Paul Manafort, President Trump’s onetime campaign chairman, is on trial in federal court in Alexandria on bank and tax fraud charges. Prosecutors allege that he failed to pay taxes on millions he made from his work for a Russia-friendly Ukrainian political party, then lied to get loans when the cash stopped coming in.
The case is being prosecuted by the special counsel investigating Russian interference in the 2016 U.S. presidential election.
12:53 p.m.: Forensic accountant takes stand to track Manafort’s money
Morgan Magionos is the FBI forensic accountant who traced Paul Manafort’s financial affairs as part of the investigation and connected the foreign bank accounts to domestic spending activity.
Magionos, a certified public accountant and certified fraud examiner, reviewed documents and statements from banks in Cyprus, Saint Vincent and the Grenadines, and Britain to analyze Manafort’s overseas financial activity.
Magionos found 31 foreign bank accounts spanning 2010 to 2014 that listed Manafort, Rick Gates or Konstantin Kilimnik as the beneficial owners.
Magionos said she connected the overseas bank accounts to Manafort in part because pictures of his passport were included in the account opening applications.
Those accounts were closed in 2013, Magionos testified.
Court broke for lunch until 1:35, with Ellis again urging prosecutor Greg Andres to move the questioning along as quickly as possible. Andres estimated that he had another hour but would do his best.
12:31 p.m.: Judge again spars with prosecutors
After a lengthy break, Judge T.S. Ellis III again sparred with prosecutors over the pace of the trial and evidence they want to admit. Such heated arguments have been a common occurrence in the trial.
The latest dispute centered on charts that prosecutors want to show jurors demonstrating the flow of money from Paul Manafort’s offshore accounts to specific purchases he made in the United States. They intend to do so as they question the next witness, FBI accountant Morgan Magionos.
U.S. District Judge T S Ellis III, shown in 2008, has not hesitated to challenge prosecutors in the Paul Manafort trial. (Tracy Woodward/The Washington Post)
Defense attorneys argued that the charts were cumulative, essentially repeating evidence about which other witnesses already had testified.
That argument appealed to Ellis, who has repeatedly pushed prosecutors to increase the speed with which they are presenting their case. Ellis noted that the defense was not contesting that Manafort made the purchases with foreign accounts, and questioned whether an elaborate presentation with an FBI accountant testifying about the charts was necessary.
In arguing that he should be allowed to use the charts, prosecutor Greg Andres said the FBI accountant had done a great deal of work to put them to together.
“Look, it isn’t relevant that she spent her life doing it,” Ellis remarked, drawing laughter from those in the court.
“We need to find a way to focus sharply,” the judge continued.
The exchange grew somewhat more heated.
“We’ve been focused sharply for a long time,” Andres said. He noted that the government had to tie specific receipts to specific payments, and that defense attorneys had not agreed to any formal stipulations on that topic.
Defense attorney Richard Westling said defense attorneys would stipulate to one of the prosecution’s charts, which offered a high-level summary of Manafort’s purchases and the flow of money. Andres said he was “at a loss,” noting that the defense had not agreed to do so before Wednesday and that it would be faster to merely question the accountant as planned, rather than write a formal stipulation.
Ellis ultimately agreed to let Andres question Magionos, though he warned that Andres would be on a short leash and that Ellis would consider objections from the defense at his bench as the testimony proceeded.
“Judges should be patient. They made a mistake when they confirmed me,” Ellis quipped.
As jurors were about to be led into the courtroom, Ellis remarked that he would not let the FBI’s accountant read certain emails from Paul Manafort that prosecutors want jurors to hear. Andres said he hoped to address that issue later in the afternoon. With jurors walking into the courtroom, Ellis thundered that he had read the prosecutors’ brief and seemed to imply he considered the matter decided. He said one previous court decision that they were relying on contained only a “a throwaway line” to support their argument.
Andres fell silent as the jurors took their seats and Magionos was called to the stand.
