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ALEXANDRIA, VA — After being chastised repeatedly by U.S. District Judge T.S. Ellis in front of the jury during Paul Manafort’s ongoing trial in Virginia, the prosecutors arguing the case appear to have had enough. On Thursday, they filed a court filing taking issue with Ellis’s outburst over a government witness who had watched the full trial before being called to the stand.

Ellis told the jury Thursday morning to “put aside any criticism” of the prosecutors. “I sometimes make mistakes,” Ellis said.

The prosecutors had asked Ellis on July 31 to permit the presence of the expert witness, IRS tax expert Michael Welch, in the courtroom for the proceedings. Thursday’s filing includes an excerpt of the transcript with Ellis explicitly granting the request and even asking the name of the expert.

On Wednesday when the government called Welch and asked him if he had heard previous witnesses testimony, Ellis blew up at prosecutor Uzo Asonye.

Thursday’s filing asked for the judge to address the issue in front of the jury at the start of the day’s proceedings and correct “the court’s erroneous admonishment” of the prosecutors.

This is not the first time prosecutors pushed back on Ellis for his admonishments. At a bench conference last week prosecutor Greg Andres brought up the judge continuing to suggest that the government is making mistakes. We don’t have “to be chastised in front of the jury for every mistake,” Andres said.

Ellis pushed back. He told the prosecutors to “get it right” and said that they “haven’t been chastised for every mistake.”

Asonye brought up the court filing to Ellis at the beginning of Thursday’s proceedings. “You’re to put that aside,” Ellis told the jury about the issue. “I may well have been wrong.”

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ALEXANDRIA, VA — Paul Manafort’s businesses between 2010 and 2014 collected more than $16 million in income that it failed to report to the IRS, according to the testimony of an IRS official Wednesday at Maanfort’s trial in Virginia for tax fraud and bank fraud.

Michael Welch, a revenue agent for the IRS, said that he came to that estimation by using Manafort’s own approach of only reporting income once it hit the U.S. He offered other versions of the analysis that estimated Manafort’s unreported income on the basis of when it landed in foreign entities prosecutors have linked to the former Trump campaign chairman. The estimates yielded by that approach were also “conservative,” Welch said, because he considered certain wires from foreign accounts — including those for a Florida dentist, a New Jersey horseback riding account and “International Yacht Collection” — to be business expenses that can be deducted from Manafort’s income.

He was following the testimony of Morgan Magionos, an FBI forensic accountant for who explained a chart she created showing that more than $15 million was wired from Manafort-controlled foreign accounts to pay for goods, services and real estate that Manafort and his family purchased between 2010 and 2014.

Their emotionless testimony was an atmospheric comedown to the day and half Manafort’s former co-defendant and longtime business deputy Rick Gates spent on the stand. His explosive testimony, which started Monday afternoon and stretched through Wednesday morning, included damning revelations about Manafort’s involvement in the alleged crimes as well as to his admissions to other crimes and embarrassing conduct not related to the current charges.

Manafort is accused of tax and bank fraud, much of it related to his work as a political operative in Ukraine before joining the Trump campaign. Prosecutors allege that the money was income that Manafort hid from his accountants and bookkeepers by wiring it directly to vendors, many of whom testified for the government earlier in the ongoing Virginia trial. He has pleaded not guilty to all charges.

Magianos walked prosecutors on Wednesday afternoon through how she created the charts tracking the flow of money from Manafort’s foreign accounts to his real-estate purchases and to vendors who sold him goods and services.

Among the evidence prosecutors presented during Magionos’ testimony were documents used to open the foreign bank accounts, which included Manafort’s name and even copies of the front page of his passport. Magionos testified that emails from Manafort instructed a Cypriot law firm to complete certain wire transfers that aligned with invoices from the vendors. In the emails, which prosecutors displayed for the court, Manafort described the foreign accounts as “my” accounts.

Magionos also explained a chart she created showing the money that flowed into the foreign accounts that prosecutors have linked to Manafort. She said that much of the money flowed in from entities linked to Ukrainians who were funding Manafort’s political work.

In his cross-examination Manafort attorney Richard Westling asked Magionos about the signatures on some of the bank records that were referenced in her charts. Westling asked her about the differences between different signatures, suggesting that not all of the documents with Manafort’s signature were actually signed by Manafort.

Magionos conceded that there were differences but also pointed out that funds from the bank account in question largely benefitted Manafort.

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ALEXANDRIA, VA — Throughout Paul Manafort’s trial here, witnesses have indicated that Manafort started running out of cash when his Ukraine work dried up in 2014. This apparent reduction in income appears to have prompted Manafort, along with his deputy Rick Gates, to submit false or misleading documents to banks to obtain loans.

