Defense: ‘Only a fool’ would knowingly leave evidence of a crime on ledger

 In U.S.
Cindy Laporta testified that she sent false documents and misrepresented a home so that Manafort could get a mortgage on one of his New York City properties.

The situation started in 2016 when Paul Manafort started applying for mortgage loans for his house on Howard Street. Laporta testified that Rick Gates told her that it was used as a second home, rather than a rental. “The rate for a second home is better than a rate on a rental property,” she said. Tax documents showed that the house on Howard Street had brought in more than $115,000 in 2015, when it was available for rent 365 days a year.

Laporta said that she relied on Gates’ representation of how the home was used rather than checking Manafort’s general ledger, which would have shown it to be a rental property.

Later in the year, the loan application was denied when the bank questioned a $1.5 million loan from Peranova Holdings, LLC, a company that we now know to be controlled by Manafort. Citizens Bank wanted to see the loan documents. Laporta testified that she was directed by Gates to tell the bank that the loan had been forgiven even though she did not believe that to be true. Laporta did and cc’ed Paul Manafort on the email.

The jury was then shown an email chain where Gates told Laporta that he would “chase down the signatures” he needed for a loan forgiveness letter that was then backdated to June 2015. Laporta then sent the document to the bank. “I believed the bank would have to vet the document themselves,” she said, and she believed that she would be protected by the fact that she didn’t edit the document herself.

Cindy Laporta, Manafort’s accountant on his 2014 and 2015 tax returns, is the first witness to take the stand who had been granted immunity. 

She said she was in on discussions to falsify a loan document at the direction of Rick Gates so that Manafort could afford to his pay his 2014 income taxes.

She acknowledged that she knew it wasn’t appropriate to change these documents. “You can’t pick and choose what’s a loan and what’s income,” she said.

Laporta also testified that DMP had four season Yankees tickets that were classified as 80 percent business expense and 20 percent personal expense.

She was given a list of over a dozen foreign entities and said she didn’t know what they were. She assumed some were DMP’s clients. The prosecution asked her if she would want to know for tax purposes if Manafort owned these entities.

Manafort lawyer Kevin Downing led Ayliff’s cross examination.

He asked Ayliff a few “big picture” questions — asking what it was like working with Manafort and Gates. Ayliff said he found it difficult to get the information he often needed. He said when he did get the information he needed, it was often delayed or not until the last minute. This made it harder for him to do his job, Ayliff said.

Downing asked if it was Gates or Manafort that he worked with primarily. Ayliff responded “Both, but towards the end it was mostly Gates.”

In one exhibit the government showed the court, there was a question about whether or not an Foreign Bankand Financial Accounts report (FBAR) had to be filed concerning a Manafort company in Cyprus. Someone on Ayliff’s team consulted other tax experts at KWC, and the decision was made that an FBAR did not have to be filed, according to Ayliff.

Ayliff said he never learned of any entity that Paul Manafort had in Cyprus.

He said there were a number of things Manafort did not tell his bookkeepers or CPAs that would have been good for them to know. Here’s one such interaction in follow up questioning from the prosecution:

PROSECUTION: Did Manafort ever tell you Peranova Holdings Limited was an affiliate of DMP International?

AYLIFF: No.

PROSECUTION: Would that have been good to know?

AYLIFF: Yes.

Defense attorney Kevin Downing said would ask Ayliff if he kept documentation for auditing purposes.

His argument, he said, will be that the prosecution is alleging that Manafort knowingly concealed his overseas accounts. If he wanted to do that, why would he leave evidence of that on his bookkeeping ledgers? “Only a fool” would knowingly do so, Downing said.

Cross examination will begin after lunch.

The prosecution asked Ayliff about a 2012 loan to Paranova Holdings. Ayliff testified that he asked Manafort for any documentation for this loan but was not given any. Manafort did not pay any interest on this loan in 2013 or 2014, he said.

Ayliff testified that Manafort’s reported income dropped in 2014, at which point he started applying for mortgage loans. This lines up with the prosecution’s argument that Manafort’s cash flow dried up when Viktor Yanukovych was ousted.

The jury was shown an email from Manafort to Ayliff where Manafort instructed Ayliff that a property on 5th Avenue in New York City was never rented out, despite contrary documentation. Manafort told Ayliff to tell the bank that it was a personal residence.

Ayliff said that it was his understanding that it was always a rental property. “I told the bank that it was rental, not a personal residence,” Ayliff said.

Manafort’s accountant James Philip Ayliff returned to the stand Friday morning. He testified that he asked Manafort if he owned any foreign bank accounts and was told no. 

He was walked through a list of 15 Cyprus entities and Ayliff said that he thought they were Manfort’s clients or wasn’t aware of them altogether.

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