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Kate Linebaugh: Early this morning, outside the Manhattan Criminal Courthouse, a crowd gathered. There were reporters, photographers, protesters.

Speaker 2: Can you guys stand back?

Kate Linebaugh: For the first time, a former US president was about to be arrested on criminal charges. Flanked by security, Donald Trump stepped out of his SUV.

Speaker 3: There is former President Trump waving.

Kate Linebaugh: He headed into the Manhattan District Attorney's office.

Speaker 4: So at this moment, at 1:24 PM Eastern Time, Donald J. Trump is under arrest.

Speaker 5: Yes, he is.

Kate Linebaugh: Trump was indicted by a Grand Jury last week. But in court today, the criminal charges against him finally became public, 34 felony counts of falsifying business records. The former president's plea, not guilty.Welcome to The Journal, our show about money, business, and power. I'm Kate Linebaugh. It's Tuesday, April 4th. Coming up on the show, Indictment Number 71543-23, The People of the State of New York against Donald J. Trump.To understand the charges against Trump, we turn to someone who's lived and breathed this story for a very long time.

Joe Palazzolo: My name is Joe Palazzolo. I work on The Journal's investigations team.

Kate Linebaugh: And you're the reporter who broke the Stormy Daniels story?

Joe Palazzolo: One of the reporters, yes.

Kate Linebaugh: Okay, good. It's important to be precise. You are one of the reporters who broke the Stormy Daniels story.

Joe Palazzolo: That's right. Thank you.

Kate Linebaugh: Stormy Daniels is key to today's news. Daniels is an adult film actress. She first came on Joe's radar in 2016. Back then, Trump was running for president, and Joe and his colleagues heard that two women were alleging they'd had affairs with Trump and were going to go public. The first was Karen McDougal, a former Playboy model, and the second was Daniels.

Joe Palazzolo: And we knew that she had talked to some media and abruptly cutoff conversations. So we suspected that there was something funny going on, so we dug in.

Kate Linebaugh: And what did you find? What is the Stormy Daniels story?

Joe Palazzolo: The Stormy Daniels's story begins in 2006 at a celebrity golf tournament. According to Stormy Daniels, she met Donald Trump there and they had a sexual encounter. And then a decade later, when Donald Trump was running for president the first time, Stormy Daniels was trying to sell her story. Donald Trump's allies got wind of it and ultimately his lawyer at the time, Michael Cohen, paid her $130,000 to keep silent about the alleged sexual encounter.

Kate Linebaugh: Trump has denied having sexual encounters with both Daniels and McDougal, the Playboy model. What did it feel like to uncover this?

Joe Palazzolo: I mean, it was like a line in my head that I had to keep saying over and over, "The president's lawyer paid a porn star," just so I could get comfortable with the idea. And I guess I'm still not to this day because it's so sort of salacious and wild. I mean, the reason that we were interested in it wasn't because it involved a porn star, it was the money. The fact that there was a payment made to essentially keep someone quiet, to keep someone from saying something publicly that might impact Trump's campaign.

Kate Linebaugh: Joe and his colleagues published their story in January, 2018.

Speaker 7: Quite a story today in The Wall Street Journal. And I quote, Trump lawyer arranged $130,000 payment for adult film star's silence.

Speaker 8: What the Wall Street Journal's reporting this morning is at the private lawyer for Trump, Michael Cohen at the Trump Organization, set up a Delaware based private company and used a pseudonym to pay her essentially $130,000 in hush money.

Kate Linebaugh: The story got people's attention, including the attention of federal prosecutors. The US Attorney's office in Manhattan started investigating. They weren't focused on the alleged affair, they were focused on the money. The $130,000 that Michael Cohen paid out of his own pocket to Stormy Daniels. To federal prosecutors, it looked like a violation of campaign finance laws.

Joe Palazzolo: So the payoff to Stormy Daniels is the legal equivalent, according to prosecutors, of Michael Cohen basically just handing Trump's campaign $130,000. So if Cohen handed Trump $130,000 for his campaign, Trump would have to report that. But it's far, far more than federal law allows from an individual. And so in that sense, it was an illegal campaign contribution.

Kate Linebaugh: Okay. You're saying legally it is seen as a campaign finance violation. How so?

