Manafort jury deliberating evidence and FBAR requirements

Jurors are weighing the evidence for a second day in the fraud trial of Paul Manafort after the judge responded late Thursday to four written questions they posed.

Jurors asked about the central question at the heart of every criminal trial: What is reasonable doubt? They also asked about the legal requirements for reporting foreign bank accounts to U.S. authorities and the definition of “shelf” companies, as well as whether they could correlate hundreds of exhibits with the 18 counts in Manafort’s indictment. Separately on Friday, U.S. District Judge T.S. Ellis III said he’d permit news organizations to argue for making public a variety of documents under seal in the case, including the names and addresses of the jurors and some of the judge’s sidebar discussions with lawyers.

Complex FBAR Requirements

The jury’s questions to the judge suggested that they may trip over at least four of the 18 counts against Manafort. He’s accused of failing to file foreign bank account reports, known as FBARs, for 2011, 2012, 2013 and 2014.

Paul Manafort exits the District Courthouse after a motion hearing in Alexandria, Virginia, in May 2018.
Paul Manafort exits the District Courthouse after a motion hearing in Alexandria, Virginia, on May 4, 2018. Photographer: Andrew Harrer/Bloomberg

U.S. taxpayers must file an FBAR if they had a financial interest in and authority over an account in a foreign country valued at more than $10,000. Taxpayers must file FBARs separately from their tax returns. Manafort faces five counts of filing false tax returns that failed to disclose his foreign accounts and understated income.

Prosecutors said that Manafort owned and controlled 31 foreign accounts and that more than $60 million flowed through them from 2010 to 2014. But defense lawyers argued that prosecutors failed to prove that Manafort controlled those accounts, with names like Global Highway Limited, Leviathan Advisors Limited and Lucicle Consultants Limited.

The jurors asked whether someone is required to file FBARs if he owns less than 50 percent of an account and doesn’t have signature authority but is authorized to disburse funds. That suggests that jurors are wrestling with how to apply the law’s complex requirements to the murky structures set up by Manafort’s law firm in Cyprus.

The Justice Department rarely tries to prove criminal FBAR violations at trial. Instead, it forced thousands of U.S. taxpayers to pay large civil FBAR penalties during a crackdown over the past decade on offshore tax evasion, primarily in Switzerland.

A pioneer in the Justice Department’s use of FBAR penalties against taxpayers was Kevin Downing, who’s now in private practice and Manafort’s lead lawyer.