Tuesday was a crucially important day for Paul Manafort’s defense, as they began to cross-examine special counsel Robert Mueller’s star witness, Rick Gates — and tried to destroy his credibility.
Defense attorney Kevin Downing got Gates to admit on the stand to all sorts of shady behavior: lying to Mueller’s investigators before his plea deal, having an extramarital affair, embezzling money from Manafort, and trying to get Donald Trump’s inaugural committee to foot the bill for his personal expenses.
“There was another Richard Gates, isn’t that right?” Downing asked, according to the Washington Post. “A secret Richard Gates?”
Manafort’s lawyers have made clear that their strategy to prevent a guilty verdict hinges on attacking Gates, and that’s what Downing was trying to do. The defense has two goals: to try to shift responsibility for the financial charges against Manafort to Gates, and to convince the jury that Gates’s testimony against Manafort simply cannot be trusted.
For his part, Gates said that he regrets his past actions and that he’s “taking responsibility” for them. “I’m here to tell the truth ... Mr. Manafort had the same path. I’m here,” he said, according to Brandi Buchman of Courthouse News.
Earlier Tuesday, prosecutors had questioned Gates for several hours. They supplemented his testimony with copious evidence to make their case that in hiding Manafort’s foreign accounts from the US government, wiring millions in foreign cash to the US for Manafort’s expenses, and filling out false loan applications for Manafort, Gates was carrying out his boss’s wishes.
Cross-examination of Gates will continue Wednesday, and we won’t know for quite some time who was more persuasive to the jury. But prosecutors said they intend to question 20 more witnesses after Gates, according to CNN’s Shimon Prokupecz. That will help Mueller’s team argue that their case is not entirely reliant on just one flipper.
Prosecutors used Gates’s testimony to keep making the case that Manafort knew what he was doing was illegal
In the first day of Gates’s testimony, on Monday, he had already made several important admissions under oath.
- He said that at Manafort’s direction, he wired money from Manafort’s offshore accounts to US companies as phony “loans” — because Manafort didn’t want to pay taxes on that income. (This is part of the basis for five tax fraud counts against Manafort.)
- He said that at Manafort’s direction, he refused to fill out legally required “FBAR” disclosures for their offshore accounts, to hide them from the US government. (This is the basis for four failure to disclose foreign assets counts against Manafort.)
- And he said he helped fill out Manafort’s loan applications to US banks fraudulently, again at Manafort’s direction. (This ties into nine counts of bank fraud and bank fraud conspiracy against Manafort.)
On day two of questioning by prosecutors, Gates gave more details about the offshore accounts, Manafort’s desire to avoid taxes, and the specific false representations made on Manafort’s loan applications.
The offshore accounts: Gates provided a sort of tutorial about how Manafort’s complex web of offshore accounts to hold millions in Manafort’s Ukrainian payments was set up. He said that a Cypriot lawyer he called “Dr. K” helped set up the Cyprus accounts and maintained technical authority over them.
In reality, though, Gates testified that Manafort “always had control” over the accounts, and that the money in them was “Mr. Manafort’s money,” per the Post. He also said that after a banking crisis in Cyprus, he and Manafort decided to move their money to the Grenadines instead, according to Politico.
Manafort’s desire to avoid taxes: Prosecutors showed an email from Manafort to Gates in early 2015 in which he complained about a hefty estimated tax bill. Manafort wrote:
WTF? How could I be blindsided like this? You told me you were on top of this. We need to have options. This is a disaster.
Gate testified that he was “tasked” with figuring out how to “lower the taxes” Manafort would have to pay.
Manafort’s allegedly fraudulent loan applications: Mueller’s team alleges that after Manafort’s Ukrainian clients were deposed and the money stopped coming in, he was desperate for cash — which they say spurred him to make a series of fraudulent statements to banks, in pursuit of more than $20 million in loans. Gates was involved in submitting much of this bogus documentation, and testified he did so at Manafort’s direction.
Gates was questioned about several specific loan applications — the most interesting of which involved Chicago’s Federal Savings Bank in late 2016, which lent Manafort a combined $16 million. Prosecutors claim that Manafort tried to use his Trump connections to do favors for the bank’s chair, Stephen Calk, in exchange for the loans.
“We need to discuss Steve Calk for Sec of the Army. I hear the list is being considered this weekend,” Manafort wrote in an email to Gates during the transition. He also sent Gates an “urgent” request to get Calk and his son invited to Trump’s inauguration.
The defense went after Gates’s credibility hard
By mid-afternoon, it was the defense team’s turn to cross-examine Gates — and they did their best to shred his credibility and character.
An affair: The most salacious admission was Gates’s testimony that he did indeed have an extramarital “relationship” 10 years ago, which involved big spending on first-class flights and hotel stays and paying for an apartment in London. (Manafort also had a mistress in recent years, but the jury likely won’t hear about that.)
Gates had already admitted to embezzling money from Manafort. And on Tuesday, defense lawyer Kevin Downing suggested that Gates used that stolen money to fund his affair. However, Gates denied that, according to the New York Times, saying he paid for these expenses on his own.
Lying during his proffer: Downing also pressed Gates on the specifics of his plea deal with Mueller’s team. According to the plea, when Gates initially entered negotiations with Mueller’s team about a deal, he lied during his proffer session — and eventually pleaded guilty to one false statements charge for doing so.
Gates initially seemed to suggest that he had merely “struggled” to remember information, but when pressed, he said he had lied intentionally — but said he’d only done so before the agreement was reached, per the Post.
Inauguration expenses: After working on the Trump campaign, Gates had a high-level role in planning the inauguration, and Downing asked him whether he had improperly submitted “personal expenses to the inaugural committee for reimbursement,” per the Post. Gates said this was “possible.”
However, toward the end of the day, Gates insisted that despite all of what he called his “mistakes” in the past, the jury would believe him. He had now decided “to tell the truth,” he said, and Manafort “had the same path” of making a plea deal — but chose to fight the charges instead.
The defense team’s cross-examination of Gates will continue on Wednesday.