Gates Testifies He Stole From Manafort and Helped Him Break Law

(Bloomberg) -- Paul Manafort’s former right-hand man, Rick Gates, broke his silence Monday and offered dramatic inside testimony about how wealthy Ukrainian businessmen used offshore accounts and shell companies to pay his boss millions of dollars for political consulting work.

Gates, 46, appeared at Manafort’s bank and tax-fraud trial, where he told jurors that he worked to help his boss conceal millions of dollars in income from the Internal Revenue Service, hide offshore accounts from tax authorities, and lie to banks that loaned money. The crimes Gates described largely predated Manafort’s stint as Donald Trump’s presidential campaign chairman in 2016.

The appearance by Gates, who pleaded guilty and is cooperating with Special Counsel Robert Mueller, sent a jolt through the courtroom in Alexandria, Virginia, where Manafort’s lawyers have branded him as a liar and a thief who embezzled millions of dollars and can’t be trusted. While Gates never mentioned Trump by name, he said he worked for “one of the recent presidential campaigns.’’

Speaking at a rapid clip, Gates told jurors he stole from Manafort even as he told lies to bookkeepers and accountants so that his boss could conceal most of his offshore earnings, estimated by prosecutors as more than $60 million from 2010 to 2014.

For the first time at this trial, Gates identified some of the wealthy businessmen, commonly referred to as oligarchs, who backed Ukraine’s former President Viktor Yanukovych and his pro-Russian Party of Regions. Those benefactors who wired money into Manafort’s Cyprus accounts included Rinat Akhmetov, Sergei Lyovochkin and Borys Kolesnikov, as well as Sergei Tihipko, a former government official who ran for president of Ukraine in 2010, Gates said.

At Manafort’s behest, Gates said, he essentially served as the back office facilitator of payments that ran through a Cyprus law firm where he worked with a lawyer known as “Dr. K.’’

“I was the one who helped organize the paperwork and initiate the wire transfers,’’ Gates said.

Jurors have previously heard about how Manafort lived a lavish lifestyle that included several houses, expensive clothes and luxury automobiles, all paid for with wire transfers from Cyprus accounts. But prosecutors hadn’t offered direct evidence that Manafort controlled the accounts until Gates provided that inside view.

Gates was clean-shaven, unlike his Feb. 23 court appearance, when he pleaded guilty to conspiracy and making false statements. He said his own crimes included cheating on his taxes and lying to FBI agents just weeks before he pleaded guilty in February to conspiracy and false statements. He also said he inflated his expenses by hundreds of thousands of dollars to steal from Manafort –- a lower figure than the millions of dollars that defense lawyers said he stole.

He said he decided to plead guilty and help prosecutors in the hope that they will recommend he serve less than the 57 to 71 months in prison he faces under advisory sentencing guidelines.

Tax Authorities

Over 75 minutes, prosecutor Greg Andres posed dozens of questions about Gates’s financial crimes and the ways that he worked to help Manafort conceal from his financial professionals and tax authorities.

“We told them that he did not have foreign financial accounts,’’ Gates said.

Like several of the witnesses who appeared last week, Gates said Manafort was “one of the most politically brilliant strategists I’ve ever worked with.’’ Manafort, he said, brought Yanukovych “back from the proverbial political dead.’’

Gates first worked for Manafort’s political consulting firm as an intern out of college. He left for other jobs and then rejoined Manafort from 2006 to 2016. He said his responsibilities grew over the years, and that he communicated with Manafort daily, and sometimes several times a day.

He testified that he worked with Manafort on a private equity fund that tried to raise money in Ukraine. That fund raised $18.9 million from Oleg Deripaska, a Russian oligarch with
close ties to the Kremlin who invested in a cable-television venture that ended badly.

Lawsuits filed by Deripaska in 2014 describe how Gates failed to respond to requests for
information on the investment around the same time. In January, Deripaska sued Manafort in New York, claiming money he gave him for the Ukrainian deal had vanished. Including fees, Deripaska said he paid Manafort more than $26 million. Prosecutors showed jurors a 2009 political memo that Manafort wrote to Deripaska.

Gates will return on Tuesday morning to continue his examination.

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