Federal prosecutors presented Thursday evidence indicating that Paul Manafort falsely claimed a property he sought a mortgage loan for was a second residence when it was really used as a rental property and listed on Airbnb.
Melinda James, a mortgage loan assistant at Citizens Bank, said during testimony Thursday that Manafort was applying for a $3.4 million cash-out refinance for a property he owned on Howard Street in New York City.
Manafort, she said, had claimed on numerous documents submitted with Citizens Bank as part of the loan application that the Howard Street property was used as a second residence that would not be income-producing.
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James said the bank needed to know whether the property in question would be used to generate income because that would affect the terms of the loan.
When James conducted her own research on Manafort’s property, however, she found it was listed to rent.
Confronted by another bank representative about the rental listing, Manafort said in an email that he reached out to his then-son-in-law, Jeffrey Yohai, and “solved the issue.”
The representative informed Manafort that an appraiser coming to the property needed to know it was a second residence that he and his wife shared with their daughter Jessica and her husband Yohai.
Manafort later emailed Yohai on Nov. 26, 2016, about the appraiser coming to the Howard Street property, according to records presented by prosecutors.
“Remember, he believes that you and Jessica are living there,” Manafort wrote.
Manafort’s ultimately received the $3.4 million loan on March 4, 2016.
Despite Manafort’s assurances the Howard Street home would be used as a second residence, a representative from Airbnb told the court it was listed on the site as an “amazing full floor loft in SoHo” and rented numerous times.
Darin Evenson, the director of customer experience for North America at Airbnb, testified that a listing for 29 Howard Street was active on the rental site in 2015 and into 2016, with the exception of two breaks.
One of those breaks occurred from Feb. 26, 2016 to March 26, 2016 — the time period during which Manafort was seeking and then obtained the mortgage loan for the Howard Street property he said was a second residence.
The listing was also inactive from Oct. 27, 2015 to Nov. 20, 2015.
The testimony from James and Evenson addresses the government’s allegations that Manafort defrauded banks to obtain millions of dollars in loans.
He began seeking those loans, prosecutors say, after Manafort’s work in Ukraine dwindled.
In addition to telling the court Manafort falsely said the Howard Street property was used as a second home, she also indicated Manafort lied about a mortgage on another New York City property, located on Union Street, while seeking the $3.4 million loan.
Manafort had indicated the Union Street property was owned “free and clear.” But insurance declarations she received from Rick Gates, Manafort’s business associate, indicated there was a mortgage on the townhome.
Manafort was included on Gates’ email to James in which the documents were included.
When James sought clarification from Manafort, he told her a mortgage had been approved in February 2016, but was not final.
A second email from Gates to James, which copied Manafort and his bookkeeper, included new insurance documents for the property that showed no mortgage for the Union Street home. Gates told James that Manafort decided not to move forward with the mortgage he had been approved for.
What James didn’t realize was the dates of the two policies were different, and the policy showing no mortgage on the property was effective Oct. 15, 2015. The notices that listed the mortgage, by contrast, were effective December 2015 to December 2016.
During cross-examination, Manafort’s lawyer, Jay Nanavati, sought to show that Manafort’s finances changed during the course of the lengthy loan process.
He also sought to establish that Gates was solely behind the sending of the insurance declarations, dated Oct. 15, 2015, that showed there was no mortgage on the Union Street property.
James said Gates had phoned her on the day she realized the conflict over the Union Street mortgage.
Nanavati asked James if “things went off the rails” regarding the mortgage mix-up after her phone conversation with Gates.
“If you want to call it going off the rails,” she replied.
Manafort is facing 18 counts of bank and tax fraud and has pleaded not guilty.
Prosecutors plan to call six more witnesses and expect to rest their case Friday.
