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Manafort Trial: Mueller Brings in FBI, IRS as the Case Nears the Finish Line

Beyond the drama of Rick Gates’ testimony, the numbers tell the real story

Patrick Fallon/ZUMA Wire

ALEXANDRIA, VIRGINIA — There were gasps in the courtroom, then stunned silence. It was close to 11 a.m. on the seventh day of Paul Manafort’s fraud trial, and Kevin Downing, one of Manafort’s lawyers, had just lobbed a grenade at Rick Gates, Manafort’s former protégé turned star witness for Special Counsel Robert Mueller.

“Do you recall telling the office of the special counsel that you actually engaged in four extramarital affairs?” Downing asked.

Gates, who was in his third day of testimony, had already admitted to one affair that he’d funded with money stolen from Manafort. Now, Manafort’s attorney was suggesting additional trysts and the possibility that Gates had lied to Mueller, imperiling his plea agreement.

One of Mueller’s lawyers, Greg Andres, quickly objected to the relevance of the question, and Judge T.S. Ellis III summoned each side’s lawyers to the bench for a brief conference. Gates sat in the witness box while Ellis and the lawyers huddled a few feet away. He stared straight ahead, shoulders hunched, hands in his lap. He appeared to shrink into himself.

It was possible then, for a brief of moment, to sit in room 900 of the Albert V. Bryan Courthouse and think that maybe, just maybe, Manafort’s defense strategy had worked. His lawyers had done everything they could to destroy Gates’ credibility, painting him as a liar, a thief and a serial adulterer. After the lawyers had returned to their respective tables, Downing resumed his questioning about Gates’ “secret life” but dropped the matter of the affairs. Of course, the jury wouldn’t forget it. As they say in court, you can’t unring the bell.

But if Gates’ testimony left any doubt about the strength of Mueller’s case — namely, that Manafort committed numerous counts of bank fraud and tax evasion when he hid money from the U.S. government that he earned overseas — the afternoon’s proceedings served as a corrective. Over several hours, Mueller’s team called as witnesses an FBI forensic accountant and an IRS agent who walked the jury through the dry-but-damning details of Manafort’s alleged financial crimes.

Morgan Magionos, the FBI forensic accountant, explained how she had traced more than $60 million that moved through Manafort’s accounts in Cyprus, the U.K. and St. Vincent and the Grenadines between 2010 and 2014. She offered various charts to show how Manafort had used $15 million of those funds to purchase homes in New York and Virginia, in addition to luxury clothing, audio-visual equipment and to finance landscaping projects.

In matter-of-fact bluntness befitting his profession, IRS agent Michael Welch said Manafort had failed to report $16.4 million in income between 2010 to 2014. Manafort had also filed false tax returns for multiple years, Welch said, because he had failed to disclose his overseas bank accounts as required by law.

Unlike earlier in the day, there were no were no gasp-worthy moments in these testimonies. There were no fiery exchanges, no explosive quotes. The evidence of Manafort’s alleged crimes, as laid out by Magionos and Welch, was damning enough. And there was little Manafort’s defense lawyers could do to poke holes in that evidence.

One of Manafort’s lawyers, in his cross-examination, gained little traction raising questions about the authenticity of the financial records used by Magionos — records provided to the FBI by the banks themselves. When cross-examining Welch, another Manafort lawyer questioned whether his client would have been able to apply for a so-called embezzlement deduction had he known that Gates was stealing funds from him. Welch kneecapped that line of questioning when he pointed out that Manafort would have had to report the income on his taxes in the first place to apply for that embezzlement deduction.

Salacious details aside, United States of America v. Paul Manafort is a case about alleged bank fraud and tax evasion. For all the spectacle of Gates’ testimony, Mueller’s case boils down to whether he and his team can prove that Manafort hid money from the government and lied on his taxes. The prosecutors showed on Day 7 how strong of a case they have in convincing 12 random Virginians of Manafort’s alleged crimes. They plan to call a half-dozen more witnesses.

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