Jurors have already heard Paul Manafort’s accountant testify about how Manafort recorded what she believed were fictitious loans on his taxes to reduce the amount he’d have to pay the IRS. She said Manafort’s business partner, Rick Gates, was intimately involved in that effort. … Prosecutors showed jurors a familiar, 2015 email in which one of Manafort’s accountants told Gates that in order to reduce a tax bill Manafort was facing, they would have to claim Manafort had an outstanding loan. Gates told jurors that he had been “tasked” by Manafort with initiating the exchange, because Manafort was upset about the taxes he would have to pay. …He said too that he and Manafort had discussions over the years about whether Manafort’s overseas accounts needed to be disclosed. This is a key point to the prosecutors’ case because it is illegal to knowingly fail to disclose such accounts to the IRS.
Gates said they set up various accounts to accept payments from the Ukrainian businessmen for whom they worked. Those businessmen routed the payments through companies that similarly disguised their involvement. At one point, Gates said, when Manafort learned that his name was connected to an account, he grew concerned. Gates, too, said he asked for his own name to be removed from an account to which it was connected.
In previously unreported developments, federal prosecutors in New York are examining whether Mr. Cohen committed tax fraud, people familiar with the investigation said.
Federal authorities are assessing whether Mr. Cohen’s income from his taxi-medallion business was underreported in federal tax returns, one of the people said. That income included hundreds of thousands of dollars received in cash and other payments over the last five years, the person said.Prosecutors also are looking into whether any bank employees improperly allowed Mr. Cohen to obtain loans for which he didn’t provide adequate documentation, people familiar with the matter said. In particular, federal investigators are looking closely at Mr. Cohen’s relationship with Sterling National Bank — which provided financing for Mr. Cohen’s taxi-medallion business — including whether Mr. Cohen inflated the value of any of his assets as collateral for loans, according to people familiar with the matter.