- On Thursday, prosecutors used Paul Manafort’s bookkeeper, Heather Washkuhn, to draw out a detailed case for some of the financial fraud charges brought against Manafort in Virginia.
- As Manafort’s bookkeeper for seven years, Washkuhn has intricate knowledge of Manafort’s and his consulting firm’s financial activities.
- Her testimony took up most of the trial Thursday.
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ALEXANDRIA, Virginia – On day three of the high-stakes criminal trial against Paul Manafort, prosecutors used Manafort’s bookkeeper to begin laying out a case for the most substantial charges against him.
Manafort, the former chairman of Donald Trump’s campaign, is a defendant in two separate criminal indictments from the special counsel Robert Mueller, who is investigating Russian interference in the 2016 presidential election and whether members of the Trump campaign colluded with Moscow to tilt the race in Trump’s favour.
The indictment at the center of this week’s trial was brought in Virginia and charges Manafort with financial crimes related to tax and bank fraud, as well as conspiracy, failure to register as a foreign agent, and obstruction of justice.
Jury selection and opening statements were made Tuesday, and on Wednesday the jury heard testimony about Manafort’s extravagant spending.
Much of Thursday was spent hearing testimony from one key person: Heather Washkuhn, Manafort’s longtime bookkeeper.
Manafort ‘approved every penny of everything we paid’
Given her day-to-day involvement in detailing Manafort’s financial dealings, Washkuhn is one of the most important witnesses for the prosecution.
She is the managing director of the accounting firm Nigro Karlin Segal Feldstein & Bolno (known as Nigro), and Washkuhn testified that she had managed or helped manage Manafort’s finances from 2011 to 2018, taking the lead on his account in 2013.
Washkuhn described Manafort on Thursday as “very knowledgeable” and “very detail oriented,” adding that “he approved every penny of everything we paid.”
The defence has made clear since the trial started that it plans to pin the blame on Rick Gates, Manafort’s longtime business partner who was a codefendant in the indictment until he struck a plea deal with prosecutors in February.
In particular, the defence has sought, so far, to paint Gates as a liar and fraudster who should be under the spotlight instead of Manafort.
The prosecution is seeking to prove that Manafort was the big fish and that Gates was merely an accomplice. For that reason, Washkuhn’s assertion that Manafort “approved every penny of everything we paid” was critical to Mueller’s case.
Washkuhn described Gates on Thursday as Manafort’s “right-hand man.”
Asked about her understanding of the role Gates played in handling Manafort’s business dealings and finances, Washkuhn replied that “we were to get in touch with Rick if we couldn’t get a hold of Paul.”
But the most pivotal part of Thursday’s proceedings came when Greg Andres, one of the prosecutors on Mueller’s team, embarked on a lengthy line of questioning to gauge what, if anything, Washkuhn knew about Manafort’s offshore accounts, shell companies, and alleged bank fraud.
Washkhuhn testified that though she was the main person handling Manafort’s finances, she did not know that he controlled more than a dozen offshore accounts. She also said she came across several loans on Manafort’s ledgers in which she was “unaware” of the underlying loan documentation.
Notably, she also testified that Manafort and Gates appeared to falsify financial statements for Manafort’s consulting firm and inflate the firm’s income to secure bank loans.
She said those actions took place after 2015, when Manafort’s biggest client, Viktor Yanukovych, was ousted from the Ukrainian presidency and fled Ukraine amid violent protests against his leadership.
The prosecution pointed to several documents and financial statements that appeared to indicate as much – Washkuhn testified that Manafort’s firm made just $US338,542 in 2015 and reported a loss of $US1.2 million in 2016.
The financial hemorrhage was also reflected when Manafort was increasingly late in paying his bills. Washkuhn testified that Manafort at one point needed more than $US1.1 million to pay off his expenses.
Andres asked Washkuhn how she knew Manafort wasn’t paying his bills on time, and she replied that she had to ask him multiple times, and with increasing urgency, to make the payments, and that his account also didn’t have the funds necessary to cover his fees.
“Did that include bills to you?” Andres asked.
“Yes,” Washkuhn replied.
Gates asks Washkuhn to inflate DMP’s income by over $US2 million
In another noteworthy exchange, Andres asked Washkuhn to describe to the jury a March 2016 email exchange between herself and Gates.
Gates wrote to Washkuhn early in the morning asking her to send him an income statement for Manafort’s company DMP for the year 2015 as a document, rather than a PDF file.
Washkuhn replied that she could send Gates only a scanned PDF version. Per the email chain, Gates appeared to grow increasingly frustrated, at one point calling Washkuhn’s firm’s procedures a “poor system” that “doesn’t make sense.”
When he asked Washkuhn to add $US2.6 million in additional income to DMP’s financial statement for 2015, she replied that she was not able to do that. Gates had said in a previous email that Manafort had requested the change.
Later that day, Gates emailed Laura Tanner, another employee at Washkuhn’s firm, and directed her to add $US2.6 million to DMP’s 2015 income “per email with Heather.”
Washkuhn said it was unclear whether Tanner complied with the request.
Prosecutors then showed the jury an attachment Gates sent to Banc of California that purported to be a 2015 DMP financial statement from Nigro, Washkuhn’s firm.
But Washkuhn noted that the document was missing the firm’s disclaimer and had different fonts – and numbers.
In particular, she said, the document reflected that DMP made “$US4 million more than what was reflected on the documents that we created.”
In another purported DMP financial statement, this time sent from Manafort to Federal Savings Bank, Washkuhn pointed out that the document misspelled the month “September” as “Septembe,” and misspelled “review” as “REVew.”
During the cross-examination, Manafort’s lawyer, Thomas Zehnle, tried to depict Gates as having been a key figure in any illicit financial activity.
Though Washkuhn acknowledged that Gates was important in directing foreign wire transfers to DMP, she maintained that Manafort “approved every expenditure on the personal and business side.”
Washkuhn’s testimony concluded toward the end of the business day on Thursday. Prosecutors then began questioning James Ayliff, Manafort’s former CPA. Mueller’s team will most likely use Ayliff’s testimony to lay out its case for the tax-fraud charges against Manafort, and his testimony is expected to take up at least half the day on Friday.
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