Six bombshells from Rick Gates' testimony in the Paul Manafort trial

Show Caption Hide Caption AP: Gates' Testimony 'Pivotal' in Manafort Trial AP Reporter Chad Day says the testimony of Rick Gates on Monday in the fraud trial of Paul Manafort is "pivotal" because the court will hear a first-hand account from a coconspirator describing crimes committed by Manafort. (Aug. 6)

WASHINGTON – Rick Gates, the ex-business partner of former Trump campaign chairman Paul Manafort, provided the most explosive testimony yet in the federal government's tax evasion, bank fraud and conspiracy case against Manafort.

Gates, who testified Monday and returned to the witness stand Tuesday, detailed years of alleged lawbreaking at Manafort's political firm and admitted to stealing money from secret overseas bank accounts.

Gates, who also worked on Trump's campaign, is the star witness against Manafort. He agreed to cooperate with federal prosecutors and has pleaded guilty to conspiracy and lying to the FBI.

The trial is the first stemming from special counsel Robert Mueller's 14-month investigation of Russian interference in the 2016 election and possible collusion between the Trump campaign and the Kremlin. However, the Manafort case – as President Donald Trump has been quick to point out – focuses on Manafort's business dealings and has no direct connection to Manafort's work with the Trump campaign.

Here's a look at some of the highlights of Gates' testimony:

Seven-year criminal conspiracy

Gates testified that he engaged in an extensive criminal conspiracy with Manafort that lasted seven years and included lying to the Internal Revenue Service to avoid paying taxes and providing false documents to banks to obtains millions of dollars in loans.

Secret overseas accounts

Gates said he helped Manafort hide secret bank accounts in the United Kingdom, Cyprus and the Grenadines. He said he followed Manafort's directions in failing to disclose the overseas accounts to federal tax authorities as required by law.

"Mr. Manafort requested ... that we did not disclose foreign bank accounts,” Gates testified. He said there were 15 secret accounts.

Stealing money

Gates, under questioning by prosecutor Greg Andres, admitted that he padded his expense accounts with phony charges without Manafort's knowledge, siphoning "several hundred thousand" dollars from the secret accounts. Gates said the money he took was sent to his account in the United Kingdom and was never disclosed to his accountants or the U.S. government. He also admitted to embezzling money from other employers in the past.

Tax and bank fraud

Gates said he falsely labeled hundreds of thousands of dollars in income as loans to reduce Manafort's tax liability. He also testified that he pressed the firm's accountants to reclassify loans as income so the company could qualify for more bank loans or get favorable lending rates.

Possible embezzlement of millions

Manafort’s attorneys went on the attack against Gates on Monday, alleging that Gates told accountants to falsify Manafort's tax returns because Gates was trying to cover up the fact that he had "embezzled millions of dollars" from their firm. Gates did not have a chance to respond to those allegations Monday.

Mysterious 'Doctor K'

Gates testified Tuesday that he and Manafort engaged a law firm in Cyprus – and its director, "Doctor K" – to help hide millions of dollars they received for their work in Ukraine.

Gates said he and Manafort created an elaborate operation in Cyprus to use shell companies to secretly accept the money.

Manafort, according to Gates, assigned members of the Cypriot law firm as ghost directors of the shell corporations. The firm's director was known to Manafort and Gates as "Doctor K." Gates said the man schooled them on how to shield their operations from scrutiny by tax collectors.

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