ALEXANDRIA, Va. -- Rick Gates wrapped up his testimony Wednesday after implicating President Donald Trump's former campaign chairman and himself in financial crimes while also enduring stinging attacks on his character and credibility.
Gates has been the government's star witness in Paul Manafort's financial-fraud trial, testifying how, at the behest of his longtime boss, he helped conceal millions of dollars in foreign income and submitted fake mortgage and tax documents.
Defense lawyers saw an opening to undermine his testimony by painting him as a liar and a philanderer, getting him to admit to an extramarital affair and reminding jurors how he had lied to special counsel Robert Mueller's team while working out a plea deal for himself.
The testimony, stretching across three days, created an extraordinary courtroom showdown between the two former Trump campaign aides who were indicted together by Mueller but who have since opted for radically different strategies: Manafort decided to go to trial, whereas Gates pleaded guilty and agreed to cooperate by testifying against his former boss.
Neither man was charged in connection with their Trump campaign work, but the trial has nonetheless caught the attention of the president who insists that Manafort was treated shabbily and who continues to publicly fume about Mueller's investigation into potential ties between his associates and the Kremlin.
Prosecutors sandwiched the testimony of Gates around other witnesses who, in sometimes dry and detailed testimony, described Manafort's lavish spending and use of offshore accounts to stash Ukrainian political consulting fees.
A clothier said he sold Manafort more than $900,000 in suits, a bookkeeper said she helped disguise foreign income as a loan to reduce Manafort's tax burden and, on Wednesday, an FBI forensic accounting specialist said Manafort hid more than 30 offshore accounts in three types of currencies from the Internal Revenue Service.
But it was Gates' testimony that has so far generated the most drama, as the witness admitted embezzling hundreds of thousands of dollars from his boss.
Prosecutors relied on Gates to provide direct, firsthand support of the accusations against Manafort.
He told jurors how he disguised millions of dollars in foreign income as loans in order to lower Manafort's tax bill. He 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.
Prosecutors sought to soften the blow of the cross-examination by asking Gates to acknowledge his own crimes, including a lie to Mueller's team in February. But Gates nonetheless faced aggressive questioning by Manafort's lawyer, Kevin Downing, who at one point asked him, "After all the lies you've told and the fraud you've committed, you expect this jury to believe you?"
Downing made one last effort Wednesday to erode Gates' credibility.
He asked if Gates had told the special counsel's office that "you actually engaged in four extramarital affairs" instead of just the one Gates had admitted to earlier in the trial. The attorney appeared to be trying to show that even in his court testimony, Gates was still not telling the full truth. But after a lengthy sidebar before U.S. District Judge T.S. Ellis III, Downing asked a different question, whether Gates' "secret life" continued into the 2010-14 time period.
Those are the years prosecutors have focused on in attempting to prove that Manafort hid about $15 million in income from the IRS.
"Mr. Downing, I'd say I made many mistakes, over many years," Gates answered.
It was not immediately clear whether Downing was accusing Gates of lying to the special counsel's team before the trial or lying on the witness stand during the trial. Downing failed to explicitly ask Gates how many affairs he had, which may have limited the effectiveness of the effort to impeach Gates on that point.
Downing also sought to counter earlier testimony that Manafort had encouraged Gates to deceive authorities. He got Gates to acknowledge that Manafort told him to be truthful about offshore shell companies and bank accounts during a 2014 interview with the FBI.
The interview was part of an FBI investigation that sought to recover assets looted from the Ukrainian government under the rule of former President Viktor Yanukovych.
Gates said under questioning Wednesday that he told FBI agents and Justice Department lawyers about some of the offshore companies that contained millions of dollars in proceeds from their Ukrainian political work.
But prosecutor Greg Andres followed up by suggesting that Gates and Manafort were not fully truthful.
"Did you tell the FBI that there was hidden income in those accounts?" Andres asked.
"No, I did not," Gates responded.
When the questioning of Gates ended around 11 a.m. Wednesday, he was dismissed from court. Gates did not look at Manafort as he left the room.
PROSECUTORS, JUDGE CLASH
During and after Gates' testimony, Ellis continued to spar with prosecutors, a daily occurrence during the trial.
The judge barred prosecutors from showing the jury a chart that had been prepared by the FBI. Ellis has repeatedly pressed prosecutors to accelerate their case, and he said the chart would only slow things.
"We need to find a way to focus sharply," the judge said.
"We've been focused sharply for a long time," Andres countered.
Ellis ended the argument with a joke. "Judges should be patient," he said. "They made a mistake when they confirmed me."
The judge berated prosecutors again when he learned that the prosecution's next witness -- IRS agent Michael Welch -- had been watching the trial from the gallery.
Prosecutors asked the judge to allow Welch as an expert witness -- meaning he, unlike other witnesses, would be allowed to offer his professional opinion to the jury. Assistant U.S. Attorney Uzo Asonye then revealed that Welch had been seated in the courtroom for the duration of the proceedings.
Ellis was angry, saying that he typically bars all witnesses -- save the case agent -- from observing and thought he had done so in this case.
"I want you to remember, don't do that again. When I exclude witnesses, I mean everybody," Ellis said. When Asonye pointed out that the judge had previously said the expert could stay in the courtroom, the judge snapped: "I don't care what the transcript said; maybe I made a mistake. Don't do it again."
Manafort, Welch testified, paid out more than $15.5 million to vendors between 2010 and 2014, without reporting and paying taxes on that money. Manafort also classified another $1.5 million in income falsely as a loan, Welch said.
The IRS agent said that figure was a conservative estimate and did not include possible business expenses such as about $153,000 to a yacht company, $49,000 for an Italian villa rental, $45,000 for cosmetic dentistry and $19,800 for a riding academy.
Even under that conservative analysis, he said, Manafort did not report millions of dollars in offshore income.
That accounting dovetailed with the testimony of FBI forensic accountant Morgan Magionos, who found 31 foreign bank accounts from the 2010-14 time period that listed Manafort, Gates, or Manafort's longtime employee Konstantin Kilimnik as the beneficial owners of those accounts. They kept those accounts in Cyprus until about 2013, when a banking crisis on that island led them to move their money to accounts in St. Vincent and the Grenadines.
She said Manafort's passport was used to open many of the accounts in U.S. dollars, euros and British pounds.
Using charts, emails, and financial and tax records, Magionos told jurors how she traced millions of dollars of payments for mortgages, home improvements, rugs and clothes back to his hidden foreign bank accounts. In one case, she alleged that foreign accounts were used by Manafort to pay for more than $3.5 million in home improvements.
Kilimnik, a man prosecutors say has ties to Russian intelligence, is charged along with Manafort with witness tampering in a separate case.
Prosecutors have said they expect to finish presenting their case Friday.
Information for this article was contributed by Chad Day, Stephen Braun, Eric Tucker and Matthew Barakat of The Associated Press; by Rachel Weiner, Matt Zapotosky, Lynh Bui, Devlin Barrett and Tom Jackman of The Washington Post; and by Kenneth P. Vogel and Noah Weiland of The New York Times.
RELATED ARTICLES
http://www.arkansas…">Trump lawyers reject Mueller's interview offerhttp://www.arkansas…">Senator delivers letter from Trump to Putin
A Section on 08/09/2018