This courtroom sketch depicts Rick Gates, right, testifying during questioning in the bank fraud and tax evasion trial of Paul Manafort in Alexandria, Virginia. Illustration / AP
The courtroom showdown between Paul Manafort and his former right hand man Rick Gates grew painfully personal today.
A defence lawyer forced Gates, the prosecution's star witness, to admit he embezzled money years ago to fund a transatlantic extramarital affair.
In his second day on the witness stand in Alexandria, Virginia, Gates described in detail the lies, phony documents, and fake profits he said he cooked up at Manafort's direction.
Manafort, seated at the defence table, stared intently at Gates, who has assiduously avoided his gaze.
Gates' testimony is a central part of the prosecutors' case as they try to prove Manafort, US President Trump's former campaign chairman, committed bank fraud and tax crimes.
He testified that most of his crimes were committed on behalf of his former boss, while others he did for himself. Gates pleaded guilty in February as part of a deal with Special Counsel Robert Mueller.
As the first trial to emerge out of the special counsel investigation, the Manafort case is a critical public test of Mueller's work. His team of prosecutors and agents continue to probe Russian interference in the 2016 presidential election and whether any Trump associates conspired with those efforts.
The most jarring testimony today came when Manafort's lawyer Kevin Downing got his turn to question Gates.
"There was another Richard Gates, isn't that right? A secret Richard Gates?" Downing asked.
Gates, who seemed to immediately understand the lawyer's hint, began speaking in a quiet, strained voice, saying that about 10 years ago, he had "another relationship" - an extramarital affair.
Asked if that affair had taken place in London, Gates said it had occurred there and other places. For around two months, Gates said, he had kept a separate apartment in London. Under questioning, he admitted he had also flown first class and stayed in luxury hotels as part of that relationship.
NEW: MANAFORT & GATES didn't merely help elect the Russia-aligned Ukrainian president YANUKOVYCH. They were paid $4M/year through a "policy contract" to help him govern, including helping him enact ”campaign promises.” https://t.co/NCtf1rLxVA
— Kenneth P. Vogel (@kenvogel) August 7, 2018
Gates also testified that he had used money embezzled from Manafort to help fund his relationship. When Downing asked if he had spent as much as US$3 million on his affair, Gates replied that he thought the figure was lower, but agreed that he had taken money from Manafort without his permission.
Earlier in his testimony, Gates said he embezzled several hundreds of thousands of dollars while working for Manafort.
Many of Downing's questions seemed aimed at buttressing his central defence strategy - that Gates, not Manafort, is the real villain in the case, a man who told so many lies and stole so much money he could not remember them all.
Downing suggested that Gates may have swindled Gates out of US$250,000 for an investment he made in a high-frequency trading company Manafort had started with another partner in 2011.
Gates said he got the money as a bonus, though he said he didn't believe there were any emails to support his claim.
Interesting. The government showed a March 2013 agenda penned by Manafort for a meeting with Gates.
— Kyle Griffin (@kylegriffin1) August 7, 2018
The agenda has an item entitled "Yanks," which Gates said refers to Yankees tickets owned by Manafort. The doc reads "tickets going to Trump next week." https://t.co/63itahR8y6
Downing then presented Gates with a document showing money transfers from 2010 to 2014, some of them large dollar amounts out of Cypriot accounts where Manafort kept his money. Gates acknowledged the list included "unauthorised transfers," but could not specify which ones.
At one point, Gates said the document did not have enough details for him to offer better answers. But the line of questioning also prompted him to say repeatedly he did not recall money transfers to which Downing was referring, and which Downing claimed the Special Counsel had previously asked Gates about. Downing pointed out Gates's memory was much clearer when a prosecutor was the one doing the questioning.
"Have they confronted you with so many lies you can't remember any of it?" Downing asked.
Downing also accused Gates of swiping money from Manafort's firm to take trips to Vegas, buy sound equipment and shop at Whole Foods in Richmond, Virginia, where Gates lives with his family. Gates said he did spend firm money on those things but that he did not believe it came from offshore accounts. The Vegas trips were for his movie production venture, he said, not for fun.
Under cross-examination now, Rick Gates says he has met with team of Special Counsel #RobertMueller
— Jim Sciutto (@jimsciutto) August 7, 2018
*20 TIMES* since he struck his plea deal in February. #ManafortTrial
Gates said for the movie production venture, he wrote a letter falsely claiming his company would be investing a large sum of money in a friend's movie project.
"I did it as a favour," Gates said.
"You committed fraud as a favour?" Downing asked sceptically.
"I did, I admitted to that," Gates responded.
Downing switched gears quickly from one topic to the next, and at times the witness seemed to be confused as to which fraudulent act they were discussing.
