Paul Manafort might be facing long odds, but President Donald Trump’s former campaign chairman isn’t just rolling over in his Virginia trial on tax evasion and bank fraud.
Many Washington attorneys have speculated that the longtime GOP operative is biding his time, pinning his hopes on Trump swooping in with a pardon that lets him off the hook if he’s convicted in Virginia or in a second trial in September on another set of charges from special counsel Robert Mueller.
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“Normally, you’d say this is pure kamikaze, but maybe Manafort feels there’s a possible escape hatch,” said Peter Zeidenberg, who worked on a previous special counsel probe.
Still, Manafort’s legal team is mounting a case to exonerate him in Virginia — an uphill battle, experienced attorneys say, since jurors have already seen a mountain of emails, bank records and financial statements that prosecutors say implicate the ex-Trump campaign chief. This week, jurors could hear from former business partner Rick Gates, who cut a plea deal with prosecutors in exchange for his cooperation.
Here’s a look at the Manafort defense team’s key arguments so far — and at some they could still raise.
Argument 1: It’s all Rick’s fault
Since February, when Gates pleaded guilty and agreed to cooperate with Mueller’s team in exchange for leniency, it has seemed inevitable that he would become a target for Manafort’s defense. Dirtying up a cooperating witness is standard fare for defense lawyers, who typically argue that the witness is pointing the finger at others to save his own skin.
“What you’ve got to be careful of is: they may not just sing, they may also compose,” U.S. District Court Judge T.S. Ellis III observed at a hearing in the Virginia-based Manafort case earlier this year.
Yet, Manafort’s defense team startled many in the courtroom last week by putting the typical argument on steroids and arguing that Gates was not only a liar but had been stealing from Manafort for years.
“Rick Gates got himself in trouble not because of some grand conspiracy with my client, as the special counsel contends, but because he embezzled millions of dollars from his long-time employer. He abused his position of trust,” Manafort attorney Tom Zehnle argued in his opening statement.
The defense has yet to explain how and when this alleged theft took place. Gates seems to have had significant authority over at least some aspects of Manafort’s finances, based on court testimony and documents shown to jurors.
However, legal experts say that even if Gates was lining his own pockets, that doesn’t undercut the government’s case against Manafort unless they can show that Gates was orchestrating the whole scheme by moving funds through offshore havens like Cyprus and St. Vincent and the Grenadines and using it to pay for personal expenses.
That appears unlikely, though, because prosecutors have said the bulk of that money appears to have benefited Manafort, not Gates.
“Manafort has got the Hamptons mansion and incredible real estate and all this incredible wealth. Gates lived well, but modestly,” said Zeidenberg, who now works as a white-collar defense attorney at Arent Fox. “I’m sure he had a nice house and a decent car, but this was not ‘Lifestyles of the Rich and Famous.'”
“The idea that Gates was the mastermind who funneled tens of millions of dollars to Manafort while he got hundreds of thousands of dollars seems silly,” Zeidenberg added. “It doesn’t make a lot of sense. It’s very hard to pin something on someone below you.”
The defense tactic could damage Gates’ credibility as a witness, but lawyers say it is unlikely to get Manafort off the hook.
“If [Gates] is skimming, he’s skimming,” said Texas A&M law professor William Byrnes, a tax law expert. “If they could prove that and prove the whole thing was on Gates and that Manafort was somehow the victim of a fraud, that might work, but that’s not what I’m seeing….It seems like Manafort’s only thing here is, ‘It ain’t me. It’s the guy behind the tree….’ That’s his pitch, but it’s not going to stick.”
Prosecutors are moving to neutralize the defense’s blame-it-on-Gates approach by asking nearly every witness if he or she knows Gates or had any dealings with him. Manafort’s longtime bookkeeper and accountants confirmed working with Gates. But most of the building contractors and luxury goods vendors say they never did, and instead dealt directly with Manafort, undercutting the notion that Gates was the reason millions of dollars of Manafort’s bills were paid from offshore accounts.
Argument 2: Manafort was too busy to cheat the tax man
The defense is also trying to leverage Manafort’s reputation as a hard-charging political consultant who was tight with major presidential candidates and sweated the details of the campaigns he was effectively running in Ukraine. That international work required frequent travel, often putting him out of email contact for stretches of time, defense lawyers have said.
Manafort was so busy, the defense argues, that he wouldn’t have had much time to get into the details of which accounts were used to pay his bills. Often, he fell behind on such tasks, eventually hiring a bill-paying service to help him keep up, they say. And when accountants and tax preparers sent statements, questionnaires or forms for him to sign off on, Manafort may have been preoccupied or missed some of the finer points, defense lawyers suggest.
“Mr. Manafort was often seven or eight time zones away, depending on the time of the season, and he’s working on the existing contract that he has in Ukraine and he’s trying to bring in new business,” Zehnle told the jurors during his opening statement. “Paul Manafort could not be everywhere at once, and the evidence will establish that it was Rick Gates who filled that operational role and that finance role.”
But while it seems indisputable that Manafort sometimes had a hectic schedule, it’s not as if he was all work and no play. He doesn’t seem to have been too busy to visit tailors in New York and Beverly Hills to be fitted for dozens of custom-made suits. Or to pick out the now-infamous ostrich and python-skin jackets. Or to take advantage of the New York Yankees season tickets he owned.
