A tax preparer who worked for Paul Manafort said Friday she changed the amounts of loans to his consulting firm in an effort to lessen the amount he owed in taxes and told a bank that a loan to the company had been forgiven despite not believing that occurred.
Cindy Laporta of Kositzka, Wicks and Company described to the court how she reported $900,000 as a loan to Davis Manafort Partners International when it was really income. She also told the jury she informed a bank from which Manafort was seeking a loan that another $1.5 million loan on his consulting firm’s books had been forgiven, despite having misgivings.
Laporta began working on Manafort’s account after his previous tax preparer, Philip Ayliff, retired in mid-2014.
She recalled a conversation with Gates in September 2015 during which he said Manafort “didn’t have that money” to pay the taxes he owed. To decrease the amount, Gates suggested they report a $900,000 loan from Telmar Investments, an entity in Cyprus that prosecutors say Manafort controlled.
Laporta said she did not think the loan existed and said the suggestion was “not appropriate.”
“You can’t pick and choose what’s a loan and what’s income,” she told the court.
But Laporta went along with the scheme anyway and reported the loan on Manafort’s tax returns for 2014.
Her options, she said, were to refuse to file the tax return and open her firm up to the possibility of litigation, or call Manafort and Gates “liars,” though that concerned her too given Manafort’s long relationship with KWC.
“I very much regret it,” Laporta told the court.
In reporting the $900,000 loan from Telmar, Manafort’s income for 2014 was reduced by that amount. Laporta estimated he saved between $400,000 and $500,000 on his taxes.
When Laporta asked Gates for a copy of the loan agreement, she received a two-page document that included Manafort’s signature.
The letter, though, was back-dated to 2014, and Laporta said the loan was backdated, as well.
Laporta appeared on the fourth day of Manafort’s trial, where he faces charges of tax and bank fraud.
Prosecutors say he made $60 million for political consulting work in Ukraine and concealed millions of dollars in income in overseas accounts to evade taxes. They also allege Manafort deceived banks to secure loans when his income from the work in Ukraine dwindled.
Laporta is one of five witnesses to receive immunity from the government in exchange for her testimony. She told the jury Friday that she feared prosecution, given that she prepared tax returns for Manafort based on information she ultimately did not believe.
She also testified about additional loans Davis Manafort Partners International received from Telmar totaling $1 million, and a $1.5 million loan from Peranova Holdings, another Cyprus-based entity prosecutors say Manafort controlled.
Laporta said Manafort enlisted her help in 2016 regarding the $1.5 million loan from Peranova Holdings as he sought a mortgage loan from Citizens Bank.
The loan proved to be an issue for Manafort, and Laporta said he and Gates instructed her to inform Citizens Bank that the loan had been forgiven.
Laporta told the bank it had been, and said Manafort’s 2015 tax returns would reflect as such.
Laporta told the jury she relied on “their word” — referring to Manafort and Gates — with regards to the loan.
However, she did not believe the $1.5 million loan had actually been forgiven.
Laporta received a letter regarding forgiveness of the loan from Gates, but believed the letter was “being created” and likely fake. It came in the form of a Word Document, she said, which can be edited. But Laporta submitted the letter as a PDF to the bank.
During the years Laporta worked with Manafort on his taxes, she said she was never told of any foreign bank accounts he had. She also was unaware of a number of entities prosecutors say Manafort controlled in Cyprus.
“We would always want to know the full picture,” she said.
The 12-member jury selected to decide Manafort’s case has heard from more than a dozen witnesses over the first four days of the trial.
Many represent vendors that Manafort hired for a variety of services, including landscaping, home improvement, and Internet and TV wiring.
Executives from luxury men’s clothing stores told the jury of Manafort’s spending on suits and menswear, while the owner of a home improvement company said Manafort spent more than $3 million on renovations.
He also had bills of more than $2 million to a Florida-based home automation and technology company.
They each said Manafort paid for his expenses by wire transfers from overseas bank accounts.
Manafort has appeared in court each day, with his wife in the front row.
The trial will resume Monday afternoon.
