ALEXANDRIA, VIRGINIA - In a blistering back-and forth, Paul Manafort’s lawyer suggested Tuesday that the star witness in the former Trump campaign chairman’s financial fraud trial has told “so many lies”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.
Downing also ventured into territory both sides had agreed to avoid: discussion of Donald Trump's presidential campaign.
Under questioning, Gates said he may have submitted personal expenses for reimbursement by Trump’s inaugural committee, which he helped operate. Downing also asked whether Mueller’s investigators had interviewed 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 judge then brought the trial to a standstill late Tuesday afternoon, calling a brief recess. Afterward, Downing dropped the Trump-related line of questioning, moving on to other topics without explanation.
In general, references to Trump at the trial have been few and far between. Both sides agreed ahead of time to limit discussion of the campaign so as not to prejudice the jury, though they had agreed to allow testimony about the overlap of a bank loan with Manafort’s role in the campaign.
The tough questioning of Gates came after he spent hours telling jurors how he disguised millions of dollars in foreign income as loans in order to lower Manafort’s tax bill. Gates recounted how he and 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.
Under questioning from Downing, Gates acknowledged he had to plead guilty to false statements after lying during a February interview with federal investigators. At one point, as Gates had trouble recalling the details of his confession, Downing asked him, “Have they confronted you with so many lies that you can’t even remember them?”
Manafort’s defense attorneys have sought to paint Gates as an embezzler, a liar and the instigator of any criminal conduct. They have tried several times to impugn his credibility before the jury.
Ahead of that barrage, Gates implicated himself in a vast amount of criminal conduct on the stand, an apparent strategic decision by prosecutors as they hoped to take some of the steam out of the defense’s questioning.
Gates’ testified that he and Manafort knew they were committing crimes for years.
“In Cyprus, they were documented as loans. In reality, it was basically money moving between accounts,” Gates said.
Prosecutors summoned Gates to give jurors the first-hand account of a co-conspirator they say helped Manafort carry out an elaborate offshore tax-evasion and bank fraud scheme. Gates also provided the first witness testimony that overlaps with Trump’s presidential campaign.
Manafort and Gates were the first two people indicted in Mueller’s investigation into potential ties between Russia and the Trump campaign. But Gates pleaded guilty months later and agreed to cooperate in Mueller’s investigation of Manafort, the only American charged by the special counsel to opt for trial instead of a guilty plea
The case against Manafort 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 campaign coordinated with Russia — the central question Mueller's team has tried to answer. But Trump has shown interest in the proceedings, tweeting support for Manafort and suggesting he has been treated worse than gangster Al Capone.
On Tuesday, Gates did connect one part of the bank fraud charges against Manafort to his role in the Trump campaign.
The 46-year-old former political consultant told jurors how Manafort asked for tickets to Trump’s inauguration so he could give them to a banker involved in approving a loan at the center of his financial fraud trial. Gates also said Manafort floated banker Stephen Calk’s name for consideration as Secretary of the Army, a post he ultimately did not get.
The email exchange about Calk occurred after Manafort left the Trump campaign but while Gates was active on the Trump inauguration committee. Prosecutors had previously said that Manafort’s interactions with Calk were the only part of the trial expected to overlap with his Trump campaign role.
The face-off between longtime business associates and former senior members of the Trump campaign 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 testimony Tuesday, Gates laid responsibility squarely at Manafort’s feet for a series of crimes, saying the two had committed crimes together by stashing money in foreign bank accounts and falsifying bank loan documents.
Gates described to jurors how he repeatedly submitted fake financial documents 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.
In one email, Manafort wrote “WTF” and “not happy” about tax payments he was going to have to make, Gates said.
In other testimony, 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. Gates also fabricated a forgiveness letter for what he said was already a fake loan between 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,” Gates agreed.
During the testimony, Manafort did not stare Gates down as he did Monday. When the trial broke for lunch, 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.
In addition, Gates has admitted to other criminal conduct.
Gates, who is awaiting sentencing, told jurors that he embezzled hundreds of thousands of dollars from 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 Manafort’s direction.