Bookkeeper says Manafort firm gave inflated income figure in loan bid

By Nathan Layne and Sarah N. Lynch

Read: Kristi Noem Is Banned From 20% of South Dakota.

 

ALEXANDRIA, Va. (Reuters) – Prosecutors on Thursday pressed their bank and tax fraud case against Paul Manafort, presenting testimony and documents to try to prove U.S. President Donald Trump’s former campaign chairman deceived his lead bookkeeper and a bank about his finances.

On the trial’s third day, the prosecution pivoted away from describing Manafort’s lavish lifestyle, focusing instead on the nitty-gritty details of actions they believe underpin the charges against him of bank fraud, tax fraud and failing to report foreign bank accounts.

Prosecutors have attempted to portray Manafort as a tax cheat and a liar who hid much of the $60 million he earned from political work for pro-Russian politicians in Ukraine by stashing it in undisclosed overseas accounts. The trial is taking place in a federal court in Alexandria, Virginia, outside Washington.

Manafort, 69, faces 18 charges in the first trial stemming from Special Counsel Robert Mueller’s investigation of Russia’s role in the 2016 U.S. presidential election. Manafort has pleaded not guilty to all the charges.

Manafort’s lead bookkeeper Heather Washkuhn, who oversaw Manafort’s business and personal holdings, testified that she thought she had complete knowledge of his financial affairs but that she was unaware of his holdings outside of the United States.

Washkuhn, managing director of the accounting firm Nigro Karlin Segal Feldstein & Bolno, said Manafort was “very detail-oriented” and “approved every penny” the firm paid from his personal account.

Prosecutors presented evidence that Manafort emailed a doctored profit-and-loss statement to a Chicago bank from which he was seeking a loan.

They showed jurors an email from Washkuhn to the bank showing that, through Nov. 20, 2016, his business had a net loss of $1,116,497. They then displayed another email they said Manafort sent to an executive at the bank with a profit-and-loss statement for September 2016 attached. The document stated that Manafort’s consulting firm had a net income of $3,011,952.

Washkuhn said she did not produce the latter document.

Vendors who provided luxury good and services to the Manafort family testified Wednesday and Thursday that they often received overseas wire transfer payments from a variety of companies such as Peranova Holdings Limited, Global Highway Limited and Lucicle Consultants Limited.

Washkuhn testified on Thursday that she had no idea any of those entities were owned or controlled by Manafort.

Mueller has pursued a 14-month investigation of Russia’s role in the 2016 U.S. presidential election and potential coordination between the Trump campaign and Moscow, though none of the charges against Manafort involve that issue.

KEY WITNESS TO TESTIFY

Greg Andres, a member of Mueller’s team, confirmed on Thursday that the prosecution will call Manafort’s former business partner Rick Gates as a witness, a day after prosecutors suggested they might not.

“We have every intention of calling him as a witness,” Andres said.

Gates pleaded guilty to making false statements after being indicted by Mueller. Defense lawyers have painted Gates as an untrustworthy business partner who embezzled funds from Manafort’s consulting firm.

As part of his guilty plea, Gates acknowledged routinely dealing with accountants in the preparation of Manafort’s tax returns and misleading them with false information, although he said he did so with Manafort’s knowledge.

Manafort routed millions of dollars to the United States by putting it in real estate, and spending it on expensive suits, cars and home renovations, according to prosecution witnesses. Prosecutors said Manafort evaded taxes through this scheme. Five of the 18 counts he faces relate to filing false tax returns.

On Thursday, the jury heard from Joel Maxwell of a Florida-based company that installs lighting, audio visual equipment and automation systems for homes that did work for Manafort. Maxwell testified that some of the Manafort invoices shown to him from prosecutors appeared to be have been forged.

Michael Regolizio, of a landscaping firm in the Hamptons on New York’s Long Island, also testified that a Manafort invoice was phony, listing an incorrect address and an altered version of his company’s name. Regolizio said he was paid about $450,000 between 2010 and 2014 for work for Manafort, and that the money was paid via a money transfer from Cyprus.

Two witnesses – an executive at an upscale clothier and a retired general contractor – testified on Wednesday that invoices purporting to be bills from their companies to a company tied to Manafort appeared to be fake.

It was unclear who created the invoices or how they were used.

As he did on Wednesday, U.S. District Judge T.S. Ellis warned prosecutors against focusing too much on Manafort’s lifestyle.

“It kind of engenders some resentment against rich people,” Ellis said, expressing concern about displaying photos exhibiting Manafort’s wealth.

Mueller has indicted or secured guilty pleas from 32 people and three companies. Trump has called Mueller’s investigation a witch hunt and on Tuesday called on Attorney General Jeff Sessions to end it.

(Reporting by Nathan Layne in Alexandria, Virginia; Additional reporting by Susan Heavey and Karen Freifeld; Writing by Warren Strobel; Editing by Will Dunham)