11:32 a.m.: Gates testimony ends, forensic accountant expected to follow money trail
Did Paul Manafort spend money for this jacket? An FBI accountant is expected to testify about the trail of money from Manafort’s offshore accounts to his clothiers, among other merchants. (Courtesy Special Counsel’s Office)
With Rick Gates off the stand, testimony will now turn from the salacious to the technical. Morgan Magionos, an FBI forensic accountant, is expected to testify for about two hours, talking about tracing payments from Ukraine through Cyprus to Paul Manafort’s clothiers and home improvement contractors in the United States.
Prosecutors and defense attorneys are still debating whether Magionos will be allowed to read from Manafort’s own emails regarding the flow of money. Those statements are admissible, Judge T.S. Ellis said, but he’s not sure they can be introduced through this agent.
11:16 a.m.: Defense suggests Gates had four extramarital affairs between 2010 and 2014
Rick Gates stepped down from the witness stand just before 11 a.m. Wednesday after a stunning suggestion from one of Paul Manafort’s defense attorneys: Gates might have had four extramarital affairs.
The suggestion came in a final round of cross examination from defense attorney Kevin Downing. After prosecutors asked Gates about his pretrial prep with special counsel lawyers, and Gates testified he had “no doubt at all” that his plea agreement would be shredded if he lied on the witness stand, Downing probed more into what he referred to a day earlier as Gates’s “secret life.”
The defense attorney pointed to about $3 million in transactions, from 2010 to 2014, that he has suggested represent money Gates embezzled from Manafort. He noted an extramarital affair that Gates admitted to Tuesday. Then he asked: Did Gates recall telling the special counsel’s office “that you actually engaged in four extramarital affairs?”
Prosecutors objected, asking why that question was relevant. Downing said it might speak to the idea that Gates’s lying on the witness stand would result in his plea agreement being torn up. The lawyers convened at Judge T.S. Ellis III’s bench for a lengthy conversation that was shrouded in white noise piped through the courtroom.
When the conference broke up, Downing did not ask the same question. Instead, he pointed to the 2010-2014 time period and his earlier questions about Gates’s “secret life.” Those questions first prompted Gates to reveal an affair. Downing asked Gates if his secret life encompassed this period of time.
“Mr. Downing, I’d say I made many mistakes, over many years,” Gates said.
Ellis interrupted, telling Gates to answer the question.
“It did,” Gates said.
10:59 a.m.: Gates told Manafort of his affair, said it lasted five months
Near the end of his questioning of Gates, prosecutor Andres asked about the affair Gates disclosed during his testimony yesterday. Gates said it was a five-month affair that occurred 10 years ago. Gates said it was something he discussed with his wife and had told Manafort about.
Andres spent much of the questioning trying to rebuild Gates’s credibility after the defense cross-examination. Gates testified that he voluntarily disclosed to the FBI that he was embezzling from Manafort. Gates also testified that Manafort said they didn’t need to disclose the foreign bank accounts or report the money coming into the accounts to tax advisers.
Addressing defense questioning of Gates’s motivations for testifying, Andres asked again about Gates’s plea deal and the prison time he faces. Did Gates think he faced up to 200 years in prison on charges out of the federal court in Alexandria, Andres asked? Gates said he thought he would face a lesser sentence. Ellis interjected, asking how short Gates thought the sentence would be. “I thought it was in the range of 100 years, your honor,” Gates said.
Paul Manafort, left, and his wife, Kathleen, arrive at the federal courthouse in Alexandria, Va., in March. Manafort now enters through an underground garage since he is being held in the Alexandria city jail, but he is allowed to switch from a jail jumpsuit to a suit before he appears in front of the jury. (Jacquelyn Martin/AP)
10:33 a.m.: In rebuttal questioning, prosecutors show Gates hid income from offshore accounts in 2014 FBI interview
Kevin Downing ended his cross-examination of Rick Gates by asking what Paul Manafort’s net worth was around 2015 and 2016.
Was it $20 million? Downing asked.
