Insights As Manafort Trial Enters Week 2

Bookkeeper says Manafort firm gave inflated income figure in loan bid

Former Trump campaign manager Paul Manafort's accountant admitted she filed tax returns that she was aware may have been criminally fraudulent, at Manafort's tax fraud trial in Alexandria, Virginia, Friday.

"I prepared the tax returns and communicated with banks based on information that Mr. Gates and Mr. Manafort provided to me that I didn't believe", LaPorta said.

The admission is the first time a witness has acknowledged knowing involvement in potential wrongdoing during Manafort's trial, where the longtime lobbyist is fighting charges brought by special counsel Robert Mueller.

Laporta said she knew it was "inappropriate" but agreed to alter the records to show that Manafort's firm received a $900,000 loan from Telmar in 2014, a change that would save Manafort almost a half million dollars in taxes, Laporta said.

At one point Wednesday, after a prosecutor played coy about a key witness testifying, reporters scurried to break the news like "rats", outspoken Judge T.S. Ellis III remarked.

Mr Manafort's attorneys have signalled they will seek to blame Mr Gates, who was Mr Trump's deputy campaign chairman in 2016.

Other witnesses testifying this week said Manafort paid them millions from the offshore accounts tied to foreign shell companies for landscaping, expensive clothing and even a Karaoke machine. Such accounts must be reported to tax authorities if they contain $10,000 or more.

In some ways, Laporta's testimony mirrored that given by Philip Ayliff and Heather Washkuhn - Manafort's former CPA and bookkeeper, respectively.

Late on Thursday, Manafort filed an objection to the government's bid to block his legal team from raising the fact that he and his companies were never audited by the Internal Revenue Service.

And regardless of the outcome, what we've learned so far shows that Manafort should never have gotten within a mile of a major party nominee's campaign, much less been tapped to run it. The indictment says he and Gates moved money from Ukraine through foreign bank accounts to hide it from the Internal Revenue Service.

Meanwhile, Trump attorney Rudy Giuliani said negotiations are continuing to have Trump sit down for questions from Mueller, though the lawyer said, "I'm not going to give you a lot of hope that it's going to happen". Each vendor testified that Manafort paid via wire transfer from offshore bank accounts.

Paul Manafort told tax preparers on multiple occasions that he didn't control any foreign bank accounts.

Laporta testified that they all ultimately made a decision to decrease the loan amount by $900,000 on Manafort's 2014 tax returns before submitting his 2015 one so that Manafort could afford to pay his bills.

Here are four insights from the week that was and a look ahead to Manafort's second week on trial in Alexandria, Va. He pleaded guilty earlier this year and agreed to cooperate with the investigation, making him the government's star witness. Laporta was asked if she believed what Manafort and Gates said about the loans, and she said no. When prosecutors asked her why she went along with what she knew to be wrong, she said because she "had two options".

That wrench could come next week in the form of testimony from Manafort's former business partner and right-hand man, Rick Gates.

Ellis has already decided one other argument from Manafort's team out of trial. Peranova is one of the numerous Cypriot entities that prosecutors have said Manafort controlled. It has also revealed how, when income from his Ukrainian political consulting work dried up, he struggled to pay his bills and, prosecutors say, began obtaining bank loans under false pretenses. Prosecutors said that Manafort used tax-free income stashed in Cyprus accounts to support a lavish lifestyle.

When they appeared, the bookkeeper and accountants said, they thought the companies were clients or, in some cases, lenders.

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