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ALEXANDRIA, Virginia — Rick Gates, a longtime associate of Paul Manafort, testified Monday that he did not report 15 foreign bank accounts to the federal government at Manafort’s direction.
Manafort, the former chairman of President Donald Trump’s campaign, is the subject of two criminal indictments stemming from the special counsel Robert Mueller’s investigation into Russia’s interference in the 2016 US presidential election and whether members of the Trump campaign colluded with Moscow to sway the race in Trump’s favor.
Manafort and Gates were charged with tax and bank fraud, but Gates struck a plea deal with prosecutors in February that included testifying against Manafort. Gates is the government’s star witness in the criminal trial against Manafort, which is taking place in the Eastern District of Virginia.
When prosecutors asked Gates on Monday whether he was involved in committing any crimes with Manafort, he replied, “Yes.”
After explaining the illicit actions, Gates testified that he knew all the details of Manafort’s alleged financial fraud because “I was the one who helped organize the paperwork.”
He added, crucially, that he did so “at Mr. Manafort’s direction.”
Gates also testified that he embezzled “several hundred thousand” dollars from Manafort by falsifying expense reports that were reimbursed by some of the offshore accounts prosecutors say were controlled by Manafort.
Gates did not look at Manafort while he spoke. Manafort glared at his former right-hand man with his arms crossed tightly over his chest.
Gates also testified that he helped Manafort illegally file false tax returns by lying to his accountants about Manafort’s assets and liabilities, as well as the existence of the foreign bank accounts.
“This is typically the most important testimony that a ‘flipper’ can give prosecutors — an admission that they committed crimes along with the defendant, along with an explanation of how they did it,” Renato Mariotti, a former federal prosecutor, wrote on Twitter of Gates’ testimony. “It gives jurors an inside look at the criminal scheme.”
An early witness testified about similar criminal activity
Gates’ testimony on Monday seemed to stack up with the testimony of Cindy Laporta, Manafort’s former tax preparer, earlier in the day and the during the previous week.
Laporta said she helped Manafort and Gates falsify financial documents in an effort to commit tax fraud.
In one notable exchange last week, Assistant US Attorney Uzo Asonye asked Laporta to describe a conference call in September 2015.
Laporta said that during the call, Gates asked Manafort’s tax preparers to alter the amount of a loan so that Manafort would owe less in income taxes.
Specifically, Laporta testified that Gates said Manafort’s tax bill was “too high” and that Manafort “didn’t have the money” to pay it.
“He was trying to reduce income and, therefore, income taxes,” Laporta said, adding that she believed such conduct was “inappropriate.”
But Conor O’Brien, then an employee at the firm KWC, suggested in an email the prosecution displayed that “the loan amount may need to be changed.”
Laporta testified that they all ultimately decided to decrease the loan amount by $900,000 on Manafort’s 2014 tax returns before submitting his 2015 one.
Laporta, who was granted immunity, testified that she changed the loan amount but “very much” regretted her actions. She said the altered loan meant Manafort owed $400,000 to $500,000 less in taxes in 2015.
The day after the tax return was filed, Gates emailed Laporta a Word document of a loan agreement dated March 16, 2014, between Davis Manafort Partners International and a company called Telmar Investments Limited. The prosecution has described Telmar as a company in Cyprus that Manafort controls.
Laporta testified that the 2014 loan agreement “didn’t exist before the conversation” she had with Gates in 2015.
The document had Manafort’s signature.
Laporta also detailed what she said were several other instances of tax and bank fraud involving Manafort and Gates, several of which she was complicit in, at least in part. She echoed other witnesses in saying that while Gates and Manafort worked together, Manafort was the one who called the shots.