Manafort trial: Rick Gates admits to extramarital affair and former Trump campaign aide accused of 'secret life'
Rick Gates faces tough examination from defence as they seek to undermine his credibility
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Your support makes all the difference.Paul Manafort's longtime deputy Rick Gates has told court that he spent years disguising millions of dollars in foreign income as loans to lower Donald Trump’s former campaign chairman's tax bill
MrGates, the government's star witness, testified that he and Mr Manafort used offshore shell companies and bank accounts in Cyprus to funnel the money, all while concealing the accounts and the income from US tax authorities.
“In Cyprus, they were documented as loans. In reality, it was basically money moving between accounts,” Mr Gates said during his second day of testimony in the bank fraud trial,
Under cross examination Mr Gates, admitted that he had “another relationship” involving first-class flights and luxury hotels, but denied these were funded with money embezzled from Manafort. Mr Manafort's defence called this "the secret Rick Gates".
Prosecutors summoned Mr Gates, described by witnesses as Mr Manafort's “right-hand man,” to give jurors the first-hand account of a co-conspirator they allege helped Mr Manafort carry out an elaborate offshore tax-evasion and bank fraud scheme.
On Monday, Mr Gates said the pair had committed crimes together by stashing money in foreign bank accounts and falsifying bank loan documents in order to disguise income from US tax officials.
He also acknowledged having embezzled hundreds of thousands of dollars from Mr Manafort.
Mr Manafort has pleaded not guilty to 18 counts of bank and tax fraud and failing to disclose foreign bank accounts.
The charges largely predate his five months on the Trump campaign.
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Mr Manafort’s defence hinges on pinning the blame on his former aide, and his attorneys have accused Mr Gates of embezzling millions of dollars from his former boss.
The case drew scores of people who waited in line for hours outside the courthouse and then jammed into both the courtroom and an overflow room that contained a video feed of the proceedings.
In early testimony on Tuesday, Mr Gates related his role in setting up offshore bank accounts for Mr Manafort, a complex arrangement that was requested by those paying for Mr Manafort's political consultancy work in Ukraine.
Mr Gates testified that Mr Manafort negotiated the offshore payment structure in person with Ukrainian business people, and then Mr Gates would then codify the details in writing.
Mr Gates also described to jurors how he repeatedly submitted fake financial documents allegedly at Manafort's behest as his former boss became concerned he was paying too much in taxes and, later, that his funds were drying up after the consultancy work fell away after 2014
Associated Press
Mr Gates has told jurors that he provided a bank with fraudulent home insurance documents at Mr Manafort's request in order to apply for a loan from Citizens Bank.
Mr Manafort reportedly told a representative from that bank that he did not have a mortgage on a townhouse he bought for $3 million in cash in Brooklyn. But, insurance documents from insurance broker Donna Duggan showed that there was a mortgage on the house.
After buying the home, Mr Manafort had taken out loans against the property from Genesis Capital. Prosecutors claim that those loans were also acquired fraudulently.
Mr Gates has once again told the court how he helped Mr Manafort to defraud banks while seeking loans in 2016.
The new allegations revolve around an attempt to get a loan in which Mr Manafort was told by the banks that he did not have an adequate income to support the loan he was seeking.
In order to increase that income, Mr Gates said that he and Mr Manafort agreed to have a company Mr Manafort owned forgive a loan that had been made to Mr Manafort.
That action boils down to a potentially important distinction: He had previously called the income from that company, Peranova, a loan, to show a lower income rate. Later, when he wanted to show higher income, the "loan" was forgiven — which then reclassified the money as income.
Rick Gates has resumed testimony in the trial of Paul Manafort.
For the past 30 or so minutes, Mr Gates has been explaining fraudulent bank loan applications that he and Mr Manafort allegedly created during March of 2016, the time that they would have been working for the Trump campaign.
Several email threads presented by the prosecutors as evidence show messages from March 16, 2016 in which Mr Gates attempts to secure a loan for Mr Manafort from the Banc of California. In one message, Mr Manafort called Mr Gates "the quarterback" on all document preparation. Mr Gates admitted to falsifying the profit and loss statements that were required by the bank in order to secure the loan.
Mr Gates said that he lied on the bank loan application by overstating Mr Manafort's income by approximately $6 million. He sent the email to the Banc of California anyway, attaching a 2015 falsified profit and loss statement. Mr Manafort was named was on the email.
The "quarterback" message will likely be part of any defence questioning - as they have sought to paint Mr Gates as the one behind the alleged bank fraud.
The prosecution has shown Mr Gates emails that show him corresponding with Mr Manafort to get a Trump administration job for a bank executive that loaned money to Mr Manafort in 2016.
These are, again, some of the only instances in which the president or his campaign have been mentioned so far in the trial — and the specific incident in question came after Mr Manafort left the campaign, and after Mr Gates transitioned onto the team handling inauguration preparations.
In one of the emails, Mr Manafort wrote to Mr Gates: "We need to discuss Steve Calk for Sec of the Army. I hear the list is being considered this weekend". Mr Calk is the founder and CEO of Federal Savings Bank, which loaned Mr Manafort money in 2016.
In another email marked "urgent", he wrote to Mr Gates detailing who he wanted invited to Mr Trump's January inauguration party — including Mr Calk and his son.
Before the prosecution finished up with Mr Gates, those Yankees tickets have been brought up again.
Mr Gates told the court that Mr Manafort had become so hard up for cash that he was having difficulties paying for Yankees season tickets that he had had since 2006.
They ended up being paid for, but not before giving Mr Manafort a $225,000 debt — which he asked Mr Gates to write a letter claiming to have been the purchaser of. Mr Gates denied purchasing the tickets, however.
The defense is now cross-examining Mr Gates, whom they are likely to want to paint as an untrustworthy witness.
It is widely believed that the defense's general strategy is to discredit Mr Gates, and suggest he had actually been responsible for many or all of the alleged misdeeds.
During the defense's cross-examination, Mr Gates was questioned about his plea deal with the Office of the Special Counsel, and in doing so was forced to admit that he lied several times to that investigatory team before taking a deal.
Mr Gates said that he had met with that office three or four times in January, and that he accepted the plea agreement in February. He said that he has met with the Office of the Special Counsel 20 times since that deal was made.
Mr Gates has admitted that he submitted for reimbursement personal expenses to President Trump's inaugural committee, during cross-examination that has included questioning about various ways Mr Gates stole money from Mr Manafort and from others.
"Did you submit personal expenses to the inaugural committee for reimbursement," defense attorney Kevin Downing asked.
"I's possible," Mr Gates, who had said the reimbursement was overseen well but that he may have made a mistake, said.
Defense attorneys have forced Mr Gates to admit to having had an extramarital affair that he helped fund by embezzling money from Mr Manafort.
"There was another Richard Gates, isn't that right," defense attorney Kevin Downing asked Mr Gates during a heated exchange.
Mr Gates then acknowledged that he had "another relationship", and proceeded to admit that he had a secret apartment in London about 10 years ago.
When asked if he had paid for that secret life by taking $3 million from Mr Manafort, Mr Gates said he believes the total was actually lower, but that he did take money from Mr Manafort.
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