Paul Manafort, President Trump’s onetime campaign chairman, is on trial in federal court in Alexandria on bank and tax fraud charges. Prosecutors allege he failed to pay taxes on millions he made from his work for a Russia-friendly Ukrainian political party, then lied to get loans when the cash stopped coming in.
The case is being prosecuted by the special counsel investigating Russian interference in the 2016 U.S. presidential election.
4:26 p.m.: Manafort’s lawyers note he had collateral for $16 million in loans
In his cross examination of Dennis Raico, defense attorney Richard Westling sought to highlight how Paul Manafort put up adequate collateral for the loans he received from Federal Savings Bank, and how early trouble that he encountered in getting financing was largely attributable to his son-in-law.
Westling started by asking about an email that seemed key to the prosecutors’ presentation. The email showed the bank’s president, Javier Ubarri, had suggested ending negotiations with Manafort and trying to part ways on friendly terms. Raico had testified previously the bank gave Manafort loans after that message was sent.
Westling asked Raico: Wasn’t that message in reference to one particular loan, which Manafort would have been taking on with his son-in-law? After reading it, Raico testified it was, and that the bank did not ultimately issue it.
Westling then sought to show that the loans Manafort did receive had adequate collateral – attempting to undercut the notion that Federal Savings Bank was defrauded. For the $9.5 million loan on Manafort’s Bridgehampton property, Westling asked, wasn’t it true that the cash Manafort received would pay off the home – which was appraised at around $13 million — and that he was offering an additional $2.5 million in collateral through a Virginia property?
Raico testified that was true: Essentially Manafort was providing $15.5 million in collateral for a $9.5 million loan. And under Westling’s questioning, Raico acknowledged the second loan Manafort received, to complete construction on a property on Union Street in New York, had a similar situation.
Manafort, he acknowledged, had put down a $2.5 million cash deposit on top of a property that was appraised to sell at $6.3 million when it was complete. The bank, he said, had loaned Manafort $6.5 million.
Prosecutors, in their final round of questioning of Raico, pointed again to bank chairman Steve Calk’s involvement in the loan, and again got Raico to acknowledge it made him uncomfortable.
“It was not the norm,” he said.
When prosecutor Greg Andres – and Judge T.S. Ellis III – pressed Raico on whether he believed Calk was “seeking something” from Manafort, Raico ultimately hedged, saying he could point to “nothing concrete.”
4:01 p.m.: ‘Take a deep breath’: Banker says Manafort took unusual path to $9.5 million loan
A former senior vice president at Federal Savings Bank testified that the process that led Paul Manafort to get a $9.5 million loan from the bank was unlike any other loan negotiation he worked on.
First, Dennis Raico said, as they were close to closing, Manafort emailed and said that he actually owed $3.5 million on his Bridgehampton home when he said it was $2.5 million. The bank had just learned that information on its own.
“I must have had a blackout,” Manafort said.
“I can pay this debt if required in about 6 months, although I would prefer not to do so,” Manafort wrote in the Oct. 6, 2016, message to bank chairman Steve Calk. “I look to your cleverness in how to manage the underwriting.”
Calk told Manafort he would “look into this right away” and forwarded the message to Raico.
Then about a week later, on Oct. 14, Raico said he got a call informing him that from the closing table, Manafort had decided he wanted to renegotiate the terms of the loan. Instead of a construction loan for a project in California using the Bridgehampton home as collateral, he wanted a cash-out refinance loan on the Hamptons house.
A few days later, Manafort sent Raico a sheet titled “Terms of Loan,” outlining the $9.5 million line of credit.
Raico said he had “never it seen it done before” that a potential client would set terms that way. He forwarded the terms to Federal Savings Bank Vice President James Brennan, with the message, “Take a deep breath.”
“I hadn’t seen a loan restructured at the closing table before, and I hadn’t seen Steve Calk approve restructuring of a loan,” Raico testified.
Judge Ellis, who has intervened to deflate prosecutors throughout the trial, did so again here. “Is there anything wrong with that?” he asked of Manafort setting his own terms.
“No,” Raico said, but “it’s not consistent” with bank policy.
