Robert Mueller’s prosecutors rest case against Paul Manafort

Manafort’s defense team did indicate they would file a motion for acquittal, the details of which are currently unknown.

The trial involving Manafort is the first to stem from Mueller’s investigation into Russian meddling in the 2016 election, and while there was no mention of Russia and sparse reference to President Trump as prosecutors presented their case, the shadow of the probe hung over proceedings.

Manafort faces 18 counts of tax and bank fraud, and if the jury finds him guilty, it could provide momentum for Mueller’s investigation.

But if Manafort is acquitted, it would likely bolster calls from President Trump and his supporters for the special counsel’s investigation to be shut down and amplify claims the inquiry is a “witch hunt.”

During the first week of proceedings, prosecutors sought to pull the jury into Manafort’s life of luxury, which they say he was able to enjoy after making $60 million from Ukrainian oligarchs who supported Ukrainian President Viktor Yanukovych and the Party of Regions. But much of that money was concealed in offshore bank accounts tied to more than a dozen shell companies Manafort controlled in Cyprus and Saint Vincent and the Grenadines, and never reported to the Internal Revenue Service.

Morgan Magionos, a forensic accountant with the FBI, identified 15 entities that were linked to foreign bank accounts and ultimately traced back to Manafort.

A representative from the IRS told the court Manafort failed to report an estimated $16.5 million to the tax agency. Manafort sometimes paid directly for his luxury goods and services by wire transfers from his overseas bank accounts, with the flow of that money ultimately traced by the FBI.

Maximillian Katzman, the former manager of Manhattan’s Alan Couture, told the jury Manafort spent more than $929,000 from 2010 to 2014 on clothing from the store, and paid his bills by wire transfers from Cyprus-based bank accounts.

Stephen Jacobson, owner of SP&C Home Improvement, testified that Manafort spent more than $3 million on improvements to several properties he owned in New York. Manafort again paid by international wire transfers from foreign bank accounts.

Prosecutors moved closer to the heart of their bank and tax fraud case against Trump’s former campaign chairman as the trial’s first week drew to a close.

Manafort’s long-time bookkeeper indicated during testimony that financial statements that purported to come from her company appeared to have been doctored to inflate the income of Manafort’s firm, Davis Manafort Partners International.

In one instance, a 2015 financial statement for Davis Manafort Partners International showed the firm made $4.5 million. But the bookkeeper identified several issues with the document and said the company’s income for that year was really around $400,000.

Those altered financial statements, prosecutors showed, were ultimately submitted to banks to make Manafort appear worthy of loans.

Though Davis Manafort Partners International had raked in millions of dollars in the years leading up to 2015, the firm’s income cratered in 2016. That year, Manafort’s consulting business reported a loss of nearly $1.2 million and had no clients to speak of.

Manafort also appeared to be struggling to pay his bills by early 2016, as his bookkeeper emailed him asking for more than $1 million to settle expenses and sent several follow-up emails seeking funds for his bills.

Prosecutors attribute the shift in Manafort’s income to the loss of his business in Ukraine after Yanukovych was forced from power in 2014. Then, the spigot of funds from his political consulting work ran dry.

In an effort to maintain his lavish lifestyle, the government says Manafort began lying to banks to secure millions of dollars in loans.

He also, with the help of his former right-hand-man Rick Gates, reported $1.5 million of income from his work in Ukraine as a loan to lessen the amount of taxes he had to pay. Manafort later told banks the “loan” was forgiven, which allowed him to boost his income on loan applications.

Though the government called more than two dozen witnesses to demonstrate to the jury how Manafort concealed millions from the IRS and defrauded banks, their key witness appeared last week when Gates, Manafort’s former business associate, took the stand.

Gates told the jury he committed crimes with Manafort, embezzled hundreds of thousands of dollars from him, and had an extramarital affair.

