(Adds sources saying Weisselberg granted immunity, campaign finance law background, expert comment; changes dateline, previous WASHINGTON)
By Karen Freifeld
NEW YORK, Aug 24 (Reuters) - Federal prosecutors have granted immunity to the Trump Organization's chief financial officer in an investigation involving U.S. President Donald Trump's former personal lawyer, Michael Cohen, according to people familiar with the matter.
The immunity deal for the CFO, Allen Weisselberg, was first reported by the Wall Street Journal, which also reported he was called to testify before a federal grand jury earlier this year.
Weisselberg was given immunity months ago, one of the people familiar with the matter told Reuters. The source declined to provide further details.
A cooperation deal between Weisselberg and prosecutors could be damaging to the president given the CFO's longtime role in Trump's business affairs. Weisselberg has worked for the Trump family for more than four decades, including as treasurer for the Donald J. Trump Foundation, and is one of the people to whom Trump entrusted his business before taking office.
Nicholas Biase, a spokesman for the U.S. Attorney's Office in Manhattan, which has been leading the Cohen probe, declined comment, as did the White House. The Trump Organization did not respond to a request for comment. Alan Futerfas, an outside lawyer for the New York-based company, declined to comment.
Cohen - who arranged hush-money payments shortly before the November 2016 U.S. presidential election to two women who said they had had sex with Trump in 2006 - on Tuesday pleaded guilty in New York to campaign finance violations and other criminal charges. Trump has denied having sex with either woman.
Cohen said that Trump directed him to arrange a $150,000 payment to former Playboy model Karen McDougal and a $130,000 payment to adult-film actress Stormy Daniels, whose real name is Stephanie Clifford.
Such payments could be considered illegal campaign contributions under federal election law, according to experts.
American Media Inc's National Enquirer supermarket tabloid was involved in making the payments, according to news reports. American Media Chief Executive David Pecker, a longtime friend of Trump, and the company's chief content officer, Dylan Howard, have also been granted immunity, Vanity Fair magazine reported.
Experts said the deals were a sign Weisselberg, Pecker and Howard faced criminal exposure because the government did not grant immunity lightly.
"This is bad for Trump because the more witnesses you have, in terms of people who can testify, not just about what happened but why it happened, the more likely it is for the prosecution to establish the motive behind Trump’s participating in this deal,” said Jens Ohlin, a professor at Cornell Law School.
Most legal experts agree that a president cannot be indicted while in office, but allegations that Trump was involved in a crime could factor in a debate over whether he should face impeachment.
Cohen mentioned Weisselberg on a secret recording the Trump attorney made in September 2016 and which was aired on CNN last month.
On the recording, Cohen and Trump appeared to discuss reimbursing American Media for the payment to McDougal, who has said she had a yearlong affair with Trump. Cohen is heard saying, "I’ve spoken to Allen Weisselberg about how to set the whole thing up."
McDougal sold her story to American Media for $150,000 in August 2016, but the National Enquirer never published it, in a practice known as “catch and kill” aimed at suppressing potentially damaging stories.
Rudy Giuliani, a lawyer for the president, has said the payments were personal matters not subject to campaign finance law.
Federal campaign finance law limits individual donations to $2,700 per election, requires the disclosure of any donation over $200, and defines a contribution as anything of value given, loaned or advanced to influence a federal election.
The Trump Organization is the umbrella group for dozens of Trump businesses, including real estate development, management of hotels and golf courses, and production of the reality TV shows "The Apprentice" and "Celebrity Apprentice."
Under a reorganization plan announced before Trump’s January 2017 inauguration, the business was placed into a trust now controlled by Weisselberg and the president’s two adult sons, Donald Trump Jr. and Eric Trump.
The Cohen investigation was referred to federal prosecutors in New York by U.S. Special Counsel Robert Mueller, who is looking into Russian interference in the 2016 election and possible coordination between Trump's Republican campaign and Russian officials.
Trump has repeatedly denied there was coordination between Moscow and his campaign. Moscow has denied it meddled in the election. U.S. intelligence agencies concluded that Russia did interfere. (Reporting by Karen Freifeld, Brendan Pierson, Jonathan Stempel and Makini Brice Writing by Anthony Lin Editing by Jonathan Oatis)