“But is there anything wrong with it?” the judge asked again, before telling prosecutor Greg Andres he was trying to “focus the evidence.”
The process moved forward, and Raico testified Manafort sent him a statement showing his profit for 2016 so far was over $3 million. (That statement is false, Manafort’s former business partner Rick Gates has testified.)
Even with the revised income, bank president Javier Ubarri told Raico and Brennan they should not pursue the loan agreement.
He told Raico to tell Manafort the bank values his relationship with Calk “immensely” but that the loan forced the bank to assume too much risk and had taken up too much of the bank’s time already.
But Raico testified he soon got a call from Calk, saying they were moving forward with the loan, which ultimately went through on Manafort’s terms on Nov. 16, 2016
3:37 p.m.: Manafort, seeking loans, told bank Gates had bought more than $200,000 in New York Yankees tickets
Federal Savings Bank Senior Vice President Dennis Raico described an email he had received from his assistant, who detailed a phone call she had with Manafort. In the conversation she summarized in her email, Manafort explained that the income for his business DMP International had recently increased.
“He explained to me that he is in the consulting business and naturally the income fluctuates,” the email to Raico from his assistant read.
But Raico expressed some skepticism.
“A plus B didn’t equal C all the time,” Raico testified to the financial information the bank would get from Manafort.
Manafort also told Raico’s assistant that more than $200,000 in charges on his American Express was because he lent his “friend” the card.
Raico testified that he understood the friend described to be Manafort’s business partner Rick Gates, who purchased New York Yankees season tickets.
Andres then showed an American Express Plum card statement showing three different charges for New York Yankees tickets in Feb. 2016 — two charges for $99,000 and one for $10,000. The Plum card is an American Express card used by businesses.
The large charge to the credit card is important because the outstanding debt would have impacted Manafort’s ability to secure a loan with the bank, Raico testified.
Raico said sometime during the loan process, he learned that Calk and Manafort had lunch together. After the lunch, Raico said he received an email from Calk, outlining terms for one of Manafort’s loan requests.
At the start of his testimony, Federal Savings Bank Senior Vice President Dennis Raico described how Paul Manafort won quick approval for loans as part of a process that featured unusual involvement from the bank’s chief exectuive and chairman, Steve Calk. Calk was seeking a role in the Trump administration and seemed to make that known to Manafort, Raico testified.
Manafort ultimately received two loans from the bank totaling $16 million. One of them, a $9.5 million cash-out refinance on a property in Southampton, N.Y., closed on Nov. 16, 2016, shortly after the presidential election. The other, a $6.5 million construction takeout loan, closed on Jan. 4, 2017, Raico testified.
Raico testified that Manafort first contacted the bank around April 2016, inquiring about a loan for a project that he and his son-in-law were working on. Raico said he contacted Calk about Manafort’s seeking the loans after learning that Manafort was involved in politics.
“I came to learn that Mr. Manafort was involved in politics, and I knew Steve was interested in politics,” he said. Raico said Calk wanted to meet the potential client in person.
Raico said Manifort, Calk and he, as well as others, had dinner at the Capital Grille in New York in May 2016, where they discussed “politics, loans” and other subjects. Calk and Manafort, then part of the Trump campaign, also talked between themselves at the dinner, Raico said.
Raico said on July 27 of that year, he had a video conference with Manafort and Manafort’s son-in-law to discuss properties they wanted to finance. The very next day, high-level bank officials approved a loan to the two men – a turnaround quicker than Raico said he had ever seen before.
Calk was directly involved in the negotiations for both loans, something Raico also had never seen before. Raico said he sometimes passed messages between Calk and Manafort, which made him uncomfortable.
On Nov. 11, 2016, for example, Raico said Calk called him to say he would “possibly be up for some role in the Trump administration,” and asked Raico if he could inquire about that. The possible roles, Raico said, were Treasury secretary or Housing and Urban Development secretary. Emails show that a few months earlier, Manafort had asked for Calk’s resumé after Calk apparently asked if he could serve in the administration.
Raico said in that instance he ultimately did not ask Manafort about the matter.
“It made me very uncomfortable,” he said.
