Manafort’s bookkeeper testifies against him, alleging efforts to inflate income
ALEXANDRIA, Va. — Paul Manafort’s longtime bookkeeper testified against him Thursday, telling a Virginia jury that his seven-figure lifestyle lasted until about 2015 when the cash ran out, the bills piled up, and he and his business partner began trying to fudge numbers to secure loans.
The dry but potentially damaging testimony from the bookkeeper, Heather Washkuhn, appeared to undercut Manafort’s defense against bank and tax charges, which is that his business partner is responsible for any financial misdeeds. But Washkuhn testified that Manafort approved ‘‘every penny.’’
Washkuhn spent hours on the witness stand, describing account balances, bills received, and payments.
Her testimony is critical to the case being heard by a six-man, six-woman jury in Alexandria, Va., as Manafort, who was President Trump’s campaign chairman for a period in 2016, is charged with running a years-long scheme to hide millions of dollars from the Internal Revenue Service, and then, when his income dried up, lying to get bank loans so he could continue living the good life.
Washkuhn characterized Manafort as a ‘‘very knowledgeable’’ client. ‘‘He was very detail-oriented. He approved every penny of everything we paid,’’ she said.
That point could prove vital to jury deliberations because Manafort’s lawyers have made it clear they aim to place blame on the case’s star witness, Manafort’s former right-hand man, Rick Gates, portraying him as a liar and embezzler who is responsible for any financial chicanery found by the FBI.
On the witness stand, Washkuhn said she prepared ledgers for Manafort’s finances, which she would eventually hand off to his accountants to file his tax returns. She said she sometimes saw transactions in those accounts from other accounts to which she did not have access.
Critically, Washkuhn testified she did not have any records of foreign accounts controlled by Manafort, and had not been aware of such accounts. Prosecutors have already introduced evidence that Manafort used foreign accounts to pay for millions of dollars of clothes, cars, real estate and home remodeling.
Prosecutors charge that Manafort made $60 million between 2010 and 2014, while working for the Ukraine government, and hid millions in foreign accounts that were not reported to the IRS.
Washkuhn described how Manafort’s firm, Davis Manafort Partners, took in millions of dollars a year before its revenue cratered in 2015. The firm reported only $338,542 in income in 2015 and a $1.2 million loss in 2016.
Prosecutors say that’s because Manafort’s biggest client — what one associate called his ‘‘golden goose,’’ Ukrainian president Viktor Yanukovych — fled for Russia in 2014 amid massive protests against his government.
As his business was gasping, Manafort was tapped to run Trump’s campaign in mid-2016.
He received no pay for the job, even though his firm was losing hundreds of thousands of dollars a month, according to election filings and evidence presented to the jury.
Trying to pay Manafort’s bills became a problem, Washkuhn testified, and he needed more than $1.1 million to pay off credit cards and other expenses.
Washkuhn’s testimony is important not just for the tax charges against him, but the bank fraud counts as well.
Prosecutors charge Manafort engaged in a scheme to doctor documents submitted to banks, wildly overstating his firm’s 2015 revenue.
Manafort’s lawyer Thomas Zehnle tried to show that Gates played an important part in any financial misdeeds, getting Washkuhn to concede that Gates had authority to direct wire transfers from overseas.
Gates ‘‘handled a lot of the business affairs,’’ Washkuhn said.
But later, the line of questioning seemed to backfire on the defense. In response to questioning, Washkuhn said Manafort kept a tight grip on financial decisions for the firm and himself.
‘‘He approved every expenditure on the personal and business side,’’ Washkuhn said.
Prosecutors said that Gates, the key witness in the case, could testify as early as Friday.
Gates pleaded guilty earlier this year to lying to the FBI and conspiring against the United States, and agreed to cooperate against his former boss and partner in the hopes of getting a lighter sentence.