On Monday, the prosecutors in the case will be back in court as a federal judge weighs a request by Mr. Cohen to keep investigators from reviewing the materials they gathered during searches of his office, home and hotel room as part of the inquiry.
It is one the most consequential corruption inquiries in a generation, notable even by the standards of the Southern District office, which has never been shy about reaching far beyond Manhattan to find headline-grabbing cases. And the office’s longstanding reputation for nonpartisanship and autonomy — it is jokingly referred to as the “Sovereign District” — could make it less vulnerable to attacks from either the president’s allies or his critics.
“The office has been historically known for its independence of the Justice Department,” said John S. Martin Jr., a former United States attorney in Manhattan and former federal judge. “That’s what makes it so powerful in this investigation, and such a danger to Donald Trump.”
The potential threat is not lost on the White House. Mr. Trump’s advisers now view the investigation into Mr. Cohen as more imminent a problem for the Trump presidency than the inquiry by the special counsel, Robert S. Mueller III, The New York Times reported on Friday.
President Trump has called the F.B.I. raid “a disgraceful situation” and a “total witch hunt.”
The materials seized from Mr. Cohen could open a window into the president’s relationship with a loyal aide who guided Mr. Trump through not only business dilemmas but personal and political ones as well. That includes Mr. Cohen’s role in helping to arrange payments during the campaign to women who claimed to have had affairs with Mr. Trump.
In federal court hearings in Manhattan on Friday, lawyers for Mr. Cohen and Mr. Trump argued that many of the records seized by the F.B.I. were protected by attorney-client privilege. Mr. Cohen has asked for an order temporarily prohibiting prosecutors from reading the documents until the matter could be litigated.
Mr. Cohen’s lawyer, Stephen Ryan, has said the search was “completely inappropriate and unnecessary.” A spokesman for the United States attorney for the Southern District declined to comment.
Mr. Berman is not known to have any connection to Mr. Cohen. A former Southern District prosecutor, Mr. Berman is a registered Republican, donated $2,700 to the Trump campaign and did some part-time volunteer work for Mr. Trump’s transition team.
Although Mr. Berman had been law partners with Rudolph W. Giuliani, another former Southern District United States attorney and one of Mr. Trump’s most vocal supporters, that connection was not a factor in the recusal, according to the people briefed on the matter.
Also not a factor in the recusal, one person said, was the personal interview that Mr. Trump conducted with Mr. Berman last year as part of the selection process. Mr. Berman has not disclosed publicly details of any such meeting.
With Mr. Berman sidelined, Mr. Khuzami assumed responsibility for the Cohen investigation. Mr. Khuzami is in his second stint in the office, having made a name for himself as a terrorism and financial crimes prosecutor from 1990 to 2002.
He helped secure the conviction of Omar Abdel Rahman, who conspired to blow up New York City landmarks. As an outgrowth of that case, he worked on the investigation of Mr. Abdel Rahman’s lawyer, Lynne Stewart, who had her office and files searched by federal authorities.
After leaving the Southern District, Mr. Khuzami joined Deutsche Bank, where he ultimately became general counsel for the firm’s American arm. But his role as a terrorism prosecutor arose again when he was asked to give the 2004 speech at the Republican National Convention, in which he staunchly defended the Patriot Act and credited President Bush with having “the courage and the wisdom” to seek its passage.
Mr. Khuzami, who grew up in Rochester, is registered as “nonpartisan.” His friends have teased him about his speech, expressing disbelief that he would participate in the convention even though he is not a Republican. Mr. Khuzami responded that he had actually edited out other comments in his speech praising President Bush.
Mr. Khuzami made a donation to John McCain’s presidential campaign in 2007. He also donated to the campaign of John Anderson, who ran for president in 1980 as an independent against Ronald Reagan and Jimmy Carter.
“He’s apolitical, a consummate public servant who plays by the rules,” said Richard Walker, a partner at King & Spalding who was Mr. Khuzami’s boss at Deutsche Bank and is a former S.E.C. enforcement chief himself.
