By Aruna Viswanatha, Sadie Gurman and Julie Bykowicz 

ALEXANDRIA, Va. -- A federal jury found Paul Manafort guilty on eight counts of tax and bank fraud, but deadlocked on the 10 others counts -- and the judge declared a mistrial on those charges.

The former Trump campaign chairman was found guilty on all five counts he faced for tax fraud. He was also found guilty of failing to file a report on a foreign bank account, and two bank-fraud counts.

But the jury couldn't reach a verdict on three other counts of failing to report a foreign bank account and seven other counts of bank fraud.

"Mr. Manafort is disappointed at not getting acquittals all the way through, or a complete hung jury on all counts," said Kevin Downing, an attorney for Mr. Manafort. Mr. Downing also told reporters outside the courtroom, "However he would like to thank Judge (T.S.) Ellis for granting him a fair trial and the jury for its hard-fought deliberation." Mr. Downing said Mr. Manafort is evaluating all his options.

There was no immediate comment from the prosecution.

In comments from the bench, Judge Ellis said: "I think the government and Mr. Manafort received very zealous and effective representation from their counsel."

A pre-sentencing report by the probation office will be prepared to guide the judge in determining the penalty for Mr. Manafort. There was no immediate comment from his lawyers or the prosecution.

Earlier Tuesday, Judge Ellis instructed the jurors to continue their deliberations after they sent a note asking how to proceed if they couldn't agree on an individual count.

The six men and six women of the jury ended up deliberating for four days after two weeks of testimony.

Special Counsel Robert Mueller's prosecutors had called more than two-dozen witnesses and presented hundreds of emails, memos and financial documents over a two-week trial. They had argued Mr. Manafort had not paid taxes on at least $16 million of that income in the early 2010s -- and later mislead multiple U.S. banks to obtain millions of dollars in loans in 2016 after that income dried up.

Mr. Manafort's lawyers, meanwhile, argued that prosecutors were "selectively pulling" information to create a misleading picture, and relied too much on the testimony of Mr. Manafort's former deputy, Richard Gates. Mr. Gates admitted to a litany of misconduct over three days of testimony, including that he had embezzled hundreds of thousands of dollars from Mr. Manafort.

Defense attorneys also showed that Mr. Manafort had paid $8.3 million in taxes between 2005 and 2015 and had been open about his financial dealings.

While Mr. Mueller's investigation is focused on Russian interference in the 2016 election and potential links to the Trump campaign, Mr. Trump and the campaign came up only a few times during the trial. The trial instead had focused on Mr. Manafort's prior consulting work, how he paid for personal high-end expenses from foreign accounts, and the documents he provided banks as he applied for loans.

Jurors had asked for clarification about the legal obligations for reporting such accounts after their first day of deliberations

"This is the case about Paul Manafort and his money," prosecutor Greg Andres said when he summed up the case to the jury.

During the trial, colleagues described Mr. Manafort as a brilliant strategist who earned some $60 million running victorious political campaigns in Ukraine between 2010 and 2014

"I was deeply impressed by him and the people around him," Tad Devine, who worked with Mr. Manafort on the Ukraine campaigns, said as the first witness of the trial. Mr. Devine was top strategist for Bernie Sanders's 2016 presidential campaign.

Prosecutors then introduced a parade of high-end clothing, landscaping, and real-estate providers who said Mr. Manafort was one of their top clients. They said he bought, among other things, a custom-made $15,000 jacket "made from an ostrich" and landscaping services that included "hundreds and hundreds of flowers" in the shape of an "M." The vendors also testified Mr. Manafort was an unusual client in that he frequently paid by international wire transfers from bank accounts held in the name of companies like Leviathan Advisors Ltd. and Lucicle Consultants Ltd.

Then came Mr. Manafort's accountants, who said they were never told of those foreign accounts. Mr. Andres asked Mr. Manafort's bookkeeper if she knew of any accounts Mr. Manafort controlled in any of those names. As he read names aloud of the same Cyprus companies that vendors had just acknowledged, Heather Washkuhn said simply, "no," more than a dozen times, saying she believed those to be third-party clients of Mr. Manafort.

"Why would Mr. Manafort pay Ms. Washkuhn $100,000 a year to pay his bills?...And then when the bills related to payments from the Cyprus accounts...why would he pay those bills himself?" Mr. Andres asked jurors as he made his closing arguments. "The answer is, again, because he wanted to hide those accounts," he said.

Mr. Manafort's team argued he has been open about the accounts and transferred money from them to domestic accounts, which Ms. Washkuhn appropriately booked as income.

The star of the prosecution followed: Mr. Gates, Mr. Manafort's longtime associate. His appearance drew so much public interest that the 150-capacity courtroom and the overflow room were filled over the three days of his testimony. He pleaded guilty earlier this year and received a deal under which his cooperation could earn him probation, though a judge would ultimately decide his sentence.

Mr. Gates said he committed crimes with Mr. Manafort and didn't disclose the foreign bank accounts to accountants and tax preparers "at Mr. Manafort's request."

Mr. Manafort's lawyer Kevin Downing subjected him to a sharp cross-examination, in which he pressed Mr. Gates repeatedly about his "secret" life, scoffing when he struggled to remember events he discussed with prosecutors.

"Have they confronted you with so many lies that you can't remember any of it?" Mr. Downing asked Mr. Gates at one point.

"I'm here to tell the truth. I'm here because I made a decision to take responsibility for my actions. Mr. Manafort had the same path. I'm here, " Mr. Gates said.

As Mr. Downing made his closing statement, he told jurors not to trust Mr. Gates, saying, "To the very end, he lied to you."

FBI and IRS employees also testified to examining Mr. Manafort's financial dealings, saying at least $16 million of the money Mr. Manafort spent between 2010 and 2014 wasn't reported to tax authorities and that those expenses were personal in nature and couldn't be construed as business expenses subject to tax deductions.

Mr. Manafort's team had stressed that the political consultant had retained bookkeepers and accountants thinking they would appropriately manage his financial affairs. "How could this be this grand concealment? It doesn't make any sense," Mr. Downing said.

The second part of prosecutors' allegations followed, with testimony from employees from several banks that Mr. Manafort obtained more than $20 million in loans from in 2016 and 2017. They said their banks' decisions were largely based on financial information provided by Mr. Manafort that previous witnesses had testified was misleading or false. Mr. Manafort's team argued prosecutors cherry-picked innocent mistakes on those applications to paint a picture of fraud.

"We have to pull the lens back...If this were fraud, we would have courts across the country filled," another attorney for Mr. Manafort, Richard Westling, told the jury.

Hanging over much of the trial has been U.S. District Judge T.S. Ellis's courtroom commentary. He pressed prosecutors to "focus sharply" and "expedite" when chastising them for highlighting Mr. Manafort's free-spending ways at the outset of the trial -- and kept chastising them each time they brought up the subject.

As the days passed, prosecutors appeared to grow accustomed to Judge Ellis's asides. Late last week after Mr. Andres acknowledged he did not introduce a piece of evidence earlier as he should have, the judge said: "All right. Confession is good for the soul."

Mr. Andres responded: "I think my soul is in pretty good shape, or it should be after this process."

Mr. Manafort's attorney rested his defense Tuesday without presenting any witnesses or evidence.

Write to Aruna Viswanatha at Aruna.Viswanatha@wsj.com, Sadie Gurman at sadie.gurman@wsj.com and Julie Bykowicz at julie.bykowicz@wsj.com

(END) Dow Jones Newswires

August 21, 2018 17:50 ET (21:50 GMT)

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