ShareThis Page
Political Headlines

Income was disguised to help Paul Manafort, tax preparer says

| Friday, Aug. 3, 2018, 8:30 p.m.
Kevin Downing, attorney for Paul Manafort, walks to the Alexandria Federal Courthouse in Alexandria, Va., Friday, Aug. 3, 2018, on day four of President Donald Trump's former campaign chairman Paul Manafort's tax evasion and bank fraud trial. (AP Photo/Manuel Balce Ceneta)
Kevin Downing, attorney for Paul Manafort, walks to the Alexandria Federal Courthouse in Alexandria, Va., Friday, Aug. 3, 2018, on day four of President Donald Trump's former campaign chairman Paul Manafort's tax evasion and bank fraud trial. (AP Photo/Manuel Balce Ceneta)
Paul Manafort's former bookkeeper Heather Washkuhn, left, walks to the Alexandria Federal Courthouse in Alexandria, Va., Thursday, Aug. 2, 2018, to testify at the trial of President Donald Trump's former campaign chairman's tax evasion and bank fraud trial. Washkuhn testified that Manafort kept her in the dark about the foreign bank accounts he was using to buy millions in luxury items and personal expenses. (AP Photo/Manuel Balce Ceneta)
Paul Manafort's former bookkeeper Heather Washkuhn, left, walks to the Alexandria Federal Courthouse in Alexandria, Va., Thursday, Aug. 2, 2018, to testify at the trial of President Donald Trump's former campaign chairman's tax evasion and bank fraud trial. Washkuhn testified that Manafort kept her in the dark about the foreign bank accounts he was using to buy millions in luxury items and personal expenses. (AP Photo/Manuel Balce Ceneta)
This courtroom sketch depicts Paul Manafort, fourth from right, standing with his lawyers in front of U.S. district Judge T.S. Ellis III, center rear, and the selected jury, seated left, during the jury selection of his trial at the Alexandria Federal Courthouse in Alexandria, Va., Tuesday, July 31, 2018. A jury set to decide the fate of President Donald Trump's former campaign chairman Manafort was selected Tuesday, and opening statements in his tax evasion and bank fraud trial were expected in the afternoon. (Dana Verkouteren via AP)
This courtroom sketch depicts Paul Manafort, fourth from right, standing with his lawyers in front of U.S. district Judge T.S. Ellis III, center rear, and the selected jury, seated left, during the jury selection of his trial at the Alexandria Federal Courthouse in Alexandria, Va., Tuesday, July 31, 2018. A jury set to decide the fate of President Donald Trump's former campaign chairman Manafort was selected Tuesday, and opening statements in his tax evasion and bank fraud trial were expected in the afternoon. (Dana Verkouteren via AP)
Kevin Downing, attorney for Paul Manafort, walks to the Alexandria Federal Courthouse in Alexandria, Va., Friday, Aug. 3, 2018, on day four of President Donald Trump's former campaign chairman Paul Manafort's tax evasion and bank fraud trial. (AP Photo/Manuel Balce Ceneta)
Kevin Downing, attorney for Paul Manafort, walks to the Alexandria Federal Courthouse in Alexandria, Va., Friday, Aug. 3, 2018, on day four of President Donald Trump's former campaign chairman Paul Manafort's tax evasion and bank fraud trial. (AP Photo/Manuel Balce Ceneta)
Kathleen Manafort, right, runs towards the entrance at teh Alexandria Federal Courthouse in Alexandria, Va., Friday, Aug. 3, 2018, after a noon break on her husband, President Donald Trump's former campaign chairman Paul Manafort's tax evasion and bank fraud trial. (AP Photo/Manuel Balce Ceneta)
Kathleen Manafort, right, runs towards the entrance at teh Alexandria Federal Courthouse in Alexandria, Va., Friday, Aug. 3, 2018, after a noon break on her husband, President Donald Trump's former campaign chairman Paul Manafort's tax evasion and bank fraud trial. (AP Photo/Manuel Balce Ceneta)
Kevin Downing, left, and Thomas Zehnle, attorneys for Paul Manafort, walk to the Alexandria Federal Courthouse in Alexandria, Va., Friday, Aug. 3, 2018, on day four of President Donald Trump's former campaign chairman Paul Manafort's tax evasion and bank fraud trial. (AP Photo/Manuel Balce Ceneta)
Kevin Downing, left, and Thomas Zehnle, attorneys for Paul Manafort, walk to the Alexandria Federal Courthouse in Alexandria, Va., Friday, Aug. 3, 2018, on day four of President Donald Trump's former campaign chairman Paul Manafort's tax evasion and bank fraud trial. (AP Photo/Manuel Balce Ceneta)

