Manafort Jury Wrestling With Tough Choices Before a Verdict
(Bloomberg) -- Jurors in the Paul Manafort trial are wrestling with plenty of questions as they consider 18 bank- and tax-fraud counts against President Donald Trump’s former campaign chairman. Some are simple –- did that witness tell the truth? Others are mind-numbingly complex -- what is a financial interest in a foreign account? Here are some of the disputed areas that jurors must wade through, and the legal instructions from U.S. District Judge T.S. Ellis III:
Credibility of Rick Gates:
Manafort’s lawyers say Rick Gates, Manafort’s former right-hand man, is the linchpin to Special Counsel Robert Mueller’s case and jurors must acquit if they don’t believe him. Gates, who pleaded guilty and hopes to avoid prison, told jurors how he helped Manafort commit crimes. He admitted that he stole money from his boss and lied to Mueller’s investigators. Prosecutor Greg Andres said Manafort was Gates’s mentor and didn’t choose a Boy Scout to help him break the law.
While Ellis didn’t specifically offer guidance on Gates, he told jurors that in reviewing any testimony, “you may decide to believe all of that witness’s testimony, only a portion of it, or none of it.’’ He said to “carefully scrutinize all of the testimony given, the circumstances under which each witness has testified and all of the other evidence which tends to show whether a witness is worthy of belief.” He urged jurors to consider each witness’s intelligence, motive to lie, state of mind, appearance and manner.
In the U.S. legal system, every criminal defendant is presumed innocent, and prosecutors must prove guilt beyond a reasonable doubt. Manafort’s lawyers say jurors must acquit because prosecutors failed to meet that burden.
Ellis said prosecutors need not prove someone is “guilty beyond all possible doubt. The test is one of reasonable doubt.’’ He said jurors must use good sense and give evidence “a reasonable and fair construction in light of your common knowledge of the natural tendencies and inclinations of human beings.’’
This is the central question in the nine counts relating to whether Manafort had to disclose foreign accounts in Cyprus and elsewhere to U.S. authorities. He’s accused of five counts of filing false tax returns that didn’t declare his offshore accounts and four counts of failing to file foreign bank account reports, or FBARs.
Andres said “it’s not really in dispute’’ that Manafort had a financial interest and beneficial control over 31 foreign bank accounts. “He owned those accounts and he controlled them,’’ Andres said. “He moved money from those accounts as well.’’ Defense lawyers say prosecutors didn’t prove that.
Jurors may trip over the judge’s complex instructions. He said a person has a financial interest in an account if they are the owner of record or have title to it, whether it benefits them or someone else. They also have a financial interest if they act “as agent, nominee, attorney, or in some other capacity on behalf’’ of a U.S. person or corporation that “owns directly or indirectly more than 50 percent of the voting power or the total value of the shares.’’ He cited a partnership where someone “owns directly or indirectly more than 50 percent of the interest in profits or capital.’’ A person has signature authority if, in conjunction with another, they “control the disposition of money, funds, or other assets” in an account, communicating with “the person with whom the financial account is maintained.”
Simple, right? Maybe not. On the first day of deliberations, jurors asked: "Is one required to file an FBAR if they own less than 50 percent of the account, do not have signature authority, but do have authority to direct disbursement of the funds?"
When do a defendant’s misrepresentations and omissions matter? This question is at the heart of many fraud cases, and it underpins Manafort’s defense in the nine counts of bank fraud and bank-fraud conspiracy. It’s also key to the tax counts.
On the tax counts, Ellis said, something is material if it must be reported to the Internal Revenue Service to compute tax correctly, while a misstatement could hinder the IRS.
Manafort’s lawyers argued that any misrepresentations he made to three banks about income and debt didn’t matter to getting approval for more than $20 million in loans. Ellis told jurors that on the bank-fraud counts, they must decide whether Manafort made a statement that was “known to be untrue’’ or was made with “reckless indifference’’ to its truth. “A material fact is a fact that would be of importance to a reasonable person making a decision about a particular matter or transaction,’’ he said.
Prosecutors argued that Manafort used $15 million from offshore accounts to pay for real estate, custom suits, home renovations, and other luxuries. Such payments should have been declared as income, they said. Manafort’s lawyers said some payments were considered loans, not income.
Ellis said an income tax return may be materially false not only because of a misstatement or an omission of a material matter but also that prosecutors must prove that Manafort willfully filed a false tax return. They need not prove any additional tax was due.
After deliberating a day, jurors asked Ellis to define “shelf company” -- the expression Gates used for Manafort’s shell entities -- and “filing requirements related to income.” The judge told them to rely on their memories.
Manafort’s lawyers suggested several times that the Justice Department wouldn’t have charged Manafort if not for the special counsel’s investigation of Trump. They said Mueller cut a deal with Gates because he was “desperate’’ to convict Manafort.
Ellis instructed jurors to “ignore any argument about the Department of Justice’s motives or lack thereof in bringing this prosecution.’’
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