2:46 p.m.: Trial resumes, another bench conference, no explanation for delay
After a lengthy delay, Paul Manafort’s trial resumed Friday afternoon at around 2:25 p.m. with the testimony of Dennis Raico, an employee of Federal Savings Bank and one of the immunized witnesses.
Racio’s testimony will relate to the $16 million in loans FSB issued Manafort between 2016 and 2017. Prosecutors have alleged Manafort secured the money by inflating his income on loan applications and providing fraudulent statements.
Raico is the first witness of the day after prosecutors, Manafort’s attorneys and the judge met for several sidebars throughout the day.
Before court resumed, one of Manafort’s attorneys was seen leaving judge’s chambers. The lawyers and Judge T.S. Ellis III entered the courtroom at about 2:18 p.m., when the judge said, “Let me have one of you please from each side.” Prosecutor Greg Andres and Manafort attorney Kevin Downing spoke with the judge at the front of the courtroom before they returned to their tables.
“All right Mr. Andres, you can call your next witness,” Ellis said returning to the bench without any discussion of what the side conferences were about.
“The jury, your honor?” Andres asked, sparking laughter in the courtroom before the jury filed in to take their seats.
11:33 a.m.: Manafort trial, with bench conferences and no witnesses, pauses for lunch
Paul Manafort’s trial will not resume until 1:45 p.m. Friday, though the reason for the delay is not precisely clear.
As the trial resumed around 9:45 a.m., Judge T.S. Ellis III summoned lawyers for both sides to his bench for a conference that was blanketed by white noise. The jurors were not yet in the courtroom. He then took a short break – about 10 minutes — and returned to the courtroom for another bench conference.
That conference was somewhat lengthier, and the judge summoned the court security officer to join the lawyers. The judge seemed to talk with the court security officer as the lawyers listened.
Ellis then declared another recess, though before he left court, he issued a strange warning to those gathered, “You cannot look and see what’s on counsels’ tables, without their permission of course.” He left to the side of the courtroom where the jurors usually gather, which is different from where he usually exits.
The judge said the break would take about 15 minutes, though it was substantially longer. At about 10:35 a.m., one of the judge’s staff members emerged to gather the board used during jury selection.
At 11:07 a.m., Ellis came back and seemed to call the case as usual. “All right, bring the jury in, please,” he said.
All 16 jurors came in.
“A belated good morning to you,” Ellis said. He told the panel he planned to call the roll as normal, but then have an early lunch break so he could consider other matters.
“We are going to continue with the evidence in this case in the afternoon,” Ellis said.
Ellis’s clerk called each juror by their number, and all said they were present. As he does each morning, Ellis asked the group if they had been able to avoid talking to anyone about the case or doing their own investigation. They said they had. Then Ellis delivered a lengthier admonition.
“It’s very important that you not discuss the case with anyone,” he said. He noted that Manafort had a “presumption of innocence,” and jurors should be keeping an open mind until the case was complete.
“Keep an open mind until all the evidence is in,” Ellis said.
With that, the jurors left. The panel – which has usually entered the courtroom smiling or even laughing – seemed more stone faced than usual. Ellis offered no explanation to the public for what had happened. The trial is expected to resume at 1:45 p.m.
Perhaps emboldened by their small victory Thursday, when Judge T.S. Ellis III conceded he was “probably wrong” to lambaste the special counsel for doing something he allowed them to do, prosecutors in the Paul Manafort trial have now asked him to tell the jury to ignore another of his intemperate comments.
On Thursday, after Assistant U.S. Attorney Uzo Asonye walked a banker through a $5.5 million loan negotiation with Paul Manafort that ended in rejection, the judge cut in with skepticism.
“You might want to spend time on a loan that was granted,” he said.
When Asonye protested that the attempt to get that loan constituted one of the bank fraud conspiracy charges against Manafort, Ellis responded harshly, “I know that.”
“The Court’s statement that the government ‘might want to spend time on a loan that was granted’ misrepresents the law regarding bank fraud conspiracy, improperly conveys the Court’s opinion of the facts, and is likely to confuse and mislead the jury,” prosecutors wrote in their filing Friday morning. “The Court should provide a curative instruction in order to avoid any potential prejudice to the government.”
