At Trump trial, Stormy Daniels' ex-lawyer Keith Davidson details interactions with Michael Cohen

An attorney who represented two women seeking payments in 2016 for their silence about alleged sexual encounters with Donald Trump is continuing his testimony Thursday in the former president's criminal trial.

Keith Davidson told the court about his interactions with Michael Cohen, Trump's former personal attorney. Davidson negotiated an agreement with Cohen in 2016 in which Cohen paid $130,000 in exchange for adult film star Stormy Daniels' silence about an alleged sexual encounter with Trump.

Earlier in the week, he told the court how he represented Daniels and model Karen McDougal, another woman who said she had sex with Trump and sought a deal for the rights to her story.

McDougal was paid $150,000 by the parent company of the tabloid magazine the National Enquirer for her account, as part of what prosecutors say was a scheme to bolster Trump's 2016 presidential campaign. 

Cohen is expected to be called later in the trial as a key witness against Trump, who has pleaded not guilty to 34 felony counts of falsifying business records. Trump denies committing the crimes and says he did not have sex with Daniels or McDougal.

In court on Tuesday, prosecutors showed a series of text messages and emails in which Davidson marketed McDougal's allegations to the tabloid, calling them a "blockbuster" story about Trump. He later negotiated directly with Cohen to sell the rights to Daniels' claims. Davidson testified that he understood suppressing the stories would be beneficial to Trump's candidacy.

Before he returned to the stand, Judge Juan Merchan held a hearing over whether Trump should be held in contempt of court and fined for four more alleged violations of a gag order Merchan imposed before the trial. The order limits what Trump can say about those involved in the case, including likely witnesses and jurors. Prosecutors urged the judge to again impose fines of $1,000 per violation but said they weren't seeking jail time. Merchan did not immediately issue a decision.

Keith Davidson's testimony

Under questioning by prosecutor Joshua Steinglass, Davidson detailed the settlement agreement between Daniels and Trump that Davidson ultimately reached with Cohen days before the 2016 election. He said the deal included a $1 million penalty for any breach, a provision he said was "unenforceable." Trump never signed the paperwork, which used pseudonyms for him and Daniels.

Davidson recalled the hours and days after Election Day on Nov. 8, 2016, when Trump won the presidency. Steinglass displayed a text exchange between Davidson and Dylan Howard, the editor of the National Enquirer, in the early morning hours of Nov. 9. Davidson said, "What have we done?" Howard replied, "Oh my god."

"This was sort of gallows humor," Davidson said on the stand, later explaining, "There was an understanding … that our activities in some way may have assisted the presidential campaign of Donald Trump." 

He said Cohen would call him "fairly frequently" in the weeks after the election. He recalled one conversation that occurred on a Saturday morning in mid-December.

"It was a long call, and he had told me he was depressed and despondent and said that I — and he used very colorful language about that stage in his life," Davidson said. 

Steinglass said Davidson could quote the "colorful language" Cohen used.

"He said something to the effect of, 'Jesus Christ, can you f--king believe I'm not going to Washington, after everything I've done for that f--king guy?'" Davidson recalled. "'I can't believe I'm not going to Washington. I've saved that guy's ass so many times, you don't even know.'"

He said Cohen told him he "never even got paid" and that Trump was "not even going to pay me the $130,000 back."

The Stormy Daniels agreement emerges

Fast-forwarding to 2018, Davidson recounted how the Daniels payment first came to light. He said a reporter from the Wall Street Journal emailed him on Jan. 10, 2018, seeking comment for an article about Daniels and Trump. 

Davidson said he denied the allegation of a sexual encounter between Trump and Daniels and forwarded the email to Cohen. "I think I had a contractual duty to let them know that something was about to be published," he told the court. Cohen told him to write a "strong" response denying "everything."

That same day, Davidson prepared a statement under Daniels' name, one which she would later renounce. The statement said that allegations of "a sexual and/or romantic affair with Donald Trump many, many, many years ago" were "absolutely false."

On Jan. 12, the Wall Street Journal published a story revealing the "hush money" arrangement for the first time, under the headline: "Trump Lawyer Arranged $130,000 Payment for Adult-Film Star's Silence." The story included the supposed denial by Daniels, which Cohen also circulated to other news outlets.

On the stand, Davidson said an "extremely strict reading of this denial would technically be true."

"I don't think anyone had ever alleged that any interaction between [her] and Mr. Trump was 'romantic,'" he explained. Daniels would later allege that Cohen used "intimidation and coercive tactics" to get her to sign on to the statement.

A week later, on Jan. 17, Davidson said Cohen told him he had arranged for Daniels to appear on Sean Hannity's Fox News program. Cohen later reconsidered, telling Davidson in a text that "the wise men all think the story is dying and don't think it's smart for her to do any interviews." Davidson replied, "100%." 

"This was sort of in one of [Cohen's] pants-on-fire stages, and he was running around planning things and then when he ran it up the flagpole and consulted someone or some group, whoever 'wise men' are, they didn't actually think it was a good idea for her to appear on 'Hannity,'" Davidson testified. Daniels never appeared on the show.

After Trump's State of the Union address on Jan. 30, Daniels appeared on ABC's "Jimmy Kimmel Live!" but declined to confirm or deny she had sex with Trump. Earlier that day, Davidson prepared a second statement under Daniels' name denying the encounter. In her interview with Kimmel, Daniels hinted that the signature under the statement was not hers, an assertion Davidson disputed on the stand.

"Impossible," Davidson texted Cohen, saying she signed it in front of him.

At that point, Davidson said he was "trying to thread the needle" and avoid triggering allegations that Daniels had breached her contract with Trump. "We're trying to placate him while also trying to meet Stormy's desires," he testified.

Davidson said Cohen threatened to sue Daniels "many times."

"He can be a very aggressive guy. Aggressive in his pursuits to protect his client, and he would oftentimes make legal threats, say that he would bankrupt her and rain legal hell down on her, and, 'Don't f--k with us, you don't know who you're f--king with," he said. "He wanted to deny her story to protect his client."

Davidson under cross-examination

Emil Bove, an attorney for Trump, began his cross-examination of Davidson after Steinglass concluded his questions. He suggested that Davidson "can be aggressive, too," just like Cohen.

Bove ran through a series of questions about other clients the Hollywood attorney had represented, including women who made allegations against Charlie Sheen, and people who allegedly shopped sex tapes of Hulk Hogan and Tila Tequila.

Bove asked Davidson if these deals and others required that Davidson understand "getting right up to the line without committing extortion."

Davidson repeatedly said he didn't quite understand what Bove was getting at.

Davidson declined to discuss the details of deals, ultimately citing attorney-client privilege when Bove asked if he had "extracted" money from Sheen. During one tense exchange, Bove said, "Look, we're both lawyers, I'm not going to play lawyer games with you," adding that he just wanted truthful answers.

"You're getting truthful answers, sir," Davidson said. "I'm not going to discuss confidential matters." 

Davidson then added, "If you're not here to play legal games, don't say 'extract.'"

Bove showed Davidson a report from the Tampa Police Department about an investigation into the Hogan matter. Davidson was not charged, but acknowledged that the investigation looked into whether extortion was committed.

Graham Kates

Graham Kates is an investigative reporter covering criminal justice, privacy issues and information security for CBS News Digital. Contact Graham at KatesG@cbsnews.com or grahamkates@protonmail.com