Joe Palazzolo: They were allegedly done in coordination with the campaign, specifically Donald Trump. And they were made for the purposes of influencing an election. That's according to prosecutors.

Kate Linebaugh: Federal prosecutors were also looking into a potential coverup. After Cohen paid Daniels, Trump reimbursed him. But prosecutors argued that the Trump organization disguised that reimbursement. They made it look like Cohen was being paid for legal work. In 2018, federal prosecutors charged Cohen.

Speaker 8: President Trump's former longtime attorney and fixer Michael Cohen pleading guilty to eight counts of campaign finance violation, tax fraud, and bank fraud.

Speaker 9: Cohen, a man who once said he would take a bullet for Donald Trump, stood before a federal judge and admitted he paid off two women for the principle purpose of influencing the 2016 presidential election.

Joe Palazzolo: Basically, he said Donald Trump directed him to pay Stormy Daniels. And again, there was just this moment in 2018 when he's in court and he stands up and he says that a candidate for office, being Donald Trump, told him to do this. So he's saying the president told him to commit a crime, to commit multiple crimes.

Kate Linebaugh: And how did Trump react to this?

Joe Palazzolo: His line is that he didn't do anything wrong. This was a legal agreement and my lawyer did it. And he's acknowledged that he reimbursed Cohen that much is known. But he has not said When he learned about the Stormy Daniels deal, when he learned she was shopping the story, when he learned about the payment. Michael Cohen says that he knew about it from day one and blessed it and instructed him to make it.

Kate Linebaugh: So Cohen was convicted and sentenced to prison in 2018 and it's only now that his boss is facing charges. What's behind that lag?

Joe Palazzolo: It's a really good question. When he pleaded guilty, Donald Trump was still president. And the Justice Department has long opined that a sitting president can't be indicted. So that covers through 2020. And then the US Attorney's office could have reopened the case after Trump left office, but it didn't. And instead the Manhattan District Attorney's office, so state prosecutors, picked up the case and they looked at the hush money payment for a long time. They looked at it so many times that it became known as the zombie case, and only this year was their Grand Jury impaneled to investigate it under Manhattan District Attorney, Alvin Bragg.

Speaker 10: The Manhattan DA Alvin Bragg will begin presenting evidence to a Grand Jury surrounding allegations that Donald Trump paid hush money to Stormy Daniels during the 2016 presidential campaign.

Kate Linebaugh: Last week that Grand Jury indicted Trump, but the charges remained secret until today. That's next.

Alvin Bragg: Good afternoon. Thank you you for joining us here today.

Kate Linebaugh: That's Manhattan DA Alvin Bragg speaking to reporters after Trump's arraignment today.

Alvin Bragg: Earlier this afternoon, Donald Trump was arraigned on a New York Supreme Court indictment, returned by a Manhattan Grand Jury on 34 felony counts of falsifying business records in the first degree. Under New York State law, it is a felony to falsify business records with intent to defraud and intent to conceal another crime. That is exactly what this case is about.

Kate Linebaugh: Bragg's office released the indictment and a so-called statement of facts. Joe has been digging into them.

Joe Palazzolo: A statement of facts, it's the story. It's this story that you're telling and it helps provide context for the charges. And so the charges are kind of bare bones and the statement of facts is what Bragg's office has used to explain why in fact these charges are crimes. And the story that they're trying to tell is that Trump was part of this broad scheme with his allies to suppress negative news about him through a legal means in the run up to the 2016 presidential election. And as evidence, they have the Stormy Daniels payment, they have the payment to Karen McDougal.

Kate Linebaugh: And they point to a third payment, to a doorman at Trump Tower. According to prosecutors in 2015, this doorman alleged that Trump had a child out of wedlock. The doorman tried to sell the story to the National Enquirer, and prosecutors say that the National Enquirer bought the story as part of an arrangement with Trump and Cohen and then buried it. According to the statement of facts, the tabloid eventually concluded the doorman's story wasn't true. But Joe says it was the Stormy Daniels payoff that led to those 34 criminal charges and 34 counts seems like a lot.

