ALEXANDRIA, Va. — In blistering questioning, a defense lawyer accused the protege of former Trump campaign chairman Paul Manafort of being immersed in “so many lies” he can’t remember them all, as he tried to undermine the credibility of the government’s star witness in Mr. Manafort’s fraud trial.
Defense lawyer Kevin Downing began his cross-examination of longtime Manafort deputy Rick Gates by pressing him on his own lies to special counsel Robert Mueller’s investigators, an extramarital affair and hundreds of thousands of dollars he admitted to embezzling from his former boss.
Mr. Downing also ventured into territory the two sides have mostly avoided: discussion of Donald Trump’s presidential campaign. The charges are not related to Mr. Manafort’s work with the Trump campaign.
The aggressive questioning was aimed at shifting blame from Mr. Manafort onto Mr. Gates, who pleaded guilty in Mr. Mueller’s investigation and agreed to cooperate with investigators by testifying in the financial fraud trial.
“After all the lies you’ve told and the fraud you’ve committed, you expect this jury to believe you?” Mr. Downing asked incredulously.
Mr. Gates said he did, but the defense lawyer wasn’t satisfied. He scoffed at the idea that Mr. Gates had repented for his actions, noting that prosecutors have said they won’t oppose his bid for probation and getting him to acknowledge he had not repaid the money he had taken from Mr. Manafort.
After Mr. Gates described his theft as “unauthorized transactions” instead of embezzlement, Mr. Downing prodded him to use the latter term — and Mr. Gates ultimately relented, saying, “It was embezzlement from Mr. Manafort.”
Prosecutors had braced for the tough questioning by getting Mr. Gates to come clean about his own crimes. He told jurors how he disguised millions of dollars in foreign income as loans in order to lower Mr. Manafort’s tax bill. Mr. Gates recounted how he and Mr. Manafort used more than a dozen offshore shell companies and bank accounts in Cyprus to funnel the money, all while concealing the accounts and the income from the IRS.
But the grilling got more intense, and personal, Tuesday afternoon when Mr. Downing pressed Mr. Gates about a “secret life” he said was funded by embezzlement, including an extramarital affair that Mr. Gates himself acknowledged. Mr. Gates also said he may have submitted personal expenses for reimbursement by Mr. Trump’s inaugural committee, which he helped operate.
After Mr. Gates struggled to recall precisely what he had told Mr. Mueller’s team, Mr. Downing asked if he had been confronted with “so many lies” that he can’t keep his story straight.
Mr. Downing at one point asked whether Mr. Mueller’s investigators had interviewed Mr. Gates about his role in the campaign, prompting an objection from prosecutors and a sidebar conference with U.S. District Judge T.S. Ellis III. The defense moved on. Both sides have agreed to limit discussion of the campaign to avoid prejudicing the jury, though they did permit testimony about the overlap of a bank loan with Mr. Manafort’s role in the Trump election effort.
Mr. Gates implicated himself in broad criminal conduct on the stand, an apparent strategic decision by prosecutors to take some of the steam out of defense questioning. He told jurors he embezzled from Mr. Manafort by filing false expense reports. He also said he committed credit card and mortgage fraud, falsified a letter for a colleague involved in an investment deal and made false statements in a deposition at Mr. Manafort’s direction.
Prosecutors summoned Mr. Gates to give jurors the first-hand account of a co-conspirator they say helped Mr. Manafort carry out an elaborate offshore tax-evasion and bank fraud scheme. Mr. Gates testified that he and Mr. Manafort knew they were committing crimes for years, saying they had stashed money in foreign bank accounts and falsified bank loan documents.
“In Cyprus, they were documented as loans. In reality, it was basically money moving between accounts,” Mr. Gates said.
Mr. Manafort and Mr. Gates were the first two people indicted in Mr. Mueller’s investigation into potential ties between Russia and the Trump campaign. Mr. Gates pleaded guilty months later and agreed to cooperate in Mr. Mueller’s investigation of Mr. Manafort, the only American charged by the special counsel to opt for trial instead of a guilty plea.
The case has little to do with either man’s work for the Trump campaign and there’s been no discussion during the trial about whether the Trump election effort coordinated with Russia — the central question Mr. Mueller’s team has tried to answer. But Mr. Trump has shown interest in the proceedings, tweeting support for Mr. Manafort.
On Tuesday, Mr. Gates did connect one part of the bank fraud charges against Mr. Manafort to his role in the Trump campaign.
He said Mr. Manafort asked for tickets to Mr. Trump’s inauguration so he could give them to a banker involved in approving a loan at the center of his financial fraud trial. Mr. Gates also said Mr. Manafort floated banker Stephen Calk’s name for consideration as Secretary of the Army, a post he ultimately did not get. The email exchange occurred after Mr. Manafort left the Trump campaign but while Mr. Gates was active on the Trump inauguration committee.
Mr. Gates described to jurors how he repeatedly submitted fake financial documents at Mr. Manafort’s behest as his former boss became concerned he was paying too much in taxes and, later, that his funds were drying up.
In one email, Mr. Manafort wrote “WTF” about tax payments he was going to have to make, Mr. Gates said.
In other testimony, Mr. Gates recounted how he converted a PDF of a profit-and-loss statement to a Microsoft Word document so he could doctor it to inflate the business’ income. Mr. Gates also fabricated a forgiveness letter for what he said was already a fake loan between Mr. Manafort’s consulting company and a Cypriot entity he controlled.
Prosecutor Greg Andres pointed out he had created a “loan forgiveness letter between Mr. Manafort and Mr. Manafort.”
“Yes,” Mr. Gates agreed.
During the testimony, Mr. Manafort did not stare Mr. Gates down as he did Monday. When the trial broke for lunch, Mr. Manafort looked back at his wife, sitting in the front row, smiled and winked at her, followed by a quick shake of his head, seeming to indicate he was unfazed by the morning’s testimony.
First Published: August 7, 2018, 10:15 p.m.