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Paul Manafort's Accountant Testifies She Helped Alter Financial Documents


Paul Manafort’s Accountant Testifies She Helped Alter Financial Documents

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Cynthia Laporta, a Virginia tax accountant, said she altered records for Paul Manafort, President Trump’s former campaign chairman, because she was trying to protect her firm, KWC.CreditChip Somodevilla/Getty Images

ALEXANDRIA, Va. — The tax accountant for Paul Manafort, President Trump’s former campaign chairman, testified in his fraud trial on Friday that she had agreed to alter tax and bank documents to help Mr. Manafort out of his financial troubles in late 2015 and 2016, even though she believed that key financial records were false.

Cynthia Laporta, a Virginia accountant who testified under a limited grant of immunity, said she had agreed in September 2015 to lower Mr. Manafort’s reported income on a tax return, which saved him about a half-million dollars in taxes. She did so, she said, after Rick Gates, Mr. Manafort’s longtime aide and Mr. Trump’s former deputy campaign chairman, told her that Mr. Manafort was unable to pay what he owed.

And then the next year, as he tried to convince banks to lend him millions against his homes, she said, she did the opposite, inflating his income so that he would qualify. Banks were reluctant to lend Mr. Manafort money because his business showed no income, she and others testified.

So Ms. Laporta said she agreed to record a $1.5 million loan to Mr. Manafort’s company as forgiven. She also sent letters stating that Mr. Manafort would receive $2.4 million in payments owed to him by November — even though she doubted the truth of both those assertions.

Asked by prosecutors why she did so, Ms. Laporta said she was trying to protect her firm, KWC. “I could call Mr. Manafort and Mr. Gates liars,” she said, but “Mr. Manafort was a longtime client.” If she challenged him, she said, it was also possible her company could be sued.

Her testimony brought to life in dramatic fashion the financial machinations that prosecutors have been sketching out since Mr. Manafort’s trial on 18 charges of bank and tax fraud opened on Tuesday. And it underscored questions about how Mr. Manafort landed such a prime spot on Mr. Trump’s campaign, where he served as a delegate manager and then as campaign chairman for five months in 2016, when his political consultancy business was essentially bankrupt.

Prosecutors working for the special counsel, Robert S. Mueller III, spent much of the week on Mr. Manafort’s flush years, when a highly lucrative contract to promote pro-Russia political forces in Ukraine from 2010 to 2014 financed a life of opulence for the veteran political consultant. They showed how millions of dollars — wired from overseas bank accounts that were hidden from his accountants — paid for Mr. Manafort’s luxury clothing, rugs, home entertainment systems, home renovations, landscaping and three new homes.

But it was Mr. Manafort’s behavior once he fell on hard times after 2014 that produced the most compelling testimony. Prosecutors say that Mr. Manafort earned about $60 million working for pro-Russia oligarchs behind Viktor F. Yanukovych, who was elected Ukraine’s president in 2010. But after Mr. Yanukovych was ousted and fled to Russia in 2014, prosecutors say that Mr. Manafort’s income plummeted to zero. He then switched from hiding his income in foreign bank accounts to inflating it so American banks would extend millions in real estate loans to him.

Ms. Laporta testified that in August 2016, just a week before Mr. Manafort left Mr. Trump’s campaign amid controversy over his activities in Ukraine, she assured a potential lender that a $1.5 million loan to Mr. Manafort’s firm had been forgiven. In truth, she said, she was worried that the loan did not exist and was instead a ploy to lower Mr. Manafort’s tax bill. When she asked for documentation of the transaction, she testified, Mr. Gates gave her an unsigned letter, just over a page long, with almost no details. In an email, he wrote that he still needed to “chase down signatures.”

She also sent letters to banks noting that Mr. Manafort anticipated a $2.4 million payment by November 2016 for work in Ukraine. In fact, his Ukraine work for Mr. Yanukovych — whom prosecutors called Mr. Manafort’s “golden goose” — had ended at least a year earlier. Other financial records showed that Mr. Manafort’s company, DMP International, finished 2016 nearly $1.2 million in debt.

In other efforts to help Mr. Manafort, Ms. Laporta testified that she backed up his assertion that he was using his Manhattan condominium as a second home so that he could qualify for a lower mortgage interest rate from banks, even though records showed he had been renting the property on Airbnb to generate more cash.

Mr. Gates, who pleaded guilty this year to financial fraud and lying to federal authorities, is crucial to the outcome of the trial. Mr. Manafort’s lawyers are hoping to show that Mr. Gates is the real culprit and that Mr. Manafort is guilty of no more than negligence for not paying greater attention to Mr. Gates and other employees.

Like some of the other roughly dozen witnesses who have testified for the prosecution, Ms. Laporta seemed to treat Mr. Manafort and Mr. Gates as one person. At one point on Friday, she referred to both of them as “the client.” But other witnesses, including Heather Washkuhn, Mr. Manafort’s bookkeeper, testified this week that while he relied on Mr. Gates, Mr. Manafort kept track of “every penny” of his finances.

Besides Ms. Laporta, four other witnesses have been given limited grants of immunity to testify against Mr. Manafort. Mr. Manafort’s lawyers are expected to delve into exactly what led Ms. Laporta, a veteran accountant who said she earned about $400,000 a year, to cooperate with prosecutors. But they have already signaled that Mr. Gates will be their main point of attack.

Ms. Laporta’s testimony was especially helpful to prosecutors because she was able to crystallize financial transactions that were otherwise befuddling, even to courtroom spectators steeped in the case. Short and soft-spoken, Ms. Laporta did not hide her suspicions that Mr. Manafort’s financial records had been doctored.

She clearly explained, for instance, why Mr. Gates asked — and she agreed — that she characterize $900,000 that had been previously reported as income as a loan to DMP International, which Mr. Manafort and his wife owned. Otherwise, Mr. Gates told her in a phone call, the tax bill was “too high” and Mr. Manafort “did not have that money.”

But since loans are not taxable, she said the change “resulted in a tax amount due that could be paid by Mr. Manafort.”

A version of this article appears in print on , on Page A13 of the New York edition with the headline: Manafort Accountant Tells of Faked Records. Order Reprints | Today’s Paper | Subscribe

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