The Manafort trial: Guilty on 8 counts
Prosecutors used Peggy Miceli, an underwriting manager for Citizens Bank, to describe just how much more money Paul Manafort secured when he told a bank that a Soho condo he listed on Airbnb was his family's "second home."
Under Citizens Bank policy, he would never have gotten more than a $1 million loan if the underwriters had known the condo rented out more than 180 days in a year — effectively being used as an investment property. He also would have faced a steeper interest rate on the loan.
The exceptions to the $1 million loan maximum were "far and few between," Miceli added.
Instead, Manafort received a $3.4 million loan from Citizens Bank in 2016. That was "way over the max," Miceli said.
At one point, Miceli read the jury an email she wrote in February 2016 to others within Citizens Bank, saying that Manafort's business didn't have the funds to get the money he sought.
The email ended with her writing "😞." That's "the sad face," she explained to the jury.
Miceli then received a doctored letter from Manafort's Cypriot shell company Peranova and from his accounting firm, saying a $1.5 million loan was forgiven.
Miceli approved the $3.4 million loan.
When asked if she would have wanted to know if the accountant sent false information or if Manafort controlled the company Peranova, she first said "yes," stretching out the word for emphasis, then said "absolutely."
Paul Manafort's "amazing full floor loft in Soho" disappeared from Airbnb during a month-long period Manafort closed a $3.4 million mortgage on it, after telling a bank it was a second home used by his family.
The Howard St. property was listed on the Airbnb online vacation rental platform from January 2015 to late April 2016, according to Darin Evenson, Airbnb's director of customer experience for North America. The property had two bedrooms and two baths and the title "amazing full floor loft." Guests had access to the entire home for their stay, according to printouts of reservations and listings shown in court.
But there was a break from late February to early March 2016, where the property was no longer available for rent on Airbnb.
The Airbnb employee's testimony appears to confirm one of the lies Manafort told a bank as he sought money from them. Banks give more money toward properties used by their owners as residences -- even second homes -- than they do rentals, and Manafort appears to not have disclosed income from the rental on his tax returns.
Five guests paid over $11,000 at one point to stay there, one reservation showed. They rented the condo for 21 nights. Another reservation showed a four-night stay costing two guests close to $1,800.
The Airbnb travelers rated the condo five out of five.
Manafort’s then-son-in-law Jeff Yohai's name was listed on the Airbnb account. Evenson testified that he was not aware whether Manafort was the host or owner.
A banker who testified earlier Thursday said Manafort described the property's ownership as split between him, his wife and his daughter Jessica, who was then Yohai's wife. Manafort had encouraged Yohai to convince an appraiser researching a mortgage application on the condo that "you and Jessica are living there," according to an email the jury saw earlier Thursday.
The court just went on its lunch break.
The criminal trial of Paul Manafort will resume at 1:30 p.m. ET with testimony from AirBnB employee Darin Evenson.
What has happened so far today: Melinda James, mortgage loan assistant at Citizens Bank, testified earlier on how Manafort, his former deputy Rick Gates and their accountant, Cindy Laporta, misled her bank.
During her testimony, both defense attorney Jay Nanavati and prosecutor Uzo Asonye had her revisit her timeline of emails and phone calls leading up to Manafort closing a $3.4 million mortgage.
Prosecutors revealed in court Friday an email Paul Manafort sent to his then-son-in-law Jeff Yohai as he sought to cover up that a Soho condo he owned was rented out instead of lived-in.
Manafort needed an independent appraiser in early 2016 to confirm for a bank looking into the property that the condo was a residence.
He directed Yohai to meet with the appraiser, according to the January 2016 email.
"Remember, he believes that you and Jessica are living there," Manafort wrote, referring to Yohai's then-wife, Manafort's daughter Jessica.
Melinda James, mortgage loan assistant at Citizens Bank, finished testifying shortly after noon, after both defense attorney Jay Nanavati and prosecutor Uzo Asonye had her revisit her timeline of emails and phone calls leading up to Manafort closing a $3.4 million mortgage.
Then, AirBnB employee Darin Evenson took the stand. One allegation in Manafort's bank fraud charge is how he told officials a property in New York was used as a residence or second home, while he listed it on the online vacation rental site.
Why all of this matters: Banks take into consideration the use of a property when determining how much to loan on it.
Mortgage assistant Melinda James testified Thursday morning on how Paul Manafort, Rick Gates and their accountant, Cindy Laporta, misled her bank, Citizens Bank.
The three did so when they secured a $3.4 million mortgage loan in March 2016 on a condo in Manhattan's Soho neighborhood on Howard Street.
James walked through several application and insurance documents that Manafort provided the bank. The documents assured Citizens Bank that he had no other mortgages on his real estate properties and the condo was a residence for his daughter Jessica and her ex-husband Jeff Yohai, which Manafort called a second home.
In emails with Manafort and others, the bank employees raised concerns, including
- Concerns about Manafort's available cash in his business
- The possibility another property in New York already backed a loan
- And that the Soho condo was being rented on AirBnB, she testified.
She reached out to Manafort and Gates repeatedly for clarity, and they assured the bank several times their documents were correct.
"The underwriter needs a clear picture of all the debts, the monthly debts of the borrower," she said, explaining why a loan applicant can't lie to a bank.
Judge Ellis told the jury he was wrong in criticizing prosecutors yesterday for having one of their witnesses, an expert IRS agent, in the room to hear other witness testimony.
Prosecutors had reminded him following his scolding in front of the jury they had discussed allowing IRS revenue agent Michael Welch to sit in the courtroom.
"Put aside any criticism. I was probably wrong in that," Ellis said to kick off the trial proceedings Thursday morning. "This robe doesn't make me anything other than human."
Welch testified Wednesday afternoon about the amount of unreported income Paul Manafort hid from the IRS in foreign bank accounts.
Prosecutors are now questioning their 19th witness, Melinda James. She is a mortgage loan assistant from Citizens Bank in New York, and received false documents from Manafort's associates when they sought a mortgage on a property in New York.
Prosecutors are fighting back in a filing Thursday morning following several days of Judge T.S. Ellis growing increasingly angry with steps they've taken during their presentation of the case against Paul Manafort.
What's in the filing: The filing specifically asks Ellis to tell the jury he was wrong when he chastised the prosecutors in the courtroom Wednesday.
It is likely Ellis will address this filing from prosecutors with them Thursday morning.
What happened: As IRS revenue agent Michael Welch testified as an expert witness, Ellis reprimanded prosecutors for allowing him in the courtroom to witness the proceedings of the previous week.
"But the next time we do this, it's my clear recollection, Mr. Asonye, that I wasn't admitting experts. You need to ask specifically. You're going to go ahead now, I'm going to permit that, but I want you to remember that," Ellis said, cutting into prosecutor Uzo Asonye's questioning of Welch on Wednesday. Asonye reminded the judge they had discussed having Welch in the room, since he was testifying as an expert and not a fact witness.
Ellis continued, sternly, with the jury watching:
"Let me be clear: I don't care what the transcript says. Maybe I made a mistake. But I want you to remember don't do that again. When I exclude witnesses, I mean everybody. Now, it may be that I didn't make that clear. It may be that I did allow this, but don't do it in the future."
Note: The prosecutors had explicitly discussed at the start of the trial having Welch in the courtroom to hear other witness' testimony, according to the court transcript from day one.
Their filing Friday asks Ellis to tell the jury the prosecutors didn't act out of line by having Welch in the room.