Manafort trial day 4: Accountant concedes possible wrongdoing, Manafort's double life

[Nomad]

Not lookin' real great for Trump's main Russia contact and Putin go-between.

Manafort trial day 4: Accountant concedes possible wrongdoing, Manafort's double life

08/03/2018

People wait in line to enter the Albert V. Bryan United States Courthouse to attend the trial of former Trump campaign manager Paul Manafort in Alexandria, Va. | Mark Wilson/Getty Images

An accountant for former Trump campaign chairman Paul Manafort admitted at Manafort’s tax- and bank-fraud trial Friday that she filed tax returns she thought contained false information and that she may have committed a crime in doing so.

Cindy Laporta said she had a sense that what Manafort and his aide Rick Gates told her about money being transferred into their international political consulting business wasn’t accurate.

“I prepared the tax returns and communicated with banks based on information that Mr. Gates and Mr. Manafort provided to me that I didn’t believe,” said Laporta, the first witness at the trial to testify under*a grant of immunity.

The admission was the first time a witness has acknowledged knowing of potential wrongdoing during Manafort's trial, in which the longtime lobbyist is fighting charges brought by special counsel Robert Mueller. Laporta is one of five people on Mueller’s witness list for whom the government requested immunity.

Laporta, who works for Kositzka Wicks & Co., based in Alexandria, Virginia, said she sought immunity because she was concerned about being prosecuted. Her attorney had indicated that Laporta would invoke her Fifth Amendment rights if forced to testify without immunity.

Laporta’s testimony was some of the first evidence to support bank fraud charges in the federal indictment against Manafort. Her statements were some of the most damaging testimony at the trial thus far, but the presence of Gates in many of her dealings with the tax and financial issues may leave the defense an opening to pursue their argument that Gates was freelancing when he drafted loan-related documents that may have been backdated and forged.

Laporta said that when preparing tax returns and related records, she agreed to treat as loans $2.4 million in funds that Manafort’s consulting firm received from offshore businesses, even though she had doubts that they really were loans and got little documentation to back up that claim.

The accountant said her requests for details on the loans yielded unusual one- or two-page documents, not the typical stack of paper with numerous clauses. The alleged loans were also recorded in the books of Manafort’s DMP International as coming from the consulting firm’s customers, which Laporta found suspicious.

“I had not seen that before,” she said. “Yes, it was a concern.”

In another exchange, Laporta testified that Gates told her in September 2015 that Manafort’s income needed to be reduced so he could afford to pay his taxes. To finesse the situation, she said, Gates instructed her to reduce Manafort’s income by not counting one of his loans.

While Laporta said she followed the instructions, she told Mueller prosecutor Uzo Asonye that the move was “not appropriate.”

“We can’t pick and choose what’s a loan and [what’s] income,” she explained.

Although the purported loans allowed Manafort at one point to bring in cash without paying taxes, a $1.5 million loan from a company called Peranova in 2012 caused problems by 2016 when Manafort was seeking a fresh loan from Citizens Bank.

“The bank wanted to see more money available to pay back the loan” it was considering, Laporta said. “There wasn’t enough income and there was the debt.”

Laporta said Manafort or Gates — she was unclear about which one — told her the loan had been forgiven in 2015, so she passed on that information to the bank.

“What information did you rely on in providing this response?” Asonye asked.

“Their word,” Laporta replied.

“Did you believe the $1.5 million loan from Peranova had actually been forgiven?” the prosecutor asked.

“Uh … no,” she answered.

When the bank asked for documentation, Gates sent Laporta a draft forgiveness letter dated June 2015, even though it was February 2016, she said.

“At the time, did you believe this document was true or false?” Asonye asked.

“False,” she said.

“Did you understand this letter to be backdated?” the prosecutor asked.

“Yes,” Laporta said.

Eventually, Gates sent a copy of the forgiveness letter that was signed by someone claiming to be a director of Peranova, but still dated eight months earlier.

Gates pleaded guilty in a related case in February and agreed to cooperate with prosecutors in exchange for most of the charges against him being dropped. He’s expected to testify against Manafort in the coming days.

Asked why she went along with the fake memo, Laporta said, “I honestly believed the bank would have to vet that document themselves, and I felt I was protected by having them prepare that document and own that document.”

The accountant also testified that in August 2016, while he was at the helm of the Trump campaign, Manafort pressed her directly for a revised financial statement that would show his firm anticipating income when it had received none at all that year.

Manafort told Laporta via email that the firm was expecting payment of $2.4 million in November for Ukraine-related work. He wanted an accrual-based accounting statement that showed the funds as earned. But the accountant found it odd that no expenses had been reported to her for that work.

Asked whether the company really was due $2.4 million, Laporta said: “I had no idea. I just asked for evidence. … I never received the information I requested regarding backup for income or for any additional expenses.”

Prosecutors contend the loans were shams, coming from offshore accounts Manafort controlled, and designed to inject cash into his struggling business while avoiding tax liability.

After Laporta left the stand Friday afternoon, U.S. District Court Judge T.S. Ellis told Manafort defense lawyer Kevin Downing he would be free to question the accountant on Monday about her immunity agreement and any other arrangements with the government. The judge said he was confused by the CPA, who said she makes about $400,000 a year, declaring that she took responsibility for what transpired with Manafort and Gates.