Defense attorneys in other cases have pointed to similar comments from Ellis when challenging guilty verdicts in the U.S. Court of Appeals for the Fourth Circuit. But prosecutors cannot appeal a not-guilty verdict, and so the special counsel has begun challenging Ellis mid-trial.
Prosecutors filed a similar motion Thursday morning, after Ellis yelled at prosecutors for allowing their expert witness to sit through the trial in the gallery, when witnesses are typically excluded from the courtroom so as not to be influenced by other witnesses’ testimony. The transcript of the first day of trial showed Ellis had explicitly allowed the expert, an IRS agent, to stay in the courtroom.
Ellis responded in court by saying that while he had not checked the transcript, he “may well have” allowed the expert in and that the jury should disregard his comments.
The judge overseeing the Paul Manafort trial on Thursday granted a request from the special counsel’s office to keep secret a conversation that might shed light on its ongoing investigation into whether the Trump campaign coordinated with Russia.
The conversation came on Tuesday, as Rick Gates, Manafort’s business partner who worked on both the Trump campaign and the Trump inaugural, was on the witness stand. During his cross examination of Gates, Manafort defense attorney Kevin Downing asked if, during Gates’s cooperation with the special counsel after he agreed to a plea deal, he was interviewed about the Trump campaign. Gates said he had been.
“And were you interviewed on several occasions about your time at the Trump campaign?” Downing continued.
“Objection, your honor,” special counsel prosecutor Greg Andres interjected.
The lawyers then convened at the bench of Judge T.S. Ellis III as white noise was piped through the courtroom. Gates was ultimately never asked to answer the question, and the conversation between the lawyers and Ellis, known as a bench conference or sidebar, was sealed in a transcript produced by the court reporter.
On Thursday, the special counsel’s office asked the judge to keep it that way.
“Disclosing the identified transcript portions would reveal substantive evidence pertaining to an ongoing investigation,” the special counsel’s office wrote. “The government’s interest in protecting the confidentiality of its ongoing investigations is compelling and justifies sealing the limited portion of the sidebar conference at issue here. In addition, sealing will minimize any risk of prejudice from the disclosure of new information relating to that ongoing investigation.”
The special counsel’s office wrote that their concerns about making the conversation public would “continue until the relevant aspect of the investigation is revealed publicly, if that were to occur.”
Ellis granted their request, writing it was necessary because making the conversation public would “reveal substantive evidence pertaining to an ongoing government investigation.” The public was left with a mere tantalizing hint about what Gates might have told the special counsel about his time on the Trump campaign, and what “new information” might have been revealed in the discussion at Ellis’s bench.
UPDATE, 1:16 p.m.: The special counsel’s office confirmed in a filing in Washington later Friday that Gates is still cooperating with them, but did not divulge any specifics about what they are discussing with Gates. In an update to the judge overseeing Gates’ criminal case in D.C., where he pleaded guilty in a plea deal, prosecutors said that Gates continues to cooperate and meet with the special counsel’s office, and that “the investigation, which includes the possible continued need for assistance from the defendant as required by his Plea Agreement, is ongoing.”
9:05 a.m.: Prosecution expected to rest case against Manafort today
Prosecutors expect to rest their case against Paul Manafort on Friday after calling four or five more witnesses to round out their case. That is an increase from their previous estimate, though one of the witnesses has testified in the case before.
Among those expected to take the stand are officials from Federal Savings Bank, one of the institutions Manafort is accused of defrauding to get a loan. That testimony could be particularly interesting because Manafort took steps to try to get Stephen Calk, the founder and chief executive of the bank, a job as Army secretary in the Trump administration, as well as an invite to the presidential inauguration. Calk himself, though, is not expected to be called by prosecutors.
Prosecutors also say they intend to call a man whose online bio says he is senior director of ticket operations for the New York Yankees. Manafort is accused of having his former associate Rick Gates claim, falsely, that he had used Manafort’s credit card to purchase Yankees season tickets.
After prosecutors wrap up their presentation, defense attorneys will be given an opportunity to call their own witnesses. It is unknown how many people — if any at all — they intend to call. Testimony resumes at 9:30 a.m.