Paul Manafort trial: Accountant helped falsify tax returns for former Trump campaign manager

Kevin Johnson | USA TODAY

Show Caption Hide Caption Explaining the first week in the Paul Manafort trial AP reporter Chad Day highlights the first week of the Paul Manafort trial, which saw one of Manafort's tax preparers admit that she helped disguise $900,000 in foreign income as a loan in order to reduce his tax burden. (Aug. 3)

ALEXANDRIA, Va. – One of Paul Manafort’s accountants told a federal court jury Friday she knowingly helped prepare false tax returns for the former Trump campaign chairman and supplied a bank with phony documents to obtain a loan on Manafort’s behalf.

Cynthia Laporta, who oversaw preparations of some of Manafort’s business and personal tax returns, testified she filed returns in 2014 despite her complete lack of confidence in her client’s support for more than $2 million in reported loans.

Laporta admitted to reclassifying some $900,000 in income as a loan to her client’s consulting firm to reduce Manafort’s tax liability at the urging of his partner, Rick Gates.

The accountant, who testified under a grant of immunity from prosecution, conceded that she knew the action to be “wrong” but feared labeling longtime clients as “liars” while exposing her accounting firm to possible litigation.

“I very much regret it,” Laporta said.

In her separate involvement in a 2015 loan application for Manafort, she told the court that she forwarded information to Citizens Bank supporting the classification of one of Manafort’s New York homes as a “second residence,” knowing that it had been used a rental property. She said the move was an attempt to get a lower mortgage rate.

Among the other materials she forwarded to the bank was a falsified document showing that a $1.5 million loan had been forgiven and re-categorized as income to boost Manafort’s eligibility for the mortgage loan.

From the witness stand located just a few feet from Manafort’s seat at the defense table, Laporta told the jury she forwarded the falsified materials to the bank because she believed the bank would have to ultimately vet the information, which had been prepared by her clients, Gates and Manafort.

Laporta’s testimony may have proved to be the most damaging so far to Manafort, who faces 18 criminal counts of tax evasion and bank fraud.

Manafort’s defense team was to begin cross-examination of Laporta Monday

More: Paul Manafort trial: Judge T.S. Ellis III known as taskmaster, unafraid to speak his mind

Also: As Rick Gates pleads guilty, Mueller secures cooperation of third Trump campaign aide for Russia probe

Testimony limited by judge on Manafort's luxuries The prosecution in the Paul Manafort trial focused on personal finances Wednesday, sometimes in painstaking detail. Associated Press Eric Tucker says the judge repeatedly scolded the government's attorneys about relevancy . (Aug. 1)

Although the government has presented evidence that Manafort allegedly stashed tens of millions of dollars in secret foreign accounts, Laporta, who took over Manafort’s accounting duties in 2014, testified that Manafort repeatedly denied controlling any foreign interests when she directly inquired about any such holdings and when he was required to disclose them on his tax returns.

Virginia accountant James Phillip Ayliff, who for years supervised the preparation of Manafort’s business and personal tax returns before Laporta at the firm KWC, told the jury his client repeatedly denied any international financial interests.

During Ayliff’s lengthy testimony, Manafort appeared to be riveted to a computer screen at the defense table closely tracking the government’s exhibits, many of them copies of his own tax returns and ledger sheets.

When Ayliff flagged suspicious payments flowing from unfamiliar entities, the accountant said he was assured by Manafort or Gates that they had no control over accounts abroad.

Earlier this week, prosecutors presented evidence that Manafort tapped multiple accounts in Cyprus, the Grenadines and Ukraine to funnel millions of dollars to support an extravagant lifestyle in the U.S.

Ayliff’s testimony is key to the government’s contention that Manafort also falsified his tax returns during the five-year period between 2010 and 2014.

“Did you ask Mr. Manafort whether he had foreign bank accounts each year?” prosecutor Uzo Asonye asked Ayliff.

“Yes,” the accountant said.

“What did he report?”

“None.”

The accountant’s testimony comes a day after Manafort’s longtime bookkeeper said that she also had no knowledge of Manafort’s foreign interests or the dozens of wire transfers he approved from those accounts to pay for homes, cars and custom clothes.

His attorneys are expected to argue that Manafort did not intend to hide accounts or mislead bookkeepers, and shift the blame to Gates, who is slated to testify against his former partner.

Gates pleaded guilty earlier this year to conspiracy and lying to the FBI. As part of his plea deal with the government, he agreed to cooperate with federal investigators.

Like Laporta, Ayliff testified earlier Friday that he was aware that Manafort had sought loans against his various properties, but was never provided the underlying documents supporting those loan applications. Manafort's pursuit of loan assistance came after his lucrative political consulting operation in Ukraine began to dry up in 2015.

Ayliff did, however, recall that Manafort once instructed him to provide inaccurate information to UBS Bank related to a 2015 loan involving the Manaforts’ Trump Tower apartment on Fifth Avenue in Manhattan.

Reading aloud from an email, Ayliff said Manafort told him to classify the apartment as a personal residence in any conversation with the bank, a move that could secure a more favorable loan rate.

Ayliff responded, stating that the apartment had always been regarded as a rental property.

The case against Manafort is the first to be tried by special counsel Robert Mueller and focuses on Manafort's business dealings. It doesn't directly have to do with Manafort's work for President Donald Trump.

More: Mueller seeks immunity, secrecy for up to 5 witnesses in Paul Manafort trial

Related: Paul Manafort trial: Prosecutors accuse ex-Trump campaign chief of amassing