By Nathan Layne and Sarah N. Lynch
ALEXANDRIA, Va. (Reuters) - Prosecutors in the trial of U.S. President Donald Trump's former campaign chairman Paul Manafort hammered away on Thursday at his lavish spending as they sought to prove fraud charges, while they also confirmed plans to call a key witness to testify.
The prosecution has spent the first 2-1/2 days of the trial attempting to portray Manafort as a tax cheat and a liar who hid much of the $60 million (£46 million) he earned from political work for pro-Russian politicians in Ukraine by stashing it in undisclosed overseas accounts.
A day after the prosecution raised the possibility that Manafort's former business partner Rick Gates - expected to be a star government witness - would not be called to testify, Greg Andres, a member of Special Counsel Robert Mueller's team, made clear on Thursday that he would.
"We have every intention of calling him as a witness," Andres said in a federal court in Alexandria, Virginia, outside Washington.
Gates pleaded guilty to making false statements after being indicted by Mueller. Defence lawyers have painted Gates as an untrustworthy business partner who embezzled funds from Manafort's consulting firm.
Manafort's trial is the first stemming from Mueller's 14-month investigation of Russia's role in the 2016 U.S. presidential election and potential coordination between the Trump campaign and Moscow, though none of the charges against Manafort involve this issue.
Manafort, 69, is charged with tax fraud, bank fraud and failing to report foreign bank accounts. He has pleaded not guilty to all charges.
Manafort routed millions of dollars to the United States by putting it in real estate, and spending it on expensive suits, cars and home renovations, according to prosecution witnesses.
Prosecutors said Manafort evaded taxes through this scheme. Five of the 18 counts he faces relate to filing false tax returns. Manafort has pleaded not guilty to all charges.
On Thursday, the jury heard from Joel Maxwell of a Florida-based company that installs lighting, audio visual equipment and automation systems for homes that did work for Manafort. Maxwell testified that some of the Manafort invoices shown to him from prosecutors appeared to be have been forged.
Michael Regolizio, of a landscaping firm in the Hamptons on New York's Long Island, also testified that a Manafort invoice was phoney, listing an incorrect address and an altered version of his company's name. Regolizio said he was paid about $450,000 between 2010 and 2014 for work for Manafort, and that the money was paid via a money transfer from Cyprus.
Two witnesses - an executive at an upscale clothier and a retired general contractor - testified on Wednesday that invoices purporting to be bills from their companies to a company tied to Manafort appeared to be fake.
It was unclear who created the invoices or how they were used.
'RESENTMENT AGAINST RICH PEOPLE'
As he did on Wednesday, U.S. District Judge T.S. Ellis warned prosecutors against focussing too much on Manafort's lifestyle.
"It kind of engenders some resentment against rich people," Ellis said, expressing concern about displaying photos exhibiting Manafort's wealth.
ADVERTISEMENTLater on Thursday, prosecutors are expected to call to the witness stand accountants and a series of tax preparers in an effort to convince the jury Manafort cheated on his taxes and failed to report foreign bank accounts.
Heather Washkuhn, managing director of the accounting firm Nigro Karlin Segal Feldstein & Bolno, will be one of the witnesses to be called on Thursday, Andres said.
In a court filing on Thursday, Mueller's team asked for an opportunity to further explain why Manafort's spending was directly relevant to the charges and would not unfairly prejudice the jurors.
In a separate motion, prosecutors also asked the judge to prevent Manafort from raising the issue of an Internal Revenue Service audit, saying any potential civil action was irrelevant to the criminal charges and could confuse or mislead the jury
As part of his guilty plea, Gates acknowledged routinely dealing with accountants in the preparation of Manafort's tax returns and misleading them with false information, although he said he did so with Manafort's knowledge.
ADVERTISEMENT"It is critical for the government to show that the returns were prepared based on information of which Manafort was personally aware," said David Axelrod, a former federal prosecutor who is now a partner at Ohio-based law firm Shumaker, Loop & Kendrick and is unaffiliated with the trial.
"The government must prove that Manafort was complicit in whatever Gates said or did," Axelrod said.
Mueller has indicted or secured guilty pleas from 32 people and three companies. Trump has called Mueller's investigation a witch hunt and on Tuesday called on Attorney General Jeff Sessions to end it.
(Reporting by Nathan Layne in Alexandria, Virginia; Additional reporting by Susan Heavey and Karen Freifeld; Writing by Warren Strobel; Editing by Will Dunham)
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