Paul Manafort Paul Manafort. Photo: Diego M. Radzinschi/ALM

A tax preparer for Paul Manafort testified Friday of how she had a hand in the former Trump campaign chairman allegedly lying on a tax return.

The government trotted out Cindy Laporta—the first witness to testify who’s been granted use immunity—as prosecutors continue to wade through the meatier details of its tax and bank fraud case against Manafort.

The end of Friday’s session means Manafort attorney Kevin Downing will likely cross-examine Laporta when court is set to reconvene Monday afternoon.

Here are some takeaways from Friday’s session:

In the thick of the tax and bank fraud case.

While earlier days of the trial focused on Manafort’s work in Ukraine and his lavish lifestyle, the government brought out two witnesses Friday that pushed the trial into bank and tax fraud-territory. But only Laporta, Manafort’s main tax preparer for his 2014 and 2015 returns, acknowledged she had suspicions of mishandled money.

Her testimony drew out a key moment in September 2015, on the day a 2014 tax return filing was due, when Rick Gates urged Laporta to help reclassify reported income in their books as a $900,000 loan.

Such a move “is not appropriate,” she told prosecutor Uzo Asonye. “You can’t pick and choose what’s a loan and what’s income.”

That loan was based off of fake loan documents Gates provided her, and that also came from Telmar Investments, one of Manafort’s Cyprus accounts, Laporta said.

But that change was ultimately made, reducing the income Manafort would have to report, and therefore the taxes Manafort’s firm would need to turn over to the government, Laporta said. Such a conversion could have saved them $400,000 to $500,000 in taxes, she said.

“I had a couple choices at that point,” Laporta said. She could refuse to file a tax return, which would open her firm up to litigation, or call Manafort and Gates “liars.”

“I didn’t think I should do that either,” she said. Of her decision, she told jurors: “I very much regret it.”

Discredit the tax preparer? Sure, judge says.

So far, Manafort’s defense attorneys have not aggressively gone after witnesses. But that could change after Laporta’s testimony.

Manafort’s defense team—consisting of Kevin Downing, Brian Ketcham, Richard Westling, Jay Nanavati and Thomas Zehnle—have avoided ruffling too many feathers. But Judge T.S. Ellis III hinted at an opening for the defense lawyers at the end of Friday’s session.

Questioning Laporta about being granted use immunity is not off-limits, Ellis said.

“You’re entitled to go into that,” Ellis said. “She said on stand she took responsibility for it. … You’re not limited in your cross-examination with respect to the immunity that was provided by the government.”

Downing will lead the cross-examination of Laporta on Monday, which could last 30 or 45 minutes.

The fact that she admitted wrongdoing?

“The question is if that makes her less believable for the jury,” said Barbara McQuade, a former U.S. attorney for the Eastern District of Michigan, who was watching Friday’s testimony. On the other hand, “when people admit to wrongdoing it could bring with it an aura of credibility.”

Don’t forget about the bank records.

Defense attorneys also hinted at another possible defense strategy earlier in the day. A conversation with the judge left a small hint about another kind of strategy they could use.

Before preparing to cross-examine Ayliff, Downing indicated to Ellis he would question Ayliff on whether the accountant kept records in case of an audit. “Only a fool” would hide accounts from his tax preparer if they risked being caught through an audit, Downing said.

Prosecutor Brandon Van Grack initially said the line of questioning about audits could be “incredibly prejudicial,” but the judge agreed to questions about maintenance of bank records, and whether they were kept in case of an audit, were appropriate, so long as Downing didn’t ask the accountant if he ever got audited.

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