Although we’ve seen a lot of the numbers throughout the trial, Tuesday offered the best glimpse into just how worried Manafort was about paying bills, specifically his tax bill. An email submitted into evidence on Tuesday and made available to the press Tuesday night shows Manafort reacting angrily to the amount of taxes he owed on his 2014 tax returns.

“WTF?” Manafort wrote in the email to Gates dated April 17, 2015. “How could I be blindsided like this. You told me you were on top of this.”

“We need to discuss options. This is a disaster,” Manafort continued in the email. “When am I supposed to write this check?”

The email from Manafort came after Gates informed him that the tax accountants had calculated that Manafort would have an increase in taxes of about $509,000 in 2014. Gates testified on Tuesday that the email chain took place when Manafort’s accountants revealed that the actual amount owed by Manafort in taxes would be higher than they had projected earlier.

Gates told Manafort in the email that he was working with the accountants on ways to possibly reduce the amount of taxes Manafort would owe as a result of his 2014 return.

Read the entire email chain below:

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ALEXANDRIA, VA — Paul Manafort attorney Kevin Downing asked Rick Gates during questioning Wednesday whether he told the special counsel about four extramarital affairs that Gates had.

Downing’s question came after prosecutor Greg Andres had stressed in his questioning of  Gates Wednesday morning that his plea deal would be ripped up if he lied from the stand.

When Downing got up for another round of questions, he asked Gates about his description of the relationship as “a” mistake.

After Downing asked whether Gates told the special counsel about four extramarital affairs, the prosecutors quickly objected on the basis of relevance.

Downing hinted that he wanted to get at the prosecution’s questioning of Gates about what would happen to his plea deal if he lied from the witness stand.

The judge asked the lawyers to come to the bench to discuss the matter.

Manafort is on trial here facing bank and tax fraud charges. Manafort has pleaded not guilty to all charges.

Gates served as Manafort’s deputy during the pair’s lobbying work in Ukraine. He was expected to be the prosecution’s star witness in the case after reaching a plea deal with special counsel Robert Mueller’s team.

The bench conference took ten minutes. The court was not told what Judge T.S. Ellis ruled, but when Downing came back he asked Gates if his “secret life” spanned the period in defense exhibit 17, which spanned several years.

Gates first responded, “I made many mistakes over several years.”

Gates then responded “yes” to Downing’s question.
The tensions over Downing’s focus on Gates’ marital infidelity came after rounds of questioning where the temperature was somewhat cooler than what it had been on Tuesday afternoon, when Downing drubbed Manafort’s ex-business deputy about his admission that he embezzled from his former boss, and other alleged criminal activity.

Downing’s initial round of questions Wednesday morning focused on 2014 interviews Gates and Manafort gave separately to the FBI about their Ukraine work, which Gates understood to part of an investigation into how their former client, Ukraine ex-President Viktor Yanukovych, handled the country’s money.

Gates testified that Manafort had instructed him to be “open” with the FBI in that interview about how they were paid.

However, when Andres returned to the podium for another chance to question Gates, Gates said that Manafort did reach out to a Ukrainian businessman before his FBI interview to get more information about the entity that the businessman used to pay him and to make sure that it was “clean,” meaning it was only used to pay Manafort.

Andres also used his questioning to clean up some of the other messes made during Downing’s initial round of cross-examination Tuesday afternoon. Andres notably used the word “embezzlement,” a word prosecutors previously avoided in describing Gates’ scheme to take money from Manafort by inflating expense reports, and Gates testified that the Ukrainian businessmen funding their consulting work ultimately paid for the reported expenses.

Andres asked if Gates, who had previously testified to meeting with the special counsel’s office 20 times for trial prep, had been instructed by the special counsel’s team how to answer certain questions.

“The only answer I was told was to tell the truth,” Gates said.

Downing finished questioning Gates around 11 a.m. Wednesday. FBI agent Morgan Magionos is expected to take the stand next.

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Rep. Chris Collins (R-NY) was arrested and indicted on federal insider trading charges Wednesday.

The charges, brought by the Manhattan U.S. Attorney’s office, relate to securities of Innate Immunotherapeutics, an Australian biotechnology company on whose board Collins served.

Collins’ son Cameron and Stephen Zarsky, the father of Cameron Collins’ fiancée, were also listed as defendants.

Collins was the first congressman to endorse Donald Trump’s 2016 presidential campaign, and has been a loyal defender of Trump’s agenda on Capitol Hill.

