Mueller Team Rests in Manafort Fraud Trial

ALEXANDRIA, Va. (CN) – Prosecutors wrapped up their case against former Trump campaign chairman Paul Manafort on Monday afternoon, as the judge agreed to instruct jurors they cannot find Manafort guilty for omissions made by his company because the indictment only names him individually.

Members of the defense team for Paul Manafort, including Kevin Downing, left, Richard Westling, and Thomas Zehnle, walk to federal court as the trial of the former Trump campaign chairman continues, in Alexandria, Va., Monday, Aug. 13, 2018. (AP Photo/Jacquelyn Martin)

That information can be used as evidence, however, to determine Manafort’s intent or “willfulness” to omit information about the entities on his personal tax returns, U.S. District Judge T.S. Ellis III told attorneys after jurors were dismissed from the courtroom.

Judge Ellis will now consider defense attorneys’ motion for acquittal following his decision to allow additional testimony  from Paula Liss, a special agent with the Treasury Department’s Financial Crimes Enforcement Network.

Liss testified last week but was questioned again Monday about whether Manafort’s companies reported foreign bank accounts on their tax records from 2011 to 2014.

Following a rapid line of questioning from prosecutor Greg Andres, Liss told jurors the companies had not.

On that note, Andres rested the prosecution’s case.

During a procedural sidebar, defense attorneys argued that the overarching charges brought by Mueller’s team against Manafort were invalid because they lacked “materiality” and failed to show “necessary willfulness.”

Ellis sealed the courtroom before discussing the defense’s motion to acquit, but noted that what was discussed in secret Monday will eventually be revealed.

“When the case is over, the seal will be lifted,” Judge Ellis said.

Defense attorney Kevin Downing requested until Tuesday morning to write the motion for acquittal. Ellis granted the request.

The motion hinges on details that another defense attorney, Thomas Zehnle, said would likely come up during closing arguments.

Zehnle argued during one sidebar that Manafort had no obligation to report foreign bank accounts held by Davis Manafort International LLC since he only owned 50 percent of the company at the time. Manafort’s wife, Kathleen, owned the other half from 2012 to 2014.

The alleged conduct in the government’s indictment spans from 2011 to 2014. Prosecutor Uzo Asonye was quick to point out that Manafort was the sole owner of Davis Manafort International for at least one of those years, in 2011.

Asonye also emphasized that when Manafort filed as a foreign agent in 2017, he also listed himself as 100 percent owner of the company.

Judge Ellis replied that the government “could have indicted the company but you didn’t.”

The penultimate witness called by attorneys for Special Counsel Robert Mueller was James Brennan, who worked as a construction and commercial loan officer at the Chicago-based Federal Savings Bank.

Brennan testified Monday that even though it was evident that he lacked the assets to back them up, two loans for Manafort totaling $16 million were approved at the behest of an executive who was angling for a spot in the Trump administration.

Brennan told jurors that financial statements the bank received from Manafort in August 2016 indicating that he had $4.4 million in income from 2015 were “inconsistent.” The testimony corroborated other witness statements which suggested that Manafort made just under $400,000 in 2015.

Brennan admitted that the “inconsistency” threw up “red flags” for the bank about the borrower’s “character.”

“You would want to know who it is you’re lending to,” Brennan said, and whether the information they provide is reliable.

Though defense attorneys have argued that Manafort’s real estate holdings served as sufficient collateral to guarantee the massive loans, prosecutor Andres worked to undo that notion Monday, asking Brennan if those assets were in fact sufficient indicators of the ability to repay.

“We’re not in the business to own real estate…we’re in the business [of being repaid],” Brennan said.

After the bank learned about his outstanding mortgages on properties in New York, Manafort allegedly rejected the structuring terms of the loan provided by the bank and instead created new ones himself. Federal Savings Bank president Javier Ubarri rejected the new terms but Brennan said the loan closed anyway at the behest of CEO Steve Calk.

The loans “closed because Mr. Calk wanted it to close,” Brennan testified.

Last week, former Federal Savings Bank employee Dennis Raico told jurors that Calk only helped Manafort secure the risky loans because Calk wanted a position inside the Trump administration.

During Brennan’s cross-examination Monday, defense attorney Richard Westling’s strategy largely focused on attempts to undercut the credibility of Federal Savings Bank.

“The bank understood that when they made the loan, Mr. Manafort did not have the income to support the loan?” Westling asked.

“Correct,” Brennan said.

Westling then displayed a loan memo associated with Manafort’s $16 million borrowing request. It summarized the findings of Manafort’s financials and according to Brennan, the bank gave the loan a risk rating of a four, the highest possible rating.

The rating, Brennan testified, was due to a number of issues, one of which was Manafort’s political work for foreign governments – a factor that could lead to “investigations later,” he said.

The “volatile nature” of the New York housing market also made the loan high-risk,  Brennan said.

Westling also pointed to an error the bank reportedly made: it entered the wrong address for one of Manafort’s properties that was being used as collateral.

Attempting to show a pattern of negligence, Westling continued his questioning, asking Brennan if it was “part of his job” to provide the loan committee at the bank with any and all information which might give lenders pause.

Brennan conceded.

“It is part of my job, yes,” he said.

But Westling wasn’t able to pursue the thread much further. The defense attorney was met with the same answer three times following questions about who at the bank specifically knew Manafort had outstanding mortgages.

“I don’t know,” Brennan said.

Westling also pointed out that the bank went ahead with the loan with the full knowledge that Manafort had taken an unpaid “voluntary” position with the Trump campaign.

There was also the matter of who actually filled out the loan applications at the bank. Though the forms were signed by Manafort, Westling suggested his client was unaware that he must report outstanding debts to the bank if they were not his alone.

Brennan told prosecutors Monday that if he had his druthers – and if he was in total control over the loan approval process – he wouldn’t have made the loans to Manafort to begin with because the risk rating was too high.

He also revealed information to jurors that drew some gasps from the gallery.  Due to the loans given to Manafort, which have not been repaid, the bank “took a hit to the loan reserve of $11.8 million.”

During cross-examination, defense attorney Westling worked to neutralize that statement and asked if the bank ever “went after” the collateral Manafort put up for the loans.

“I’m not privy to that,” Brennan said.

But since the time Manafort obtained the loans, the bank has changed its loan committee approval process, he added.

Now, Brennan told jurors, the committee has to sign a document outlining the differences between the original loan structure and where it ends up at the last step of the process.

Westling challenged again, saying that Brennan told FBI investigators last year that the loan was “still performing.”

“At the time it was,” Brennan said.

The trial will resume Tuesday with the defense’s case.

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