Michael Cohen offers a fresh window into how Trump did business
Posted February 27, 2019 1:10 p.m. EST
CNN — Trump's former fixer and lawyer Michael Cohen accuses Trump of being a "cheat" -- inflating and deflating his net worth to suit his needs.
"It was my experience that Mr. Trump inflated his total assets when it served his purposes, such as trying to be listed among the wealthiest people in Forbes, and deflated his assets to reduce his real estate taxes," Cohen says in the prepared testimony.
Later during the hearing, Cohen answered "yes" when he was asked if the President or his company ever intentionally inflated assets to get a loan.
As evidence, Cohen offers up three different exhibits, which are essentially back-of-the-envelope general estimations of Trump's assets and liabilities and a bottom line declaration of his worth.
Cohen suggested they were prepared by Trump and his associates when Trump was trying to secure a loan from Deutsche Bank for an ultimately unsuccessful bid to buy the Buffalo Bills and for Forbes Magazine, which publishes an annual list of billionaires.
"These documents and others were provided to Deutsche Bank in one occasion when I was with them in our attempt to obtain money so that we could put a bid in on the Buffalo Bills," he said in response to questions.
The one- and two-page documents show Trump claimed his net worth grew from $4.2 billion to $8.7 billion between 2011 and 2013 -- a jump that comes from the addition of a line estimating Trump's "brand value."
The move appears to have been a way for Trump to puff up his net worth for the benefit of loan officers or magazine factcheckers. But, according to Cohen, Trump was also practiced at making his net worth seem smaller at tax time.
As proof Cohen offered two news articles, one from 2015 in which Forbes said Trump had been inflating his wealth and another, from The Guardian in 2016, on Trump's long legal effort to slash the value of Trump National Golf Course in Westchester County, New York.
The pattern has also been reported by CNN. In 2017, CNN found that Trump had fought the tax assessments of all 12 of his US golf courses except the one in Bedminster, New Jersey. That included his Trump National Golf Course Westchester, which Ossining, New York, said was worth $15.1 million, but which Trump, fighting for a smaller tax bill, argued in court the property was worth just $1.5 million.
In a 2017 financial disclosure, Trump said the club was worth far more than the $15 million claimed by Ossining.
In his prepared testimony, Cohen also said Trump once bragged of a $10 million tax refund in the depths of the financial crisis just as he was slashing salaries for his employees, including Cohen.
"When telling me in 2008 or 2009 that he was cutting employees' salaries in half -- including mine -- he showed me what he claimed was a $10 million IRS tax refund, and he said that he could not believe how stupid the government was for giving 'someone like him' that much money back," Cohen said in the prepared testimony.
While Cohen didn't offer proof of his tax claim, The New York Times published documents in 2016 that showed Trump claimed a nearly billion-dollar loss in 1995, which could potentially have shielded him from 18 years of income taxes. But while this offers a snapshot of Trump's finances, the public still doesn't know the full picture since he's steadfastly refused to release his tax returns.
We don't know everything Trump tells the government about his net worth and his income because he has refused to release his tax returns.
However, we do know he paid some taxes in the intervening decades. A selectively leaked page of Trump's tax return for 2005 showed he paid $38 million in tax in that year. The White House said the tax was paid on more than $150 million in income that year, which was in the midst of the real estate bubble.
The White House said at the time Trump also made a "large-scale" write-off for construction losses.
But Trump's efforts to secure financing to expand his empire paid off. He never bought the Bills, but Trump businesses wound up borrowing over $300 million from Deutsche Bank to pay for a Florida golf course and hotels in Chicago and Washington, according to financial disclosures and public filings from 2012 to 2015, including disclosures Trump filed as a presidential candidate with the Office of Government Ethics.
According to a Bloomberg report, executives at the bank considered extending the repayment several years to 2025, after a potential Trump second term. The New York Times reported Deutsche Bank rejected a loan request from Trump Organization in 2016. Democrats have zeroed in on the loans as an area for investigation.
Trump's history of borrowing from Deutsche Bank is long, according to an in-depth Wall Street Journal analysis, which also notes he defaulted on more than $300 million in 2008 and sued the bank, claiming the financial crisis was an unforeseen event. They eventually settled out of court.