Trump Directed Bogus Asset Inflation, Ex-Fixer Cohen Says

Erik Larson and Patricia Hurtado
·5 min read
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(Bloomberg) -- Donald Trump’s onetime lawyer and fixer Michael Cohen told a New York judge that the former president instructed him to inflate his net worth by billions of dollars to dupe banks and insurers, backing claims made by New York state at its $250 million civil fraud trial.

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Cohen, who served time in prison for tax evasion, on Tuesday came face to face with his ex-boss for the first time in five years in a packed Manhattan courtroom. Cohen said Trump would ask him and former Trump Organization Chief Financial Officer Allen Weisselberg to “reverse engineer” his net worth to meet an inflated number for his annual statements of financial condition.

Trump “would look at the total assets and say, ‘I’m actually not worth $4.5 billion dollars, I’m really worth six,’” Cohen testified, as the former president watched from the defense table about 20 feet away. “Then he’d direct Allen and I to go back to Allen’s office and return when we’d achieved the desired goal.”

Cohen’s star role in the lawsuit filed last year by New York Attorney General Letitia James became inevitable after he told Congress in 2019 that Trump was a “con man” and “a cheat” who lied about his wealth, triggering the state’s probe. The trial, in its third week, is one of six that Trump is facing, including four criminal prosecutions, as the Republican frontrunner seeks reelection in 2024.

James, a Democrat, alleges that Trump, his Manhattan-based company and his sons Donald Trump Jr. and Eric Trump inflated the former president’s asset valuations for more than a decade to trick banks and insurers into giving him better terms on loans and policies, reaping $250 million in “illegal profit.”

Trump has attended the trial periodically amid tight security and a heavy media presence. He denies wrongdoing and claims the case — along with all the others — is part of a “witch hunt.” Cohen’s testimony will resume Wednesday, with more questioning by Trump’s attorneys.

“Let me just turn around and say that this is not about Donald Trump versus Michael Cohen or Michael Cohen versus Donald Trump,” Cohen, 57, told reporters gathered outside the courthouse before his testimony began. “This is about accountability, plain and simple.”

Trump, 77, told the throng of reporters outside the courtroom that his former lawyer was a “proven liar” who also had lied “trying to get a better deal for himself.”

Cohen kept the real estate mogul’s business and personal secrets for years before a bitter falling out in 2018. His testimony is potentially the most damning in the trial so far, giving a first-hand account of Trump allegedly directing him use fraudulent asset figures.

‘Reverse Engineer’

“I was tasked by Mr. Trump to increase the total assets based upon a number he arbitrarily selected,” Cohen said. “My responsibility, along with Allen Weisselberg, predominately, was to reverse engineer the various different asset classes and increase those assets in order to achieve the number that Mr. Trump had tasked us.” Cohen said he helped inflate assets for Trump financial statements in 2012, 2013, 2014 and 2015.

James alleges Trump achieved his desired net worth by inflating the value of many of his key assets, including Trump Tower in Manhattan and his Mar-a-Lago estate in Florida. Cohen testified that he stopped participating in the alleged asset inflation around 2016, the year Trump was elected president.

Cohen began his testimony by recounting his background as a Trump employee and the circumstances surrounding his legal troubles. Trump, wearing a blue tie, folded his arms tightly and stared in Cohen’s direction when he wasn’t leaning over to whisper to his lawyers.

“When all of this started, it was overwhelming the amount of misinformation, disinformation about me,” Cohen testified. “It was enormous.”

Read More: Trump’s $250 Million Business Fraud Trial and What’s at Stake

At one point during the testimony, Cohen engaged in a heated exchange with Trump attorney Alina Habba, who made him explain in detail how he pleaded guilty to crimes and admitted being deceptive and dishonest. When Habba asked Cohen if he lied to his wife about his taxes, he became angry and objected to the question from the witness stand.

Christopher Kise, another Trump lawyer, jumped up to call Cohen a “serial liar.”

“This witness is out of control!” Kise said.

The judge overseeing the trial, Justice Arthur Engoron, kept control over the courtroom despite the lawyers talking over each other, and Cohen continued answering Habba’s questions in a calm manner.

Cohen’s testimony comes less than a month after Trump dropped a $500 million lawsuit against his former lawyer, who the former president accused of violating their attorney-client bond and spreading “embarrassing or detrimental” lies. He also accused Cohen of violating a non-disclosure agreement and fraudulently misrepresenting a $74,000 business expenditure.

Criminal Probe

Public statements by Cohen also helped form the basis for Manhattan District Attorney Alvin Bragg’s indictment of Trump for allegedly falsifying business records tied to hush-money payments to porn star Stormy Daniels before the 2016 election.

Cohen pleaded guilty in November 2018 to crimes including campaign finance violations and bank fraud. Ever since, he has blamed Trump.

“It was my duty to cover up his dirty deeds,” Cohen said when he was sentenced.

Read More: Trump’s Business Empire at Risk of Dissolution After Ruling

(Updates with Cohen being cross-examined by Trump attorney Alina Habba.)

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