The Manafort trial: Guilty on 8 counts

By Meg Wagner, Veronica Rocha, Brian Ries and Sophie Tatum, CNN

Updated 8:10 p.m. ET, August 21, 2018
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5:22 p.m. ET, August 2, 2018

Accountant says Manafort never told them he had foreign bank accounts

From CNN's Marshall Cohen 

An accountant with Kositzka, Wicks & Company, which handled Paul Manafort's individual and business taxes, testified Thursday that Manafort never told them that he had foreign bank accounts.

This question is asked on IRS tax forms, and it's a crime to hide foreign bank accounts from the US government. 

"We ask the taxpayer," accountant Philip Ayliff said. "We had asked the question, and the response was 'no.'"

Manafort is charged with failing to report foreign accounts on his tax forms. He has pleaded not guilty to these charges. 

4:36 p.m. ET, August 2, 2018

Manafort's accountant will take the stand next

From CNN's Marshall Cohen and Katelyn Polantz

After more than three hours on the stand, Paul Manafort's bookkeeper Heather Washkuhn is done. 

Next up: Philip Ayliff, an accountant with Kositzka, Wicks & Company, which handled Manafort's individual and business taxes.

Ayliff is the first of at least two other tax-preparation witnesses scheduled to testify against Manafort. His current colleague Cindy LaPorta and former colleague Conor O'Brien have received immunity from the judge so that they cannot assert their Fifth Amendment rights when testifying and cannot be prosecuted based on what they say at the trial.

Prosecutor Uzo Asonye said Ayliff would be a "substantial witness" and may be on the stand for several hours.  

4:10 p.m. ET, August 2, 2018

Manafort and Rick Gates sent bogus income statements to banks, bookkeeper says

From CNN's Katelyn Polantz and Marshall Cohen

Paul Manafort's bookkeeper Heather Washkuhn testified Thursday that Manafort and his longtime deputy Rick Gates sent several fake, inflated income business statements to banks, when their political consulting company was actually losing money.

She said the statements were sent to Banc of California, the Federal Savings Bank and Citizens Bank in 2016 and early 2017.

One side-by-side of documents showed Washkuhn's company telling Federal Savings Bank that Manafort's company DMP International had lost $1.11 million in the first 11 months of 2016. 

Manafort then sent the same person at the bank, Dennis Raico, a financial statement for the first nine months of the year that said his company made $3 million. On the version Manafort sent to Raico, the word "review" was misspelled as "REVmw" and the month of September was missing its "R."

Federal Savings Bank ultimately loaned to DMP, when its executive Stephen Calk sought a Trump campaign position. Raico is on the witness list for Manafort's trial and has been granted immunity from prosecution if he testifies, though he has not appeared yet.

Manafort is accused of bank fraud and has said he's not guilty.

At one point, Washkuhn sent a statement to DMP that showed the firm made about $400.744. But the income statement that Banc of California received said DMP made almost $4.5 million.

"There's a lot of changes," Washkuhn said, as the court showed the two profit and loss statements side-by-side in court. "There's about a $4 million difference." 

A third side-by-side of the fake and the real accounting statements showed DMP claiming to Citizens Bank they had made $1.7 million, while their bookkeepers said they lost $638,000.

4:26 p.m. ET, August 2, 2018

Paul Manafort was broke in 2016

From CNN's Marshall Cohen

After the income from foreign lobbying in Ukraine dried up, Paul Manafort found himself in serious financial trouble. By early 2016, Manafort was falling behind on bills and maxing out a bank credit line, his longtime bookkeeper told jurors on Thursday. 

Prosecutor Greg Andres highlighted Manafort's dire financial straits as they turned to the bank fraud portion of their case.

Their argument in a nutshell: Manafort illegally lied to banks to get loans when he was desperate for cash. 

The bookkeeper, Heather Washkuhn, described how Manafort's international lobbying company hemorrhaged money in the years after his patrons in Ukraine were driven from power, losing more than $630,000 in 2015 and $1.1 million in 2016.  

Without a steady income, Manafort fell behind on his bills, including payments to the bookkeeping company. At one point, Manafort was even at risk of losing his health insurance because he couldn't make the payments, Washkuhn testified. 

Manafort's longtime deputy Rick Gates asked Washkuhn in January 2016 if he could draw funds from one of Manafort's credit lines at the Swiss bank UBS. In court Thursday, Washkuhn read from her reply to Gates, where she said the account was "fully drawn." 

Another email from Washkuhn to Manafort said $120,000 was "urgently needed for your personal bills." Another series of emails warned him of an upcoming deadline to pay property taxes on one of his homes in New York before penalties kicked in.

The bookkeeper's testimony described Manafort's financial troubles in January 2016. That's one month before he reached out to candidate Donald Trump, offering to run his campaign without getting paid, according to The New York Times. Trump hired Manafort in March 2016 and stayed until August 2016. It's unclear why Manafort offered to work for free at a time when he needed money. 

An important note: The jury hasn't heard anything about Manafort's role on the Trump campaign, and his outreach to Trump is not part of the evidence in this case. Manafort's alleged crimes are unrelated to the campaign. Prosecutors previously told the judge that they will only bring up the Trump campaign to talk about an alleged quid pro quo between Manafort and a banker who wanted a campaign job. 

