Paul Manafort's Trial: Rick Gates Testifies Against His Former BossAugust 7, 2018
• Rick Gates, who was long the right-hand man to Paul Manafort, President Trump’s campaign chairman, is testifying in Mr. Manafort’s trial on bank and tax fraud charges.
• In the start of his testimony on Monday, Mr. Gates admitted that he and Mr. Manafort committed crimes together.
• Though this is the first trial stemming from the investigation of Robert S. Mueller III, the special counsel, Mr. Manafort’s case is separate from the investigation into Russia’s interference in the 2016 election and any ties to the Trump campaign.
Rick Gates returns to the stand
Mr. Gates was to resume the stand Tuesday morning in federal court in Alexandria, Va. The case pitted two of Mr. Trump’s former senior campaign aides, men who worked together for decades, against each other in a high-stakes battle that could land either or both of them in prison for years.
The prosecution is relying heavily on Mr. Gates to show that Mr. Manafort directed a multiyear financial fraud scheme, even if Mr. Gates helped him execute it. Mr. Gates, 46, President’s Trump’s former deputy campaign chairman, has figured more prominently than Mr. Manafort in the documents that prosecutors have presented as evidence.
But the prosecution’s witnesses have also testified that they generally believed that Mr. Gates was carrying out Mr. Manafort’s wishes when he gave false information to Mr. Manafort’s accountants. Prosecutors claim that information helped Mr. Manafort evade taxes on tens of millions of dollars in income and fraudulently obtain millions of dollars in bank loans.
Mr. Gates never glanced on Monday at Mr. Manafort, who glared in his direction. Asked whether they were involved in criminal activity together, Mr. Gates responded, “Yes.”
How their scheme worked
When one of the defense lawyers tried to suggest to Mr. Manafort’s tax accountant Monday that Mr. Gates had kept Mr. Manafort in the dark about his own finances, the accountant, Cynthia Laporta, pushed back.
“In most instances, it was clear that Mr. Manafort was aware what was going on,” she testified.
Mr. Gates’s statements reinforced that picture. He said that Mr. Manafort knew it was illegal not to report his foreign bank accounts to the Treasury Department but asked Mr. Gates to help him deceive his accountants so he could conceal income and pay less in taxes.
“I assisted Mr. Manafort in filing false tax returns,” Mr. Gates testified. “We didn’t report the income or the fact that the accounts existed.”
He said that some of Mr. Manafort’s income was disguised as loans from 15 shell companies that Mr. Manafort controlled, most of them in Cyprus.
Four Ukrainian oligarchs funneled money to Mr. Manafort’s accounts from their own shell companies in Cyprus, Mr. Gates testified. Once that income dried up, the government alleges, Mr. Manafort, with Mr. Gates’s help, falsified financial records so he could obtain bank loans maintain his opulent lifestyle.
Why Gates is so important to the prosecutors’ case
The outcome of the trial, the first to be mounted by prosecutors working for the special counsel, Robert S. Mueller III, may well hinge on whether or not the jury finds Mr. Gates to be credible. The trial is separate from the special counsel’s investigation into Russia’s election interference, though Mr. Mueller’s mandate allows him to pursue any crimes uncovered as part of his inquiry.
Mr. Gates and Mr. Manafort worked together for roughly two decades, including on the Trump campaign. Mr. Manafort served as campaign chairman for three months before he was forced out in August 2016. Mr. Gates served as his deputy, then worked as the campaign’s liaison to the Republican National Committee after Mr. Manafort’s departure.
Mr. Gates, 46, admitted Monday that he was guilty of a long list of crimes, including stealing hundreds of thousands of dollars from Mr. Manafort’s accounts by inflating his business expenses. He said that while he was helping Mr. Manafort hide income to evade taxes, and later to inflate his income to obtain bank loans, he was doing essentially the same on his own behalf.
He said he concealed some of his own income in overseas accounts, evading taxes, and lied on applications for a mortgage and for a credit card. In exchange for his cooperation, the government in February agreed to dismiss 22 criminal charges stemming from his involvement in the scheme for which Mr. Manafort is now on trial.
Mr. Gates pleaded guilty to lying to federal authorities and conspiracy to commit fraud but has yet to be sentenced. Although sentencing guidelines recommend a prison term of up to six years, he testified that prosecutors have agreed not to object if his defense attorney argues that he should receive probation.