Prosecutors confirm Trump's lawyer has been under criminal investigation for months

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By Brendan Pierson and Jonathan Stempel

NEW YORK (Reuters) – A U.S. prosecutor on Friday attacked a claim by President Donald Trump’s longtime personal lawyer Michael Cohen that many of the materials seized this week in FBI raids on Cohen’s office and home as part of a criminal investigation should remain private.

In a court filing on Friday, federal prosecutors also confirmed that Cohen has been under criminal investigation for months, largely over his business dealings rather than his legal work.

At a hearing in Manhattan federal court, Assistant U.S. Attorney Tom McKay accused Cohen of trying to hide behind a legal doctrine known as attorney-client privilege to avoid disclosing materials related to the president and other cases.

These could include claims by Stormy Daniels, the adult film star who claimed to have had a sexual encounter with Trump in 2006. She wants to be freed from a nondisclosure agreement under which she was paid $130,000 to keep quiet about that encounter shortly before the 2016 presidential election.

Cohen’s lawyers asked U.S. District Judge Kimba Wood at the hearing to let them review the seized materials to ensure that there was no violation of attorney-client privilege, which permits clients to shield communications with their lawyers.

Uncertainty over exactly what Federal Bureau of Investigation agents seized from Cohen comes as Trump faces an intensifying probe by Special Counsel Robert Mueller into whether his presidential campaign colluded with Russia.

“The attorney-client privilege can’t at the same time be used as a sword (and) as a shield,” McKay told Wood.

“What they are trying to do is use attorney-client privilege as a sword to challenge the government’s ability to review evidence” obtained lawfully, McKay added.

Michael Avenatti, a lawyer for Daniels, suggested at the hearing that his client might be the subject of some of the seized materials, and her interests needed protection as well. Daniels’ legal name is Stephanie Clifford.

‘ACUTE INTEREST’

The judge also heard from a new lawyer for Trump, Joanna Hendon, who said the president had “an acute interest” in the case. Hendon, who said Trump hired her on Wednesday evening, urged Wood not to decide who gets first shot to review seized documents until after she files a brief by Sunday night.

“I’m not trying to delay anything but nor do I see a particular rush,” Hendon said.

In Friday’s filing, prosecutors accused Cohen’s lawyers of making the “unprecedented” claim that they should decide which documents are privileged, or else leave the decision to a court-appointed special master.

Prosecutors said they should be allowed to use their own “taint team,” or “filter team,” to do the job.

Wood ordered the lawyers to reconvene later on Friday.

Monday’s raids infuriated Trump, who tweeted “Attorney-client privilege is dead!” on Tuesday.

McKay said Trump’s ability to invoke the privilege is “no different” from anyone else’s.

A source familiar with the matter has said FBI agents who conducted the raids were seeking information on payments to Daniels and former Playboy model Karen McDougal, who also claims to have had a sexual relationship with Trump.

Investigators have also been looking into a possible broader pattern of fraud, tax evasion, money laundering and other possible crimes in Cohen’s private dealings, including his work for Trump and some real estate transactions involving Russian buyers, the source said.

(Reporting by Karen Freifeld, Brendan Pierson and Jonathan Stempel; Editing by Frances Kerry and Susan Thomas)