Paul Manafort trial day 7: Rick Gates cross examination continues

Frederick Owens
August 8, 2018

Rick Gates said under questioning from Manafort's lawyer Wednesday that he told Federal Bureau of Investigation agents and Justice Department lawyers about some of the offshore companies that contained millions of dollars in proceeds from their Ukrainian political work.

In an aggressive cross-examination on Tuesday, Manafort's lead attorney, Kevin Downing, said to Gates: "You stole from Mr. Manafort".

DMP International's revenue stream from Ukraine dried up in 2014 after its main client, former Ukrainian President Viktor Yanukovych, fled to Russian Federation amid a popular revolt.

Prosecutors had braced for the tough questioning by getting Gates to come clean about his own crimes.

When Downing questioned why Gates had embezzled money from his boss, he used it as an opportunity to issue a public apology.

"After all the lies you've told and the fraud you've committed, you expect this jury to believe you?"

Gates undermined another of the defense's main arguments: that Manafort did not have the time to pay attention to his day-to-day expenses and personal finances.

Mr Manafort's trial in Alexandria is the first to arise out the Mueller probe and marks a major public test of that investigation's credibility. Mr Downing asked Gates.

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That's important to prosecutors, who need to not only prove Manafort skimped on paying millions of dollars in taxes. Gates testified that he'd followed Manafort's instructions as they set up Cypriot and other foreign bank accounts, moved money from Ukrainians into the U.S., made sure Manafort's name was scrubbed from the accounts, then lied to the IRS and banks. He said there were 15 secret accounts.

Ahead of that barrage, Gates has implicated himself in a vast amount of criminal conduct on the stand, an apparent strategic decision by prosecutors as they hope to take some of the steam out of the defense's questioning. He told jurors he embezzled from Manafort by filing false expense reports. Cindy Laporta, one of the accountants, also testified that Manafort and Gates had used phony loan documents to improperly reduce Manafort's income and lower his tax bill. The funds were logged as loans in order to meet later audits in Cyprus that required documentation of transfers between bank accounts. Prosecutors had previously said that Manafort's interactions with Calk were the only part of the trial expected to overlap with his Trump campaign role.

Manafort, a former Trump campaign chairman, has pleaded not guilty to 18 counts of bank and tax fraud and failing to disclose foreign bank accounts.

The case against Manafort has little 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 Russian Federation - the central question Mueller's team has tried to answer. But Trump has shown interest in the proceedings, tweeting support for Manafort. He has pleaded not guilty to the charges. Gates said he was guilty, having wired money from Cyprus through the United Kingdom to the U.S. without paying taxes on it for himself. Gates testified that Manafort asked him to float Calk, who was on Trump's economic advisory council, for Secretary of the Army. Manafort business partner Rick Gates testified Tuesday that it was Weissmann who confronted him about a lie he had told special counsel investigators, and it was Weissmann who told him he would have to admit to that lie in an additional charge to keep his plea deal with the special counsel's office alive. "WTF", Manafort wrote to Gates in an email using a common shorthand to show exasperation after learning his projected tax payment for 2014. You told me you were on top of this.

Gates finally admitted that he had provided false information prior to striking a plea agreement.

Gates, who also worked on Trump's campaign, is the star witness against Manafort.

Gates acknowledged that he did for two months and that he took first-class flights and stayed in "fancy hotels" around Europe, but said the money came from bonuses rather than illicit gains. Manafort broke his stare only to review government exhibits on a small monitor in front of him.

This story deletes a misquoted "not happy" from a Manafort email.

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