Tabloid publisher says he wrangled with Trump over who should buy sex stories

By Jack Queen, Jody Godoy and Andy Sullivan

NEW YORK (Reuters) -Former National Enquirer publisher David Pecker testified at Donald Trump's criminal trial on Thursday that he wrangled with Trump and his former lawyer ahead of the 2016 election over who should buy the silence of women who said they had sexual encounters with him.

Pecker's second day of testimony provided further evidence that he worked as Trump's "eyes and ears" to suppress stories which could have hurt the businessman-turned-politician's presidential bid at a time when he was facing multiple accusations of sexual misbehavior.

New York prosecutors have charged Trump with falsifying business records to cover up that activity, which they say corrupted the election. Trump has pleaded not guilty. Pecker does not face charges.

Pecker, 72, testified that American Media, the Enquirer's owner, paid to buy the stories of former Playboy model Karen McDougal, who said she had an affair with Trump in 2006 and 2007, and a former Trump Tower doorman who said Trump fathered an illegitimate child, which turned out not to be true.

The tabloid did not run either story but ensured that rivals would not publish them either -- a practice known as "catch and kill." Pecker said the newspaper spent hundreds of thousands of dollars over the years to buy stories involving prominent people, including movie star Arnold Schwarzenegger and golfer Tiger Woods.

Pecker said he alerted Trump's lawyer Michael Cohen when he heard that porn star Stormy Daniels was looking to sell her story of a 2006 sexual encounter with Trump for $120,000 in the weeks before the election.

Pecker said he was not interested in paying Daniels at that point because he had already paid for the other stories.

"I thought it should come off the market, and if anyone was going to buy it, Michael Cohen and Donald Trump should buy it," Pecker said."

Pecker said Cohen pressed him to buy Daniels' story, but Pecker testified he did not want to be involved with a porn star.

Cohen has said he ultimately paid Daniels $130,000 to stay silent and was reimbursed $420,000 by Trump after the election. Trump faces 34 felony counts of falsifying business records for labeling his payments to Cohen as legal fees.

Before that, Pecker testified, American Media bought McDougal's story and signed an agreement to use a shell company to secretly sell it on to Trump.

Pecker said he called off the deal after speaking with a company lawyer.

"Michael Cohen said, 'The boss is going to be very angry with you.' And I said, 'I'm sorry, I'm not going forward, the deal is off,'" Pecker testified.

"He was very angry, very upset, screaming, basically, at me," Pecker said of Cohen.

Pecker said Trump was angered when Pecker allowed McDougal to speak to news media after the Wall Street Journal revealed the hush money deal.

"He was very upset. He couldn’t understand why I did it,” Pecker testified.

McDougal is expected to testify later in the trial.

Trump has denied having sex with Daniels, whose real name is Stephanie Clifford, and McDougal.

Hush money payments themselves are not illegal, and Trump's lawyers have argued the Daniels payout was personal and unrelated to his campaign.

Prosecutors say the payment was a campaign expense that should have been disclosed, and that Trump’s arrangement with the Enquirer deceived voters by suppressing stories of alleged extramarital affairs at a time when he faced accusations of sexual misbehavior.

'ELECTORAL FRAUD'

Pecker testified that he did not notify federal election officials of the McDougal payment, even though he knew that campaign expenditures made in coordination with candidates must be reported.

The Enquirer's editor, Dylan Howard, appeared to be aware of the conflict as well. "At least if he wins, I'll be pardoned for electoral fraud," Howard said in a text message prosecutors have asked to show jurors.

American Media admitted to campaign finance violations in 2018 in a deal with the Justice Department that averted prosecution and required them to cooperate with the probe.

The trial is the first of a former U.S. president and carries political risks for Trump as he prepares for a November election rematch with President Joe Biden and fends off three other criminal indictments, to which he has also pleaded not guilty.

As Trump watched Pecker testify in New York, the U.S. Supreme Court heard Trump's arguments that he is immune from prosecution for actions taken as president. Justice Juan Merchan denied Trump's request to attend the Supreme Court arguments.

Merchan has imposed a limited gag order on Trump that bars him from publicly attacking witnesses, jurors and other people close to the case, including court staff and their families.

Merchan has not yet ruled on a request by prosecutors to punish Trump for violating that order.

Trump has said the gag order violates his right to free speech and says he is being treated unfairly by Merchan.

(Reporting by Jack Queen and Jody Godoy in New York and Andy Sullivan in Washington; Additional reporting by Susan Heavey in Washington; Writing by Andy Sullivan; Editing by Jonathan Oatis, Howard Goller and Daniel Wallis)