt Cohen later if the taxi
business doesn't turn around to help cover higher interest
payments.
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Park Avenue
One property that may prove harder to extract cash from:
Cohen's palatial Park Avenue home. Purchased for $5 million in
2005, the sprawling 10th-floor unit used to be three separate
apartments and has four bedrooms. It could be worth $8 million
or more, based on comparable sales.
In late 2015, the Cohens moved the property into a type of
trust designed to limit tax exposure when transferring property
to heirs. The trust structure has tax consequences for typical
mortgages, but those could be dodged if the Cohens took out an
interest-only loan.
In February 2016, Laura Cohen, in her role as a trustee of
the new entity, did just that, taking out a revolving $500,000
home-equity line of credit against the property from First
Republic Bank. It was the first time the family had borrowed
against the property since a loan of more than $2 million 11
years earlier when they bought it, property records show.
There are also Cohen's in-laws, who may pitch in to a
legal-defense effort. Fima and Ania Shusterman, who haven't
responded to requests for comment, emigrated from Ukraine and
built their own taxi empire over decades while helping Cohen
expand his across New York and Chicago. They own three units in
Trump World Tower. In an indication of their willingness to help
those close to them, the couple have lent $20 million to another
Ukranian couple in the taxi business, Semyon and Yasya Shtayner
and their companies.
Richard Kahn
HBRK Associates Inc.
575 Lexington Avenue 4th Floor
New York, NY 10022
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