“She wasn’t prosecuted. … I don’t know if there were any professional consequences or consequences of that sort,” the judge said. “I don’t know what she means when he says she took responsibility. Nothing happened."

Manafort led financial double life, prosecutors say

Earlier on Day Four of Manafort’s trial, prosecutors advanced their case that the high-flying international political consultant lived a financial double life — hiding overseas bank accounts from his accountants and lying to them about the source of large sums he deposited in U.S. banks.

The testimony further underscored the argument by Mueller’s team that Manafort relied on a complex web of foreign financial entities and transactions to conceal and evade U.S. taxes on millions of dollars he earned from managing and advising foreign political campaigns, particularly in Ukraine several years ago.

Manafort’s defense team has suggested that false statements on his tax returns were understandable oversights by a busy man. But prosecutors are working methodically to demolish that position through testimony showing a years-long pattern of deception on Manafort’s part.

An accountant who helped prepare Manafort’s taxes for almost 20 years, Philip Ayliff, testified Friday that he and his colleagues often directly asked Manafort and Gates about possible foreign accounts and other unusual transactions but were never informed about a web of foreign entities prosecutors say Manafort controlled.

“They never told us about any income deposited in foreign accounts,” Ayliff said.

He said he assumed the exotically named companies that transferred millions into Manafort’s consulting firm were clients in the consulting work he did abroad, adding that ledgers provided by Manafort’s bookkeeper had described them that way. In fact, prosecutors say, Manafort himself controlled the companies.

Manafort’s bookkeeper testified Thursday that she was unaware that Manafort and Gates had financial accounts in Cyprus and had filed tax returns there. Asked by Asonye, the Mueller prosecutor, whether Manafort’s accountant would have wanted to know that, Ayliff said yes. “It’s worldwide income that they have to report on,” he said. “We want to make sure we’re complying with the law.”

After Manafort bought a brownstone townhouse on Union Street in Manhattan in 2012, the tax preparers sent Gates an email asking where the money came from. The reply was that it was money that Manafort’s wife, Kathleen, had in the bank.

“This came from a savings account of Kathy’s, according to PJM,” Gates wrote back.

In fact, prosecutors allege, Manafort purchased the home by wiring $3 million from a Cyprus-based business, Actinet Trading Limited.

Defense attorneys told jurors earlier this week that Gates was scamming Manafort — embezzling from him or his company. Gates appears to have acted as an intermediary for Manafort with the tax preparers and accountants on numerous occasions.

Before defense attorneys got their crack at Ayliff on Friday, Asonye sought to head off any argument that Gates was freelancing when he answered the accountants’ questions. He asked Ayliff whether during the years he dealt with the two men he noticed any disagreement between them.

“Did Rick Gates ever contradict Mr. Manafort?” the prosecutor asked. “Did Mr. Manafort ever contradict Rick Gates?”

“No,” Ayliff answered to both questions.

While some of the email exchanges were intriguing, much of Ayliff’s testimony was painfully tedious, consisting of his reading various lines from several years of tax returns for Manafort and his business.

Manafort’s attorneys signaled part of their defense strategy during a short exchange with Ellis while jurors were out of the room.

Downing asked that the judge let him ask Ayliff a couple of questions about whether the accounting firm maintained all client records in the event of an audit.

Downing said he was planning to make the case that while Manafort may have answered no when signing off on tax returns declaring he did not have a foreign bank account, he was not doing it in willful violation of the law since he did submit documents to his tax preparers signaling there were, in fact, such accounts.

“Only a fool would give that kind of information to the accountant” if the client was trying to evade the IRS, Downing said.

Ellis is giving trial participants the morning off Monday, convening court at 1 p.m. “You may play or sleep until then,” he said.

Yer goin' DOWN, buddy!!!!!

[Jack]

Manafort needs to start talking real quick before the ship sinks.

[LutherF]

Sounds to me like a lot of financial games were being played all around. The accountant's ethics are appalling and it sure sounds like Manafort and Gates were playing all kinds of games. Then again, this is the prosecution making their case and it's supposed to sound bad for the defendant. We'll have to see what the coming weeks bring. As a professional in the industry, I'm more than a little disturbed that these accountants were given immunity. There is no excuse for exposing your client to this kind of risk.

[tsuke]

pretty much what we expected. They are going to make the case for a lot of financial stuff with no hint of russian collusion.

[Frank Apisa]

Manafort is almost as dirty as Donald Trump.

I cannot understand why he has not cut a deal already. Maybe he has nothing to trade...but if he has anything, he should bail right now, because this is not looking good.

Of course, the defense still has a case to present, but "Gates tricked me...he did it...I didn't" sounds like a lousy way to go.

[Bigdog]

Manafort needs to start talking real quick before the ship sinks.

Yep, Manafort is a Political Prisoner being squeezed for info on Pres. Trump, ... Leftist Russian Gulag style.

[Nomad]

pretty much what we expected. They are going to make the case for a lot of financial stuff with no hint of russian collusion.

He knows that Putin will have either him or his family killed if he cooperates with Mueller.

[Nomad]

Manafort needs to start talking real quick before the ship sinks.

Maybe he's waiting to see if the jury comes back with a guilty verdict, then if they do, he offers up Trump on a platter in exchange for a light sentence.

[volsrock]

Not lookin' real great for Trump's main Russia contact and Putin go-between.



Yer goin' DOWN, buddy!!!!!

possible????? LOL