Rick Gates said Monday that he and former business partner Paul Manafort did commit fraud together, as the key witness took the stand in the first case that the Russia investigation’s special counsel has taken to trial.
Mr. Gates, though, also admitted to embezzling from Mr. Manafort during their time as partners working for foreign clients, a disclosure that could hurt the government’s attempt to label Mr. Manafort the mastermind of fraud.
Mr. Gates took the stand Monday afternoon and, asked directly whether the two men had committed crimes, he answered, “Yes.”
He said he hid foreign bank accounts with millions of dollars from U.S. Treasury Department officials, at Mr. Manafort’s direction, backing the government’s contention that Mr. Manafort, a onetime chairman of the 2016 Trump campaign, knowingly committed bank and tax fraud.
Mr. Gates, who was also with the Trump team as deputy campaign manager, told the courtroom that he and Mr. Manafort did not report 15 foreign accounts. He said they knew it was a crime because Mr. Manafort’s accountants told them so in emails.
In later testimony, Mr. Gates said he lied to Mr. Manafort’s accountants to help his former boss file false tax returns. Those lies, he said, included underreporting Mr. Manafort’s income, creating false loans and not reporting Mr. Manafort’s ownership of foreign accounts.
When asked why he lied to the accountants, Mr. Gates said it “was at the direction of Mr. Manafort.”
Some witnesses have described Mr. Gates as Mr. Manafort’s “right-hand man.”
Mr. Gates also acknowledged a list of his own misdeeds, including acknowledging that he embezzled “several hundred thousand” dollars from Mr. Manafort by filing false expense claims. Those expenses were paid through a wire transfer from the foreign bank accounts in Cyprus that he and Mr. Manafort did not disclose to the government.
He said Mr. Manafort was unaware that his former protege had been stealing from him.
Mr. Gates also disclosed a number of other crimes that were not in the federal indictments of him and Mr. Manafort. While on the stand, Mr. Gates confessed to creating a fake letter to an investment company for a colleague named Steve Brown; overreporting his income on mortgage and credit card applications; and lying to his personal accountant about overseas accounts he controlled.
Furthermore, Mr. Gates admitted that he lied in a lawsuit deposition after Mr. Manafort asked him not to include certain information. He also admitted to lying to federal investigators while discussing a plea deal in the Manafort case. He claimed a March 2013 meeting with a lobbyist and Congress did not include a discussion about Ukraine, which he later recanted.
The disclosures will likely give Manafort attorneys plenty of ammunition when they cross-examine Mr. Gates on Tuesday. They have claimed that Mr. Gates’ efforts to hide his own embezzlements created the apparent basis for the charges lodged against Mr. Manafort.
That means the case will likely turn on which former Trump campaign adviser has more credibility in jurors’ eyes.
Mr. Gates has pleaded guilty to deceiving federal investigators and is working with the special counsel’s office against Mr. Manafort.
As part of the plea deal, prosecutors will not charge Mr. Gates with the crimes he admits on the witness stand and will drop a second indictment accusing him of bank and tax fraud.
But, Mr. Gates said, if he lies on the witness stand, the deal could be revoked and he might face additional charges. Under those circumstances, he said, he could go to prison for 10 years.
Prosecutors called Mr. Gates as the last witness Monday after two financial experts testified.
The first witness, accountant Cindy Laporta, was cross-examined by Manfort attorney Kevin Downing. His questions focused on Mr. Gates’ role in organizing Mr. Manafort’s taxes.
Ms. Laporta testified about the high level of complexity required to complete Mr. Manafort’s taxes and discussed several properties in New York that often shifted from rental to personal use each year.
When asked how she knew how to list the properties on Mr. Manafort’s taxes, Ms. Laporta said she “relied on Rick Gates’ facts.”
She later said the “only information she had” on the property came from Mr. Gates.
Defense attorneys likely viewed that testimony as helpful as they prepared for their cross-examination of Mr. Gates.
A witness saying she relied on Mr. Gates for details on Mr. Manafort’s finances could bolster their argument that he was the real mastermind behind the bank and tax crimes.
• Jeff Mordock can be reached at jmordock@washingtontimes.com.
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