Gates responded that he was “not privy to” Manafort’s personal finances and did not know the value of all his properties, but “I thought somewhere in the realm of $6 [million] to $12 million.”
Prosecutors have said Manafort reported wildly different numbers for his net worth. On loan applications over a three-month period in 2016, he represented his net worth as $15 million, $17 million, $21 million and $36 million, according to the court documents.
Special counsel Greg Andres then came back to the
podium lectern. He started by rebutting the idea that Gates and Manafort were honest with the FBI in 2014, when agents were investigating their former Ukraine client Viktor Yanukovych.
Gates agreed that the agents did not ask about tax returns and that most of the Cyprus accounts at issue were already closed at that point.
He said he did not tell the agents about any hidden income from those accounts.
Gates again testified that Manafort asked him to go to France and meet with one of their Ukraine patrons, wealthy politician Serhiy Lyovochkin. Gates said Manafort wanted to know whether the entity Lyovochkin used to pay them was “clean” — used only for those payments and nothing else.
Andres then went on to ask Gates again about his plea deal. Downing said Tuesday that prosecutors had agreed not to oppose his request for a probationary sentence, although he faces as much as 19 years in prison. But reading the plea agreement in court, Gates agreed that the commitment was not ironclad. The document says the special counsel “may not” oppose such a motion, depending on the “precise nature” of Gates’s cooperation.
Rick Gates, right, answering questions from prosecutor Greg Andres as he testifies in the trial of Paul Manafort, seated second from left, at the Alexandria Federal Courthouse on Aug. 6. He is on the stand for a third day today. (Dana Verkouteren via AP)
10:25 a.m.: Gates disclosed offshore accounts to FBI in 2014, thought he was truthful
Rick Gates took the witness stand for a third day shortly before 10 a.m., describing how he had been interviewed by the FBI as far back as 2014 about his work in Ukraine — and believed he had told the truth.
Under questioning from defense attorney Kevin Downing, Gates said he met with FBI agents and Justice Department lawyers in July of that year. The way he understood it, the bureau was investigating money that Viktor Yanukovych, the political candidate for whom he and Paul Manafort had worked, might have taken out of Ukraine.
Notably, Gates said he disclosed to the FBI some of the Cyprus and Grenadines bank accounts that he and Manafort used to receive payments from their Ukrainian benefactors. He said Manafort told him they should be “open and provide the information” in response to the bureau’s questions. Gates testified that he told the FBI that they opened the accounts so they could easily get payments from the people they worked for in Ukraine.
The testimony is important because prosecutors have sought to demonstrate that Gates and Manafort hid their connection to the accounts and did not report them on required forms. That is the basis for some of their charges. Their disclosing the accounts to the FBI in 2014 cuts against the idea that they were hiding them. Gates also testified that he and Manafort talked after their interviews, and Manafort indicated that he had been truthful in his own conversation with the bureau.
Gates might be on the witness stand only briefly Wednesday. Downing said he intended to question him for only 15 more minutes, and prosecutors said they would have another half-hour or less of questions.
9:25 a.m.: Gates wasn’t actually asked about having an affair. He admitted that on his own.
On Tuesday, defense attorney Kevin Downing appeared to press Rick Gates to admit that he had an extramarital affair as part of the effort to discredit his testimony against Paul Manafort. But a transcript of a bench conference held before the cross-examination shows that Downing hadn’t planned to get into Gates’s infidelity.
“The government raised an issue whether or not we were going to cross-examine Mr. Gates about specific acts of marital infidelity,” Downing told Judge T.S. Ellis III. “We don’t plan on doing that, but we plan on questioning him about what we call his, you know, separate secret life and how . . . it relates to money he had stolen, embezzled, and things that he was doing, but specifically as to infidelity, we do not think we’re going to get into that.”
Prosecutor Greg Andres had objected to the defense using the affair against Gates, saying the Fourth Circuit Court of Appeals has ruled “that if somebody cheats on their wife or whatever, it’s not necessarily indicative of truthfulness.”
