Prosecutors rested their case Monday against former Trump campaign chairman Paul Manafort after two weeks of testimony detailing the million-dollar lies they say he told to the IRS and banks that loaned him money.
The six-man, six-woman jury in Alexandria, Va., is expected to hear closing arguments later this week, and Monday’s session ended without defense lawyers signaling how many witnesses — if any — they intend to call to rebut the government’s case.
The judge is expected to decide Tuesday whether to grant a defense motion to dismiss the case before it goes to the jury — a frequent defense request that is rarely granted.
Manafort, 69, faces the prospect of spending the rest of his life in prison if he is convicted on many of the 18 charges of lying on tax forms and loan applications in the case brought by special counsel Robert S. Mueller III, who is investigating Russian interference in the 2016 election and related matters.
Prosecutors say Manafort lied to the IRS to hide millions of dollars in foreign bank accounts and then, when that money ran out, lied to bank executives to get loans to maintain his seven-figure lifestyle of expensive suits and luxury homes.
In the course of testimony from more than two dozen prosecution witnesses, the biggest arguments were not between prosecutors and defense lawyers, but between prosecutors and U.S. District Court Judge T.S. Ellis III.
Ellis has repeatedly expressed skepticism over points raised by the government, to the frustration of prosecutors, who have urged him not to misstate facts or law in the jury’s presence. Twice, the prosecution team filed formal requests that the judge tell the jury to ignore a prior statement of his; he did so once.
The prosecution had planned to rest its case last week, but an unknown issue that the judge kept under seal delayed the start of proceedings for several hours that day. On Monday, defense lawyers filed a sealed motion, and prosecutors filed a response also under seal. Neither side gave any sign what the issue was, but the judge indicated that it would be revealed after the trial was over.
“What we do will not be permanently sealed,” he told reporters and onlookers in the courtroom, as he prepared to have another sealed discussion.
Prosecutors also Monday called a Federal Savings Bank executive to testify about loans Manafort received in 2016 and 2017.
By that time, according to investigators, the millions of dollars Manafort had been making every year as a political consultant in Ukraine had dried up. His main client, former Ukrainian president Viktor Yanukovych, had fled the country in 2014, and Manafort had not found new clients, according to witnesses.
As his business hemorrhaged money, Manafort decided to take out loans on various properties he owned, but prosecutors say he lied about his debts and income to get those loans approved.
James Brennan, a vice president at Federal Savings Bank, which issued two loans worth a total of $16 million, testified Monday that Manafort didn’t declare on his applications that he had mortgages on two properties in New York — information that would have made it harder for him to secure a loan.
Other bank officials saw “red flags” in Manafort’s loan application and wanted to reject it, he said. On the forms, Manafort claimed more than $4 million in income for his business in 2015, but other documents showed that he made less than $400,000, Brennan testified.
Those concerns were overruled by the bank’s chief executive, Steve Calk, according to Brennan and another witness. Calk hoped to land a Cabinet-level position in the new Trump administration, a former bank executive testified Friday.
When Manafort changed the terms of a proposed loan, the bank’s president wanted to reject it but was overruled by Calk, Brennan testified. “It closed because Mr. Calk wanted it to close,” he said.
One of the loans received a rating of 4 — the lowest possible grade an application could get and still be approved, Brennan said, adding that he would not have approved the loan. The only reason the rating was even that high was because Calk pushed for it, Brennan said.
The $16 million loans were the largest the bank had ever issued up to that point, Brennan testified.
He testified that the loans have not yet been repaid, and the bank has written them off as a loss.
Before prosecutors rested, they sparred with defense lawyers about a technical issue that may be key in closing arguments. The case against Manafort has long centered on whether he lied when he claimed not to control any foreign bank accounts. As the prosecution case neared its end, defense lawyers said they intended to argue that Manafort did not own enough of his company to require him to disclose such accounts.
One of Manafort’s lawyers, Thomas Zehnle, said they plan to tell the jury that Manafort had no obligation to report foreign bank accounts in the years he owned only 50 percent of his firm, Davis Manafort International.
“It’s very clear that if you do not own more than 50 percent of the entity, you do not have a responsibility,” Zehnle said.
The other half of the firm is owned by Manafort’s wife, and they file joint tax returns.
Prosecutor Uzo Asonye countered that when Manafort filed paperwork as a foreign agent in 2017, he described himself as owning 100 percent of the business.
Manafort faces a second trial next month in the District on charges of failing to register as a lobbyist for a foreign government and conspiring to tamper with witnesses.
Separately Monday, a federal judge upheld the constitutionality of Mueller’s appointment, finding that Deputy Attorney General Rod J. Rosenstein lawfully named Mueller in May 2017 in response to a challenge to an indictment brought by a Russian firm accused of funding an Internet trolling operation targeting U.S. voters.
U.S. District Judge Dabney L. Friedrich, a 2017 appointee of President Trump to the District Court for the District of Columbia, was the latest trial-level judge — including ones appointed by Republican and Democratic presidents — to cast doubt on arguments advanced by conservative legal thinkers, led by Northwestern University law professor Steven G. Calabresi, about the validity of Mueller’s appointment.
Some advocates have said they are seeking to get an appeal before the Supreme Court. Calabresi is a founder and current chairman of the Federalist Society.
Friedrich became the second federal judge to find that higher-court precedents “make clear that the Acting Attorney General has the necessary statutory authority” to name a special counsel under the appointments clause of the Constitution. Rosenstein was put in charge of the Russia probe as acting attorney general after Attorney General Jeff Sessions recused himself.
Attorneys for Concord Management and Consulting argued that the appointments clause requires that the special counsel either be a “principal officer” nominated by the president and confirmed by the Senate, or be put in place only after Congress passes a law specifically allowing the deputy attorney general to confer the attorney general’s prosecutorial authority on an “inferior officer.”
Concord has pleaded not guilty to charges that it conspired to obstruct the 2016 U.S. election by funding a coordinated social media propaganda campaign, run by the Internet Research Agency of St. Petersburg, that pushed voters toward Republican candidate Donald Trump and away from Democrat Hillary Clinton.
Tom Jackman and Spencer S. Hsu contributed to this report.