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Rick Gates testifies he, Paul Manafort committed crimes together

August 6, 2018

Rick Gates said Monday that he and former business partner Paul Manafort did commit fraud together, as the key witness finally took the stand in the Russia probe special counsel’s first case to go to trial.

Mr. Gates, though, also admitted to having embezzled 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 the alleged fraud.

Mr. Gates took the stand Monday afternoon and, asked directly if they committed crimes, he answered “Yes.”

He said he hid foreign bank accounts with millions of dollars in them from U.S. Treasury Department officials at Mr. Manafort’s direction, backing the government’s contention that Mr. Manafort, a one-time chairman of the 2016 Trump campaign, knowingly committed bank and tax fraud.

Mr. Gates, who was also on the Trump campaign, told the courtroom that he and Mr. Manafort did not report 15 foreign accounts. He said that they knew it was a crime because they had been told by Mr. Manafort’s accountants 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 under-reporting 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 he embezzled “several hundred thousand” dollars from Mr. Manafort by filing false expense claims. He said he stole the money by submitting false expense reports. Those expenses were paid through a wire transfer from the foreign bank accounts in Cypress that he and Mr. Manafort did not disclose to the government. He said Mr. Manafort was unaware of 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, over-reporting 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 things. 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 the Ukraine, a claim 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 was responsible for the crimes lodged against Mr. Manafort in an effort to hide the embezzlement.

That means the case will likely to down which former Trump campaign advisor has more credibility in the jury’s eyes.

Mr. Gates has pleaded guilty to deceiving federal investigators and is working with special counsel’s office against Mr. Manafort.

As part of the plea deal, prosecutors will not charge him the crimes he admitted on the witness stand and will drop a second indictment accusing him of bank and tax fraud, Mr. Gates said. That deal could be revoked and he could go to prison for 10 years.

But, Mr. Gates said, he could face additional charges if he doesn’t fulfill the agreement, which requires him to be truthful on the witness stand.

Prosecutors called Mr. Gates as the last witness Monday after two financial experts testified.

The first witness, accountant Cindy Laporta, was cross-examined by Mr. 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, discussing 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 had come from Mr. Gates.

Defense attorneys likely viewed that testimony as helpful as they prepare for their crack at Mr. Gates Tuesday. A witness alleging she relied on Mr. Gates for details on Mr. Manafort’s finances could bolster their argument that he was real mastermind behind the bank and tax crimes.

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