ALEXANDRIA, Va. — One of Paul Manafort’s tax preparers admitted Friday that she helped disguise $900,000 in foreign income as a loan in order to reduce the former Trump campaign chairman’s tax burden.

The testimony of tax preparer Cindy Laporta came as prosecutors from special counsel Robert Mueller’s office focused on the heart of their financial fraud case against Manafort, with jurors hearing testimony that he inflated his business income by millions of dollars and concealed foreign bank accounts he was using to buy luxury items and pay personal expenses.

Manafort’s defense has sought to blame any criminal conduct on his longtime deputy Rick Gates, while witnesses for the prosecution have testified that Manafort was heavily involved in his own finances and personally directed Gates’ actions.

On Friday, Laporta acknowledged that she agreed under pressure from Gates during a conference call in September 2015 to alter a tax document for one of Manafort’s businesses to show the $900,000 loan.

When Laporta and a colleague provided an assessment of how much tax Manafort would owe, Gates responded that Manafort didn’t have the money to pay it. After a back-and-forth discussion about how much income should be reclassified as a loan to aid Manafort, they settled on $900,000, she testified.

The result, Laporta said, was an altered tax payment that Gates told her “could be paid by Mr. Manafort.”

Laporta, who testified under a grant of immunity from prosecutors, said she knew what she did was “not appropriate,” adding that “you can’t pick and choose what’s a loan and what’s income.”

Asked why she engaged in misconduct, Laporta said she had few good choices.

“I could have called them liars,” she said of Manafort and Gates. “But Mr. Manafort was a longtime client of the firm, and I didn’t think I should do that.”

That testimony is important as prosecutors try to rebut defense arguments that Manafort can’t be responsible for financial fraud because he left the details of his spending to others. Those others include Gates, who pleaded guilty earlier this year and is expected to testify soon as the government’s star witness.

Most of the email evidence introduced Friday implicated Gates more directly than Manafort in a scheme to convert income into loans. But Manafort was copied in on several emails discussing the matter.

Laporta also described an effort by Manafort and Gates to falsify financial records that would allow Manafort to obtain mortgage loans.

As late as August 2016 — the same month he resigned from the Trump campaign — Manafort was sending emails to Laporta asking her to alter a profit-and-loss statement for his company.

At that time, his company had not received any income in 2016, but Laporta testified that Manafort directed her to reflect that he expected to receive $2.4 million in income later that year.

Laporta said Manafort provided no documentation to back up the claim. Nevertheless, she wrote an email to loan officers saying the income would be received by November of that year.

It was one of several times that Laporta testified that she accepted questionable financial statements pressed on her by Gates or Manafort, including some involving other loans prosecutors say were shams to conceal income.

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 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 Trump nor Russia has been discussed, as evidence has focused on Manafort’s work as a consultant in the years before he joined Trump’s campaign in the presidential year.

While the question of collusion remains unanswered, 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.

Laporta’s testimony built on that of another of Manafort’s accountants, Philip Ayliff, who told jurors that Manafort denied on multiple occasions that he controlled foreign bank accounts when asked. That’s why the accounts weren’t reported on years’ worth of Manafort’s tax returns as required by federal law, Ayliff said.

Ayliff also testified that he sometimes communicated with Gates about the former Trump campaign chairman’s personal and business tax returns. But he said Manafort authorized those discussions, and Gates and Manafort never contradicted each other.

In one instance, Ayliff testified that Manafort pressed him to tell bankers considering a loan application that one of 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 at a low rate.

Ayliff responded to 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 Manafort was using doctored documents to secure loans including some papers that a witness previously testified inflated his income by about $4 million.

The trial in northern Virginia is the first of two for 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.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.

click me