World / Crime & Legal

Bookkeeper says Paul Manafort kept her in dark about offshore accounts and ‘approved every penny’ of bills

AP, Reuters

Paul Manafort inflated his business income by millions of dollars and kept his bookkeeper in the dark about the foreign bank accounts he was using to buy luxury items and pay personal expenses, according to testimony during his trial Thursday.

But he otherwise approved “every penny” of the personal bills that bookkeeper Heather Washkuhn paid for him, she said.

That testimony is important to special counsel Robert Mueller’s team as it looks to rebut defense arguments that Manafort can’t be responsible for financial fraud because he left the details of his spending to others. That includes his longtime associate Rick Gates, who pleaded guilty earlier this year and is expected to testify soon as the government’s star witness.

“I would say he was very knowledgeable. He was very detail-oriented. He approved every penny of everything we paid,” Washkuhn told jurors.

She also described documents submitted by Manafort to obtain loans. Prosecutors say the documents inflated the net income of his business by roughly $4 million, and they say he tried to pass them off as coming from her accounting firm.

The fraudulent loan documents came after Manafort’s political consulting work in the Ukraine had dried up and as he had begun to financially struggle, prosecutors say.

Central to the government’s case are allegations that Manafort funneled more than $60 million in proceeds from his Ukrainian political consulting through offshore accounts, including in Cyprus, and hid a “significant” portion of it from the IRS.

Manafort’s client in Ukraine, former President Viktor Yanukovych and his Party of Regions, were forced out of power in 2014, and Yanukovych lives in exile in Russia.

Washkuhn told jurors about a series of emails she sent him in 2016 warning that he was behind on his payments — including to her.

Manafort faces charges of bank fraud and tax evasion that could put him in prison for the rest of his life.

It is the first courtroom test of Mueller’s team, which is tasked with looking into Russia’s efforts to interfere with the U.S. election and whether the Trump presidential campaign colluded with Moscow to sway voters.

The other 31 people charged by Mueller so far have either pleaded guilty or are Russians seen as unlikely to enter an American courtroom. Three Russian companies have also been charged.

While the question of collusion remains unanswered, Manafort’s financial fraud trial has exposed the lucrative and secretive world of foreign lobbying that made Manafort rich.

Other witnesses testifying this week said Manafort paid them millions from the offshore accounts tied to foreign shell companies for landscaping, expensive clothing and even a karaoke machine.

When prosecutor Greg Andres read off some of the offshore companies to Manafort’s bookkeeper, she said Manafort never told her about them. She said she would have documented them for tax purposes if he had.

On cross-examination, Manafort attorney Thomas Zehnle tried to get Washkuhn to say Gates was heavily involved in approving expenses. The Manafort legal team has been working to convince the jury that Gates is to blame rather than their client.

But Washkuhn said that while Gates dealt with some business matters for Manafort’s consulting firm, “mainly Mr. Manafort was the approval source.”

The judge overseeing the trial has questioned the hundreds of exhibits prosecutors want to submit as evidence of Manafort’s lavish spending.

U.S. District Judge T.S. Ellis III said the money is relevant but he doesn’t see the need for prosecutors to “gild the lily,” especially considering that Manafort’s lawyers have not disputed that their client spent his money on luxury items.

Ellis told prosecutors on Wednesday not to use the word “oligarch” to describe wealthy Ukrainians who paid millions to the former Trump campaign chairman. He said the term has a pejorative meaning and using it is not relevant to the fraud and tax charges against Manafort.

He cautioned them that the term could imply that Manafort was associating with “despicable people, and therefore he’s despicable.”

“That’s not the American way,” the judge added.

Defense lawyers also sought to address head-on Manafort’s wealth and the images of a gaudy lifestyle that jurors are expected to see.

“Paul Manafort travels in circles that most people will never know and he’s gotten handsomely rewarded for it,” Zehnle said. “We do not dispute that.”

Prosecutors told Ellis they expect to rest their case next week, noting that they are ahead of schedule.

Manafort has a second trial scheduled for September in the District of Columbia. It would address allegations that he acted as an unregistered foreign agent for Ukrainian interests and made false statements to the U.S. government.