Manafort financial fraud trial shifts focus to secrecy
Testimony heard on offshore accounts
ALEXANDRIA, Va. — Prosecutors headed toward the heart of their financial fraud case against former Trump campaign chairman Paul Manafort on Friday, with jurors hearing testimony that he never told his tax accountants about offshore bank accounts containing millions of dollars.
The testimony of longtime accountant Philip Ayliff builds on evidence presented by special counsel Robert Mueller’s team that Mr. Manafort inflated his business income by millions of dollars and kept his bookkeeper and tax preparers in the dark about the foreign bank accounts he was using to buy luxury items and pay personal expenses.
Mr. Ayliff told jurors that Mr. Manafort denied on multiple occasions that he controlled foreign bank accounts when asked by his tax preparers. That’s why the accounts weren’t reported on years’ worth of Mr. Manafort’s tax returns as required by federal law, he said.
Mr. Ayliff also testified that he sometimes communicated with longtime Manafort deputy
Rick Gates about the former Trump campaign chairman’s personal and business tax returns. But he said Mr. Manafort authorized those discussions, and Mr. Gates and Mr. Manafort never contradicted each other.
That testimony is important to prosecutors as they look to rebut defense arguments that Mr. Manafort can’t be responsible for financial fraud because he left the details of his spending to others. Those include Mr. Gates, who pleaded guilty earlier this year and is expected to testify soon as the government’s star witness.
Mr. Manafort faces charges of bank fraud and tax evasion that could put him in prison for the rest of his life. It’s the first courtroom test of Mr. Mueller’s team, which is tasked with looking into Russia’s efforts to interfere with the 2016 U.S. election and whether the Trump presidential campaign colluded with the Kremlin to sway voters.
In Friday’s testimony, and throughout the trial thus far, neither President Donald Trump nor Russia have been discussed, as evidence has focused on Mr. Manafort’s work as a consultant in the years before he joined Mr. Trump’s campaign in the presidential year.
While the question of collusion remains unanswered, Mr. Manafort’s financial fraud trial has exposed the secretive world of foreign lobbying that made him rich. It has also revealed how, when income from his Ukrainian political consulting work dried up, he struggled to pay his bills and, prosecutors say, began obtaining bank loans under false pretenses.
In one instance, Mr. Ayliff testified that Mr. Manafort pressed him to tell bankers considering a loan application that one of Mr. Manafort’s New York properties was being used as a personal residence when in fact he was using it to rent out. Classifying the property as a personal residence would have made it easier to obtain the mortgage.
Mr. Ayliff responded to Mr. Manafort that “we have always treated it as a rental. ... Not sure where that leaves us.”
That email exchange occurred around the time prosecutors say Mr. Manafort was using doctored documents to secure loans.
Bookkeeper Heather Washkuhn testified Thursday that a series of profit-and-loss statements Mr. Manafort submitted with his loan applications were fake, including one that inflated the net income of his business by about $4 million.
Ms. Washkuhn also testified that Mr. Manafort never told her that millions in foreign wire transfers were coming from companies prosecutors say he controlled.
“I would say he was very knowledgeable,” Ms. Washkuhn told jurors. “He was very detail-oriented. He approved every penny of everything we paid.”
Other witnesses testifying this week said Mr. Manafort paid them millions from offshore accounts tied to foreign shell companies for landscaping, expensive clothing and evena karaoke machine.
The trial in northern Virginia is the first of two for Mr. Manafort. A second trial is scheduled for September in the District of Columbia. That case involves allegations that he acted as an unregistered foreign agent for Ukrainian interests and made false statements to the U.S. government.