A fake bill, a banned word

Manafort Trial Day 2: A fake bill, a banned word, and a Rick Gates surprise

By JOSH GERSTEIN and DARREN SAMUELSOHN

Prosecution questioning Wednesday of the former manager of a luxury men’s clothing boutique Manafort frequented, Alan Couture in New York, revealed an intriguing and mysterious development: someone apparently forged invoices from the store.

Seeking to establish just how expensive Manafort’s tastes were, Manafort’s team got Maximillian Katzman—the store’s ex-manager and son of its owner—to certify that Manafort ran up bills of more than $900,000 between 2010 and 2014.

Katzman said the boutique had only about 40 customers and Manafort ranked in the top five. Unlike other clients, Manafort didn’t pay the firm by check or credit card, but in funds wired from accounts abroad in the names of foreign businesses. “This is the only client that paid us in international wire transfers,” Katzman aid.

Although many details about Manafort's spending have been made public, prosecutor Greg Andres surprised many in the courtroom by posting an invoice on the TV monitors from “Alan Corture LLC.”

Asked about the bill, Katzman quickly indicated it was fake. “It’s off by a letter,” he said. “The zip code is incorrect.”

Unlike the real invoices, the invoice Andres showed did not contain any direct reference to Manafort. Instead, it appeared to be intended to show direct billing to a company linked to Manafort, Global Endeavor LLC. That was one of the companies used to wire funds to pay Manafort’s bills.

Katzman said he knew the invoice was not authentic. “We have never billed to Global Endeavor, nor had a client named Global Endeavor,” he said.

Prosecutors didn’t say why someone might have forged the invoices, but they have accused Gates of conspiring with Manafort to forge financial records in connection with loan applications. A forged invoice might have been useful in persuading bookkeepers or tax preparers that the payments to Alan Couture were some sort of business-to-business transaction rather than a way to cover Manafort’s personal bills.

During cross-examination, defense attorney Jay Nanavati suggested the payments from abroad might not be surprising given Manafort’s regular travel abroad. “Is it fair to say Mr. Manafort was one of your more international clients?” the lawyer asked.

“Absolutely,” Katzman replied.

Nanavati also suggested that Manafort’s partner and aide Rick Gates might have been behind the apparently forged invoices. Katzman told the court he had some dealings with Gates to try to get bills paid, but under questioning by the defense attorney, Katzman said he could not address Gates’ educational level “or spelling ability.”

Judge says "oligarch" is a dirty word

The term "oligarchs" may well be added to the growing list of banned words list at the tax evasion and bank fraud trial of former Trump campaign chairman Paul Manafort.

As the second day of Manafort's trial got underway Wednesday, U.S. District Court Judge T.S. Ellis III indicated he was worried that referring to the businessmen who funded Manafort's political work in Ukraine as "oligarchs" had the tendency to suggest that the defendant was engaged in shady and unsavory work.

"We're not going to have a case tried that he associated with despicable people and, therefore, he's despicable," the judge declared during an exchange before jurors were brought into the courtroom. "That's not the American way."

"Oligarchy is just despotic power exercised by a privileged few," Ellis observed. "Principals of high schools are oligarchs in that sense. What I want to avoid ... is how you use the term oligarch to mean he was consulting and being paid by people [who] are criminals. Of course, there will be no evidence about that."

Ellis said that if the term simply meant a wealthy person, it might not be objectionable. "Well, Mr. Soros would be an oligarch by that definition, and so would Mr. Koch, but we wouldn't call them that," the judge said, referring to politically active American billionaires George Soros and, apparently, to either Charles or David Koch, or perhaps both.

"The word 'oligarch' has come to have a pejorative meaning about which there will be no evidence in this trial," the judge said.

Prosecutor Greg Andres rose to object to the government being prevented from using the term.

"We don't call American businessmen oligarchs. Ukrainian businessmen are referred to as oligarchs. Those are the facts," Andres said.

Ellis interrupted to disagree. "Those are not the facts of this case," he snapped, saying that any witnesses using the term would be offering an opinion.

Prosecutors used the term repeatedly in opening statements Tuesday, saying that a number of Ukrainian oligarchs paid a total of more than $60 million to back Manafort's work in Ukraine on behalf of President Viktor Yanukovuch and his Party of Regions.

The judge ultimately agreed to allow the prosecution to submit a brief on the issue, including the question of whether some of the many documents being admitted into evidence in the case may contain the term and how to handle that.

Prosecutor floats idea Rick Gates won't be called

A prosecutor caused a scramble in the courtroom just after noon Wednesday by suggesting that Rick Gates, the longtime Manafort protege who took a plea deal and is often billed as the government's star witness, might not take the stand at all.

However, the move appeared to be not so much a blockbuster reveal as a feint aimed at getting more leeway from the judge to admit into court proceedings financial documents the FBI seized from Manafort's condo last year.

As prosecutor Uzo Asonye was questioning an FBI agent about a 2013 document Gates wrote relating to several tax issues, the judge asked why the government was having the agent discuss the contents of the memo rather than questioning the apparent author when he takes the stand.

"You're going to offer Mr. Gates, aren't you?" Ellis asked, clearly trying to move the tedious questioning along.

"He may testify in this case, your honor, he may not," Asonye said.

The statement prompted more than a dozen reporters to leave their seats in the gallery and head for the door.,

"That was news to me and, obviously about 27" others in the courtroom, the judge said to laughter from various quarters including some jury members.

