Donald Trump's alleged hush payment to adult film actress Stormy Daniels has become a new legal challenge for the White House, grabbing headlines from Special Counsel Robert Mueller's ominous Russia collusion investigation.
Weeks before the 2016 election, Daniels — whose real name is Stephanie Clifford and who gained fame as a pornographic film actress and director — was about to go public with an alleged 2006 affair with Trump.
Instead, she negotiated a deal with the billionaire's personal lawyer and fixer Michael Cohen to remain silent for $130,000.
That October 2016 deal, a binding non-disclosure agreement (NDA), was secret.
In it, Trump and Daniels were referred to as David Dennison or "DD" and Peggy Peterson or "PP."
The deal says that "PP" has physical evidence, such as pictures or text messages, that relate to "DD", which "PP" had allegedly threatened to sell or release publicly.
The agreement requires "PP" to turn over the evidence, and says she will be liable for penalties of $1 million each time she violates the agreement, including making disparaging remarks about "DD."
That kept the affair quiet until January 12 of this year, when The Wall Street Journal reported that Daniels had been paid $130,000 in hush money ahead of the November 2016 vote.
A week later, the Journal reported details of Cohen's payment, blowing away his denials, and he finally admitted making the payment out of personal funds.
In March, Daniels sued to have a judge rule the non-disclosure agreement null and void, both because Cohen had spoken to the media about it and because Trump never himself signed it.
Cohen countersued for millions of dollars, citing Daniels on multiple counts of breaking the agreement.
Non-disclosure agreements and hush payments are perfectly legal, if they don't cover up a crime.
Moreover, an old Trump affair is not news. And if Trump persists in denying it, it's not a crime.
Critics though have asked whether the payment to Daniels ahead of the election may have come from Trump campaign funds, or violated election laws.
In January, public interest group Common Cause submitted formal complaints with the Federal Election Commission and the Justice Department, alleging the Daniels payment was a serious violation of campaign finance laws.
On Wednesday, Trump's new high-powered lawyer, former New York mayor Rudy Giuliani, sought to put the issue to rest by detailing what happened.
He said that Cohen made the $130,00 payment from his personal funds.
Then, after becoming president in January 2017, Trump repaid Cohen from his personal accounts.
Cohen got $35,000 a month for a given period for a total of up to $470,000, covering a monthly retainer and expenses, Giuliani said.
"That removed the campaign finance violation, and we have all the documentary proof for it," Giuliani told The New York Times .
But Giuliani, speaking to Fox News the same day, added a comment that further fuelled allegations of campaign finance violations.
"Imagine if that came out on October 15, 2016, in the middle of the last debate with Hillary Clinton," he said of Daniels's story of an affair with the then-candidate.
Campaign finance laws cover anything paid with the aim of "advancing the campaign," and do not require the involvement of official campaign funds.
With that comment, Giuliani "put President Trump in legal peril for 'knowing and willful' violations of campaign finance law," said Common Cause vice president for litigation Paul Ryan.
If they are right, and a crime was committed, if could be adjudicated by the FEC.
Trump's lawyers could negotiate a civil penalty that would be a maximum double the amount originally paid, small change for Trump.
But the issue could also be pursued as a criminal case by the Justice Department. There, the maximum penalty would be a five-year jail sentence.
Trump's lawyers could argue that the campaign finance law is too broad — that too much can be covered by the definition of what is paid to "advance a campaign."
They can also point to a pattern of Trump NDAs and hush payments to women unrelated to the election.