3:09 p.m. ET, August 2, 2018

Manafort bookkeeper reveals more details of income from shell companies 

From CNN's Katelyn Polantz

Heather Washkuhn, managing director of the accounting firm Nigro Karlin Segal Feldstein & Bolno, arrives at the Albert V. Bryan United States Courthouse to testify in the Paul Manafort trial on August 2, 2018 in Alexandria, Virginia.
Heather Washkuhn, managing director of the accounting firm Nigro Karlin Segal Feldstein & Bolno, arrives at the Albert V. Bryan United States Courthouse to testify in the Paul Manafort trial on August 2, 2018 in Alexandria, Virginia.

Paul Manafort's bookkeeper Heather Washkuhn walked through years of ledgers that showed payments in and out of his consulting company, revealing several income payments from shell companies were apparently disguised as loans, and vice versa.

Shell companies that prosecutors allege Manafort used to hide his money offshore loaned his consulting firm DMP International more than $3.5 million from 2014 until 2016.

On at least one occasion, DMP started calling that money income — though Washkuhn's bookkeeping company never saw documentation that the loan was forgiven.

Income from shell companies:

  • Washkuhn also spoke about $7.3 million that came into DMP in 2012 as income from shell companies that she didn't recognize — but prosecutors believe were for Manafort's foreign accounts.
  • Another $3.37 million came in from the shell company Smythson to DMP as income in 2013.

She said they "would have recorded it a bit different here," if she had known Manafort himself or Rick Gates controlled that company.

Prosecutors have implied during Washkuhn's testimony that Manafort was using his DMP business account to pay for personal expenses. That practice, Washkuhn said, should have been kept separate. 

Prosecutors also showed that after reporting net profits for consecutive years, DMP International began to lose money in 2016.

2:55 p.m. ET, August 2, 2018

This is how much Manafort paid himself, according to his bookkepper

From CNN's Katelyn Polantz

Paul Manafort's longtime bookkeeper Heather Washkuhn said Manafort paid himself a salary of $1.99 million in 2012, according to her testimony about his on-the-books finances from his political consulting firm.

Washkuhn also said Manafort paid his longtime deputy Rick Gates a salary of $240,000 in 2012. Gates made the same salary in 2013 and 2014.

Konstantin Kilimnik, another Manafort associate in Russia, received tens of thousands of dollars from Manafort's consulting company DMP International in 2013 for professional services and in a "private transfer" of cash, Washkuhn said. She said she didn't know who Kilimnik was.

Kilimnik is accused by the Special Counsel's Office of trying to influence trial witnesses.

1:57 p.m. ET, August 2, 2018

Manafort spent millions on audio-video home installations and $10,000 on a karaoke system 

From CNN's Katelyn Polantz

Paul Manafort was a big spender when it came to computers and entertainment — spending millions on audio-video home installations, and $10,000 on a karaoke system for his Hamptons mansion.

Prosecutors read details about wire transfers that Manafort sent to pay for the karaoke system in 2010 during the parade of testimony from vendors who sold high-end goods and services to Manafort. The vendors said they were all paid via international wire transfers coming from offshore shell company accounts.

Joel Maxwell of Big Picture Solutions also took the stand, and told the jury that Manafort installed Apple TVs, networks and other electronics in his Hamptons home from 2011 to 2014. The cost was $2.2 million. 

Echoing several other vendors who've testified, Maxwell said Manafort paid with wire transfer using offshore corporate bank accounts under names like Leviathan Advisors Limited and Lucicle Consultants Limited.

Prosecutors also read to the jury descriptions of Manafort's personal purchases that both Manafort's defense team and the investigators agreed were true.

1:12 p.m. ET, August 2, 2018

It's lunchtime. Questioning will resume soon.

The court is on a lunch break until 1:30 p.m. Prosecutors and the defense team will continue their questioning of Paul Manafort's business and personal estate bookkeeper Heather Washkuhn after lunch.

12:58 p.m. ET, August 2, 2018

Manafort's bookkeeper testifies she's never heard of the 14 different shell-company bank accounts

From CNN's Katelyn Polantz

Paul Manafort's business and personal estate bookkeeper Heather Washkuhn denied ever knowing about the companies Manafort used to wire money for his extravagant personal purchases. 

Prosecutor Greg Andres asked Washkuhn if she had ever heard of 14 different shell-company bank accounts.

She said "no" to every one.

Washkuhn said she handled all of Manafort's personal and professional financial dealings from 2011 to 2018, and said she never recorded the existence of any foreign bank accounts for Manafort while she kept his books.

She also said it was important for her to keep track of all of his bank accounts and bills so she could help him properly pay his taxes each year.

Why this matters: Prosecutors are using Washkuhn's testimony to underline Manafort's alleged criminal use of unreported foreign bank accounts. They say she will also be able to speak to Manafort's criminal bank fraud charges.

"He approved every penny of everything we paid," Washkuhn testified. Washkuhn "wanted to provide a complete picture to the tax preparers."

Washkuhn also said she hadn't known if Manafort had accounts in Cyprus, St. Vincent, Grenadines and Ukraine — Many of the personal items Manafort bought were paid for through international wire transfers from banks in Cyprus, according to previous witnesses' testimonies.

In addition, Washkuhn said she had no knowledge of at least one loan Manafort's political consulting company made to one of the shell companies for $275,000.

The court is on a lunch break until 1:30 p.m. Prosecutors and the defense team will continue their questioning of Washkuhn after lunch.