Joe Palazzolo: Yeah, yeah. I mean it does. And they really add up. But just to step back a little bit, the plan, according to Michael Cohen and the statement of facts, the plan was to reimburse Michael Cohen in monthly increments of $35,000. And the indictment, like you said, 34 seems like a lot, but it's not a lot when you consider all the different records that were sort of created and allegedly falsified to make sure that no one knew the true purpose of this reimbursement plan. So you have the checks, the check stubs, how those are recorded, there's the invoices, how those are recorded. So when you combine all those, you come up with 34 instances of falsified records.

Kate Linebaugh: Did you learn anything today about when Trump knew about these payments?

Joe Palazzolo: No. I mean the statement of facts, again, it alleges kind of the same communications and meetings that we already knew about that we had already reported.

Kate Linebaugh: These are felony charges, but falsifying business records can also be a misdemeanor. How did prosecutors get to this felony level?

Joe Palazzolo: So just run of the mill accounting fraud is just a misdemeanor, but you can elevate it to a felony if the prosecutors show that records were falsified to conceal or to commit another crime. So in this case, Bragg's office is saying the records were falsified and they were falsified to conceal the payment to Stormy Daniels, which itself was a violation of campaign finance law.

Kate Linebaugh: Trump didn't make any statements as he left the court, but his lawyers did. They said the charges were quote, boiler plate and that it was a sad day for the country. So what happens from here?

Joe Palazzolo: Well, the first thing that's going to happen is that Trump's attorneys are going to vigorously litigate. And that means they're going to ask the judge overseeing the case to dismiss it. They're going to file motions. And the District Attorney's office is going to have to answer that. They're going to have to respond and defend these charges.

Kate Linebaugh: Already in the weeks leading up to the indictment, Trump has been attacking the case.

Joe Palazzolo: He's called the case a witch hunt. He's said it's politically motivated. Alvin Bragg, the District Attorney, is a Democrat. He's also said there's no way he can get a fair trial in New York, which of course is his native city. But many here no longer embrace him, if they ever did.

Kate Linebaugh: Do you have a sense of the kind of defense Trump's team is planning to make?

Joe Palazzolo: So his lawyers have previewed and Trump himself on social media have kind of previewed some of the arguments they plan to make. The most technical one, I guess is kind of a statute of limitations argument. So the statute of limitations is the time in which prosecutors can bring charges. They have an expiration date, and his lawyers say that these charges are long expired. Now on the other side, the DA's office is likely to argue that when Trump became president and he moved out of New York, the statute paused. So there's still a lot of time left for them to make this case.

Kate Linebaugh: And if it isn't dismissed and can go ahead, how long could it take to go to trial?

Joe Palazzolo: So if the case survives the expected motion to dismiss, you could have a situation where Trump is put on trial basically at the height of his presidential campaign.

Kate Linebaugh: So you have a former president campaigning to be reelected as president while also on trial for criminal charges.

Joe Palazzolo: Yeah, yeah, exactly. We keep saying things like historic and unprecedented, but everything from this point forward is going to be that.

Kate Linebaugh: If Trump were to be found guilty, what could that mean for him? Would he go to prison?

Joe Palazzolo: He could go to jail. The charges against him don't have any mandatory jail sentence though. So he may not, if he's convicted. And it's not really going to impact his candidacy. The US Constitution doesn't say anything about candidates who are convicted of felonies. It doesn't bar them from running for office.

Kate Linebaugh: Could there be other cases coming against Trump?

Joe Palazzolo: Yeah. So this is history. I mean, we're witnessing history here. But of the ongoing investigations of Donald Trump, this seems qualitatively the least of them. There are other cases. There's an investigation of Georgia of election interference. There's been reporting that Grand Jury is going to start hearing that soon. And then there are two federal investigations under the same special counsel, one of which is looking at the alleged mishandling of classified documents. And the other, which is looking at January 6th and Trump's efforts to overturn the election. So any of the three of those cases could potentially lead to charges.

Kate Linebaugh: Trump has denied wrongdoing in all these cases. He plans to give a speech from Mar-a-Lago later tonight.That's all for today, Tuesday, April 4th. The Journal is a co-production of Gimlet and The Wall Street Journal. Additional reporting in this episode by Rebecca Ballhaus, Jennifer Calfas, Ben Chapman, James Fanelli, Alyssa Lukpat, and Corinne Ramey.Thanks for listening. See you tomorrow.

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Donald Trump Is Charged on 34 Felony Counts - The Journal. - WSJ ... - The Wall Street Journal