ALEXANDRIA, Va. _ Prosecutors for special counsel Robert Mueller concluded their case Monday as the bank- and tax-fraud trial of Paul Manafort entered its third week. Manafort's lawyers now have a choice _ should they put on a defense to convince jurors he's not guilty or rest, satisfied that prosecutors failed to prove their case beyond a reasonable doubt?
Mueller's prosecutors called their final witness Monday and U.S. District Judge T.S. Ellis III is now considering a request from Manafort's lawyers to dismiss the case before it goes to the jury. Ellis ended the day by closing the courtroom to the public to hear arguments on a sealed motion by Manafort.
Manafort, 69, must decide whether to present any defense witnesses or take the witness stand himself. If Manafort offers no witnesses, closing arguments could begin as early as Tuesday.
As the final witness, prosecutors recalled Paula Liss, a senior special agent at the Financial Crimes Enforcement Network, to testify about the failure of Manafort's companies to file reports of foreign bank accounts, or FBARs, each year from 2011 to 2014. Liss said she searched FinCEN's database, and Manafort's companies didn't file the reports.
Ellis told jurors to consider the testimony only to help determine whether Manafort willfully failed to file individual FBARs, as charged in the indictment. He stressed that the companies weren't charged, and Manafort can't be convicted because the firms failed to file FBARs.
Liss followed spirited questioning of James Brennan, a vice president at Chicago-based Federal Savings Bank tasked with reviewing $16 million in loans that the lender extended to Manafort. Brennan told jurors about the reservations of bank officials over Manafort's ability to repay the loans, but Chief Executive Officer Stephen Calk insisted they go through. Another banker testified last week that Calk pushed for the loan approvals even as he sought Manafort's help in getting a job in the Trump administration.
"It closed because Mr. Calk wanted it to close," said Brennan, who 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.
He gave the loan application a passing grade although he didn't believe it deserved one, Brennan said. "Mr. Calk insisted the loan was going through." A three-member credit committee, which included Calk, agreed to lend money to Manafort, he said.
Brennan was not the only one to raise questions. Brennan said the bank's primary regulator, the Office of the Comptroller of the Currency, asked him pointed questions about whether the bank overvalued Manafort's property and income.
Prosecutor Greg Andres closed with a flourish when he asked about the status of Manafort's loans. Brennan said the bank wrote off the entire value of the loans outstanding at the end of 2017 and "took a hit to our loan-loss reserve." The bank, he said, was out $11.8 million.
Under questioning by defense lawyer Richard Westling, Brennan seemed to concede that Federal Savings Bank knew about some of Manafort's real estate debts, undercutting prosecutors' claims that Manafort had hidden them from the lender as he sought $16 million in loans.
A November 2016 email from Brennan, a senior vice president in the bank's Maryland office, included a list of three Manafort-associated properties with liens against them, including his estate in Bridgehampton, N.Y., a home in Alexandria, Va., and an apartment in Trump Tower in New York.
But Brennan resisted the lawyer's suggestion that the bank's exposure was limited by the more than $15 million in collateral _ including the Bridgehampton and Alexandria properties plus cash _ against which Manafort had borrowed $9.5 million.
"If the bank had to foreclose on it, it is always a question as to whether we'll get our money back," Brennan said.
Before Manafort borrowed $16 million from the bank, he lied on applications about his income, the reason he had run up American Express debt and the loans he had outstanding, Brennan testified on Monday.
Brennan said Manafort gave the bank a phony statement showing his political consulting business made $4 million more than it had actually earned. He said Manafort told the bank that he had lent his American Express card to an associate, Rick Gates, who sent a letter saying he spent more than $200,000 on New York Yankees tickets. Manafort failed to disclose mortgages he had on properties, and two were in foreclosure, Brennan testified on the trial's 10th day.
Andres asked if it would matter to the bank if Manafort failed to identify the debts he owed on his properties.
"It would be a definite red flag which goes to the heart of the matter," Brennan said.
Brennan said he came to learn that an income statement that Manafort submitted falsified business income for 2015. Andres asked why that might be significant.
"It would go to the character of the borrower and raise a red flag," Brennan said. "We would turn down the loan. As a lender, you want to know who you're lending to."
Brennan testified with an immunity grant because he feared prosecution. He amplified testimony that jurors heard on Aug. 10 from another Federal Savings Bank witness, Dennis Raico, who also had an immunity grant. Raico said Calk, the bank's chief executive officer, expedited the two loans that Manafort received because Calk wanted his help in getting a job in the Trump administration.
Asked by Andres if he knew why the loans were approved, Brennan said: "There was an email from Mr. Calk that he wanted the loans to close."
Prosecutors argued that even if Calk intended to approve the loans "for reasons relating to his personal interests, that would have no bearing on the materiality of Manafort's false and fraudulent representations to the bank."
They said materiality doesn't depend on whether the bank was actually influenced by Manafort's false statements. Even if Calk knew of Manafort's falsehoods, that wouldn't be relevant because Calk and the bank are separate entities, prosecutors said. They conceded, though, that he owns 67 percent of its holding company, National Bancorp Holdings Inc.
Manafort is charged with bank fraud and a conspiracy to commit that crime. Under the law, prosecutors argued, it doesn't even matter whether he succeeded in conspiring with Gates, his former right-hand man who pleaded guilty and is cooperating with Mueller.
At a sidebar conference on Friday, Andres, the prosecutor, said that Calk was considered a conspirator in the fraud, and "he participated in the conspiracy to defraud the bank." He also added without elaborating: "Mr. Calk has other criminal liability aside from this bank fraud."
