Paul Manafort, former campaign manager for Donald Trump, walks to his vehicle after a status conference at the U.S. Courthouse in Washington, D.C., U.S. (Photographer: Andrew Harrer/Bloomberg)

Gates Says He Committed Crimes With Manafort: Trial Update

(Bloomberg) -- The trial of Paul Manafort resumed Monday afternoon with Rick Gates, Manafort’s former right-hand man, taking the witness stand to testify against his former boss. Gates is the prosecution’s star witness in the tax- and bank-fraud trial of Manafort in Alexandria, Virginia.

Gates Says He Stole From Manafort (5:34 p.m.)

Gates told jurors that when he worked for Manafort he submitted fake expense reports, which brought him hundreds of thousands of dollars that he didn’t deserve. Manafort’s lawyers claim Gates embezzled millions.

The testimony elicited by prosecutors is intended to blunt attacks on Gates’s character that defense lawyers are expected to launch on cross-examination.

Gates, clean-shaven for his court-room appearance, testified he lied to Manafort’s tax accountants at his boss’s direction. He admitted that he falsely characterized loans as income to reduce Manafort’s tax bill. Gates also said that he worked at Manafort’s direction to conceal his foreign accounts and hide his income.

He said that when Manafort began working on former Ukrainian president Viktor Yanukovych’s early campaigns, he brought Yanukovych "back from the political dead." Gates called Manafort, "one of the most politically brilliant strategists I’ve ever worked with."

Gates Recounts Work With Manafort for Jury (4:56 p.m.)

Prosecutor Greg Andres walked Gates through his career, focusing on the 10 years when he worked directly for Manafort. Gates said he worked primarily on political campaigns and on private equity deals in Ukraine and Cyprus.

"Over the years, my responsibilities increased," Gates said.

"Did you commit any crimes with Mr. Manafort?" Andres asked.

"Yes," Gates responded.

"Were you arrested?" Andres asked.

"Yes," Gates said. He said he later made the decision to plead guilty to one count of conspiracy against the U.S. and one count of making a false statement to the government.

Gates spoke rapidly and didn’t appear to look at Manafort directly. He recounted his biography, saying he graduated from William and Mary in 1994 and worked for an earlier Manafort firm from 1995 to 1997.

Gates Is Called to Testify (4:28 p.m.)

No, really this time. Gates, Manafort’s longtime deputy, has begun his testimony. The defense has accused him of embezzling money from Manafort’s political consulting firm and setting up the illegal bank and tax structures for which Manafort is charged.

Gates Appearance Is Pushed Back (4:12 p.m.)

The jury will have to wait just a little longer to hear from Gates, the government’s star witness. Soon after a Manafort defense lawyer told the court that Gates would be next to testify, the government called a different witness, Paula Liss.

Liss, a senior special agent for the Treasury Department’s Financial Crimes Enforcement Network, testified that she conducted searches to see whether Manafort had reported the existence of foreign accounts and came up empty.

Awaiting Rick Gates’s Testimony (3:19 p.m.)

Gates, who pleaded guilty to criminal charges and agreed to cooperate in the case against his former employer, is next to testify in Manafort’s criminal trial in Alexandria, Virginia.

Defense attorney Kevin Downing made that revelation Monday afternoon as he questioned Manafort accountant Cindy Laporta about what she would have done had she known that Gates embezzled millions of dollars from his former boss. The defense has blamed Gates, often described as Manafort’s right-hand man, for Manafort’s predicament.

Assistant U.S. Attorney Uzo Asonye objected to Downing’s questions about any Gates embezzlement, since no evidence of that had been presented yet at trial. Downing replied, “Mr. Gates is next up.”

Gates is expected to be the star witness for prosecutors. He worked closely with Manafort for a decade in Ukraine, where they served as political consultants and where prosecutors said they earned tens of millions of dollars.

Immunized Accountant Faces Cross-Examination (12:23 p.m.)

Jurors are hearing again Monday from Laporta, an accountant who testified Aug. 3 about going along with phony, backdated documents intended to help lower Manafort’s tax bills and secure real-estate loans even as his personal debt rose. Downing, the Manafort attorney, will cross-examine Laporta, who is testifying under an immunity agreement because she feared prosecution for perjury or false statements.

Downing will probably focus on Laporta’s interactions with Gates, who pleaded guilty and is cooperating with Mueller. Last week, another Manafort attorney, Thomas Zehnle, depicted Gates as a liar who embezzled millions of dollars while going behind his boss’s back.

Notably, after urging prosecutors to speed things along as jurors heard from 14 witnesses last week, U.S. District Judge T.S. Ellis III said late on Aug. 3 that Downing could begin his questioning of Laporta on Monday and wouldn’t rush him.

Two documents could prove troublesome for Manafort, 69. One came after a Sept. 15, 2015, conference call in which Gates balked at the amount of taxes that Manafort’s political consulting firm owed for 2014.

“Rick said it was too high, he didn’t have that money,” Laporta said.

After that, Gates sent her a document dated March 6, 2014, that purported to represent a $900,000 loan from a Cyprus entity, Telmar Limited, to Manafort’s company. The effect of the loan was to reduce Manafort’s income by that amount and reduce his taxes, she said. She recounted two other purported Telmar loans totaling $1 million that Gates helped engineer.

Laporta also discussed problems that arose in February 2016 when Manafort needed cash and applied to Citizens Bank for a real-estate loan against property he owned in New York. When a banker asked about $1.5 million debt that Manafort’s company owed to a Cyrus entity called Peranova Holdings Limited, Gates produced a backdated document showing it was forgiven. Laporta said she didn’t believe the loan had actually been forgiven.

In a court filing on Monday, prosecutors said they may call FBI forensic accountants Morgan Magionos and Renee Michael to read from Manafort’s emails.

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