During the podcast yesterday, Rich and I discussed the cross-examination of Michael Cohen at the Trump trial by defense lawyer Todd Blanche. In particular, I focused on what has been reported (including now, by me) as the bombshell revelation that Cohen had essentially embezzled $60,000 from the Trump Organization. Now that I’ve spent the past couple of days reading the trial transcript (after having relied on reporting from inside the courtroom), it seems like less of a bombshell than I’d previously understood it to be.
Don’t get me wrong: It is deeply dishonest conduct, to be sure. It should further harpoon any thought that a jury could rationally trust the testimony of Cohen, a convicted perjurer and fraudster whose bias against Trump is unabashed. What I mean, instead, is that the reporting I’d seen suggested that the jury first heard about Cohen’s theft from his employer during cross-examination. As I told Rich, I was puzzled that prosecutors could let that happen — prosecutors always want to draw the sting of damaging impeachment evidence against their own witnesses by eliciting it first, so the jury isn’t shocked when it inevitably comes up during the defense’s cross-examination.
In fact, the prosecutors didn’t let that happen. While I believe the prosecution of this case has been appalling (more on that this weekend), in this instance I was unfair to one of the prosecutors, Susan Hoffinger. She can be faulted for failing (a) to stress that Cohen stole from his employer but was never prosecuted for it, and (b) to remind jurors that the amount of the theft was double the $30,000 amount Cohen conceded because of the way the Trump organization structured the reimbursement. But she did not fail to inform the jury about Cohen’s theft.
Basically, in early 2017, Cohen (who was leaving the Trump organization to be then-president Trump’s private lawyer) and Trump Organization CFO Allen Weisselberg negotiated the amount Cohen was going to be paid in 2017. Cohen maintains that this was solely to reimburse what he was owed from 2016, when he fronted money to pay for Stormy Daniels’s silence and for digital services from a business known as Red Finch, and when he claims Trump shorted him on his annual bonus.
The relevant testimony involves the Red Finch expenditure.
In a nutshell, Red Finch charged $50,000 but Cohen paid the company only $20,000. Then, when he was negotiating with Weisselberg, Cohen indicated he had paid $50,000 — an amount that the Trump organization doubled (i.e., “grossed up”) to $100,000 because it was expected that Cohen would pay income tax. (The same thing was done with the $130,000 Stormy payment; even though no-interest reimbursement of fronted money is not a taxable event, the Trump organization structured the 2017 payments to Cohen to look like lawyer’s fees, which are taxable.) But Cohen never paid Red Finch the $30,000 still outstanding; he pocketed it. And since the Trump Organization doubled the payment, this $30,000 became $60,000 that Cohen kept for himself.
With that as background, here’s the relevant part of Hoffinger’s direct examination of Cohen (Transcript 3486-88):
Q: Now, you mentioned Red Finch. The payment plus the $50,000 to Red Finch. And I think you mentioned that it was some services that a tech company had provided to Mr. Trump?
A: Yes.
Q: And you said it was a couple of years earlier?
A: Yes, it was earlier.
Q: And had they completed the work for Mr. Trump?
A: They did.
Q: And had you discussed with Mr. Trump the work that was done and completed and that he owed Red Finch $50,000?
A: Yes, ma’am.
Q: And did he decide to pay Red Finch the money that they were owed?
A: No ma’am
Q: And given that you didn’t pay him the whole $50,000 why did you put down 50,000 on there?
A: Well for the previous year and a half I had told Allen [Weisselberg]: “Look I laid it out.” My hope was to get it, the money from Allen onto it, so that I can give it to him [i.e., to the owner of Red Finch]. But it never happened, but I constantly reminded him [i.e., Weisselberg] because I did want him [i.e., the Red Finch owner], you know, to receive the funds.
Q: Did you pay red Finch less than $50,000?
A: I did.
Q: Okay. And why did you then ask for $50,000 back [from the Trump organization]?
A: Because that’s what was owed and I didn’t feel Mr. Trump deserved the benefit of the difference.
Q: And if you were going to get $50,000, but you paid out less than $50,000, were you going to keep the rest of it for yourself?
A: That’s what I ended up doing.
Q: And just to go back to one thing. Did Allen Weisselberg — was Allen Weisselberg able to approve the repayment to Red Finch for $50,000 without Mr. Trump’s approval?
A: No.
This testimony makes clear that Cohen fraudulently convinced the Trump organization to pay him a $50,000 reimbursement when he’d actually laid out only $20,000, and that he kept the difference rather than paying Red Finch.
Hoffinger should have pointed out that Cohen got a windfall from his deceit because the Trump organization doubled the “reimbursement” amount. (She subsequently said in passing that the total reimbursements of $180,000 were “grossed up” to $360,000 for tax purposes, but she didn’t highlight that the $360,000 included $60,000 that wasn’t reimbursement — it was theft — because Cohen didn’t pay it out.) Hoffinger also should have pointed out that the Manhattan district attorney’s office never demanded that Cohen plead guilty to stealing $60,000 from the Trump organization — a felony offense more serious than the manufactured offense for which Bragg indicted Trump. This left the door open for Trump lawyer Todd Blanche to pound Cohen on these matters, which appears to have been very effective.
Still, Hoffinger neither hid the ball nor missed a significant issue.