Longtime Manafort deputy admits to fraud
Witness points finger at his former boss
ALEXANDRIA, Va. — The government’s star witness in the trial of Paul Manafort testified Monday 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, described by witnesses as Mr. Manafort’s “righthand man,” explained his criminal conduct as prosecutors looked to provide jurors with testimony from a co-conspirator they say carried out an offshore tax-evasion scheme on behalf of his former boss.
Mr. Gates, who is expected to continue testifying Tuesday, has been regarded as a crucial witness for the government since pleading guilty to two felony charges. He agreed to cooperate in special counsel Robert Mueller’s investigation into possible ties between Russia and the Trump campaign.
The courtroom testimony brought Mr. Gates face-to-face with Mr. Manafort, his longtime boss and fellow Trump aide, for the first time since his plea deal. 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 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 documents to help his former boss obtain millions of dollars 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.
Under questioning from prosecutors, Mr. Gates read off the names of more than a dozen shell companies he and Mr. Manafort set up in Cyprus, St. Vincent and the Grenadines and the United Kingdom to stash the proceeds of Ukrainian political consulting work.
Askedwhether the money in the accounts was Mr. Manafort’s income, Mr. Gates said, “it was.”
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. 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. Manafort’s defense signaled early in the trial that they intend to blame Mr. Gates for any illegal conduct and to cast him as a liar and embezzler who can’t be trusted.
Mr. Gates pleaded guilty to a conspiracy charge and to lying to investigators as part of his plea agreement. He is awaiting sentencing, and he told jurors Monday that in exchange for his truthful testimony prosecutors agreed not to oppose his attorney’s request for probation at a later date. That recommendation is nonbinding as a federal judge will ultimately decide his sentence. He faces 57 to 71 months in prison under federal sentencing guidelines.
The criminal case has nothing to do with either man’s work for the Trump campaign and there’s been no discussion during the trial about whether the Trump campaign coordinated 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.
U.S. District Judge T.S. Ellis III, who repeatedly interrupted prosecutors last week as they tried to present evidence about Mr. Manafort’s lavish life, such as $900,000 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.
Judge Ellis said all that’s relevant is that Mr. Manafort was paid and whether he hid the income from the IRS.
“It doesn’t matter whether these are good people, bad people, oligarchs, Mafia. ... You don’t need to throw mud at these people,” Judge 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 Honor stops us and tell us to move on,” he said.
Prosecutors say Mr. Manafort used the companies to stash millions 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.
All told, prosecutors allege that Mr. Manafort failed to report a “significant percentage” of the more than $60 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.