Mr. Khuzami’s experience at Deutsche Bank, President Trump’s largest lender on Wall Street, has generated some blowback from liberal commentators, but that could bolster his credibility with conservatives. Steven M. Cohen, a former Southern District prosecutor who later became the top aide to New York Gov. Andrew M. Cuomo, a Democrat, recalled watching Rachel Maddow, the MSNBC host, lament Mr. Berman’s and Mr. Khuzami’s ties to Deutsche Bank. Recalling the show, Mr. Cohen said it made him think: “Good lord, he has just been inoculated.”
And Mr. Trump’s advisers are not the only ones who recognize the potential dangers posed to the president by the Southern District’s independence. Andrew C. McCarthy, a former Southern District prosecutor who is now a conservative columnist with National Review and has been a harsh critic of Mr. Mueller, wrote a column on Saturday titled “The Real Investigation.”
“President Trump now has real legal peril” because of the Southern District inquiry, Mr. McCarthy declared. “Anyone potentially connected to it should be worried,” he added.
The investigation is not Mr. Khuzami’s first politically sensitive matter. While at the S.E.C. in 2010, he approved an action against Steven Rattner, a well-connected financier who led the Obama administration’s auto industry overhaul.
And in the aftermath of the 2008 financial crisis, when the S.E.C. was under fire for not detecting the Madoff scheme, Mr. Khuzami shook up the enforcement division and filed a record number of actions, many of them against companies at the center of the crisis, including Goldman Sachs.
“We handled lots of politically sensitive cases together at the S.E.C., and my experience is he’ll make the right decision based on the right standard for the right reason,” said Lorin Reisner, who was Mr. Khuzami’s deputy at the S.E.C. and later became the head of the criminal division in the Southern District. “He’s an on-the-merits leader,” said Mr. Reisner, now a partner at Paul Weiss in New York.
But Mr. Khuzami also handed out awards to officials who spent years building potentially big cases that they then chose not to file for lack of evidence — sending a message that the agency should not bend to public and political pressure to punish unpopular figures on Wall Street, according to current and former officials. As a result, the agency faced criticism from the left for not charging top Wall Street executives after the crisis. Much to the dismay of critics of Wall Street and even the agency’s chairwoman at the time, Mr. Khuzami sided with investigators in New York who were opposed to charging top Lehman Brothers executives. Judge Jed S. Rakoff once called one of the agency’s settlements under Mr. Khuzami “pocket change.”
After leaving the S.E.C. in early 2013, Mr. Khuzami became a partner at Kirkland & Ellis in Washington, which proved to be a lucrative role. He earned about $11 million over the last two years, a significant sum even by the standards of big law partnership shares.
As Mr. Khuzami leads the Cohen investigation, he is being counseled by two senior prosecutors: Audrey Strauss, a prominent New York lawyer whom Mr. Berman brought back to the office as senior counsel; and Lisa Zornberg, the chief of the criminal division.
Ms. Zornberg was named to lead the division in late 2016 by Preet Bharara, the United States attorney under President Obama. Mr. Bharara was among 46 United States attorneys who were asked in March of last year to submit their resignations. While the directive itself was routine, Mr. Trump had initially asked Mr. Bharara to meet with him at Trump Tower and remain in his post.
The corruption unit prosecutor who spoke in court on Friday was Thomas McKay, who previously helped prosecute Dean G. Skelos, the former Republican majority leader of the New York State Senate. Also in the courtroom were Tatiana Martins, who heads the corruption unit, and her deputy, Russell Capone.
Mr. Bharara, appearing on CNN on Sunday, called the members of the government team professionals “who do things by the book.”
The court hearings on Friday also underscored the Southern District’s reputation for catapulting its alumni into powerful jobs in government and the defense bar.
President Trump’s own lawyer at the hearings, Joanna C. Hendon, once worked as a Southern District prosecutor.
Continue reading the main story