Asonye quickly backpedaled, insisting he was simply observing that the prosecution constantly assesses its case to decide how to proceed.

"As the evidence comes in, we constantly evaluate whether or not" to call a witness, the prosecutor said. "That applies to every witness, not only Mr. Gates."

Ellis wasn't buying it. "The fact of the matter is you know who you are going to call," the judge shot back. "If you are going to call Mr. Gates, this is a waste of time."

Mueller's team did reveal their afternoon witnesses during the morning proceedings. They will include include Maximillian Katzman, a business partner to one of Manafort’s lawyers; Daniel Opsut, a comptroller from Mercedes Benz in Alexandria; and Ronald Wall, whose identity isn’t yet clear.

FBI agent details Manafort condo raid

The FBI knocked three times on Manafort’s door without getting an answer before its early morning raid last summer on his Alexandria, Virginia condominium, one of the lead agents who conducted the search testified Wednesday morning.

Matthew Mikuska, an 11-year FBI veteran and special agent, explained that the agents announced themselves and their search warrant but didn’t get an answer. Ultimately, they entered Manafort’s unit shortly after 6 a.m. with a key they’d already obtained. Mikuska, who said he works on counterintelligence issues, said he did not know how the FBI got the key.

Manafort, meanwhile, sat in the courtroom Wednesday morning at the defense table dressed again in a dark suit. He smiled at his wife, Kathleen and a small entourage of supporters, who were seated in the front row behind his attorneys. During the questioning, Manafort took notes on a yellow notepad and frequently whispered to one of his defense lawyers sitting next to him, Kevin Downing.

Mueller’s prosecutors made Mikuska their third government witness in the Manafort trial and asked him to walk the jury through how the FBI got into the longtime GOP operative’s apartment building in Northern Virginia, as well as more than 20 pieces of evidence they seized from the three bedroom, 2,000 square-foot unit.

Mikuska testified that the FBI had obtained a key fob — he didn’t know where it came from — that gave them access to Manafort’s building via an underground parking garage. They then took one set of elevators up to the lobby and rode in another set of elevators to Manafort’s unit on the fourth floor.

During cross examination, Mikuska said the FBI team of about 14 agents and other bureau officials were armed, with some wearing jeans or khakis and FBI-labeled coats or vests. Manafort’s lawyer, Richard Westling, tried to ask whether the FBI agents were wearing bullet proof vests, but Ellis sustained an objection from Asonye that the question wasn’t relevant.

Manafort didn’t answer the door when the FBI agents announced themselves, but Mikuska said the defendant was walking toward the FBI team as it entered the unit. Manafort’s wife was also present, the agent testified, adding that Manafort did not appear to be mnaking an effort to hide anything as federal agents came into the apartment.

Mikuska added that he was not working on Mueller’s wider Russia investigation prior to the raid.

Among the documents the FBI seized: signed applications for several bank loans at the center of the government’s bank fraud case against Manafort, as well as wire transfers indicating movement of several million dollars and invoices for home improvement work on Manafort-owned properties on Long Island, in New York, and in Palm Beach, Florida.

All of the documents were added to the court record and are expected to be made public later Wednesday.

Ellis called a mid-morning recess, interrupting Mikuska’s testimony after about 30 minutes. But the questioning resumed after a brief intermission. Headed into the lunch break, Ellis again joked to the jurors about the delights of the court’s menu.

“I hope your pheasant under glass will be delivered,” the judge said.

Admaker takes the stand

After the dust-up over language, the first prosecution witness for the day took the stand early Wednesday: admaker Daniel Rabin, who described his work with Manafort producing TV spots for Ukrainian political campaign.

"He demanded a lot of the people who worked for him. Paul was thorough. He was strategic. He always worked for the best of the campaign. He ran a very good campaign," Rabin said.

Ellis limited prosecutors further during Rabin's appearance, balking at efforts to introduce three photos showing Manafort with Yanukovych. The judge agreed to allow only one into evidence, suggesting that he didn't want too much evidence showing how Manafort rubbed shoulders with the very powerful.

While the judge allowed one of the photos to be admitted, when Andres asked to actually show it to the jury, the judge said tersely: "No." So Andres moved on.

Rabin said another key player in the group's work in Ukraine was Konstantin Kilimnik, a Ukrainian-Russian citizen who took ads written in English and translated them into conversational Ukrainian.

The name of one oligarch, Rinat Akhmetov, was also raised by Andres Wednesday. Rabin called Akhmetov "someone of wealth" in Ukraine and said he'd met him, perhaps in connection with a campaign Akhmetov mounted for Ukraine's parliament.

Defense lawyer Richard Westling asked Rabin if he'd done well financially in the dealings with Manafort. "Were you paid well for your work?" the lawyer inquired.

"It depends on who you ask," Rabin replied, estimating that the payments were in the hundreds of thousands of dollars.

Westling also again raised the notion that political consulting work overseas often bridges the U.S. ideological divide. While cautioning the Democratic consultant not to say if he worked for Democrats or Republicans in the U.S., the defense attorney asked: "In cases of international consulting, these side gets melded?"

"Well, there's no Democrats and Republicans anywhere but the U.S.," Rabin replied.

While federal authorities began investigating Manafort around 2014 and stepped up that scrutiny in the last couple of years, Rabin said he'd only been contacted by prosecutors for the first time about two months ago.