An accountant for Donald Trump's former campaign chairman Paul Manafort testified on Friday that she prepared his tax returns despite her concerns about the propriety of classifying money he transferred from overseas as loans.
Judge TS Ellis asked the accountant, Cynthia Laporta, whether she was testifying under an immunity agreement with the government because she was concerned that she could be prosecuted. She answered, “Correct.”
Ms Laporta testified she knew an accounting treatment for a loan was wrong when preparing Mr Manafort's tax return for 2014. “I very much regret it,” she told the courtroom.
Her testimony came on the trial's fourth day as prosecutors sought to drive home their case that Mr Manafort tried to hide millions of dollars he earned working for pro-Russian politicians in Ukraine. Manafort, 69, has pleaded not guilty to charges of bank fraud, tax fraud and failing to disclose foreign bank accounts.
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Mr Ayliff's firm asked Mr Manafort directly in an email in 2011 if he, or his wife, or two daughters had foreign accounts.
Mr Manafort said no, according to an email shown to the jury.
In 2013, the accountants asked about Mr Manafort's foreign accounts a third time.
The accountants reminded Gates in an email that Mr Manafort would need to disclose to the US Treasury Department any foreign accounts he controlled.
“As discussed, to my knowledge, nothing has changed,” Mr Gates wrote back.
Mr Manafort has denied all charges of such a crime.
The tax documents preparer Philip Ayliff said he believed a number of foreign companies were clients of Paul Manafort’s; he did not think Mr Manafort controlled them.
“They never told us about any income that was deposited in foreign accounts,” he said.
Court is now on a break for another 20 minutes.
Philip Ayliff, the accountant, is still on the stand, but prosecution has finished its first round of questioning him. The defense team plans to cross-examine him after lunch for about 45 minutes.
Essentially, Mr Downing argued that if Mr Manafort had known he was doing something illegal, he would not have been so easy to catch.
“Nobody intending to violate the law would leave the evidence around for his accountant to find it,” Mr Downing said in court.
Court is now back after the lunch break. After Mr Manafort's attorney cross-examines accountant Philip Ayliff, prosecutor Uzo Asonye has told the judge they will call Cindy La Porta, another member of the accounting firm.
Ms La Porta is one of the witnesses who has been granted immunity to testify.
Judge TS Ellis said either side could raise the immunity issue before the jury as she testifies.
Accountant Cindy LaPorta, the first witness granted immunity from prosecution so she would testify in the Paul Manafort trial, has taken the stand.
Ms LaPorta inherited Manafort's account in 2014 from accountant Philip Ayliff, whom she worked with at the tax firm Kositzka, Wicks and Company.
She is one of five witnesses with immunity on the prosecutors' roster for the trial. Without immunity, the individuals would be able to refrain from answering questions by asserting their Fifth Amendment protection from self-incrimination.
Before Mr Ayliff finished his testimony, he told the jury he knew of no foreign entities —meaning companies or accounts — that Mr Manafort had in Cyprus. The prosecution has alleged that Mr Manafort used an account in Cyprus to hide money from the US government.
Mr Manafort denies all the charges against him.
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 the accountants would have wanted to know that information, Laporta confirmed that they would: “We would always want to know the full picture.”
Prosecutor Uzo Asonye has asked Paul Manafort’s former accountant Cindy LaPorta to detail financial arrangements that prosecutors allege Mr Manafort and his business partner, Rick Gates, used to evade paying taxes, including classifying income from foreign companies as “loans” to themselves.
Ms Laporta testified that she was suspicious of the documentation for loans
“Did you have concerns about representation you received about these foreign loans?” Asonye asked.
“Yes,” she said.
“Did you believe the representations about these foreign loans?”
“No,” she said.
“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 Mr 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 Mr 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.
Prosecutors alleged Paul Manafort misled banks when applying for mortgages on two New York City properties, one on Howard Street and another on Union Street.
They showed the jury an email that Manafort sent to David Fallarino at Citizens Bank in January 2016, indicating that the Howard Street property was listed as a second home in his tax returns.
Accountant Cindy Laporta testified that she spoke with the banker from her office in Alexandria and told him the Howard Street property had been used as a second home.
She told the jury that it was "inconsistent" with Manafort's tax filings.
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The trial in federal court in Alexandria, Virginia, is the first arising from Special Counsel Robert Mueller's investigation of Russia's interference in the 2016 US election.
Both Ms Laporta and fellow accountant Philip Ayliff, her predecessor who handled Mr Manafort's tax filings at the firm KWC, testified that they had no knowledge that Mr Manafort controlled foreign bank accounts. Such accounts must be reported to tax authorities if they contain $10,000 or more.
Ms Laporta said she asked Mr Manafort directly about any such holdings and was told there were none.
Prosecutors have tried to make their case first by presenting testimony about Mr Manafort's lavish lifestyle and then detailing his financial dealings.
Defence attorneys have signalled they will seek to blame the financial charges against Mr Manafort on his business partner Rick Gates, who was President Trump's deputy campaign chairman in the 2016 presidential election.
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