Prosecutors Sum Up Manafort’s Finances as a Trail ‘Littered With Lies’

ALEXANDRIA, Va. — The evidence against Paul Manafort is “overwhelming,” a prosecutor told jurors during closing arguments in his fraud trial on Wednesday, saying that he hid more than $16 million in income and fraudulently obtained $20 million in bank loans even though, as a trained lawyer, “Mr. Manafort knew the law.”

But in a response that drew prosecutors’ ire, lawyers for Manafort, once President Donald Trump’s campaign chairman, hinted that the special counsel, Robert Mueller, had charged Manafort to pressure him into cooperating with the inquiry into Russian influence over the 2016 presidential race.

On the final day of the trial, the lead prosecutor, Greg D. Andres, cast Manafort as a bright and highly capable political consultant, steeped in tax law and financial matters and fluent in terms like “write-offs” and “distribution” income. “It wasn’t a clerical decision. It wasn’t ‘forgot to check a box,'” Andres said. “When you follow the trail of Mr. Manafort’s finances, it is littered with lies.”

Over 12 days in court, the prosecution called 27 witnesses and offered 388 photographs, emails and other documents as evidence of a scheme by Manafort to finance a life of opulence through sustained and sprawling fraud. But in their closing statement, Manafort’s lawyers implied that the real issue was why he was in the courtroom to begin with.

Only after the special counsel took an interest in him, they argued, did bank executives and accountants begin to raise questions about irregularities in his financial records, tax returns or loan applications.

Investigators for the special counsel were “going through each piece of paper and finding anything that doesn’t match up to add to the weight of evidence against Mr. Manafort,” said Richard Westling, one of Manafort’s lawyers. Manafort was even charged, he said, with fraudulent statements in an application for a loan that was never granted.

“What would be the motivation?” Westling asked. “I’ll leave you to determine what was behind that.”

The dueling summations ended in a heated confrontation over whether Manafort’s lawyers had crossed a line in seeking to sow doubt about the prosecutors’ motivations. While the fraud charges against Manafort are not related to Mueller’s inquiry into Russian interference in 2016, as Trump’s former campaign chairman he might know about Moscow’s efforts to influence the campaign.

Without saying so directly, the defense lawyers made clear that Manafort was a Republican, telling jurors that he had worked on the presidential campaigns of Ronald Reagan, Bob Dole, Gerald R. Ford and George Bush. Though they did not mention Trump by name, they said that Manafort had no income in 2016 because he had volunteered for “a presidential campaign.”

After prosecutors protested, Judge T.S. Ellis III of the U.S. District Court in Alexandria instructed the jury to “ignore any argument about the Justice Department’s motive or lack of motive in bringing this prosecution.”

In a tacit acknowledgment that his criticism of prosecutors during the trial might influence the verdict, Ellis also told the panel “not to construe any comments the court has made” as his opinions.

The trial is the first major courtroom test for Mueller’s team. The other Americans charged thus far by the special counsel have all pleaded guilty without going to trial. If he is found guilty, Manafort, 69, could spend the rest of his life behind bars. The most serious of 18 charges against him carry a maximum sentence of 30 years. His wife, Kathleen, was in the courtroom Wednesday to hear the closing arguments, as she has been throughout the trial, but his two daughters were absent.

Defense lawyers sought throughout the trial to destroy the credibility of the prosecution’s star witness, the longtime Manafort protégé and Trump deputy campaign chairman Rick Gates, who had faced similar fraud charges and testified against Manafort to try to win lighter punishment. Gates, who pleaded guilty to lying to federal authorities and conspiracy to commit fraud, is hoping to avoid a prison term when he is sentenced.

Kevin Downing, one of Manafort’s lawyers, told the jurors on Wednesday that they should completely discount Gates as a witness, saying he was guilty of “multiple lifetimes of fraud.”

Prosecutors relied on Gates, Downing said, only because they were “so desperate” to catch Manafort. He added, “How he was able to get the deal he got, I have no idea.”

The defense argued that Gates was the only witness to testify that Manafort knowingly and willfully engaged in fraud to hide his income and deceive banks. In fact, they said, Manafort only misinterpreted or overlooked complex financial regulations, such as the requirement to report foreign bank accounts to tax authorities.

Andres acknowledged to the jury that Gates was a flawed witness. “We are not asking you to take Rick Gates’ testimony at face value,” he said. “We’re not asking you to like him either.” When Manafort enlisted Gates to help him execute a fraud scheme that spanned more than seven years, he said, “he didn’t choose a Boy Scout.”

But he also told jurors that they could convict Manafort on the basis of his own words, highlighting emails and documents that Manafort personally wrote or signed. “Ladies and gentlemen, the star witness in this case is the documents,” he said.

Even though the bank records, loan applications and emails were voluminous, he said, “Mr. Manafort’s scheme, when you break it down, was not that complicated.”

Manafort deliberately deceived his bookkeeper and tax accountants, Andres argued, so he could evade taxes on $16.5 million in income and then trick banks into loaning him millions when “he was going broke and he couldn’t pay his bills.”

With the stroke of a pen, Andres argued, Manafort achieved financial magic, making mortgages and other debts disappear, turning a rental apartment into a second residence, changing a loan into income and back again, and disguising a near-bankrupt political consultancy into one whose income was “on the upswing.”

Andres repeatedly asked the jurors, who are to begin their deliberations Thursday morning, to rely on their common sense when confronting book after exhibit book of financial documents. “Ladies and gentlemen, a loan is not income. Income is not a loan. You don’t need to be a tax expert to understand that,” he said.

He told them to ask themselves why Manafort would pay an accounting firm $100,000 a year to pay his bills, but pay more than $15 million in personal expenses himself out of 31 foreign bank accounts in Cyprus and St. Vincent and the Grenadines. “The answer? He wanted to hide those accounts,” he said. “Use your common sense.” Although defense lawyers suggested that some of the signatures on Manafort’s foreign bank accounts appeared to be forged, Andres insisted that Manafort personally controlled the foreign bank accounts through which $60 million in income flowed between 2010 and 2014.

Some of Manafort’s lies, he said, were “nothing short of absurd.” For instance, he said, Manafort “reminded” his son and daughter-in-law that bank officials believed they were living in a SoHo apartment that was in fact a rental so that he could qualify for a better mortgage rate. “If you are living in a residence, do you need to be reminded?” he said.

But Manafort’s lawyers argued that he was being singled out for discrepancies that typically might only lead to more questions from bank officials, or perhaps a tax audit. If every loan applicant who mischaracterized a rental apartment as a second residence was charged, Westling said, courthouses would be overflowing with defendants in bank fraud cases.

Downing suggested that Manafort did not hide his income from tax authorities, he simply tried to defer it to pay later. “It goes on all the time,” Downing said.

He also said the prosecutors were oversimplifying complex issues that confused even Manafort’s own tax accountants, including in what cases he was required to declare that he had foreign bank accounts. “Any idea that has been given to you by the office of special counsel that this stuff is straightforward and simple is just not true,” Downing said.

He said the FBI had known about Manafort’s foreign bank accounts as long ago as 2014, when Ukrainian authorities sought the FBI’s help in investigating payments from the previous government to Manafort’s firm. Yet Manafort only came under investigation more than two years later, he said, hinting that the special counsel’s office had an ulterior motive.