The star witness in the trial of former Trump campaign chairman Paul Manafort faced tough questioning on cross-examination on Tuesday about a "secret life" that included an extramarital affair and stealing funds from his former boss.
Rick Gates, who served as a right-hand man to Mr Manafort in his political consulting business for a decade, acknowledged maintaining a flat in London for the affair, inflating expense reports and a long list of other misdeeds.
“In essence, I was living beyond my means,” the married father of four said from the witness stand in Alexandria, Virginia. “I’m taking responsibility for it. I made a mistake.”
Mr Gates, who is co-operating with US Special Counsel Robert Mueller’s investigation into alleged Russian meddling in the 2016 US election, testified on Monday that he helped Mr Manafort doctor financial statements, hide foreign income and evade hundreds of thousands of dollars in US income taxes.
Under questioning by defence attorney Kevin Downing on Tuesday, Mr Gates also admitted he wrote a fraudulent letter to prospective investors in a movie project and that "it's possible" he submitted to Mr Trump's inaugural committee personal expenses, which may have been improper.
Mr Downing sought to portray Mr Gates as an inveterate liar, raising questions about whether he has been truthful with Mr Mueller’s office even after cutting a plea deal in February. Under the deal, he admitted to helping Mr Manafort evade taxes, violate US lobbying laws, and conceal foreign bank accounts. In addition, he pleaded guilty to making false statements to investigators.
“After all the lies you told you expect this jury to believe you?” Mr Downing asked Mr Gates, who responded that he did.
“I’m here to tell the truth,” Mr Gates shot back. “Mr Manafort had the same path. I’m here.”
Undercutting Mr Gates' credibility is the foundation of Mr Manafort's defence. Mr Manafort (69) has pleaded not guilty to 18 counts of bank fraud, tax fraud and failing to disclose foreign bank accounts containing tens of millions of dollars earned from work for Russian-backed politicians in Ukraine.
The charges largely predate the five months Mr Manafort spent on Mr Trump's campaign. If convicted on all counts, Mr Manafort could face eight to 10 years in prison based on federal sentencing guidelines, according to sentencing expert Justin Paperny.
Mr Gates made numerous damaging admissions during cross-examination.
He admitted to stealing from Mr Manafort, but he said he did not know how much money he took. Looking at a ledger listing nearly $3 million in transactions, he was unable to say which ones were legitimate and which ones he initiated with false expense reports.
Downing also pressed Mr Gates about creating “fake and phony” invoices to trigger payments to himself from Manafort’s accounts in Saint Vincent and the Grenadines.
“Are they payments for your secret life?” Mr Downing asked.
“No, they’re not,” Mr Gates said.
Prosecutors hope to wrap up their case this week. Mr Manafort’s trial is the first on charges brought by Mr Mueller’s office, who is also investigating whether Trump campaign members co-ordinated with Russian officials. Mr Gates also worked on the campaign.
During questioning by prosecutors on Tuesday morning, Mr Gates said that Mr Manafort had emailed him in late 2016 asking for the incoming Trump administration to consider tapping Federal Savings Bank Chief Executive Steve Calk for Secretary of the Army.
Employees from Federal Savings Bank are expected to testify later this week. Prosecutors allege that the bank lent Mr Manafort money based on fraudulent documents, and that Mr Calk was named an adviser to the campaign and sought the Army post as part of a quid pro quo. Mr Calk and Federal did not reply to requests for comment.
Mr Gate’s testimony was part of the prosecution’s effort to prove that Manafort was responsible for financial manoeuvring that he and other witnesses have testified include filing false tax returns, defrauding banks in borrowing against real estate, and failing to report foreign bank accounts.
I just saw this. WTF
One part of his testimony led to laughter in the courtroom. “Not happy. I just saw this. WTF,” Mr Manafort wrote to Mr Gates in an email using a common shorthand to show exasperation after learning his projected tax payment for 2014.
Mr Gates said that he helped fabricate documents to convert some income to a loan to lower Mr Manafort’s tax bill.
Mr Gates also acknowledged creating a fraudulent letter for movie producer and political operative Steven Brown, who pleaded guilty in April to participating in a scheme that defrauded investors of over $9.5 million involving false documents. Walter Mack, Mr Brown's lawyer, declined comment. Mr Gates also testified on Tuesday how he and Manafort hid income earned for political work in Ukraine, explaining their efforts to set up companies in Cyprus so they could easily be paid by Ukrainian businessman who held bank accounts there.
Prosecutors showed contracts laying out that Mr Manafort would be paid $4 million a year in quarterly instalments of $1 million, all channeled through Cyprus. The funds were logged as loans in order to meet later audits in Cyprus that required documentation of transfers between bank accounts. Gates testified they were not loans but compensation to Mr Manafort. - Reuters