“Congressman Collins, who by virtue of his office, helps to write the laws of our nation, acted as if the law didn’t apply to him,” Geoffrey Berman, the U.S. Attorney for the Southern District of New York, said at a press conference Wednesday. 

In a statement shared by the congressman’s office, Collins’ lawyers pledged to “mount a vigorous defense to clear his good name.”

“It is notable that even the government does not allege that Congressman Collins traded a single share of Innate Therapeutics stock.   We are confident he will be completely vindicated and exonerated,” Baker Hostetler attorneys Johnathan Barr and Jonathan New said in the statement.

“Congressman Collins will have more to say on this issue later today,” they added.

According to the complaint, Collins learned on June 22, 2017 that a drug Innate was developing to treat multiple sclerosis had failed clinical trials. He allegedly then promptly notified his son of the nonpublic information, who spread the news to other family members and friends who had bought shares in the company.

Associates of Collins “collectively sold over 1.78 million Innate shares” before the poor trial results were announced on June 26, “Cameron Collins, Stephen Zarsky, and their tippees avoided total losses of approximately $768,600,” the complaint alleges.

Collins’ involvement with Innate was the subject of a congressional ethics watchdog report released last October. The independent Office for Congressional Ethics (OCE) concluded that there is “substantial reason to believe” that he broke ethics rules and federal law by sharing nonpublic information about the purchase of Innate stock with investors.

The report also cited interviews with two National Institute of Health employees who said that Collins asked an NIH employee to help Innate with a clinical trial.

Collins also reportedly talked up the investment opportunities with Innate to other Republican officials, including ousted Health and Human Services Secretary Tom Price. Innate Immuno CEO Simon Wilkinson told the Wall Street Journal last January that Price was among a small group of investors offered an exclusive deal to purchase discounted shares. Wilksinson subsequently walked back those claims, saying they were available to “every US shareholder who had ever participated in any share offering in the US.”

Collins has represented his western New York congressional district since 2013. He is a member of the House Energy and Commerce Committee.

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ALEXANDRIA, VA — During cross examination of Rick Gates, Paul Manafort’s attorney Kevin Downing used his questions to try to paint Gates as an unreliable witness by pointing out that Gates has already admitted to lying to the special counsel office, as well as to stealing from Manafort. Downing suggested that the money Gates stole was to fund a “secret life.”

Gates, Manafort’s former right-hand man, repeatedly referred to this scheme as his efforts to take money from his former boss, even after Downing referred to it as “embezzlement.” After several questions, Downing finally got Gates to utter the phrase, “It was embezzlement from Mr. Manafort.”

After probing Gates’ involvement in taking money from Manafort and helping Manafort determine whether to report foreign bank accounts, Downing directly questioned whether Gates was believable.

“The jury is just supposed to believe you?” Downing asked Gates. “After all of the lies that you told?” In response, Gates told Downing that he is “taking responsibility” for his previous actions and that he is “trying to change.”

The exchange was one of many tough lines of inquiry Downing pursued with Gates, whose testimony the defense has previously called the “heart” of the government’s case. It was not always easy to follow the lines of Downing’s inquiry, and Gates’ refusal to confirm many of the allegations added to the confusion.

Downing also grew frustrated with Gates as he repeatedly used the line “I don’t recall” in response to Downing’s questions. Downing lamented that Gates seemed to have a better memory when prosecutors were questioning him.

At one point, Downing grilled Gates about whether he was using money he stole from Manafort to fund a “secret life” in London, where Gates, who is married, had already admitted he was in another “relationship.”

“In essence, I was living beyond my means,” Gates said. “I regret it clearly, and I’m taking responsibility for it.”

Later, when Downing was grilling Gates on why the jury should believe his testimony, Gates again noted that he is taking responsibility.

“Mr. Manafort had the same path. I’m here,” Gates said. “I’m trying to change.”

Downing’s dizzying cross-examination covered a number of accusations that Gates committed crimes, some related to the current charges facing Manafort and others distinct from the case.

Downing mentioned allegations of insider trading, and discussed Gates’ relationship with film producer Steven Brown, who is accused of engaging in a scheme to defraud investors in D-list films.

A main topic was Gates’ embezzlement scheme. Gates has admitted that he inflated his expense reports to Manafort’s consulting firm. Downing grilled Gates on the fake invoices he used to back up wire transfers of money out of a Manafort entity in the Grenadines. Some of those wires were authorized by Manafort, Gates said, while some were not.

Downing attempted to connect Gates’ scheme to embezzle from Manafort to his time working for President Trump’s inaugural committee.

