Michael Cohen delivered plenty of bombshells during his testimony Wednesday on Capitol Hill, accusing President Donald Trump of a pattern of deception and criminality. Among those charges are allegations of financial trickery, including lying about his wealth to lower his tax bills and obtain a bank loan.
In a, Mr. Trump said his longtime lawyer and “fixer” Michael Cohen was lying.
To be sure, Cohen’s testimony may be considered suspect, given he has a record of lying to Congress and media outlets and failed to provide proof for some of his allegations of financial funny business. Yet the allegations may spark renewed congressional interest in Mr. Trump’s tax returns and in his business practices.
Under questioning from freshman Congresswoman Alexandria Ocasio-Cortez, Cohen claimed Mr Trump had sought to lower his property tax bills by deflating the value of his properties. Cohen alleged the tactic was used at the Trump National Golf Club in Briarcliff Manor, New York.
“What you do is you deflate the value of the asset then you put in a request to the tax department for deduction,” Cohen said during the testimony.
Cohen also claimed Mr. Trump had provided inflated asset counts to an insurance company, although the context of the allegation isn’t clear.
Here are three takeaways from Cohen’s allegation of financial trickery.
Mr. Trump’s fluctuating wealth
Cohen alleged Mr. Trump has both inflated and underreported his wealth — for a number of reasons. One is for pure vanity, in an effort to get on Forbes’ list of America’s richest people. Puffing up one’s net worth to a publication isn’t illegal, although it may be considered ethically dubious.
Cohen provided documents that showed Mr. Trump’s net worth fluctuated by $4.2 billion in a span of less than a year, ranging from $4.2 billion to $9.2 billion. Some of the difference was due to adding a “brand value” for Mr. Trump and his business that totaled around $4 billion.
Misstating assets on a loan application
Asked by Rep. William Lacy Clay, a Missouri Democrat, whether Mr. Trump had ever inflated assets to obtain a bank loan, Cohen claimed Mr. Trump did just that when he sought a Deutsche Bank loan to buy the Buffalo Bills, an effort that never bore fruit.
Misstating your assets or income on a bank loan application is considered fraud, according to Bankrate.com. After the hearing, Clay told the St. Louis Post-Dispatch he believes Mr. Trump will face charges of bank fraud for the alleged false loan application.
Tax avoidance versus evasion
Cohen also alleges Mr. Trump misrepresented his properties’ values to lower his property taxes. Property values can increase or decrease depending on many factors, of course. And tax avoidance is a legal strategy employed by many businesses and individuals, who rely on tactics like deductions and write-offs to lower their tax bills.
But tax evasion is illegal. For instance, several years ago, owners of a Times Square building failed to report the money they earned from renting billboards, helping them lower their property tax bill by “tens of thousands of dollars” each year, The New York Times reported. A grand jury that heard the case suggested that property tax evasion was likely wide-spread.