A revenue agent with the Internal Revenue Service told the court Wednesday he believes Paul Manafort failed to report more than $16 million in business income on his taxes and should have disclosed to the tax agency that he had bank accounts overseas.
Michael Welch, a 34-year veteran of the IRS, testified as an expert witness and told the court he reviewed financial records showing the income Manafort earned from his political consulting work in Ukraine, as well as payments he made to vendors in the U.S. for high-end clothing, cars, property, and other expenses.
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Welch’s calculations indicate that Manafort’s unreported income to the IRS topped $16 million from 2010 to 2014, a conclusion he came to by examining money Manafort made that was directed from his foreign bank accounts to vendors based in the United States to pay his bills, used to purchase property or falsely classified as loans rather than income.
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Welch said he used an accounting method employed by Manafort to arrive at the $16.5 million in unreported income.
A forensic accountant with the FBI said earlier Wednesday that Manafort made more than $60 million for his political consulting work in Ukraine and paid U.S. companies millions of dollars from foreign bank accounts over a four-year span.
Prosecutors say Manafort hid millions from the IRS and did not disclose his numerous foreign bank accounts. Welch’s testimony appeared to strike at the heart of their claim.
The government also says Manafort misled banks to secure loans after the money from his Ukraine work dried up.
Welch told the court he was assigned to assist with the government’s trial in April and had reviewed documents, conducted analysis, and created charts as part of those efforts.
He also noted that he had observed the trial’s proceedings from inside the courtroom — a revelation that angered U.S. District Judge T.S. Ellis III.
Ellis said he usually prohibits all witnesses from remaining in the courtroom, including expert witnesses. Only case agents, he said, are allowed to observe.
“When I exclude witnesses, I mean everyone,” he bellowed from the bench.
Prosecutor Uzo Asonye said he believed Ellis had earlier allowed for the expert witness to watch the proceedings and would check the transcript to be sure.
“I don’t care what the transcript said,” Ellis replied. “Maybe I made a mistake. Don’t do it again.”
Ellis has gone head-to-head with federal prosecutors over the trial’s seven days, urging them to move things along to expedite the trial.
Prosecutors said Wednesday they have eight more witnesses to call and expect to rest their case by the end of the day Friday.
