Jurors in the Paul Manafort fraud trial may have come away from the first week of testimony with a vivid impression of him as a man who spent vast sums on luxurious houses, landscaping, and clothes, and who gave lenders phony documents as he grew desperate for cash.
But prosecutors for Special Counsel Robert Mueller, who charged Manafort with bank and tax fraud, hadn’t provided much direct evidence through Friday to back their claims that he controlled the foreign shell companies that funded those purchases. Prosecutors accused Manafort, President Donald Trump’s former campaign manager, of failing to report those accounts on his tax returns or file required reports with the U.S. Treasury Department.
When testimony resumes next week, Manafort’s lawyers will get a chance to deliver on their promise to show that his former right-hand man, Rick Gates, was the true criminal. Gates pleaded guilty and is expected to be Mueller’s star witness. Jurors heard about Gates on Friday from Cynthia Laporta, an accountant who testified under an immunity grant.
She said she knew that Gates was using phony backdated loan documents to help his boss lower his taxes and borrow from banks as his financial strength eroded. Many of those machinations took place in 2016, when Manafort was Trump’s campaign manager. Laporta said she created a $900,000 loan that disguised income in that amount and helped Manafort save up to $500,000 in taxes.
“I had a couple of choices,’’ Laporta told jurors in federal court in Alexandria, Virginia. “I could have refused to file’’ the tax return, potentially exposing her accounting firm to the risk of litigation. Or, she could have called Manafort and Gates liars, she said. But “Mr. Manafort was a longtime client of the firm and I didn’t think I should do that either. I very much regret it.”
In several instances, Laporta said she put up little resistance to documents she admitted were phony and were intended to help Manafort lower his taxes or obtain loans. She could get battered on cross-examination, and she’s not alone. Prosecutors have said four other professionals who helped Manafort with his finances may testify with immunity grants.
But the trial’s highlight will be Gates’s testimony. He spent a decade with Manafort at his political consulting firm in Ukraine and followed him to the Trump campaign. Prosecutors said Manafort made $60 million as a political consultant in Ukraine from 2010 to 2014, and Gates helped him hide much of that income from the Internal Revenue Service through accounts in Cyprus and other tax havens.
In his opening statement, Manafort’s attorney Thomas Zehnle cast Gates as the true villain, a man who stole money and dealt with the accountants and bookkeepers while Manafort was plying his trade around the world.