Michael Cohen tells court he ‘reverse engineered’ Donald Trump’s financial statements

Michael Cohen, the one-time fixer and personal lawyer of Donald Trump, testified on Tuesday that he had been instructed by the former US president to “reverse engineer” the value of assets that are now at the cornerstone of a $250mn civil fraud lawsuit.

Cohen told the Manhattan court that the annual “statement of financial condition” he helped prepare for his former boss was a fiction.

“I was tasked by Mr Trump to increase the total assets based on a number that he arbitrarily selected,” Cohen said. His responsibility, he added, “was to reverse engineer” the values of different assets “in order to achieve a number”.

As Cohen spoke, clasping his hands, Trump looked on from the defence table, arms folded across his chest, occasionally tilting his head. Hours earlier he told reporters outside the courtroom that Cohen was “a proven liar and a felon”.

Cohen was once so devoted to Trump that he pledged to “take a bullet” for his boss, if necessary. But in recent years he turned against the family he once served — first in an appearance before Congress and then in a book and podcasts and media interviews. Now, he is one of the central witnesses in a civil case that cuts to the heart of the former president’s business empire.

Cohen’s credibility, however, presents an enormous target for Trump’s lawyers. In 2018, he pleaded guilty to tax fraud and other charges stemming from a scheme to pay hush money to an adult film actor with whom Trump had an alleged liaison. He was sentenced to three years in prison.

Alina Habba, one of Trump’s lawyers, began to take aim at Cohen’s credibility in a scrappy cross-examination, repeatedly prodding him to restate his guilty pleas. At one point a visibly irritated Cohen cried “objection” — drawing a chuckle from the judge.

“Clearly, I hit a trigger with you,” Habba said.

Cohen’s appearance on the witness stand amped up the intensity of a trial that had been muddling through spreadsheets and accountants’ letters for the past three weeks.

Judge Arthur Engoron has already found that Trump persistently committed fraud by inflating his net worth in order to secure loans and insurance on favourable terms. The trial is to determine whether Trump and his adult sons, Donald Jr and Eric, will pay upwards of $250mn in penalties and be stripped of their ability to operate a business in New York.

On one occasion, Cohen recalled a Trump assistant calling him into his boss’s office, where he was discussing the financial statement with Allen Weisselberg, the Trump Organization’s longtime chief financial officer.

“He would say, ‘I’m actually not worth four-and-a-half billion dollars. I’m actually worth more like six,’’’ Cohen testified.

Cohen and Weisselberg then retreated to the CFO’s office, he said, returning only when they had reached the desired number.

When Cohen entered the courtroom he passed within feet of Trump but did not look at his former boss. He was wearing a grey suit and white shirt, unbuttoned at the collar. His appearance came on the same day that another former Trump lawyer, Jenna Ellis, pleaded guilty in a Georgia criminal case in which the former president is accused of attempting to overturn the 2020 election.

After detailing his background to a lawyer for the New York attorney-general, Cohen — who was disbarred as a result of his criminal conviction — made a wry smile when asked if he still held any professional licences. “Not any longer,” he replied.

He then set about peeling back the layers of the Trump Organization and recounting how he had gone from obscurity to serving one of the world’s most famous families. He had been working as a lawyer at a small firm and operating a yellow cab business in New York when he came to the Trumps’ attention in the early 2000s for helping to resolve a dispute at a Trump building where he owned an apartment. Cohen managed to replace the residents’ board.

Donald Trump Jr took notice and eventually introduced him to his father, Cohen recalled. “As a result, I was asked to handle a few other matters,” Cohen told the court. In March 2007, while sitting in Trump’s office, the property mogul asked him if he “would like to leave that sleepy old firm” and come work for him.

He joined as an executive vice-president, Cohen explained — on par with the Trump children. But, as Trump’s “special counsel” he reported only to the patriarch, he said, describing his job as: “Whatever issues he had — whatever created ire for him — I would resolve.”

Cohen recounted how he and Weisselberg would use a red pen to make notations on a list of Trump assets. He would inflate them, he said, by using bogus comparisons, often with the help of Google. In one case, he used the Westchester mansion of billionaire Nelson Peltz as a basis to increase the stated value of a nearby Trump estate.

He also recounted the calculated and choreographed manner in which Trump would intervene in meetings company executives were holding with insurance underwriters, boasting about his wealth to try to win a better rate.

“About three-quarters of the way through the meeting Mr Trump would then come in the room. And he would have a conversation about his extensive net worth,” Cohen testified. Trump would say he was even wealthier than the insurance companies, and suggest that he might self-fund his insurance — unless they could provide a compelling offer, Cohen said.

“It was co-ordinated that he would arrive like that,” Cohen said.

Colleen Faherty, a lawyer for the New York attorney-general, began to explore Trump’s ill-fated bid for the Buffalo Bills American football team in 2014. As part of that endeavour, he secured a letter from Rosemary Vrablic, his private banker at Deutsche Bank, attesting to his financial wherewithal to fund a $1bn, all-cash bid. Vrablic resigned from the bank in 2021.

In a cover letter to Morgan Stanley, which was handling the sale, Trump wrote: “I have a net worth in excess of Eight Billion Dollars.”

Faherty later abandoned the line of questioning, giving way to Habba, whose cross examination will resume on Wednesday.