[More: Rick Gates tells Paul Manafort jury tales of embezzlement, tax fraud, and an extramarital affair]

Considered to be the star witness for the prosecution, Gates told the court that he — and Manafort on one occasion — falsified documents submitted to banks and demonstrated to the jury how Manafort hid millions in foreign bank accounts opened in Cyprus and Saint Vincent and the Grenadines.

Gates was indicted with Manafort, but pleaded guilty in February. He accepted a plea deal from the government and agreed to testify against his former business associate.

During his three-day span of testimony, Gates told the court he assisted with filing false tax returns to the IRS that underreported Manafort’s income and knowingly failed to disclose foreign bank accounts to the tax agency, as required by law.

Gates also said Manafort altered the income of Davis Manafort Partners International on a 2016 financial statement submitted to a bank from which he was seeking a loan. Manafort, Gates said, asked for help with converting the financial statement, in PDF form, to a Microsoft Word document, which would allow it to be edited.

The doctored statement showed Davis Manafort Partners International had a net income far higher than that of the original record, which reported a loss for the firm.

While Gates admitted to committing criminal acts with Manafort, he also acknowledged wrongdoing on his own.

Gates told the court he inflated his income on mortgage and credit card applications, falsified expense reports to Manafort’s firm to steal “several hundred thousand” dollars from him, and said it’s “possible” he submitted personal expenses to President Trump’s inaugural committee, in which he served as deputy chairman, for reimbursement.

He also admitted to having a five-month long extramarital affair more than a decade ago.

But Manafort’s lawyer suggested Gates had four more affairs from 2010 to 2014, though the revelation was not discussed further following objections from federal prosecutors.

While Gates’ testimony provided much of the drama of the trial thus far, testimony from three bank officials cut to the crux of prosecutors’ bank fraud case.

In one instance, when Manafort was seeking a $3.4 million mortgage loan for a condominium he owned on Howard Street in New York City, an employee of Citizens Bank said he falsely claimed the property would be used as a second residence when it was really being used as a rental.

The Howard Street condo was an active listing on Airbnb, a representative from the company said, and Manafort reported rental income from the property.

Additionally, prosecutors presented a top executive from the Banc of California, from which Manafort obtained a $1 million loan, with doctored financial statements entered as evidence earlier in the trial.

Gates told the court Manafort instructed him to change the 2015 financial statement for Davis Manafort Partners International to boost the firm’s income.

The executive from the Banc of California said Manafort likely wouldn’t have qualified for the loan had the bank received the original financial statement. Prosecutors further suggested Manafort excluded from his initial loan application to Banc of California the $3.4 mortgage loan he received from Citizens Bank.

Manafort also sought and received two loans totaling $16 million from Federal Savings Bank, whose chief executive officer Stephen Calk was interested in a position with the Trump administration.

Dennis Raico, the bank’s former senior vice president, told the court Calk was uncharacteristically involved in the processing and approval of Manafort’s two loans.

One day after one of Manafort’s loans from Federal Savings Bank was approved, Manafort requested Calk’s resume.

Then, days after the presidential election, Calk indicated he believed he would be up for secretary of the Treasury or another top job within the Trump administration.

Manafort went on to suggest in an email to Gates that Calk should be considered for secretary of the Army, and requested tickets to Trump’s inauguration for Calk and his son.

Despite some hesitation from other bank employees about the loans Manafort sought, he ultimately obtained one $9.5 million loan and a second loan for $6.5 million.

Calk, however, did not receive a job in Trump’s Cabinet.

Among the final witnesses to be called by the prosecution was James Brennan, a vice president at Federal Savings Bank who testified under immunity.

Brennan indicated the $9.5 million loan Manafort obtained from Federal Savings Bank was only approved because of Calk’s personal involvement. “It closed because Mr. Calk wanted it to close,” Brennan said.

He also told the court there were several “red flags” during the loan application process, which included a discrepancy in the income of Davis Manafort Partners International reported on its 2015 financial statement and an issue regarding Manafort’s outstanding loans that were not properly disclosed.

Defense attorneys are expected to tell the court Tuesday whether they intend to present a case to the jury.

The court will reconvene Tuesday at 9:30 a.m.