The Audio/Video industry plays a $2.2 million role in the first trial resulting from the investigations of Robert Mueller, US special counsel investigating Russian interference in the 2016 U.S. presidential election.
Prosecutors allege Paul Manafort, once President Trump’s campaign chairman, failed to pay taxes on $60 million he made to get Russia-friendly Viktor Yanukovych elected as President of the Ukraine.
Four years later, as Yanukovych turned away from the EU to Russia, in February 2014, Ukrainians took to the street in a revolution. Yanukovych had to flee (to Russia, of course) and the Ukraine still wants him for high treason. After Yanukovych bolted, with Russian influence in Ukraine waning, Putin gave the order for Russian troops to invade and occupy key Crimean locations, including airports and military bases. Russia formally annexed this seaside part of the Ukraine.
Paul Manafort was at the center of this, being paid handsomely to help install a pro-Russian government. And the fall-out created an international incident where Western countries including US slapped penalties on Russia, angering Putin and leading to the famous Russian intervention in the US election.
None of this is on trial… instead Manafort is in federal court in Virginia USA for bank and tax fraud charges. When the lucrative Ukrainian deal collapsed in revolution, Manafort lost his cash flow. He needed money and then, according to prosecutors, lied to get loans when the cash stopped coming in.
On previous days of Manafort’s trial, the prosecution dragged out witnesses establishing Manafort lived beyond his means, enjoying luxury items that allegedly exacerbated his cash flow problems and then led him to commit crimes of fraud.
And the testimony on luxury is where AV and home automation systems come in.
Florida-based home automation company Big Picture Solutions helped Paul Manafort set up home entertainment and internet access at homes Manafort owned on America’s East Coast.
BPS Inc. is a custom installation company specializing in high-end design, programming, project management and installation for residential and commercial markets. They work with partners including AMX, Lutron and Extreme Networks. A CEDIA member with one certified outreach instructor (COI) on staff, BPS says they build state of the art Engineered Theaters, Home Automation, Lighting Control and shades for Residential and Commercial.
Between 2011 and 2014, BPS COO Joel Maxwell says Paul Manafort spent $2.2 million with his company. Manafort was a whale of a customer, a “Top 5” client of BPS, according to Maxwell.
On the BPS website we found a client testimonial signed “Paul M.” Apparently Manafort was a happy client.
Maxwell testified Manafort paid BPS through international wire transfers—not particularly unusual as two or three other clients also paid this way..
Here is what was unusual: the prosecution showed Maxwell an invoice from BPS to Global Endeavour Inc., a Cyprus company Manafort had pay some of his bills. An invoice that proved altered, wrongly listing BPS as an LLC, wrongly listing the BPS address, and with none of the detail that BPS invoices typically show to illustrate the work done. Worse yet, Maxwell testified the company Global Endeavour Inc. was unknown to him, and not a client of his. He billed Manafort and yet Global Endeavour Inc. got a bill for it from a fake BPS.
Prosecution hasn't explained the significance yet, but it seems like a typical trick to get an overseas company to believe this expenditure was a business cost and not personal. So there might be tax advantages on the Cyprus side.
For billing issues for Manafort, Maxwell sometimes dealt with Richard Gates, Manafort’s deputy who is also under indictment. But Maxwell never met Gates-- and Manafort, he told the court, was always the client.
That testimony dials down the volume for the Manafort defense attorneys who hoped to pin blame for the fraud on Gates, rather than Manafort. Now the prosecution is showing Manafort was spending his own money. Even Manafort’s accountant testified that Manafort knew where every penny was going.
But luxury is not a crime. Judge T.S. Ellis III opened court this day by addressing the prosecution tack, agreeing the government is “allowed to introduce amounts of money" Manafort had-- but stating it was legally irrelevant what Manafort spent his money on.
“All the evidence of the fancy suits really is irrelevant and besmirches the defendant,” the judge noted. “Most of us don’t have designer suits, we don’t have pagodas … it engenders some resentment.”
So jurors must note “AV envy” is not on trial. It just represents $2.2 million of evidence that prosecutors say came from Manafort's hidden income where US tax was not paid.
Go BPS Inc.