Manafort Jury to Hear From Gates After All: Trial Update

(Bloomberg) -- Paul Manafort’s tax- and bank-fraud trial moves into its third day in Alexandria, Virginia, federal court, with the focus shifting from President Donald Trump’s former campaign chairman’s extravagant spending and lifestyle to more of the nuts and bolts of his finances. The jury of six men and six women is expected to hear Thursday from accountants and will be presented with reams of financial documents and soon will hear from the government’s star witness, Rick Gates.

Bookkeeper Says She Was Kept in the Dark (12:55 p.m.)

Heather Washkuhn, a longtime manager of Manafort’s personal and business finances, told the jury that she had no knowledge of the offshore companies and bank accounts that prosecutors say helped Manafort hide tens of millions in income from the U.S. government.

Washkuhn played a role in keeping Manafort’s books and records for about seven years, first as a junior account executive at a bank and later in a lead role when that bank acquired NKSFB LLC, which she described as an accounting and bookkeeping firm for “high net worth individuals.” NKSFB charged Manafort about $100,000 a year to manage his finances, Washkuhn said.

Under questioning from Justice Department lawyer Greg Andres, Washkuhn told the jury that her client was “very knowledgeable,” “detail-oriented” and “approved every penny” of bills paid for him by her firm.

Washkuhn first said she believed that had had access to all of Manafort’s business and personal accounts. But then Andres ran through a list of Manafort’s holdings and bank accounts outside of the U.S. and asked if Washkuhn knew about each. “No,” she replied repeatedly.

She said she didn’t know about a dozen offshore companies and bank accounts that prosecutors say were the source of money wired to the U.S. to pay for Manafort’s bespoke suits, home improvements, landscaping and high-end electronics.

Accountants generally need such information to ensure that tax returns are complete.

Landscaper Recalls a Giant ‘M’ Made of Flowers (11:34 a.m.)

Jurors heard more evidence about Manafort’s fabulous lifestyle in the Hamptons, including a $19,000 karaoke machine at his estate. This spending came in 2010, according to a document that Assistant U.S. Attorney Uzo Asonye read into the record. Jurors had previously heard that Manafort spent more than $2.2 million on audio visual equipment.

Manafort’s landscaping contractor, Michael Regolizio, also recounted in vivid detail the work he did on the estate in Bridgehampton, New York, which is larger than an acre. Regolizio said he began working on Manafort’s trees in 2010 and maintaining all landscaping two years later.

Hundreds of red and white flowers were planted in the shape of an M, Regolizio said. He had a crew on the property four to five times a week. They pruned the 14-foot hedges, mowed the grass twice a week, tended to the flower beds around the tennis courts and maintained “one of the biggest ponds in the Hamptons.’’

After prosecutor Brandon Van Grack said he had provided sufficient detail, Regolizio said: “I like to talk about my work.’’

Regolizio said that Manafort usually paid by wire transfer from Cyprus. He also said the FBI showed him a fake invoice, which Regolizio said he never received. Several other vendors have testified about mysterious fake invoices.

Price Tag for Home Entertainment: $2.2 Million (11:21 a.m.)

Manafort ran up more than $2.2 million in charges to outfit homes in New York, Virginia and Florida with state-of-the art television systems, according to the first witness to testify Thursday at the international political strategist’s tax- and bank-fraud trial in Alexandria, Virginia.

Joel Maxwell, chief operating officer of Palm Beach, Florida-based Big Picture Solutions Inc., told jurors that Manafort was among his company’s top five customers in terms of account revenue. Maxwell also said that for a time he was having difficulty collecting on invoices due from Manafort.

U.S. District Judge T.S. Ellis III and Special Counsel Robert Mueller’s prosecutors have been battling over just how much evidence they can introduce of Manafort’s wealth without unfairly causing resentment among jurors and depriving Manafort of a fair trial.

If prosecutors want to show some of the luxury items bought by Manafort, they must closely tie those items to offshore accounts that Manafort allegedly used to hide money from U.S. authorities, the judge has said.

On Thursday, the prosecution led Maxwell through a series of invoices and then through payments made via wire transfer from offshore and domestic banks.

Prosecutors had Maxwell identify a bogus invoice, superficially appearing to come from his business but bearing inaccuracies to establish it as a fake. It was at least the fourth time in two days that prosecutors had a witness discuss an allegedly fake invoice.

Under questioning by the defense, Maxwell affirmed that a batch of emails showed “a series of frustrating interactions” with Gates, Manafort’s longtime deputy, over payments due. Defense lawyers contend that Gates -- Manafort’s former top deputy -- was stealing from his boss’s business and elected to cooperate with the Mueller probe to avoid punishment.

Yes, Gates Will Tell His Story (10:40 a.m.)

The day started with a clarification from Mueller’s prosecutors. Gates will testify after all.

Gates, who pleaded guilty and is cooperating with Mueller’s investigation, initially was expected to be the star witness. Asonye, the assistant U.S. attorney, threw that into doubt on Wednesday when he said Gates may or may not testify. The comment prompted extensive news coverage and an expression of surprise from the judge.

But on Thursday, Andres, the prosecutor, removed any doubt when he told the judge: “We have every intention to call him as a witness.” He said that prosecutors hadn’t wanted to clarify the question of Gates’s testimony on Wednesday because jurors were in the courtroom.

The announcement came after a day the jurors heard from eight witnesses, including a political strategist, an FBI agent, two home-repair contractors, two people from luxury clothing stores, a real estate agent and a Mercedes-Benz dealership executive. Prosecutors laid out a case that Manafort spent millions of dollars on clothes, home renovations and other luxuries while paying for many of the items with wire transfers from accounts in Cyprus.

They also focused on Manafort making it clear he was responsible for the purchases and payments, after defense lawyers claimed at the start of the trial that Gates was the one to blame for any wrongdoing because he was in charge of Manafort’s finances.

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