Rick Gates, the former business associate to Paul Manafort, admitted in court Monday that he committed crimes with Manafort, engaged in criminal wrongdoing himself, and stole money from his former partner.
Gates, the star witness for the prosecution, took the stand in the afternoon for his highly anticipated testimony in Manafort’s bank and tax fraud trial. Slated to testify for a few more hours Tuesday, Gates is expected to shed light on how Manafort hid millions of dollars he earned through political consulting in Ukraine from the Internal Revenue Service overseas.
He is also set to discuss how he and Manafort fudged documents in an effort to help Manafort obtain millions in bank loans after his income from his work in Ukraine dried up.
Often described by witnesses as Manafort’s “right-hand” man, Gates, wearing a navy suit and gold tie, told the 12-member jury on Monday that he stole “several hundred thousand” dollars from Manafort by filing inflated expense reports to him and creating fake ones. Gates received money for the fake expenses from bank accounts in Cyprus.
The admission could provide an explanation for several invoices that ostensibly came from U.S.-based companies who listed Manafort as a client. When presented with the documents, at least three witnesses said the invoices did not come from their businesses and told the court they did not receive payment for the amounts listed on the bills.
While Gates did not tell Manafort of the crooked expense reports, he did tell the government of his actions during interviews.
Manafort is facing 18 counts of bank and tax fraud, and he has pleaded not guilty. Gates was named as a co-conspirator in the indictment against both men, but ultimately agreed to a plea deal. He pleaded guilty to one count of conspiracy against the U.S. and one count of making a false statement to the government.
[Related: The rise and fall of Paul Manafort]
Witnesses throughout the trial have described Manafort as a savvy political operative who paid keen attention to detail. But Manafort’s lawyers say that the wrongdoing alleged against him was committed by Gates, who manipulated his boss and lied to enrich himself.
Gates offered praise during his testimony for Manafort’s abilities as a political consultant and credited Manafort with bringing Ukrainian President Viktor Yanukovych, whose presidential campaign Manafort worked on, “back from the proverbial political dead.”
“He’s probably one of the most politically brilliant strategists I’ve ever worked with,” Gates said of Manafort.
But he admitted to the court during his testimony to committing a bevy of crimes, some of which Gates said he did at Manafort’s request.
Gates said he assisted with filing false tax returns to the IRS that underreported Manafort’s income and said millions of dollars were concealed in offshore bank accounts, the existence of which were never reported to the tax authorities. Additionally, he said he was aware of more than a dozen entities in Cyprus and St. Vincent and the Grenadines, which prosecutors say Manafort controlled.
Gates told the court that Manafort instructed him not to report 15 foreign bank accounts to the federal government, though they knew that was illegal. He also said Manafort told him to make wire transfers from the offshore bank accounts and directed whether income that flowed through his overseas accounts should be treated as income or a loan.
By “treating it as a loan,” Gates added, Manafort was able to defer paying the amount of taxes he owed to the IRS.
While Gates told the court he committed criminal acts with Manafort, he also acknowledged engaging in criminal wrongdoing of his own.
Gates admitted to inflating his income on mortgage and credit card applications, creating a letter for a colleague that included inaccurate information, and lying during a deposition after Manafort asked him “not to include” certain things. Additionally, Gates said he altered and provided false documents to banks to help Manafort obtain loans, though he told the court he did not benefit from the loans that Manafort received.
While Gates was on the stand, prosecutor Greg Andres sought to lay out the stakes Gates would face if he were to lie during the course of his testimony. Gates could see a lesser prison sentence in exchange for his cooperation with the government as part of his plea agreement to work with special counsel Robert Mueller, who is overseeing the investigation into Russian interference in the 2016 election and whether the Trump campaign colluded with the Kremlin.
Gates was the third witness to testify Monday, following Paula Liss, a senior special agent at the Treasury Department’s Financial Crimes Enforcement Network, and Cindy Laporta, a tax preparer who worked on Manafort’s taxes.
Kevin Downing, one of Manafort’s lawyers, indicated Gates would take the stand after Laporta, though it was ultimately Liss who followed.
Toward the end of the fifth day of Manafort’s trial, Andres sparred with Judge T.S. Ellis III over the admittance of evidence and questions related to the involvement of Ukrainian billionaires with Manafort.
“Let’s get to the heart of the matter,” Ellis told Andres.
When Andres interrupted and said, “We’ve been at the heart,” Ellis raised his voice and told Andres, “Just listen to me!”
Ellis has frequently interrupted prosecutors during the trial, urging them to weed out any unnecessary pieces of evidence and move faster.
“I want to see this matter tried expeditiously,” Ellis told Andres.
He urged prosecutors to look at what they intend to present and “see if you can focus it very sharply.”
The jury will reconvene for the sixth day of Manafort’s trial Tuesday, with prosecutors estimating Gates’ testimony will span another three hours.
