Paul Manafort Conned His Own Bookkeeper, Prosecutors Say
Prosecutors say Manafort was using forged statements to fool not just the IRS but even his own number crunchers.
Even as he prepared to join the Trump campaign, Paul Manafort hid his alleged tax evasion and bank fraud from his own bookkeepers and sought loans based on fraudulent profit statements, according to federal prosecutors.
Heather Washkuhn, a bookkeeper who worked for Manafort when he was a client of California-based NKSFB, an accounting and bookkeeping service for the rich, testified that Manafort never told them he was the owner of any foreign accounts. Prosecutors introduced exhibits showing a nearly $2 million loan to Yiakora Ventures Ltd made by Manafort’s company as well as payments to it from other Cyprus-based firms, including a $375,000 transfer from one called Global Highway Limited and approximately $2,157,300 from one called Leviathan Advisors.
The bookkeeper told the court it was her initial assumption that the companies were related to Manafort’s business in political consulting, not shell companies owned by him. But the government has argued that the companies—used to pay the tab for his lavish lifestyle, according to a host of tailors, contractors, and luxury retailers who have testified over the past two days—were secretly controlled by Manafort and designed to hide his income.
Washkuhn is not accused of any wrongdoing.
The defense has argued that Manafort was victimized by Rick Gates, his former consulting partner who pleaded guilty in a plea deal in which he agreed to cooperate with Special Counsel Robert Mueller’s Russia inquiry. Washkuhn said that Manafort was “very knowledgeable” about his own financial affairs and that “He approved every penny of what we paid” on his behalf. On cross examination, she told defense counsel that Gates was his “right hand man” but that she dealt with him only occasionally on business issues and never on Manafort’s personal finances.
Andres quashed speculation triggered on Wednesday by his colleague, Uzo Anyes, that the government might not put Gates on the stand when he told Judge Thomas Ellis that “the government has every intention of calling” him to testify.
Washkuhn’s testimony also fleshed out the desperate financial straits Manafort found himself in shortly before he joined the Trump campaign and the fraud he allegedly perpetrated in order to secure a loan as his income dropped.
In the years when he was consulting for Ukrainian President Viktor Yanukovych and his party, Manafort’s consulting firm pulled in millions of dollars, according to a general ledger for Davis Manafort Partners International offered into evidence. But the ouster of the Kremlin-backed Yanukovych in a 2014 revolution cut his consulting business off at the knees and by the end of the 2016 his firm was reporting losses of over a million dollars.
Washkuhn said Manafort soon began having trouble paying his bills, including those from her firm, and began to apply for bank loans. She said Gates sent an urgent email early one morning in March 2016 asking her to revise the profit-and-loss statement for Davis-Manafort to reflect an additional $2.6 million in revenue not originally reported on its 2015 statement—when the company showed a net loss of nearly $640,000—and grew frustrated when Washkuhn responded that NKFSB’s accounting system could not accommodate the change. The statement, Gates wrote, was intended for a loan application with the Bank of California.
Prosecutors then showed the jury copies of what Washkuhn said were inauthentic profit-and-loss statements from 2015 and 2016 for Davis Manafort that Gates and Manfort submitted to banks. The forged statements were made to appear as though they had come from her firm. The statement submitted by Gates claimed Davis Manafort made over $4 million in 2015. A profit-and-loss statement submitted by Manafort to the Federal Savings Bank towards the end of 2016 showed his company making nearly $3 million when previous statements prepared by NKFSB had shown a $1.16 million loss that year.
Washkuhn pointed out several discrepancies in the statement submitted by Manafort, including that the words “September” and “review” were misspelled and “missing difference rows (than) we’d normally have.” Manafort’s defense team pointed out on cross examination that the math on one of the forged statements wasn’t correct.
Separately, prosecutors called two other vendors, Joel Maxwell, the owner of high-end “home automation” installer Big Picture Solutions, and Mike Regolizio, owner of New Leaf Landscape Maintenance. Both testified that Manafort paid for luxury goods like $2.2 million worth of audio-visual equipment and services and $450,000 worth of landscape services with international wire transfers from Cyprus-based companies that prosecutors say were intended to deceive the IRS.