Gates, replying to a question by Downing, also said “it’s possible” that he submitted personal expenses to be reimbursed by the inaugural committee.

Downing also asked Gates if he talked to the special counsel’s office about his time at the Trump campaign. Gates replied, “yes.”

When Downing went to go ask another question, Andres objected.

The lawyers for both sides had a five-minute conference at the bench with Judge T.S. Ellis that the rest of the courtroom couldn’t hear, after which Ellis announced a 30 minute recess.

When the recess was over, there was no explicit indication from the judge whether Downing could continue the line of questioning to which Andres objected. Downing however did not bring it up again during the afternoon’s last hour of cross-examination. He said he would have another hour’s worth of cross-examination when the trial reconvened Wednesday morning.

Manafort is on trial here facing bank and tax fraud charges. He has pleaded not guilty to all charges. Gates was Manafort’s business deputy during the pair’s work as political operatives in Ukraine, and came with Manafort to the Trump campaign. Special counsel Robert Mueller originally charged Gates alongside Manafort, but Gates reached a plea deal with Mueller in February in exchange for cooperating in the investigation.

Downing began his cross-examination of Gates Tuesday afternoon by trying to highlight for the jury Gates’ lies to both the special counsel and to Manafort. First he brought up Gates’ guilty plea of lying to the federal government.

Gates said “there were instances where I struggled with the interviews,” suggesting he had trouble recalling information in his interviews with the special counsel. “I provided false information to the special counsel office prior to my plea agreement,” Gates said.

Downing brought up a document that he said suggested Gates underreported his income on his U.S. taxes by about $3 million.

It was while Downing was quizzing him more on these transactions that Gates appeared to struggle to remember which expenses were legitimate, leading to Downing’s remark that Gates “seemed to have perfect recollection” prior to cross-examination.

“Have they presented you with so many lies that you can’t remember?” Downing asked.

Gates replied no.

Correction: This post originally said Gates had joined the Trump administration transition team. He joined the inaugural committee.

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ALEXANDRIA, VA — Rick Gates testified on Tuesday afternoon that his former boss, Paul Manafort, doctored a profit-and-loss statement that went through July 21, 2016, in order to secure a loan.

While questioning Gates, lawyers for special counsel Robert Mueller admitted into evidence an email from Oct. 21st, 2016 — about two months after Paul Manafort left the Trump campaign — containing a profit-and-loss statement for 2016 that showed Manafort’s consulting firm made $3 million through July 21, 2016.

An earlier profit-and-loss statement for the same period showed that Manafort’s consulting firm had lost $638,000.

In a previous email from around the same time, Manafort asked Gates how to convert a PDF into a word document. A lawyer for the prosecution asked Gates what Gates thought Manafort meant when he asked for help converting the file.

Gates replied that he understood that Manafort was “going to make some sort of change to it.”

Gates also testified that, in the new profit-and-loss statement, some of the text alignment looked off. Gates testified that this sometimes happens when you convert a PDF into a word document to change it.

Manafort is on trial here facing bank and tax fraud charges. He has pleaded not guilty to all charges.

Gates was Manafort’s right-hand man during the pair’s lobbying work in Ukraine. Special counsel Robert Mueller originally charged Gates alongside Manafort, but Gates reached a plea deal with Mueller in exchange for cooperating in the investigation.

Gates took the stand for the first time on Monday afternoon, and returned for three hours of questioning by the prosecution this morning. This afternoon, Paul Manafort’s legal team is expected to cross-examine Gates.

Just before that testimony, lawyers for the prosecution went through some emails from March 2016 in which Gates tried to work with Cindy LaPorta, an accountant for Manafort, to create a letter that would have inflated Manafort’s income. That was around March 22, 2016. Manafort joined the Trump campaign on March 29, 2016, and Gates served as his deputy.

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ALEXANDRIA, VA — During Rick Gates’ testimony in Paul Manafort’s financial crimes trial Tuesday, prosecutors questioned Gates about an email Manafort sent on Nov. 24, 2016 regarding Steve Calk, the executive of a bank where Manafort was seeking loans.

“Rick, we need to discuss Steve Calk for sec. of army. I hear the list is being considered this weekend,” the email said.

Gates had stayed on the Trump campaign after Manafort left in August, and, at the time of the email, was working for the inauguration committee. Another email sent by Manafort to Gates on Dec. 23, 2016 was an invitation list for the inauguration. Steve Calk and Steve Calk Jr. were on the list.

Gates testified that Manafort was asking for tickets to the inauguration for Steve Calk.

