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Rick Gates testifies that he and Paul Manafort committed crimes

Rick Gates.
Rick Gates.BRENDAN SMIALOWSKI/AFP/Getty Image/file 2017

ALEXANDRIA, Va. — The star witness against Paul Manafort, President Trump’s former campaign manager, admitted in federal court Monday that he helped Manafort commit a series of financial crimes over several years while also stealing from him and others.

In the most anticipated testimony in the tax evasion and bank fraud case against Manafort, Rick Gates testified that he and Manafort falsified tax returns and held 15 foreign bank accounts that were not disclosed to the federal government. Gates said the required financial filings were not submitted “at Mr. Manafort’s direction.”

The range of crimes to which Gates confessed was wide: bank fraud, tax fraud, money laundering, lying to federal authorities, lying in a court deposition, and stealing hundreds of thousands of dollars from Manafort’s accounts by falsely claiming expenses.

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Many of the crimes, Gates testified, were done with Manafort.

The case is being closely watched as the first test of the ability of the special counsel, Robert Mueller, to win a courtroom conviction, and because Manafort and Gates held top posts on Trump’s 2016 campaign. Its outcome may well depend on what the jury makes of Gates, who continued to be associated with the campaign — and later, was named deputy chairman of Trump’s inaugural committee, raising huge sums for the event — after Manafort was forced off the campaign amid a swirl of reports about the nature of his work in Ukraine.

Manafort had served as Trump’s campaign chairman for five critical months, helping the real estate tycoon and reality TV star secure the Republican nomination and proceed to the party’s convention. He resigned in August 2016.

At a time when the investigation into Trump and Russian involvement in the 2016 campaign has left Washington in a state of constant drama, Monday’s testimony was a moment of particular pathos.

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There was the protégé, having turned against his mentor and agreed to a plea deal, starting to give his account of how the two of them laundered their income.

Gates sat somber-faced, never glancing at Manafort, who glared in his direction. Asked by prosecutors whether he was involved in any criminal activity with Manafort, Gates responded, “Yes.”

He acknowledged his own wrongdoing and, speaking rapidly, testified that he knew about what the prosecutors allege is a multiyear tax and bank fraud scheme by Manafort because “I was the one who helped organize the paperwork.”

Gates’s dozen years of work at Manafort’s side makes him a perfectly positioned witness. He seemingly knew every detail of Manafort’s finances, down to how much he paid for season tickets to the games of his favorite teams: the New York Yankees, the New York Knicks, and the Washington Redskins.

He also testified that some of the crimes he committed had nothing to with Manafort.

Gates acknowledged he had inflated expense reports, an admission sure to be cast by the defense as him stealing from Manafort.

His testimony, which he gave after 20-some meetings with prosecutors, backed up the key elements of the prosecution’s case.

He said that at his mentor’s instruction, he lied to Manafort’s accountants about the fact that Manafort controlled foreign bank accounts, mostly in Cyprus, in the names of shell companies that the accountants believed were Manafort’s clients.

He said four Ukrainian oligarchs, immensely powerful figures who, with Manafort’s help, managed to help elect a Russia-aligned president in 2010, paid Manafort millions through their own shell companies in Ukraine. He said Manafort knew that he was legally required to report his foreign bank accounts but did not because he wanted to report less income and lower his taxes.

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Such testimony could help decide whether Manafort, 69, spends what could be the rest of his life in prison. The most serious of the 18 charges he faces carries a maximum of 30 years in prison.

Yet, Manafort’s allies argue that Gates can be discredited as a morally bankrupt and untrustworthy narrator who owes his professional career to Manafort and who siphoned millions from his accounts. Then, faced with the prospect of prison and huge fines, Manafort’s allies say, he blamed Manafort for financial machinations that he himself executed.

The defense also signaled Monday that it may allege extramarital affairs by Gates once they cross-examine him when the trial resumes Tuesday.

When Gates pleaded guilty in February to lying to federal authorities and to conspiracy to commit fraud, he agreed to cooperate in a bid for a lighter sentence.

The prosecutors have tried to punch preemptive holes in the notion that Gates is an untrustworthy turncoat and that Manafort was a sought-after political consultant who was too busy to notice Gates was falsifying his financial records. While Gates was the one who demanded accountants give him copies of financial statements in PDF format so he could convert them to Word and alter them, some of the falsified documents bear Manafort’s signature.

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And Manafort told the accountants that he had no foreign bank accounts, although prosecutors claim he established many in Cyprus and St. Vincent and the Grenadines in the names of shell companies so he could hide his true income. Late last week, out of the jury’s hearing, Judge T.S. Ellis III of the US District Court in Alexandria said prosecutors had proved both that Manafort personally denied that those accounts existed and that he controlled them.

On Monday, the prosecutors elicited testimony from Gates and from one of Manafort’s accountants that tied Manafort more closely to Russia. The accountant, Cynthia Laporta, testified that in 2006, Manafort received a $10 million loan from Oleg Deripaska, a Russian oligarch close to President Vladimir Putin of Russia. She said she saw no evidence it was ever repaid.

And Gates testified that Konstantin Kilimnik, who prosecutors claim is tied to Russian intelligence, had signatory authority over some of Manafort’s hidden accounts in Cyprus.

The political overtones of some of the testimony created a flash point in tensions between Ellis and Greg D. Andres, the lead prosecutor, that have been simmering since the trial opened last Tuesday. When Andres tried to describe Manafort’s political patrons in Ukraine — pro-Russia oligarchs who control entire industries — the judge urged him, as he has on a daily basis, to “go to the heart of the matter.”

“We have been at the heart of the matter,” Andres replied.