ALEXANDRIA, Va. — Federal prosecutors on Monday rested their tax-evasion and bank-fraud case against Paul Manafort, the former chairman of Donald Trump’s presidential campaign.
The government says Manafort hid at least $16 million in income from the IRS between 2010 and 2014 by disguising money he earned advising politicians in Ukraine as loans and hiding it in foreign banks. Then, after his money in Ukraine dried up, he defrauded banks by lying about his income on loan applications and concealing other financial information, such as mortgages, prosecutors said.
The trial of the longtime Washington operator now turns to Manafort’s defense team, which has so far blamed any wrongdoing on Rick Gates, the former Manafort protege who testified that he and his former boss committed crimes together for years. Defense attorneys have called Gates a liar, a philanderer and an embezzler as they’ve sought to undermine his testimony.
Manafort’s lawyers have not yet said whether they will call any witnesses or present other evidence in the case. They will have to disclose that information today as the case reaches its final stages.
If Manafort’s lawyers offer no witnesses, then closing arguments could begin as early as today.
Late Monday, Manafort’s team also made a motion to dismiss all the charges, saying the government hadn’t met its burden of proof. U.S. District Judge T.S. Ellis III took the motion under advisement.
Ellis also closed the courtroom from the public while he heard arguments on a sealed motion filed by Manafort’s team. Ellis said the proceedings and the motion will be kept secret until after the case concludes.
The closed hearing came after the judge delayed Manafort’s trial for hours last Friday without explanation. The judge left the courtroom that day and went toward the jury room, then later admonished jurors repeatedly to not discuss the case.
Before the prosecutors rested their case Monday afternoon, the court heard testimony from a bank executive who said he found several red flags with Manafort’s finances while he was being considered for more than $16 million in bank loans.
James Brennan, a vice president at Federal Savings Bank, said Manafort failed to disclose on his applications that he had mortgages on two properties in New York, information that would have made it harder for him to secure a loan. Brennan said he also found several “inconsistencies” in the amount of income Manafort reported for his business.
Other bank officials saw “red flags” in Manafort’s loan application and wanted to reject it, he said. On the forms, Manafort claimed more than $4 million in income for his business in 2015, but other documents showed he made less than $400,000, Brennan testified.
The information led senior executives to reject one of the loans. But Brennan said Federal Savings Bank Chairman Stephen Calk overruled that decision.
“It closed because Mr. Calk wanted it to close,” Brennan said.
Other witnesses have said Calk pushed the loans through because he wanted a post in the Trump administration.
By that time, according to investigators, the millions of dollars Manafort had been making every year as a political consultant in Ukraine had dried up. His main client, former Ukrainian President Viktor Yanukovych, had fled the country in 2014, and Manafort had not found new clients, according to witnesses.
As his business hemorrhaged money, Manafort decided to take out loans on various properties he owned, but prosecutors say he lied about his debts and income to get those loans approved.
Brennan said the Chicago-based bank lost at least $11.8 million because it had to write off the two loans, which he said were the two largest the bank had made at that time.
Brennan testified with a grant of immunity because he feared prosecution. He was first approached by the FBI in front of his house in June 2017.
The prosecution also recalled a Treasury Department agent — over the objections of Manafort’s defense team — to testify that two of Manafort’s companies hadn’t filed any reports disclosing foreign bank accounts as required by federal law.
Senior Special Agent Paula Liss said the Treasury Department had no record of DMP International or Davis Manafort Partners filing such reports between 2011 and 2014.
Liss’ testimony came after Manafort’s attorneys signaled they intend to argue that the offshore accounts that he used to pay for millions of dollars in personal expenses were actually controlled by the company and not him personally.
One of the defense lawyers, Thomas Zehnle, said Manafort’s team plans to tell the jury that Manafort had no obligation to report foreign bank accounts in the years he owned only 50 percent of DMP International.
“It’s very clear that if you do not own more than 50 percent of the entity, you do not have a responsibility,” Zehnle said.
The other half of the firm is owned by Manafort’s wife, and they file joint tax returns.
Prosecutor Uzo Asonye countered that when Manafort filed paperwork as a foreign agent in 2017, he described himself as owning 100 percent of the business.
Ellis told jurors to consider Liss’ testimony only to help determine whether Manafort willfully failed to file individual reports on foreign bank accounts, as is alleged in the indictment. He stressed that the companies weren’t charged and that Manafort can’t be convicted because the firms failed to file reports.
The trial is the first to emerge from special counsel Robert Mueller’s investigation, but it does not relate to any allegations of Russian election interference or possible coordination with the Trump campaign. Neither Manafort nor Gates have been charged in connection with work on Trump’s campaign.
Trump has distanced himself from Manafort, who led the campaign from May 2016 to August 2016 — with Gates at his side. Gates, 46, has pleaded guilty to two felony charges and is hoping that by helping Mueller prosecute Manafort, he might receive probation despite the long list of additional crimes with which he has been charged.
Gates said he helped Manafort commit crimes in an effort to lower Manafort’s tax bill and fund his lavish lifestyle. During testimony, Gates was forced to admit embezzling hundreds of thousands of dollars from Manafort and conducting an extramarital affair.
The prosecutors also introduced a trove of documentary evidence as they sought to prove Manafort committed 18 separate criminal counts. Along the way, they’ve not only faced an aggressive defense team but have also drawn criticism from Ellis, who pushed for them to speed up their case.
In fact, in the course of testimony from more than two dozen prosecution witnesses, the biggest arguments were not between prosecutors and defense lawyers, but between prosecutors and Ellis.
The judge repeatedly expressed skepticism over points raised by the government, to the frustration of prosecutors, who urged him not to misstate facts or law in the jury’s presence. Twice, the prosecution team filed formal requests that the judge tell the jury to ignore a previous statement of his; he did so once.
Manafort, 69, faces the prospect of spending the rest of his life in prison if he is convicted on many of the charges. Manafort also faces a second trial next month — in Washington, D.C. — on charges of failing to register as a lobbyist for a foreign government and conspiring to tamper with witnesses.
Information for this article was contributed by Chad Day, Stephen Braun and Mary Clare Jalonick of The Associated Press; by David Voreacos, Andrew Harris, Neil Weinberg and Daniel Flatley of Bloomberg News; by Sharon Lafraniere, Kenneth P. Vogel and Maggie Haberman of The New York Times; and by Rachel Weiner, Lynh Bui, Michael Kranish, Devlin Barrett, Tom Jackman and Spencer S. Hsu of The Washington Post.
A Section on 08/14/2018
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