Calk was a Trump campaign economic advisor and an executive at the Chicago-based Federal Savings Bank. The bank lent Manafort $16 million through loans in December 2016 and January 2017. A search warrant that was partially unsealed earlier this summer alleged that Manafort made “several materially inconsistent representations during the process of negotiating.”

Mueller’s team alleges that Calk knew the loan was fraudulent. During a pretreial hearing, Judge T.S. Ellis asked prosecutor Greg Andres whether Calk knew the information on Manafort’s loan application was inaccurate. “He did,” Andres replied at the time.

Calk was named to Trump’s economic advisory team in August 2016, while Manafort was still chairman of the Trump campaign. He did not ultimately receive a job in the administration.

This line of questioning was the only time so far that Manafort and Gates’ work for the Trump campaign was referenced explicitly. Another email discussed Steve Calk being nominated for the campaign’s economic committee.

Manafort is on trial here facing bank and tax fraud charges. He has pleaded not guilty to all charges.

Gates was Manafort’s right-hand man during the pair’s lobbying work in Ukraine, and his deputy on the Trump campaign. Special counsel Robert Mueller originally charged Gates alongside Manafort, but Gates reached a plea deal with Mueller in exchange for cooperating in the investigation.

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Federal prosecutors in New York are homing in on possible tax fraud as part of their criminal investigation into the financial dealings of former Trump fixer Michael Cohen, the Wall Street Journal reported Tuesday.

A person familiar with the probe told the Journal that the possible fraud violations center on whether Cohen underreported the income he earned from his taxi medallion business on federal tax returns. Those funds amounted to hundreds of thousands of dollars Cohen received in cash.

Prosecutors from the Manhattan U.S. attorney’s office are also investigating whether employees at New York’s Sterling National Bank allowed Cohen to take out loans for that business without providing appropriate documentation, according to the report.

Cohen is under investigation for a host of financial crimes, including campaign finance violations and bank fraud. The former Trump Organization executive has signaled his willingness to cooperate with prosecutors and turn over information damaging to the president.

As TPM has reported, the once-lucrative taxi medallion business was a significant revenue stream for the Cohen family during the 2000s and 2010s. New York taxi moguls Simon Garber and Gene Freidman paid Cohen and his wife a monthly rate for managing the medallions the couple owned. The price of medallions plummeted in recent years thanks to the rise of ride-sharing apps like Lyft and Uber.

The Journal reported that federal prosecutors have subpoenaed Cohen’s former accountant, Jeffrey A. Getzel, who also served as an accountant for Freidman. Freidman earlier this year agreed to cooperate with federal prosecutors as needed as part of a lenient plea deal. The former “Taxi King” of New York pleaded guilty to one count of criminal tax evasion after an investigation into his own taxi businesses.

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ALEXANDRIA, VA — Rick Gates, Paul Manafort’s former deputy, testified on Tuesday that he helped Manafort provide false information to banks in order to obtain loans.

Gates told the courtroom that Manafort asked Gates to change certain things in order to obtain loans after the Ukraine income dried up in 2014.

“He had requested certain things be changed,” Gates said of his role in the alleged bank fraud.

Prosecutors first presented an email in which Manafort told Gates that he would claim his home in the SoHo neighborhood of Manhattan as a second residence (even though it was a rental property) when applying for a loan at Citizens’ Bank.

“In order to have the maximum benefit, I am claiming Howard St. as a second home. Not an investment property,” Manafort wrote in an email admitted by prosecutors.

Gates said that Manafort told him to get in touch with Philip Ayliff, one of Manafort’s tax accountants, but Gates said he could only reach Cindy LaPorta, another accountant who received immunity to testify last week. Gates said he spoke to LaPorta about listing the property as a residence.

Gates also testified that he helped Manafort provide old documents to Citizen’s Bank in order to hide the fact that Manafort had a mortgage on his Brooklyn property. Gates said that at Manafort’s request, he sent a 2015 insurance policy for the home that did not list a mortgage on the home, even though the more current 2016 insurance policy noted the mortgage.

Finally, before the court recessed for lunch, Gates said that he helped Manafort convert a $1.5 million 2012 loan from Peranova Holdings into income while applying for a loan in 2016. Gates said that he backdated a letter claiming that the loan was forgiven, even though it was not. Previous evidence has indicated that Peranova, a company Gates said Manafort controlled, never loaned Manafort money. Manafort listed the income as a loan in 2012 in order to reduce his taxable income, according to Gates. A letter backdated to 2015 was signed by a member of the law firm that ran Manafort’s Cypriot accounts, Gates said.

Gates will resume his testimony around 1:30 p.m. ET when the jury returns from lunch recess.

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