Michael Cohen’s testimony that President Donald Trump routinely falsified his net worth in legal documents to gain tax advantages or defraud business partners set commentators buzzing about the serious penalties baked into U.S. fraud laws.

But anyone daydreaming of multiple criminal counts that each carry 30-year potential prison terms should slow down. Even if Cohen’s claims can be fully corroborated, the white collar criminal code is more unruly beast than it might appear.

Lying about your financials to gain an advantage is a crime. Cohen’s specific allegations about falsified bank papers and his vaguer assertions that Trump also fudged numbers with tax officials and an insurance company would open some big doors: wire fraud, tax fraud, insurance fraud, bank fraud. Those statutes are unusually broad compared to the rest of the federal code, and their 5- and 10-year statutes of limitations are relatively generous compared to other white-collar statutes.

The government’s great latitude to bring bank, tax, insurance, and wire fraud cases of the sort Cohen’s testimony hinted at comes at a cost, however. Fraud laws can also trip prosecutors up after they secure a conviction. The punishment phase of a white-collar case is a minefield that rarely produces the decades-long maximum prison sentences you’ll find in the criminal code, two experts in the field told ThinkProgress.


“Your average bank fraud [where] somebody submits a false application for a loan, if it’s their first offense, they might not even go to jail,” said Rory Little, a former prosecutor who now teaches at UC Hastings College of Law in San Francisco.

Penalties are determined by the scope of the actual harm caused by the fraud, rather than by the size of the lie itself. The law says bank fraud is punishable by up to 30 years in prison and a fine up to $1 million. To locate a specific case within the wide punishment spectrum in the statute, judges and lawyers turn to federal sentencing guidelines that appear on paper to provide clear, highly specific guidance.

“These guidelines sort of masquerade as specific and mechanical and sooner or later you’ll end up at a precise number. But actually they’re so manipulable, they’re so malleable,” Little said.

Imagine a $2 million mortgage based on falsified paperwork — an inflated income, an undisclosed off-the-books loan from parents to make a down payment, or some other exceedingly common technical violation of the law.

“A lot of people would say, let’s just use the $2 million…[and] now you’re talking a 4- to 5-year sentence,” Little said. “But a defense attorney would say the bank was never going to lose $2 million, they’d recover the house and sell it and lose maybe $5,000, maybe lose nothing, heck maybe they’d turn a profit. It makes a big difference who wins that argument.”

That hypothetical seems downright reasonable compared to some of the disconnects in legal interpretations of white-collar sentencing rules Little has seen in practice. He described one ongoing fraud case where the government thinks the law mandates a life sentence and the defense used the same sentencing rules to argue for a two-year term.


“That’s an incredible gap. And both sides have filed reams and reams of paper showing, detail by detail by detail, why their calculation is correct, and the judge is going to have to figure that out,” Little said. In all likelihood that case will result in a four or five year prison term, he said, which would be a significantly stiffer penalty than Little typically saw in his own court career.

Even in cases involving relatively large sums of money that might lead the public to expect penalties close to the maximums written into law, Little said, the court generally views five or six years as a heavy enough hit.

“A small-time homeowner who falsifies their income might get probation. A banker might get jail time but they’re not going to get 30 years,” he said.

A reasonable gauge of the potential penalties facing a non-president who engaged in the practices Cohen suggested were common for Trump is hard enough. But it’s even less clear that anything he described would get prosecuted under normal circumstances.

Take the $4 billion tack-on to Trump’s assets Cohen said they reported to Deutsche Bank at one point during the president’s public campaign to buy the Buffalo Bills in 2014, for example. What looks like a gigantic swindle to civilian eyes doesn’t necessarily move the needle for prosecutors, Volkov Law Group associate Susan Simpson said, in part because the government takes its fraud cues from victims.

“If the bank’s not bothered by it, or the deal doesn’t get far enough along…how are [prosecutors] even going to find out?” Simpson said, noting that Trump watchers have long speculated that his football franchise play was a stunt rather than a serious offer.


“There’s still potential criminal liability in just making the offer. Wire fraud can hit so many things that even making the attempt can be enough,” she said. “But I have a hard time seeing how you get a criminal case out of this without something way more.”

One $4 billion misstatement on a form you draw up in service of a practical joke at Buffalo’s expense might not excite a prosecutor. Cohen’s insinuation that Trump habitually misstated things on business paperwork, though, might change the calculus.

“If it was a routine business practice of a white collar businessman, you might go after it more seriously,” Little said. “What Cohen was doing for Trump had some big numbers attached to it, but I’m sorry to say it’s not uncommon. And in New York, I think it happens every day.”

The public excitement over the notion that Trump has chronically and possibly criminally mislead tax authorities and business partners about his wealth is understandable. But the lawyers said it’s important to remember that Cohen was only discussing subjects that government prosecutors are comfortable letting the public hear about.

“If I had to take a bet where Cohen could cause the most trouble for Trump on liability, it’d be on the money laundering” for foreign business deals or tabloid newspaper ‘catch-and-kill’ practices, Simpson said.

“The stuff about inflating net worth is stuff the prosecutors were OK with him talking about. It’s interesting, and it’ll get attention, but it’s sort of a nothing.”