The strategy worked at least once, when Gates contradicted himself within a matter of minutes.
Asked about a series of wire transfers, Gates testified that he submitted a false invoice for "professional services" to an offshore bank to get it to transfer US$65,000 from the Manafort-controlled Global Endeavour Inc. to a different company, and from there into Gates' account.
In another instance, Gates submitted a false invoice to cause Global Endeavour to transfer US$125,000 into a different company which Gates also controlled.
Rick Gates testified that Paul Manafort was very good at keeping track of his money. The judge quipped that he didn’t know about all the money that Gates stole from Manafort, so he “didn’t do it that closely.”
— Ryan J. Reilly (@ryanjreilly) August 7, 2018
Gates tripped up as he explained the reason for these transfers, repeatedly agreeing that some of the money was unauthorised but also that some was to reimburse him for business expenses and some were bonuses by Manafort.
Downing asked pointedly why Gates would call these transfers reimbursements for expenses.
"I was, in essence, living beyond my means," Gates replied.
Gates, worked for Manafort for more than a decade before the pair were indicted last year on bank fraud and tax charges. In February, Gates decided to plead guilty to lying to the FBI and conspiring against the United States. Under sentencing guidelines, he could get roughly five to six years in prison for those crimes, but he said he hopes his testimony will result in less time behind bars.
At the judge's instruction, the trial has largely stayed away from mentioning the Trump campaign or Russian interference in the 2016 election, but prosecutor Greg Andres asked Gates a series of questions about what happened after the election, when Gates went to work for Trump's inauguration committee.
So, as more pours out of little Rick Gates, I have some reminders for you:
— Lincoln's Bible (@LincolnsBible) August 7, 2018
1. Paul Manafort's old, close friend is Tom Barrack.
2. Tom Barrack ran Trump's inaugural committee, from which millions are unaccounted. https://t.co/8FEYw1l8NW
(cont)
Andres showed Gates a series of emails from Manafort requesting Gates use his position in the Trump campaign to offer a series of favours to Stephen Calk, the founder and CEO of Federal Savings Bank, one of the banks that extended Manafort a loan in 2016.
Those loans are a key issue in the trial, because Gates has testified that he helped engineer false statements inflating Manafort's income to qualify for the loans.
First, Calk's name was added to a list of national economic advisers to the campaign. Then, in November 2016, Manafort wrote to Gates: "We need to discuss Steven Calk for Sec[retary] of the Army. I hear the list is being considered this weekend," indicating that he wanted Gates' help getting Calk considered by the presidential transition for the job.
Manafort wrote to Gates in December 2016 in an email marked "urgent," that provided a list of people Manafort wanted invited to the inauguration. The list included Calk and his son.
Earlier in the day, prosecutor Greg Andres methodically walked Gates through evidence of what prosecutors say were years of lies designed to hide much of Manafort's money from the IRS - and then, when his money ran out, lie again to banks to get loans to pay for his lavish lifestyle.
Gates testified that Manafort doctored a 2016 company profit statement to get a loan.
Rick Gates is on the stand again today in the Paul Manafort tax and bank fraud trial. @KenDilanianNBC says the prosecution is pushing Gates for a “show don’t tell” testimony. pic.twitter.com/sl4olG0RUz
— MSNBC (@MSNBC) August 7, 2018
The original statement had shown the firm lost over US$600,000 that year - during a time when Manafort took the job of Trump's campaign chairman with no salary. The statement Manafort sent back claimed the firm showed a profit of about US$3 million, Gates testified.
If the jury believes Gates on that point, it could undercut Manafort's defence strategy, which has been to paint Gates as the one behind any financial chicanery, not Manafort.
In his testimony, Gates has admitted to repeatedly telling lies and submitting false documents, but insisted he was following his boss' instruction.
Earlier that year, Gates said he doctored a 2015 profit statement, after an unsuccessful attempt to get Manafort's book-keeper to do it for him. Gates ended up going around the book-keeper to get a copy of the correct document, which he then edited, adding in US$6 million in fictional income to make the company look more profitable.
"Was it accurate?" the prosecutor Andres asked.
"It was not," Gates replied.
"Was it false?" Andres continued.
"Yes," Gates said.
Gates is expected to return to the witness stand tomorrow.
Too many commentators are joyfully recounting the 1st trial of “TeamTrump” without stating the obvious: whatever @PaulManafort & Rick Gates did happened long before they even went to work for @realDonaldTrump & had zero to do with his campaign. The omissions are intentional.
— Geraldo Rivera (@GeraldoRivera) August 7, 2018
Rick Gates shows why Trump is so worried about witness flipping https://t.co/0tLTb7uUYU pic.twitter.com/6vc8gavvMx
— TIME (@TIME) August 7, 2018