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Patrick Martin

Elyse Samuels

Follow our live updates on Day 5 of Paul Manafort’s trial in Alexandria <a href="https://www.washingtonpost.com/news/local/wp/2018/08/06/paul-manafort-trial-day-5-live-updates/">here</a>.

Paul Manafort, President Trump’s onetime campaign chairman, is on trial in federal court in Alexandria on bank and tax fraud charges. Prosecutors allege he failed to pay taxes on millions he made from his work for a Russia-friendly Ukrainian political party, then lied to get loans when the cash stopped coming in.

The case is being prosecuted by the special counsel investigating Russian interference in the 2016 U.S. presidential election. 
Day four testimony included:

One Manafort accountant, Cindy Laporta, said she went along with falsifying his tax records because she feared confronting her longtime client.

Some of Manafort’s tax returns in the last decade did not reflect any foreign bank accounts, another accountant testified

[Day 4 of Manafort’s trial: Accountants testify Manafort inflated loans, failed to disclose foreign accounts]

5:09 p.m.: Testimony ends for day after defense wants weekend to prepare to question accountant

Asked if he would be able to finish his cross-examination by 5:15, Kevin Downing said he would be more “efficient” if he had the weekend to prepare.

Ellis told him that, despite anything he may have said implying otherwise, Downing is “not limited” in using the fact that Cindy Laporta testified under immunity from prosecution.

“She said on the stand she took responsibility, but she didn’t get prosecuted,” Ellis said. “I don’t know if there were professional consequences — that’s for you to find out.”

Prosecutors ended the day by saying they would not release the Manaforts’ tax returns yet, although they were entered into evidence yesterday, because defense attorneys have some concerns about personal information included.

Ellis said they can work that out, but “ultimately these tax returns are going to be in the public record. Once it becomes an exhibit in a trial, I think it has to be public.”

5:05 p.m.: Accountant made call to help Manafort with loan

Accountant Cindy Laporta has testified at length Friday about how Rick Gates sent her backdated documents in an effort to help Paul Manafort pay less in taxes and secure loans. In one such effort, Laporta said Manafort turned to her when his bookkeeper wouldn’t help.

The episode occurred in 2016, as Manafort was trying to get a loan from Federal Savings Bank, Laporta testified. At the time, Manafort’s company, DMP International, had losses of $638,000 on its profits and loss statement.

Laporta said – and emails show — Manafort contacted the accountant about obtaining a profits and loss statement that would reflect $2.4 million in income he earned in Ukraine and expected to be deposited in November. His bookkeeper, Laporta testified, would not note the income because she only counted cash once he had come in.

Asked by Assistant U.S. Attorney Uzo Asonye whether she believed Manafort actually was getting the money, Laporta responded, “I had no idea.” She said she asked for supporting documents.

Laporta said she never sent a profits and loss statement as Manafort requested, because she never got documents. But on August 11, 2016, she emailed Federal Savings Bank to say that Manafort expected the $2.4 million deposit. She testified that Manafort had directed her to do so.

4:54 p.m.: Accountant testifies she helped falsify documents to help Manafort get loans

Cindy Laporta is now testifying that she was involved the falsification of documents to help Paul Manafort obtain loans.

First, she said that although documents from Manafort’s bookkeeper showed that a property he owned in Lower Manhattan was being used as a rental in 2015 — he made $116,000 in income while also claiming depreciation — she told an employee of Citizens Bank it was a second home because Manafort could “get a better rate” on a loan that way.

Next, she testified that the same bank employee, David Fallarino, said Manafort needed more “liquidity” to qualify for a loan.

“The bank wanted to see more money available to pay back the loan,” she said.

So, she reached out to Gates, who told her a $1.5 million loan from Peranova Holdings in 2012 had been forgiven in 2015. She told that to Fallarino, who asked for “color” — ie, documentation.

Asked who directed her to say the loan was forgiven, she said “Mr. Manafort or Mr. Gates.” She relied on “their word,” she said.

Given her experience with the Telmar loan, prosecutor Uzo Asonye asked, did Laporta believe the loan had really been forgiven in 2015?

When she asked for documentation, Gates told her he would send a draft and then the final version. Laporta said that was a good idea; under questioning from Judge Ellis she said she didn’t remember why she asked for a draft. 
Gates sent her a Word document on Feb. 8, 2016, with that date in the file name. It was a letter from Peranova Holdings claiming the $1.5 million loan was forgiven on June 23, 2015.

Laporta believed “it was false” she said, “because of the dates.” She did not modify the document, she said after a pause, because “I wanted it to be the client’s document.”

Her implication was that she did not want to be more complicit in fraud than she already was.

Asked directly if she used the document in the bank negotiations despite believing it to be false, Laporta said, “Yes.”

4:38 p.m.: Emails cast doubt on Paul Manafort’s defense

Prosecutors provided email evidence to link Manafort to the misdeeds that Manafort’s defense attorneys have sought to blame on Gates. In one exchange following discussions about the loans, Manafort emails the accountant.