It’s also unclear why anyone else — including Gates — would act without Manafort’s knowledge or approval to take legally risky steps to pay millions of dollars in Manafort’s bills for clothes, home renovations and a Mercedes from offshore accounts in a fashion that appears to have hidden that income from the IRS.
“No human being is going to believe that out of the good nature of his heart Gates did that,” said Byrnes, the tax law professor.
Prosecutors are also countering this defense argument by emphasizing to the jury what a stickler for detail the longtime lobbyist was when it came to things like managing a winning political campaign in Ukraine, overseeing the construction work on his homes or keeping tabs on his finances.
Under questioning by prosecutors, U.S.-based political consultant Tad Devine said the work he did with Manafort to get Viktor Yanukovych elected as president of Ukraine in 2010 was “very well organized.” Longtime Manafort bookkeeper Heather Washkuhn testified that he wasn’t the kind of client who had only a vague understanding of his finances.
“I would say he was very knowledgeable. He was very detail-oriented. He approved every penny of everything we paid,” she said.
Argument 3: Manafort came clean years ago — and no one said he broke the law
Even if Manafort dramatically understated his income and failed to report dozens of foreign bank accounts, that alone isn’t enough to make him guilty of the nine tax-related felony charges he faces. The government has to show beyond a reasonable doubt that he hid those facts on purpose and knew that it was illegal to do so.
The defense team has signaled they have a couple more openings that they think could help Manafort throw off the tax charges, if not the bank fraud counts. The FBI was nosing around Manafort’s financial dealings back in 2013 and 2014, focusing on his work for Yanukovych. On two occasions, the veteran political operative met with the FBI.
In his opening arguments, Zehnle told jurors that Manafort’s openness undercuts the idea that he was running what prosecutors now say was a massive scheme to dodge at least $15 million in taxes.
“Paul Manafort voluntarily agreed to go talk to these FBI agents and to Department of Justice attorneys. Not only to discuss his consulting work over in Ukraine, but to provide information about individuals that they were interested in,” Zehnle said. “He told them that he had received $27 million in income for his services during the years they were asking him about…he even identified these accounts by the names of the entities that they were held in.”
Manafort’s defense contends that any investigation of him went dormant, only to be revived amid the Russia-related scrutiny of the Trump campaign, but it’s not entirely clear where that probe stood when Manafort took the top job there in 2016.
“My strong suspicion is he didn’t lay all his cards on the table, because if he told them the whole truth they would have locked him up,” said Zeidenberg.
Manafort’s defense also thinks the fact that the IRS never audited him is revealing, but it’s not clear how much the jury will hear about that. Prosecutors objected after Zehnle mentioned it in his opening statement, saying it was irrelevant to the charges. Judge Ellis has so far agreed with Mueller’s team, though he said the issue could come up again if Manafort decides to take the stand to testify in his defense.
Potential Argument 1: Manafort’s luxury expenses were legitimate
Defense lawyers haven’t tried it yet, but Ellis suggested Thursday that Manafort might argue that some of the purchases at issue could actually be business-related, like the $1.3 million the veteran consultant dropped on men’s suits.
“I don’t know whether the defendant intends to argue that they were business expenses or deductible, but we’ll come to that,” the judge said.
Tax lawyers don’t think much of the argument. Clothing of that sort isn’t tax-deductible. Also, business expenses are supposed to be recorded on personal or business tax returns, not simply excluded from income.
“If you didn’t take your deductions, tough luck,” Byrnes said.
The tax professor also said that during the years Manafort is accusing of cheating on his taxes, he could have taken advantage of the same tactic many American multinational companies did: avoiding U.S. taxes by keeping profits overseas. If the offshore companies looked a little more legitimate, Manafort could have effectively parked the $60 million he allegedly made on his Ukraine work and put off paying taxes on it, Byrnes said.
“It’s doable, as long as you follow the operational rules. You can’t be saying: ‘Please send me $10,000 to pay for this home theater installation,'” Byrnes added.
But the numerous transfers from overseas for personal expenses suggest the companies were just shell entities, which meant Manafort was obliged to pay U.S. taxes on the income as it came in, the professor said.
Potential Argument 2: That email says it’s from Manafort, but is it?
The working assumption at the Manafort trial is that memos and emails saying they’re from Manafort (usually identified by his initials PJM) are, indeed, messages and directives from the defendant. No one has questioned yet whether he really wrote them, although Ellis has expressed some reservations about simply assuming every email message is authentic.
With the defense suggesting that Gates forged invoices and the prosecution arguing that he forged financial statements to help Manafort get loans, it hardly seems impossible that an aide might have sometimes signed the boss’s name, drafted a memo or even sent an email from Manafort’s account. It wouldn’t be the first time an employee knew the email password of a busy boss.
So far, the defense hasn’t indicated it will go that route, but it could throw into question a lot of the email evidence introduced in the case.
Still, even presented with the defense’s arguments, some legal experts watching the case think Manafort has already lost.
“There’s no defense here,” said Jeff Cramer, a former federal prosecutor now with Berkeley Research Group. “This is a slow guilty plea.”