Lead witness at Paul Manafort trial heavily scrutinised

Rick Gates’s motives for testifying against Trump former campaign chairman queried

Rick Gates, one-time associate to former Trump campaign manager Paul Manafort:   testified he helped Mr Manafort file false tax returns and hide his foreign bank accounts. Photograph: Michael Reynolds

Rick Gates, one-time associate to former Trump campaign manager Paul Manafort: testified he helped Mr Manafort file false tax returns and hide his foreign bank accounts. Photograph: Michael Reynolds

 

Lawyers were expected to tear into the credibility of the star witness at the trial of former Trump campaign chairman Paul Manafort on Tuesday – and potentially deal a blow to special counsel Robert Mueller.

Rick Gates, a long-time deputy to Mr Manafort who is co-operating with prosecutors, was likely to face withering cross-examination by the defence team in a case that represents the first court test for the Mueller investigation into 2016 election interference and alleged collusion between Trump aides and Moscow.

First on Tuesday, the prosecution continued to question Mr Gates, who described how millions of dollars were allegedly funnelled from entities controlled by Ukrainian businessmen into Mr Manafort’s shell companies in Cyprus.

Mr Manafort’s defence team has already portrayed Mr Gates as a liar and cheat who “had his hand in the cookie jar” when he worked for Mr Manafort, who is on trial for bank fraud and tax evasion. They now appear set to question him about his motives for testifying against his former boss in a bid to sow doubts in the jury’s mind over whether anything he says can be trusted.

Mr Gates’s admissions from the witness stand on Monday – that he failed to report income he routed through his bank accounts in the UK and embezzled several hundreds of thousands of dollars from Mr Manafort by filing false and inflated expense reports – look certain to come under scrutiny.

‘Bank fraud’

Although the allegations of collusion between Donald Trump and Russia are not at issue in this trial, any significant blows to the government’s case are likely be seized on by the president’s defenders, including conservative media, to support his contention that Mr Mueller’s investigation is a “rigged witch hunt”.

The judge, TS Ellis III, has already questioned the prosecution’s motives for bringing the case against Mr Manafort (69), a political consultant and lobbyist. “You don’t really care about Mr Manafort’s bank fraud,” he said at a hearing in May.

“You really care about getting information Mr Manafort can give you that would reflect on Mr Trump and lead to his prosecution or impeachment.”

Mr Ellis has maintained the irascible tone since the trial got under way last week in Alexandria, Virginia. He has pushed prosecutors to move faster and stay relevant. On Monday, he criticised prosecutor Greg Andres for avoiding eye contact with him, saying, “Look at me,” and suggesting that prosecutor Greg Andres “looked down as if to say, ‘That’s BS.’ ”

Mr Gates pleaded guilty in February and agreed to co-operate with prosecutors under a deal that could lead to a reduced sentence. On Monday, he testified that he helped Mr Manafort file false tax returns and hide his foreign bank accounts. He was aware that Mr Manafort was acting as an unregistered foreign agent in lobbying for Ukraine, he said.

Mr 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. His defence team is seeking to pin the blame on Mr Gates, who they say was responsible for day-to-day operations of the business. “The foundation of the special counsel’s case against Paul Manafort rests squarely on the shoulders of this one person,” they said last week.

On Tuesday, the court was shown a series of emails, contracts and what Mr Andres referred to as “fake invoices” in which Mr Gates altered the template to show the name of a shell company instead of Mr Manafort’s. This was a way to decrease Mr Manafort’s taxable income, added Mr Gates, who did not report the money to Mr Manafort’s bookkeeper or accountants.

Ukrainian payments

Mr Manafort’s political work included advising Viktor Yanukovych on policy after he won the Ukrainian presidency, Mr Gates said. “Mr Manafort worked with the local political officials and helped implement policy initiatives based on the campaign promises.”

For this Mr Manafort was paid $4 million a year, in quarterly payments of $1 million, Mr Gates recalled, though at some point the currency switched from US dollars to euro. His consultancy work also included “Engage Ukraine”, an effort to help Ukraine join the European Union.

Government lawyers have previously referred to Mr Yanukovych as Mr Manafort’s “golden goose”. After Mr Yanukovych lost power in 2014, “I would say it decreased the income stream”, Mr Gates, wearing a blue suit, white shirt and light blue tie, told the court matter-of-factly.

He added Mr Manafort worked for a time for the Opposition Bloc, the party that replaced Mr Yanukovych’s Party of Regions, but it was out of power and so “income streams were more difficult to come by”.

By July 2015, the court heard, Mr Manafort was struggling financially. Mr Andres asked: “Was he having trouble paying his bills?” Mr Gates replied: “He was.”

An August 2015 email was sent to Mr Gates about payments from the Opposition Bloc, which were overdue, causing Mr Manafort to be “upset”.

Mr Gates said he and Mr Manafort turned to a Cypriot lawyer, whom he referred to in court as “Dr K”, who set up bank accounts and shell companies on Mr Manafort’s behalf and “handled everything”.

Mr Andres questioned: “Did you understand there was some level of secrecy involved?” Mr Gates said: “Yes.”

When an individual sets up an entity in Cyprus, Mr Gates explained, their name does not appear on any of the paperwork. He said of Mr Manafort: “I believe he understood his name would not be represented, nor would mine.” – Guardian