Manafort Accountant Says She Didn’t Know of Offshore Accounts

One of the redacted financial documents submitted for evidence in the Paul Manafort trial. (Photo courtesy the Special Counsel’s office)

ALEXANDRIA, Va. (CN)  – Paul Manafort’s accountant handled his finances extensively for seven years but during her testimony at trial Thursday, she told prosecutors the former Trump campaign chairman never told her about the numerous offshore accounts he registered around the globe.

“He was very knowledgeable and detail oriented,”  Heather Washkuhn said of her longtime client, Paul Manafort. “He approved every penny paid.”

The statement came just before recess and helps prosecutors who contend it was Manafort, and not his assistant Rick Gates, who was responsible for coordinating his finances, filing taxes and properly recording income.

Washkuhn, currently managing director at the accounting firm Nigro Karlin Segal Feldstein and Bolno, or NKSFB, testified for roughly an hour ahead of lunch recess Thursday afternoon.

According to Washkuhn, NKSFB charged Manafort $100,000 annually to track his business and personal expenses.

She met Manafort a handful of times over the years, primarily communicating by email on a weekly or biweekly basis to discuss his accounts.

She met Rick Gates only once in 2011 and was told by Manafort that if he was unavailable, NKSFB “were to go to Rick with business questions.”

“Who gave you access to the account information?” Andres asked.

“Mr. Manafort did,” she said.

Despite their frequent communication, Washkuhn said Manafort never told her that he controlled various offshore accounts including Leviathan Advisors.

According to a ledger displayed by the special counsel’s team Thursday, the firm paid Manafort and his wife, Kathleen, more than $2 million at one point.

When Washkuhn asked for underlying loan documents, she claims Manafort didn’t provide them.

When preparing ledgers at the end of the year – which were ultimately turned over to his tax preparers – Washkuhn also said she occasionally saw activity in the accounts that was unfamiliar.

“Did he ever give you the underlying records you were looking for then?” Andres said.

“Sometimes,” Washkuhn replied.

More testimony continues after recess and it is unclear if another witness will be called.

Prosecutors told Judge T.S. Ellis III they expect her testimony to continue for at least two hours more Thursday but Ellis beseeched Andres to consider abbreviating his line of questioning for Washkuhn.

“She plays a relevant role in the bank and tax fraud,” Andres said before clarifying that she was not involved but had critical information about Manafort’s finances.

This morning, Manafort’s attorneys argued with prosecutors over documents the government wants to admit as trial exhibits. While all parties agreed the documents were authentic, defense attorneys objected to using parts of the documents since they aren’t exempt from evidentiary rules against hearsay.

“The show is over as to hearsay,” Ellis said.

After three days, it appears the theory the government is pursuing is that in addition to squirreling away money in offshore accounts to cheat the IRS, Manafort also created numorous fake invoices to extract even more money from his shell companies. So far the government has presented four allegedly fake invoices to witnesses on the stand.

The defense meanwhile has been steadily advancing a scenario in which Manafort business associated Rick Gates created the fake invoices to embezzle his one-time friend and colleague.

After the jury returned from a lunch recess, Washkuhn and Andres continued their walk through years of financial data from Manafort’s companies, starting in 2012 and moving through the end of 2016.

Washkuhn’s testimony focused on financial documents from Davis Manafort Partners International, a political consulting firm Manafort helped create in 2005.

Noteworthy among the documents was DMP International’s general ledger from 2015, which included an entry reporting a $1.5 million loan from Peranova Holdings as forgiven and classifying it as income to the company. Washkuhn said she spoke to Manafort’s business associate, Rick Gates, about the loan forgiveness, but that she never saw any documentation to support it.

On the same ledger was an entry for “other income” totaling $1.5 million, which Washkuhn explained was the other side of the Peranova Holdings loan forgiveness.

Manafort controlled the Cyprus-based Peranova Holdings and the 37-page indictment filed against him in February appears to detail the transaction Washkuhn testified to on Thursday. According to the indictment, in 2012, Manafort allegedly classified a $1.5 million payment from Peranova Holdings to DMP International as a loan to avoid reporting it as income and used the money to buy a condo in Manhattan.

When the mark on his books prevented him from receiving another loan, the indictment alleges Manafort falsified documents to show the loan was forgiven in 2015.

Washkuhn testified DMP International reported income as high as $3.4 million in 2014, but that the company slipped into the red in 2016. By the end of the year, the company was reporting a loss of more than $1.1 million, Washkuhn testified while reading from financial documents.

The company’s books were riddled with other loans and transactions to and from various Manafort-controlled entities that prosecutors allege Manafort and Gates used to hide income. This included Smythson LLC, which in 2013 sent $3.375 million to DMP International.

Washkuhn said she did not know Manafort controlled Smythson at  the time and that if she had, the wire would have changed how she reported the income of both DMP International and Manafort.

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