“Cindy, Have you what you need from Rick?” he wrote. Manafort then told her to call Gates, so he could move it “forward.”

4:11 p.m.: Accountant: Questionable loan saved Manafort $400,000 to $500,000 in taxes

Paul Manafort likely saved between $400,000 and $500,000 in taxes after his top deputy concocted a $900,000 loan to include on his businesses’ return for transactions in 2014, one of Manafort’s accountants testified Friday.

Cindy Laporta said the loan reduced Manafort’s income by $900,000, and at his tax rate, that would have resulted in a nearly half-million dollar savings. The testimony is important in that it shows the financial motivation that prosecutors say Manafort had to cook the books.

Laporta has been perhaps the most notable witness of the trial’s fourth day, essentially admitting she went along with tax fraud by Manafort and his deputy, Rick Gates. And through her testimony, prosecutors were able to show jurors documents that support their case.

One document, which prosecutors called an “adjusted trial balance,” showed how Manafort’s business, DMP International, initially made no reference to the $900,000 loan he would later claim on his taxes. But in a column for adjusted items, the $900,000 loan appeared. To support the change, an item initially listed as $900,000 in “other income” was reclassified as a loan in the books at Manafort’s business, Laporta testified.

Laporta testified she did not believe such a loan actually existed, because the first she heard of it was in a September 2015 conversation with Manafor’ts business partner Rick Gates. She said she asked Gates for documentation of it, and he provided just two pages, apparently documenting a March 2014 loan agreement between DMP International and a company called Telmar Limited. Prosecutors have alleged Telmar is a Cyprus company that Manafort controlled.

Notably, the loan document bore what Laporta said was Manafort’s signature. That is important because defense attorneys have sought to blame financial malfeasance on Gates, and much of Laporta’s testimony has focused on her interactions with him. Manafort’s signature would link him directly to the episode.

3:50 p.m. Accountant says she went along with alleged tax fraud because she was afraid to confront Manafort

Back on the stand after a break, Cindy Laporta wasted no time in admitting it was “wrong” to agree to increase the amount of a loan on Paul Manafort’s 2014 tax returns just before submitting them in 2015. The purported $900,000 loan came from an entity in Cyprus called Telmar Investments, which according to prosecutors Manafort controlled.

“I had a couple of choices at that point,” she said.

She had just had a conference call with Rick Gates in which he said Manafort could not afford to pay his taxes and so they had to be reduced, possibly by inflating the value of that loan.

“I could have refused to file the tax return,” which she said could lead to litigation with Manafort’s firm.

“I could have called Mr. Manafort and Mr. Gates liars, but Mr. Manafort was a long-time client of the firm and I did not want to do that either,” she said.

Asked if she regretted her actions, she agreed; “I very much regret it.” She said she was taking responsibility now.

3:42 p.m. Accountant testifies Rick Gates asked her to modify Manafort loan to decrease taxes

In remarkable testimony Friday afternoon, accountant Cindy Laporta described how Manafort’s business partner Rick Gates asked tax preparers during a call in 2015 to modify the amount of a loan so that Paul Manafort would have to pay less in taxes.

The call occurred in September 2015, though it was somewhat unclear which loan ultimately got modified. Confronted with a possible tax bill, Gates “said it was too high,” and that his boss, Paul Manafort, “didn’t have that money,” Laporta testified.

Assistant U.S. Attorney Uzo Asonye asked her what was proposed as a solution, and she responded “changing the amount of the loan.”

“He was trying to reduce income and therefore, income taxes,” Laporta testified.

Laporta testified such conduct was “inappropriate.”

“You can’t pick and chose what’s a loan and what’s income,” she said.

But prosecutors presented an email that showed a subordinate at her firm, Conor O’Brien, himself wrote,” The loan amount may need to be changed.”

They ultimately decided on a $900,000 amount because “it resulted in a tax amount that Rick said could be paid,” Laporta testified.

3:17 p.m.: Accountant testifies she didn’t believe Manafort on loans

As the afternoon waned, prosecutor <a href="https://www.washingtonpost.com/local/public-safety/whos-who-at-the-manafort-trial/2018/07/31/59c85034-7897-11e8-80be-6d32e182a3bc_story.html">Uzo Asonye</a> began pressing Manafort’s former accountant Cindy Laporta to detail financial arrangements that prosecutors allege Manafort and his business partner, Rick Gates, used to evade paying taxes, including classifying income from foreign companies as “loans” to themselves.

Laporta testified that she was suspicious of the loans, many of which were thinly documented.

“Did you have concerns about representation you received about these foreign loans?” Asonye asked.

“Did you believe the representations about these foreign loans?”

2:59 p.m. Another accountant says Manafort kept tax preparers in the dark

Cindy Laporta, like accountant Philip Ayliff before her, said Paul Manafort never told her about control over foreign companies and bank accounts or about any accountants and tax preparers he had in Cyprus.

