The US government's star witness in the financial fraud trial of Paul Manafort has testified that he embezzled hundreds of thousands of dollars from the former Trump campaign chairman – and told jurors that he and Mr Manafort committed crimes together.
Rick Gates has been regarded as a crucial witness for the US government ever since he pleaded guilty this year to two felony charges and agreed to co-operate in special counsel Robert Mueller's investigation into possible ties between Russia and the Trump campaign.
The hugely anticipated courtroom showdown brought Mr Gates face-to-face with his longtime business associate and fellow Trump campaign aide.
His testimony, given in short, clipped answers as Mr Manafort rarely broke his gaze from the witness stand, follows that of vendors who detailed Mr Manafort’s luxurious spending and financial professionals who told jurors how the defendant hid millions of dollars in offshore accounts.
Mr Gates, described by witnesses as Mr Manafort’s “right-hand man”, told jurors that he siphoned off the money without Mr Manafort’s knowledge by filing false expense reports.
He also admitted to concealing millions of dollars in foreign bank accounts on Mr Manafort’s behalf and to falsifying loan applications and other documents to help Mr Manafort obtain more in bank loans.
“We didn’t report the income or the foreign bank accounts,” Mr Gates told jurors, noting that he knew he and Mr Manafort were committing crimes each time.
Mr Gates read off the names of more than a dozen shell companies he and Mr Manafort set up in Cyprus, St Vincent, the Grenadines and the UK to stash the proceeds of Mr Manafort’s Ukrainian political consulting work.
Asked whether the money in the accounts was income to Mr Manafort, Mr Gates said, “it was”.
Mafia treatment
Mr Gates said he repeatedly lied to conceal the bank accounts and, at Mr Manafort’s direction, he would classify money that came in as either a loan or income to reduce Mr Manafort’s tax burden.
Mr Manafort’s defence has sought to blame Mr Gates for any illegal conduct and cited the embezzlement to impugn Mr Gates’ credibility.
Mr Gates, who also served in a senior role in Donald Trump’s presidential campaign, is expected to face aggressive cross-examination once prosecutors are finished questioning him.
Mr Gates pleaded guilty to financial fraud and to lying to investigators as he negotiated the plea agreement earlier this year. He is awaiting sentencing.
The criminal case has nothing to do with either man’s work for the Trump campaign and there has been no discussion during the trial about whether the Trump campaign co-ordinated with Russia – the central question Mr Mueller’s team has tried to answer.
But Mr Trump has shown interest in the proceedings, tweeting support for Mr Manafort and suggesting he had been treated worse than gangster Al Capone.
US district judge TS Ellis III, who repeatedly interrupted prosecutors last week as they tried to present evidence about Mr Manafort’s lavish life such as $900,000 (€780,00) in expensive suits and a $15,000 ostrich jacket, clashed again with prosecutor Greg Andres on Monday when Mr Andres delved into the status and identities of the Eastern Europeans who made payments to Mr Manafort.
Mr Ellis said all that is relevant is that Mr Manafort was paid and whether he hid the income from the Internal Revenue Service (IRS).
“It doesn’t matter whether these are good people, bad people, oligarchs, Mafia . . . You don’t need to throw mud at these people,” Mr Ellis said.
Mr Andres said he was entitled to show the jury why Mr Manafort was getting tens of millions of dollars in payments.
“When we try to describe the work, Your Honour stops us and tell us to move on,” he said.
Struggling finances
Prosecutors say Mr Manafort used those companies to stash millions of dollars from his Ukrainian consulting work, proceeds he omitted year-after-year from his income tax returns.
Later, they say, when that income dwindled, Mr Manafort launched a different scheme, shoring up his struggling finances by using doctored documents to obtain millions more in bank loans.
Prosecutors allege that Mr Manafort failed to report a “significant percentage” of the more than 60 million dollars (€51 million) they say he received from Ukrainians.
They aimed to show jurors how that money flowed from more than a dozen shell companies used to stash the income in Cyprus.
On Friday, a tax preparer named Cindy Laporta admitted that she helped disguise 900,000 dollars (€777, 663) in foreign income as a loan in order to reduce Mr Manafort’s tax burden.
Ms Laporta, who testified under an immunity deal with the US government, acknowledged that she agreed under pressure from Mr Gates to alter a tax document for one of Mr Manafort’s businesses.
Under cross-examination on Monday, defence attorney Kevin Downing pressed Ms Laporta on the complexities of Mr Manafort’s finances as he worked to paint a picture of a political consultant who left the details to professionals and, in particular, to Mr Gates.
Mr Downing also accused Mr Gates of embezzling “millions”, a higher amount than Mr Gates later admitted to in his testimony.
Ms Laporta said she had grown to distrust the information Mr Gates was providing her, though she did not know about the embezzlement.
But she said she believed Mr Manafort was directing Mr Gates’ efforts to disguise loans and conceal income, noting that Mr Manafort was copied on her email traffic with Mr Gates.
“In most instances, it was clear that Mr Manafort knew what was going on,” she said. – AP