Under cross examination at the tax evasion and bank fraud trial of his ex-boss Paul Manafort, Gates struggled to give clear answers

This article is more than 2 years old

This article is more than 2 years old

A former campaign aide to Donald Trump lived a “secret life” including an extramarital affair in London, a court heard on Tuesday.

Rick Gates, under cross examination at the tax evasion and bank fraud trial of his former boss Paul Manafort, admitted that he had “another relationship” involving first-class flights and luxury hotels, but denied these were funded with money embezzled from Manafort.

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Manafort, a former Trump campaign chairman, has pleaded not guilty to 18 counts of bank and tax fraud and failing to disclose foreign bank accounts. His defence team is seeking to pin the blame on Gates, who they say was responsible for day-to-day operations of the business.

In a dramatic moment before the jury, Manafort’s defence counsel, Kevin Downing, put it to the government’s star witness: “There’s another life, right, the other Rick Gates? The secret Rick Gates?”

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Gates, who is 46 and married, admitted: “There was a period in my life, about 10 years ago, when I had a relationship, yes.”

With a nod to linguistic differences for what Americans refer to as an apartment, Downing pressed: “As part of your secret life did you maintain a flat – is that what they call it? – in London?”

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Gates acknowledged that he did for two months and that he took first class flights and stayed in “fancy hotels” around Europe, but said the money came from bonuses rather than illicit gains. “I had a period of time when I had another relationship,” he added.

As well as being a senior aide on Trump’s election campaign, Gates served as the deputy chairman of the US president’s inaugural committee. On Tuesday, he admitted it was possible he had sought to cheat the committee with false expenses claims.

“Did you submit personal expenses to the inaugural committee for reimbursement?” Downing asked.

Gates answered: “I don’t recall. It’s possible.”

Gates appeared nervous on the witness stand at the court in Alexandria, Virginia, blinking frequently, his throat apparently dry as he spoke. He frequently used the phrases “It’s possible” and “I don’t recall” as Downing challenged him about inconsistencies in testimony he gave to the special counsel’s office.

“When did you start providing false and misleading information to the special counsel’s office?” the defence counsel asked bluntly.

Gates struggled so badly to give a straight answer that eventually Judge T S Ellis III was forced to intervene. “Did you provide false information or did you have a bad memory?” he asked.

Gates finally admitted that he had provided false information prior to striking a plea agreement. “I did, to one count, your honour,” he said.

He has already admitted embezzling some funds from Manafort. Downing pressed him on the specifics of their business relationship: which payments to Gates were authorised and which were not. Regarding a trading company Manafort had started with a partner in 2011, he asked with deep scepticism: “You’re asking the jury to believe Mr Manafort authorised another $250,000 as a bonus?”

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Downing wondered aloud why Gates had shown “perfect recollection” during examination by the government but was now much less precise under cross-examination by Manafort’s defence. He challenged the witness: “Have they [the special counsel’s office] confronted you with so many lies you can’t remember any of it?”

Gates replied: “No.”

Gates testified that he stole from Manafort because he was living beyond his means. Downing asked: “Was it for your secret life?”

The witness replied defensively: “It’s not a secret life. It went to an account my wife knew about.”

Though he has at times seemed evasive under cross-examination, Gates insisted that he now acknowledges his mistake and is taking responsibility for it, whereas Manafort is not.

But Downing challenged again: “After all the lies you’ve told and fraud you’ve committed, you expect this jury to believe you?”

Gates retorted: “Yes.”

Earlier on Tuesday, the prosecution had continued to question Gates, who described how millions of dollars were allegedly funneled from entities controlled by Ukrainian businessmen into Manafort’s shell companies in Cyprus.

Although the allegations of collusion between Donald Trump and Russia are not at issue in this trial, any significant blows to the government’s case are likely to be seized on by the president’s defenders, including conservative media, to support his contention that Mueller’s investigation is a “rigged witch-hunt”.

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Gates pleaded guilty in February and agreed to cooperate with prosecutors under a deal that could lead to a reduced sentence. On Monday, he testified that he helped Manafort file false tax returns and hide his foreign bank accounts. He was aware that Manafort was acting as an unregistered foreign agent in lobbying for Ukraine, he said.

On Tuesday, the court was shown a series of emails, contracts and what prosecutor Greg Andres referred to as “fake invoices”, in which Gates altered the template to show the name of a shell company instead of Manafort’s. This was a way to decrease Manafort’s taxable income, added Gates, who did not report the money to Manafort’s bookkeeper or accountants.

Manafort’s political work included advising Viktor Yanukovych on policy after he won the Ukrainian presidency, Gates said. “Mr Manafort worked with the local political officials and helped implement policy initiatives based on the campaign promises.”

For this Manafort was paid $4m a year, in quarterly payments of $1m, Gates recalled, though at some point the currency switched from US dollars to Euros. His consultancy work also included “Engage Ukraine”, an effort to help Ukraine join the European Union.

Government lawyers have previously referred to Yanukovych as Manafort’s “golden goose”. After Yanukovych lost power in 2014, “I would say it decreased the income stream”, Gates, wearing a blue suit, told the court matter-of-factly.

He added Manafort worked for a time for the Opposition Bloc, the party that replaced Yanukovych’s Party of Regions, but it was out of power and so “income streams were more difficult to come by”.

By July 2015, the court heard, Manafort was struggling financially. Andres asked: “Was he having trouble paying his bills?” Gates replied: “He was.”

Gates said he and Manafort turned to a Cypriot lawyer, whom he referred to in court as “Dr K”, who set up bank accounts and shell companies on Manafort’s behalf and “handled everything”.

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When an individual sets up an entity in Cyprus, Gates explained, their name does not appear on any of the paperwork. He said of Manafort: “I believe he understood his name would not be represented, nor would mine.”

As Manafort came under pressure to pay his bills, he was forced to seek loans, the court heard. Gates said he was responsible for collecting all relevant documents for the loan applications.

Andres asked him: “Did you provide false information to the banks?’

Without hesitating, Gates replied: “Yes.”

Andres followed up: “Did Mr Manafort know?”

Again the reply came: “Yes.”