Asked if she and Ayliff would have wanted to know that information, Laporta confirmed that they would: “We would always want to know the full picture.”

[Here are six things you need to know about Paul Manafort’s trial]

As he did with Ayliff, prosecutor Uzo Asonye went through a list of over a dozen foreign companies and asked if she knew Manafort controlled them; she said no. When those companies showed up on his tax returns, she said, they appeared as Manafort’s foreign clients — because that’s what <a href="https://www.washingtonpost.com/world/national-security/manaforts-bookkeeper-testifies-against-him-alleging-efforts-to-inflate-income/2018/08/02/abba1f88-968a-11e8-80e1-00e80e1fdf43_story.html">bookkeeper Heather Washkuhn</a> recorded them as.

Asonye showed one email from Oct. 4, 2016 in which Laporta asks Manafort specifically whether he had foreign accounts; the answer was “NONE.”

Laporta said had she known Manafort had control of the foreign companies and bank accounts, “That would require reporting.” She too said the accounting firm put more emphasis on foreign bank account reporting around 2012 when the Department of Justice began cracking down on them. It was mentioned in the firm’s annual engagement letters, she said, and they made sure to ask about it annually rather than simply ask whether anything had changed from the previous year.

2:47 p.m.: Despite the stakes, Manafort still looks relaxed

Paul Manafort wore a blue suit, blue shirt and purple tie to court Friday, and chatted amiably with his attorneys upon entering.

He has looked engaged throughout the proceedings – sometimes taking notes, sometimes looking at the attorneys or the witnesses and sometimes folding his hands in front of his face, staring straight ahead. Once on Thursday, he even corrected his own attorney when the attorney told the judge the wrong exhibit number.

[From six homes to a city jail: Paul Manafort, who redefined lobbying, faces trial]

Even as testimony has turned to complicated tax matters, jurors have also appeared engaged. Several are taking voluminous notes in black writer’s notebooks, and virtually all look at the monitors in front of them as prosecutors and defense attorneys zoom in on particular sections of documents they are seeking to highlight.

The courtroom – a mere seven rows of wooden benches underneath half-orb lights hung from the ceiling by gold posts — is almost completely full. Journalists are crammed shoulder to shoulder with courthouse observers.

2:36 p.m.: Prosecutors call first witness to testify under immunity agreement

Prosecutors called as their 14th witness Cindy Laporta – another of Manafort’s accountants. She is the first person to testify under an immunity agreement with the special counsel to prevent her from facing possible legal exposure about what she might say.

Laporta signed Manafort’s tax returns in 2014 and 2015, taking over for Philip Ayliff when he retired from their firm. With her early testimony, prosecutors sought to show jurors that Manafort – rather than Laporta, his bookkeeper or business partner Rick Gates – were responsible for inaccuracies in his tax documents, and Manafort knew that.

[Prosecutors list potential witnesses for Paul Manafort trial in Virginia]

Laporta said her firm gave Manafort a letter making clear they were not “auditing or verifying” the information clients provided – and while they offered that service, Manafort used the firm only to prepare his returns. She said she gathered information from Manafort, Gates and his bookkeeper, and “Mr. Manafort approved that.”

Laporta testified she viewed Gates as Manafort’s “assistant.”

Asked by Assistant U.S. Attorney Uzo Asonye who was in charge, she said, “Mr. Manafort,” though she noted Gates often gave her information.

National Press Foundation Feddie 2017

National Press Club Award 2016

MA New York University

Justin Jouvenal covers courts and policing in Fairfax County and across the nation. He joined The Post in 2009. 

Justin Jouvenal

George Washington University, BA in Journalism and Political Science

Rachel Weiner covers federal courts in Washington, D.C. and Richmond, Va. 

Rachel Weiner

Shared in a Pulitzer Prize for Public Service, for reporting in 2021 on the Jan. 6 attack at the U.S. Capitol 

Shared in a George Polk Award, for reporting in 2017 on ties between the Trump campaign and Kremlin-connected Russians 

Ohio University, bachelor's degree in journalism

Matt Zapotosky is Deputy Metro Editor, responsible for overseeing criminal justice and breaking news coverage and other strategic initiatives. Before moving into editing, he spent 15 years as a Metro and National reporter. He was part of The Post team that won the Pulitzer Prize for Public Service for reporting on the Jan. 6 attack at the Capitol. 

Matt Zapotosky

American University, MA in journalism and public affairs

University of Oregon, BS in journalism

Moriah Balingit is an education reporter for The Washington Post, where she has worked since 2014. She previously covered crime, city hall and crime in city hall at the Pittsburgh Post-Gazette. 

Moriah Balingit

The Washington Post

Manafort trial Day 4: Accountant Cindy Laporta testifies she helped falsify documents to help Manafort get loans

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