Downing said his point was not that Gates cheated on his wife but that “he was leading a separate secret life from Mr. Manafort and from others” and that he embezzled from his boss to fund that lifestyle.
But as soon as Downing asked about “the secret life of Rick Gates,” the witness volunteered, “There was a period of time, almost 10 years ago, when I had a relationship, yes. ”
When asked whether he took “unauthorized expenses” from Manafort to fund the “separate, secret life,” Gates replied, “yes, I acknowledge I had a period of time where I had another relationship.” But Gates said most of the money he spent on the affair came from his legitimate bonuses or from his family, and that most of the money he embezzled he shared with his wife.
Rick Gates leaves federal court in Washington in February. Gates returns to the witness stand for a third day this morning in the trial of former business partner Paul Manafort. (Jose Luis Magana/AP)
9:12 a.m.: Where is Andrew Weissmann?
Until the trial for Paul Manafort started, Andrew Weissmann had been one of the most prominent members of the prosecution team. He spoke in federal court in Virginia when Manafort pleaded not guilty to bank and tax fraud charges there, and defense attorneys accused him of leaking information to the media about Manafort before joining the special counsel’s office.
Behind the scenes, he was equally integral. Manafort business partner Rick Gates testified Tuesday that it was Weissmann who confronted him about a lie he had told special counsel investigators, and it was Weissmann who told him he would have to admit to that lie in an additional charge to keep his plea deal with the special counsel’s office alive.
But Weissmann has notably not questioned any witnesses at Manafort’s Virginia trial. He has not even sat at the prosecution table. When Weissmann has come to the courtroom — and he has not been spotted every day — he has sat alongside members of the public.
There is no reason to believe Weissmann’s absence is for nefarious reasons. The special counsel’s office has pushed back against the leak allegation, and while an FBI agent testified that he was present at a meeting with AP reporters about Manafort, the agent said the AP was offered little more than a “no comment” and an acknowledgment that their reporters were generally on track.
It is possible Weissmann is preparing for Manafort’s next trial in D.C. — which touches on issues similar to those in Virginia but delves more deeply into Manafort’s work in Ukraine and the U.S. registration requirements associated with it. Weissmann made a filing in that case as recently as Monday.
A spokesman for the special counsel’s declined to comment.
9 a.m.: Day 6 recap and look ahead
Rick Gates is back on the stand for another hour of cross-examination Wednesday, as defense attorneys seek to paint him as far too compromised to offer credible testimony against his former boss.
Paul Manafort’s former “right-hand man” admitted Tuesday that he embezzled from their consulting firm, engaged in fraud, lied to the special counsel and conducted an international extramarital affair.
He appeared to hedge at points, reluctant to speak plainly about his crimes. But he was consistent in saying he was now telling the truth and that there was a “strong record” to support his key assertions: that Manafort directed him to hide money from the IRS and fake financial documents to get bank loans.
Part of that record were several emails Manafort sent Gates. The first made clear that Manafort was upset about his 2014 tax bill.
“WTF? How could I be blindsided by this. You told me you were on top of this,” he wrote Gates in April 2015. “This is a disaster.”
Gates testified that at Manafort’s direction, he went on to reclassify some of the income as a loan to lower the taxes owed.
Another email from February 2016 had Manafort conversing with Gates about a loan forgiveness letter that both Gates and an accountant have testified was fraudulent. The loan was actually income disguised to lower Manafort’s taxes, he said, and then forgiven to help Manafort get a loan.
And later that year, while trying to get another loan, Manafort himself asked Gates for a version of the firm’s 2016 Profit & Loss Statement that could be edited, Gates testified. Manafort then sent to a bank a version of the statement that showed $3 million in profit that year rather than $600,000 in losses, Gates said in describing emails prosecutors presented in court.
Prosecutors will probably draw Gates back to those facts and away from his own misbehavior on redirect examination.
Here’s The Post’s Rachel Weiner summarizing the highlights of the day. As always, cameras are not permitted in the federal courtroom, so we feature the courtroom sketch work of artist Dana Verkouteren: