Paul Manafort's longtime deputy Rick Gates has told court that he spent years disguising millions of dollars in foreign income as loans to lower Donald Trump’s former campaign chairman's tax bill
MrGates, the government's star witness, testified that he and Mr Manafort used offshore shell companies and bank accounts in Cyprus to funnel the money, all while concealing the accounts and the income from US tax authorities.
“In Cyprus, they were documented as loans. In reality, it was basically money moving between accounts,” Mr Gates said during his second day of testimony in the bank fraud trial,
Under cross examination Mr Gates, admitted that he had “another relationship” involving first-class flights and luxury hotels, but denied these were funded with money embezzled from Manafort. Mr Manafort's defence called this "the secret Rick Gates".
Prosecutors summoned Mr Gates, described by witnesses as Mr Manafort's “right-hand man,” to give jurors the first-hand account of a co-conspirator they allege helped Mr Manafort carry out an elaborate offshore tax-evasion and bank fraud scheme.
On Monday, Mr Gates said the pair had committed crimes together by stashing money in foreign bank accounts and falsifying bank loan documents in order to disguise income from US tax officials.
He also acknowledged having embezzled hundreds of thousands of dollars from Mr Manafort.
Mr Manafort has pleaded not guilty to 18 counts of bank and tax fraud and failing to disclose foreign bank accounts.
The charges largely predate his five months on the Trump campaign.
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Rick Gates admits to committing crimes while working for Paul Manafort
The 69-year-old former campaign manager has pleaded not guilty to 18 chargesRock Gates will take the stand again and prosecutors have said they expect to question their star witness for another three hours.
After that, Paul Manafort’s defense attorneys will get their turn to cross-examine Mr Gates. Factoring in breaks and lunch, his testimony could be the only that jurors hear on Tuesday.
Mr Manafort's whole defense is that he put his trust in Mr Gates who then embezzled from him and failed to accurately report their business income to the government. Mr Manafort has denied all the charges against him.
During his testimony on Monday afternoon, Rick Gates offered some insight into his cooperation with the government.
Gates testified that he had met 20 times with the government to prepare to take the stand. He said that he had turned over evidence to the government and that the government has promised not to bring any additional charges.
Gates admitted to three other crimes that had not been previously known: He lied on a mortgage application; he lied on credit card applications; and he filed false expense reports to his employer - Mr Manafort.
Rick Gates has taken the stand again in the Paul Manafort trial in Alexandria, Virginia.
He entered the court room at 9:35 am wearing a dark navy suit and light blue tie.
Justice Department lawyer Greg Andres, who was questioning Mr Gates for all of yesterday's testimony, resumed his questioning.
He began by asking about the Cyprus bank accounts that Ukrainian businessmen had asked Gates and Manafort to set up for payment purposes as part of their political work in Ukraine.
Rick Gates has testified how much money each Ukrainian client contracted Manafort for — showcasing the amount of money that was flowing into what prosecutors have alleged were hidden Cypriot accounts in 2011 and 2012.
It amounted to five million Euros.
Prosecutors and Mr Gates showed the jury four different contracts where a Ukrainian's shell company agreed to pay a Manafort shell company for overseas political or policy consulting work.
Mr Manafort reported some of the payments to tax authorities in the US as loans — though they were income, Mr Gates said.
Rick Gates testified that he and Paul Manafort were asked to come in for voluntary interviews as part of a joint FBI and Ukrainian “forfeiture investigation” in 2014. His understanding was that neither he or Mr Manafort were under investigation.
Mr Gates said he was interviewed first and asked about their work in Ukraine. At that point he said most of their Cypriot accounts were already closed.
He said Manafort asked him to meet with Serhiy Lyovochkin to “notify him and determine the status of his Ukrainian company” because a lot of their payments came from him.
“We didn’t know a lot about” the company, Mr Gates said. They met Mr Lyovochkin in France, he said, and he answered their questions. He also agreed to start paying Manafort through one bank rather than through international wire transfers, Mr Gates said.
One sent in November 2011 was especially condemning.
The defence will seek to show that it was Mr Gates who had control of the accounts and that Mr Manafort was wrong to trust him.
Mr Gates indicated that when he handled wire transfers for services or goods on behalf of Mr Manafort, he was instructed to hide payments from the bookkeeper if they were made through overseas accounts.
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Mr Manafort’s defence hinges on pinning the blame on his former aide, and his attorneys have accused Mr Gates of embezzling millions of dollars from his former boss.
The case drew scores of people who waited in line for hours outside the courthouse and then jammed into both the courtroom and an overflow room that contained a video feed of the proceedings.
In early testimony on Tuesday, Mr Gates related his role in setting up offshore bank accounts for Mr Manafort, a complex arrangement that was requested by those paying for Mr Manafort's political consultancy work in Ukraine.
Mr Gates testified that Mr Manafort negotiated the offshore payment structure in person with Ukrainian business people, and then Mr Gates would then codify the details in writing.
Mr Gates also described to jurors how he repeatedly submitted fake financial documents allegedly at Manafort's behest as his former boss became concerned he was paying too much in taxes and, later, that his funds were drying up after the consultancy work fell away after 2014
Associated Press
