Ex-Trump aide Manafort's taxes to be focus of Friday's trial testimony

[August 03, 2018]  By Sarah N. Lynch and Nathan Layne

ALEXANDRIA, Va. (Reuters) - An accountant who prepared tax returns for U.S. President Donald Trump's onetime election campaign chairman Paul Manafort resumes trial testimony on Friday, after saying on Thursday that Manafort never told him he had foreign bank accounts.

The testimony is expected to be the second day that prosecutors will present the jury detailed financial evidence they say proves Manafort cheated U.S. tax authorities out of millions in undeclared income he earned working for pro-Russian politicians in Ukraine and lied to banks to get loans.

Philip Ayliff, an accountant with KWC, told jurors on Thursday the lack of accurate information provided would lead to an incorrect tax return. It was an issue he paid close attention to since 2010 when the U.S. Treasury Department ramped up its enforcement of a law requiring U.S. disclosure by U.S. citizens of their overseas bank accounts, Ayliff said.

The government is expected to finish questioning him on Friday, before calling its next witness in the trial in federal court in Alexandria, Virginia, which began on Tuesday.

Manafort, 69, is charged with bank fraud, tax fraud and failing to disclose foreign bank accounts. He has pleaded not guilty to all charges and his trial is the first arising from Special Counsel Robert Mueller's investigation of Russia's role in the 2016 U.S. election.

The charges largely pre-date the five months Manafort worked for Trump during a pivotal period in the race for the White House, some of them as campaign chairman.

The trial on Thursday was primarily dedicated to testimony about the nitty gritty of Manafort's business and personal finances, a shift from earlier in the week when prosecutors focused more on the details of Manafort's lavish spending on Land Rovers, ostrich jackets, designer suits and real estate.

Former Trump campaign manager Paul Manafort stands in a court room sketch, on the opening day of his trial on bank and tax fraud charges stemming from Special Counsel Robert Mueller's investigation into Russian meddling in the 2016 U.S. presidential election, in Alexandria, Virginia, U.S. July 31, 2018. REUTERS/Bill Hennessy

The jury heard hours of testimony from Manafort's former book keeper Heather Washkuhn, who was responsible for preparing financial statements, managing bank accounts and paying expenses for both Manafort's business and personal affairs.

She said that she too was unaware of Manafort's foreign holdings, and that she relied on Manafort to tell her whether wire transfers should be designated as loans or as income.

Prosecutors also showed emails sent by Manafort and his former business partner Rick Gates, to various banks which contained profit and loss statements for the consulting firm.

Washkuhn testified that her firm had not prepared those statements, which painted a rosier picture of the finances and contained multiple spelling, formatting and date errors.

(Reporting by Sarah N. Lynch and Nathan Layne in Alexandria, Virginia; editing by Grant McCool)

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