The testimony from Phil Ayliff also detailed his extensive dealings with Manafort’s longtime deputy, Rick Gates, who is poised to be a key witness in the trial. Gates could testify as early as Friday afternoon.
Gates pleaded guilty and agreed to cooperate with special counsel Robert Mueller’s team in February after he was charged alongside Manafort last year.
Manafort’s legal team has indicated it plans to use Gates as a key part of its defense, seeking to blame Gates for Manafort’s alleged crimes.
The discussion of Manafort’s taxes and finances cuts to the heart of the prosecution’s case against Manafort, who is charged with 18 counts of tax and banking crimes. He has pleaded not guilty to all charges.
The case is the first that Mueller’s team has taken to trial as part of its broad investigation of Russian election interference in 2016, and the trial is occurring while the special counsel negotiates with President Donald Trump’s legal team about Trump being interviewed.
Not disclosing foreign accounts
Ayliff said his tax preparation firm received several emails from Manafort and Gates that assured the accountants they had no foreign accounts. Ayliff’s firm asked Manafort directly in an email in 2011 if he, his wife or two daughters had foreign accounts.
Manafort said no, according to the email shown to the jury.
Again in 2012, Gates told the accounting firm “we do not need to file for Paul” documents that showed his interest in Cypriot accounts to the US government. In 2013, the accountants asked about Manafort’s foreign accounts a third time.
The accountants reminded Gates in an email that Manafort would need to disclose to the US Treasury Department any foreign accounts he controlled. “As discussed, to my knowledge, nothing has changed,” Gates wrote back.
Prosecutors have implied that Manafort and Gates used a separate set of accountants in Cyprus and filed tax returns in the country, unbeknownst to their US-based financial specialists. Manafort or Gates “never told you they filed tax returns in Cyprus” or had accountants on the Mediterranean Island, prosecutor Uzo Asonye asked Ayliff in court.
“No,” Ayliff responded.
The tax preparer was asked about several companies identified on a client list provided by Manafort. Ayliff identified nine of them, including Lucicle Consultants Ltd and Global Highway Ltd, as clients.
Prosecutors have alleged in the indictment that some of the same companies were actually controlled by Manafort and were used to pay vendors for home renovation, expensive suits and luxury cars.
Ayliff said he had no knowledge that Manafort or Gates had any financial interest in those companies. He added that he had no understanding of the relationship with the companies beyond them being identified by Manafort and Gates as clients.
Asonye asked why he would want to know if there was any financial interest by Manafort. Ayliff said if there was a financial interest, then Manafort would have had to identify them as foreign bank accounts.
Paying himself a salary
Ayliff also told the jury that in 2012, Manafort was improperly paying himself a salary through the consulting company he and his wife fully owned.
Manafort reported on his 2012 tax return a total income of $5.36 million. At the time, he and his wife each owned 50% of the Ukraine-focused political consulting firm DMP International.
He also reported earning wages of $1.99 million — the amount a bookkeeper testified to as well Thursday.
Partners with ownership of businesses like DMP International shouldn’t pay out wages, Ayliff testified. “When we found out he had been paid through the payroll company, we stopped the practice going forward,” but still reported the amount on Manafort’s 2012 tax return, Ayliff said.
That year was the same time DMP International received a $1.5 million loan from his alleged shell company Peronova Holdings Limited, which was forgiven and counted as income years later.
It was the first year DMP International existed, after a previous consulting firm that Manafort solely owned was liquidated.
CNN’s Liz Stark contributed to this report.