The threat was blunt: Back off, or there will be trouble.
The 2016 presidential campaign had just ended, and Michael Cohen was fresh off handling hush money for Donald Trump. Now he was working on behalf of Chatham Asset Management, a $4.3 billion hedge fund that owns the National Enquirer.
Chatham and the Enquirer’s publisher, David Pecker, had turned to Trump’s fixer as a mediator. They wanted to kill a lawsuit by the former head of another Chatham company. Before long, the Chatham camp would make good on its threat against that executive, unleashing a tale of sex and money worthy of the Enquirer.
Playing tough is the Chatham way. The firm and its founder, Anthony Melchiorre, have a reputation for hard-edged business.
“They are scrappy, and they aren’t afraid of litigation to defend their investments,” said Leon Cooperman, a recently retired hedge fund mogul who is a Chatham investor and part owner of American Media, the Enquirer’s publisher. “They make money for their clients.”
Yet, over the years questions have swirled around Chatham. Traders have privately criticized what they see as lofty valuations of illiquid securities. At least one executive –- the one Cohen and Pecker sparred with -- has accused the New Jersey firm of market manipulation. Federal regulators have been asking questions, too.
Chatham hasn’t been accused of wrongdoing by authorities, and the fund had no comment on its interactions with federal inspectors. A spokeswoman for Cohen declined to comment, and a spokesman for American Media and Pecker didn’t respond to requests for comment.
Cohen’s assignment: Get Carl Grimstad, the recently fired CEO of payments processor iPayment Holdings, to the table. There, they tried to prevent him from pursuing a lawsuit accusing Chatham-backed iPayment and its board member Pecker of ousting him unfairly.
Cohen’s involvement was detailed by people with knowledge of the talks. “Chatham has never had any relationship with, spoken to or compensated Michael Cohen,” a representative for the firm said in response to queries from Bloomberg. “Any statement or implication otherwise is false.” Chatham hasn’t denied Cohen’s participation in the meeting.
Sue, Chatham lawyers warned, and we’ll drag your family into this, according to court testimony.