Michael Cohen said President Trump inflated his assets to be on the Forbes list of richest people, but deflated his assets to reduce his real estate taxes.

Cohen described how that process went down in this exchange with Rep. Lacy Clay:

Clay: To your knowledge, did the President or his company ever inflate assets or revenues?

Cohen: Yes.

Clay: Was that done with the President's knowledge or direction?

Cohen: Everything was done with the knowledge and at the direction of Mr. Trump.

Clay: Tell us why he would do that and what purpose did it serve.

Cohen: It depends upon the situation. There were times that I was asked, again with Allen Weisselberg, the CFO, to go back to speak with an individual from Forbes, because Mr. Trump wanted each year to have his net worth rise on the Forbes wealthiest individuals list. And so what you do is you look at the assets and you try to find an asset that has say, for example, 40 Wall Street, which is about 1.2 million square feet. Find an asset that is comparable, find the highest price per square foot that's achieved in the area and apply it to that building. Or if you're going off of your rent roll, go by the gross rent roll times a multiple and you make up the multiple which is something he had talked about. It's based upon what he wanted to value the asset at.

Watch more: CNN's Chris Cillizza explains how Cohen became Trump’s worst enemy: