See Manafort's $15,000 ostrich coat

To demonstrate Paul Manafort's elaborate spending habits, prosecutors released an image of a $15,000 coat made from an ostrich.

Posted: Aug 3, 2018 2:27 PM
Updated: Aug 3, 2018 2:29 PM

Former Trump campaign chairman Paul Manafort's longtime bookkeeper testified Thursday that Manafort was in serious financial trouble in 2016 after his lobbying business dried up, and he and his deputy Rick Gates sent several fake, inflated income business statements to banks.

The third day of the Manafort trial saw the prosecution shift from describing Manafort's lavish lifestyle -- new details Thursday included a $10,000 karaoke machine and the "biggest pond in the Hamptons" -- to the core of their case: alleged tax and banking crimes committed when Manafort desperately needed money.

Bookkeeper Heather Washkuhn told jurors that Manafort sent a financial statement to Federal Savings Bank saying his company had made $3 million the first nine months of 2016, when his firm had actually lost more than $1 million the first 11 months of that year.

In another instance, Washkuhn said Manafort's company made $400,000, but then Manafort told Banc of California it made almost $4.5 million.

"There's a lot of changes," Washkuhn said. "There's about a $4 million difference."

Washkuhn also said Rick Gates, Manafort's business partner who is now a prosecution witness, repeatedly asked her to change old financial statements to show additional income, and requested copies of financial statements that could be edited. Gates became upset when Washkuhn said she couldn't sent him pdf documents as Microsoft Word files, which are more easily altered, she testified.

Jurors also heard from an accountant who prepared Manafort's taxes, who testified that Manafort never told them that he had foreign bank accounts. That's a question asked on IRS tax forms, and it's a crime to hide foreign bank accounts from the US government.

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

Manafort is charged with 18 counts of tax and banking crimes, including failing to report foreign accounts on his tax forms.

He has pleaded not guilty to all charges, and the trial is clearly on the mind of his former boss, President Donald Trump, who tweeted several times about the case on Wednesday. While Manafort's case isn't about the 2016 campaign, he's the first defendant Mueller's team has taken to trial, and the outcome could affect public opinion of the special counsel investigation the President has called a "witch hunt."

The trial will resume at 9:30 a.m. Friday morning.

Needed cash in 2016

Prosecutor Greg Andres highlighted Manafort's dire financial straits.

One 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.

Washkuhn also denied knowing about the companies Manafort used to wire money from overseas. Andres asked Washkuhn if she had ever heard of 14 different shell-company bank accounts.

She said "no" to every one.

Washkuhn never recorded the existence of any foreign bank accounts for Manafort while she kept his books, she said.

In addition to Manafort's alleged criminal use of unreported foreign bank accounts, prosecutors say she will also be able to speak to his alleged criminal bank fraud charges.

Washkuhn said she handled all of Manafort's personal and professional financial dealings from 2011 to 2018, and 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.

"He approved every penny of everything we paid," Washkuhn testified.

She walked the court through what the yearly profit and loss statements her company prepared for Manafort's DMP should have looked like. But the income statements that DMP provided to the banks that gave it loans were rife with misspellings, used different fonts and headers, omitted corporate disclaimers and left out some numbers the bookkeeper would have included.

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.

But 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.

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.

A (big) pond in the Hamptons

Washkuhn's testimony followed witnesses documenting another parade of expensive purchases Thursday, as landscaper Michael Regolizio testified about how Manafort -- and Manafort alone -- commissioned him to care for hundreds of flowers at his house as well as "one of the biggest ponds in the Hamptons."

He said Manafort paid for much of the work through international wire transfer and was his only client to do so.

Regolizio testified that Manafort spent about $450,000 on landscaping over five years. At first, the landscapers handled only tree-care for Manafort's estate. But in 2012, they took over the entire home's outdoor work, sending landscapers there four-to-five times a week to prune 14-foot hedges, mow the lawn and fertilize, plant "hundreds and hundreds of flowers," prune a flower bed next to the tennis courts, maintain the large pond with a waterfall feature and care for a white and red flower bed in the shape of an "M."

Prosecutors read details about wire transfers that Manafort sent to pay for a 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.

In addition to the karaoke set, which came from the whole-house audio-video design company Sensoryphile, Joel Maxwell of Big Picture Solutions told the jury that Manafort installed Apple TVs, networks and other electronics in his Hamptons home from 2011 to 2014 at a cost of $2.2 million.

A pattern has emerged in many of the witness' testimonies at Manafort's trial this week. Vendors who sold custom men's clothing, audio-visual services, landscaping, home renovations and cars have told the jury that Manafort was a major customer and frequently paid with the unusual method of wiring money from corporate-named bank accounts in Cyprus.

The vendors largely say they do not recognize the company names Manafort used, yet they knew the payments came from him because their amounts matched the bills they sent him.

Fake invoices

Regolizio said he never met, communicated with or received payments from Gates, Manafort's longtime deputy on whom defense attorneys have indicated they'd like to pin the alleged crimes.

Prosecutors also revealed yet another document that showed a bill from Regolizio's company, New Leaf, but with an incorrect vendor name and address.

Defense attorney Jay Nanavati asked him if Regolizio would call the document a "fake invoice." Regolizio replied yes.

