Paul J. Manafort's bank and tax fraud trial is underway. Three guesses, and two don't count, of what's of most interest to me.
The proceedings in the Alexandria, Virginia, federal courtroom got off to a fast start.
The prosecutors told the jury of six men and six women they would prove Manafort "believed the law did not apply to him." The former chairman of Donald J. Trump's presidential campaign is facing in this trial 18 counts alleging he hid more than $30 million in overseas income by funneling it through offshore accounts, lying to banks and evading taxes.
One of Manafort's attorneys countered with the long-time lobbyist and political operative's defense: It's not his fault. The only thing Manafort is guilty of, according to his legal team, is trusting the wrong guy.
Specifically, the defense's theory goes, it's Rick Gates, Manafort's former business partner, who is to blame. Gates has pleaded guilty in the case and is expected to be the prosecutors' star witness.
Tricking taxes for personal gain: It's a good thing the case is under the jurisdiction of the Eastern District of Virginia, the so-called Rocket Docket.
Uncle Sam's attorneys have listed more than 400 exhibits and have a list of nearly three dozen witnesses they might call to prove their contention that Manafort cheated banks and the U.S. Treasury to maintain a lavish lifestyle.
The tax charges alone allege that Manafort evaded taxes on tens of millions of dollars in income from his work in Ukraine.
He faces five counts, covering tax years 2010 to 2014, of not reporting that money to the Internal Revenue Service, as well falsely affirming that he had no control over any financial accounts in foreign countries.
In addition, Manafort is accused of four counts, from 2011 to 2014, of not filing a required report of Foreign Bank and Financial Accounts, or FBAR, to report his non-U.S. bank and financial assets. This filing, as part of the Bank Secrecy Act, goes to the Treasury's Financial Crimes Enforcement Network (FinCEN).
After spending the money that he allegedly kept from Uncle Sam's coffers, prosecutors contend that Manafort turned to an elaborate bank fraud scheme.
Personal responsibility for filing: I know rich people tend to delegate things, so let's give Manafort's "some other guy did it" strategy a chance to play itself out, at least for a while.
But realistically, at least when it comes to taxes, the "not my fault" defense generally doesn't fly.
True, that approach helped actor Wesley Snipes avoid the most serious tax fraud and conspiracy charges filed against him a decade ago, but he still spent three years in Club Fed for lesser charges related to his failure to file a return.
And by now, every U.S. citizen knows of the IRS' most celebrated case. Al Capone, suspected of but never charged with serious crimes including murder, ended up in Alcatraz because he didn't pay taxes on his illegal income.
Capone's case still applies. Any American who has income, regardless of where in the world it's from or what sources paid it, must report that money to the IRS and pay the legal tax amount due.
If Manafort did indeed fail to file or filed incorrect returns, he could be in big trouble.
Legal experts familiar with such cases say that in those such as Manafort's, prosecutors come loaded with lots of documents and receipts (note the 400-plus pieces of evidence mentioned earlier), many of which bear the defendant's signature. That, they say, is the paper trail that tends to lead to convictions.
We'll see, per the court's penchant for speed, in a relatively short time whether that's true.
Filing lessons for all: But regardless of the Manafort verdict, the case is a good reminder for even us less wealthy and not so high-living taxpayers.
When you send the IRS a tax return, you have to sign it. And the fine print above where you affix that signature, either an old-school John Hancock on a paper form or an electronic signature, says:
"Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and accurately list all amounts and sources of income I received during the tax year."
Note especially, "I have examined this return and accompanying schedules and statements."
And yes, that language remains on the new Form 1040 that's being revised to reflect the new Tax Cuts and Jobs Act changes.
That means that if there's an issue, you — and every filer, even Paul Manafort — are still responsible for reporting and paying the proper tax liability.
You also might find these items of interest:
- 3 costs of tax evasion: Countries lose more than money
- Manafort indictment offers foreign bank account tax lessons
- Jury doesn't buy 'vow of poverty' as excuse for not filing taxes