Immediately after they showed the jury the invoice, prosecutors asked Regolizio if he had ever met or corresponded with Konstantin Kilimnik, a Russian who has been indicted in DC in a separate case for helping Manafort attempt to tamper with witnesses.

Regolizio said he did not know Kilimnik.

Prosecutors have not yet revealed what they believe the fake invoices prove in their case.

Gates likely will testify. What about Manafort?

On Wednesday, prosecutors opened the door to the idea they might not call Manafort's former deputy, Rick Gates, to testify, but Thursday they said Gates could be called as early as Friday or Monday.

Gates is seen as a star witness for the prosecution, and Manafort's defense team has signaled it plans to make Gates a key part of its defense, arguing that Manafort was misled by his longtime deputy.

Another lingering question -- will Manafort himself testify? -- was addressed by Judge T.S. Ellis on Thursday during a discussion about whether Manafort's team could discuss the fact that Manafort was not subject to an IRS audit.

Ellis said he did not yet know if Manafort would testify in his own defense, and didn't want to force a decision from the defense team until they begin their side of the case after the prosecution's case rests, likely next week.

"He will not be penalized for the right to remain silent," Ellis said.

However, Ellis added that if Manafort does testify, the judge may allow testimony about whether Manafort tried to comply with IRS policy and offered to be audited before he was charged.

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 608519

Reported Deaths: 9693
CountyCasesDeaths
Marion840461335
Lake45349684
Allen32803548
Hamilton29394315
St. Joseph27380381
Elkhart24404345
Vanderburgh19411249
Tippecanoe17970138
Johnson15069295
Porter14783169
Hendricks14401248
Madison10965221
Vigo10726181
Clark10677144
Monroe9383110
Delaware9116134
LaPorte9065163
Howard8236144
Kosciusko806983
Warrick672999
Hancock6697104
Bartholomew6484100
Floyd6428110
Wayne6136162
Grant5991115
Dubois555579
Boone551168
Morgan541295
Henry507864
Marshall503984
Cass483263
Dearborn479845
Noble473059
Jackson425047
Shelby417581
Lawrence391079
Clinton373043
Gibson370359
Harrison348144
DeKalb347164
Montgomery345754
Knox335639
Miami321444
Steuben313745
Whitley307326
Wabash303251
Adams300936
Ripley298445
Putnam296850
Huntington291659
Jasper289034
White273243
Daviess270474
Jefferson263338
Decatur247683
Fayette247148
Greene239862
Posey239328
Wells236051
LaGrange228862
Scott225339
Clay222532
Randolph213548
Jennings198936
Sullivan192333
Spencer191321
Washington186423
Fountain184027
Starke175443
Jay167623
Owen165737
Fulton164030
Orange159534
Carroll158015
Rush155118
Perry154229
Vermillion149134
Franklin148333
Tipton132332
Parke13078
Pike116926
Blackford111022
Pulaski97037
Newton90921
Brown88035
Benton86610
Crawford7999
Martin73713
Warren6817
Switzerland6615
Union6287
Ohio4907
Unassigned0376

Ohio Coronavirus Cases

Data is updated nightly.

Cases: 859841

Reported Deaths: 10680
CountyCasesDeaths
Franklin101171707
Cuyahoga855711125
Hamilton64017448
Montgomery43107418
Summit34836761
Lucas31350625
Butler30973232
Stark25786435
Warren19671140
Lorain19017223
Mahoning17321338
Lake16080154
Clermont15926111
Delaware1438878
Licking13204137
Trumbull12809316
Fairfield1279381
Greene12055137
Medina11591168
Clark10942265
Wood10348158
Allen9897126
Portage9296109
Miami916873
Richland9139118
Marion7459113
Tuscarawas7381182
Columbiana7327124
Pickaway726150
Wayne7034171
Muskingum703141
Erie6152129
Hancock552390
Ross548998
Scioto539164
Geauga508455
Darke470292
Ashtabula453073
Lawrence452654
Union451828
Sandusky436662
Mercer433589
Seneca430166
Huron428741
Auglaize422264
Shelby421222
Jefferson419269
Belmont416840
Washington388740
Athens38009
Putnam374975
Madison355129
Knox352622
Ashland344938
Fulton338443
Defiance330086
Crawford322374
Preble320637
Brown312921
Logan307332
Ottawa293943
Clinton290143
Williams278667
Highland275118
Jackson263845
Guernsey254125
Champaign252028
Fayette236530
Morrow23234
Perry231318
Holmes225474
Henry218749
Hardin213033
Coshocton205622
Van Wert202245
Gallia196726
Wyandot196051
Pike176217
Adams176115
Hocking172024
Carroll155616
Paulding144321
Noble120540
Meigs108624
Monroe100732
Harrison89121
Morgan83130
Vinton70213
Unassigned00
Fort Wayne
Cloudy
27° wxIcon
Hi: 33° Lo: 13°
Feels Like: 18°
Angola
Cloudy
25° wxIcon
Hi: 30° Lo: 12°
Feels Like: 15°
Huntington
Cloudy
27° wxIcon
Hi: 33° Lo: 10°
Feels Like: 19°
Fort Wayne
Cloudy
27° wxIcon
Hi: 33° Lo: 13°
Feels Like: 18°
Lima
Cloudy
26° wxIcon
Hi: 33° Lo: 15°
Feels Like: 15°
Light Snow Sunday
WFFT Radar
WFFT Temperatures
WFFT National

Community Events