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Paul Manafort's legal team targets Richard Gates in hopes of beating criminal charges

Paul Manafort's legal team targets Richard Gates in hopes of beating criminal charges
Richard Gates, right, answers questions from prosecutor Greg Andres as he testifies in the trial of Paul Manafort, seated second from left. (Dana Verkouteren / Associated Press)

Paul Manafort’s attorneys mounted a concerted effort Tuesday to beat back criminal charges against President Trump’s former campaign chairman, hammering again and again at the credibility of Richard Gates, Manafort’s former business partner and confidante.

Gates faced a withering cross-examination by Manafort’s lawyers, who insisted that he had told so many lies that he could not keep track of them all. They portrayed him as an admitted embezzler who had siphoned money from Manafort’s company and who could not be trusted.

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At one point, they accused the government’s star witness of living a “secret life” in London, where he had conducted an extramarital affair and kept an apartment for their trysts.

"After all the lies you've told and all the fraud you've committed, you expect the jury to believe you?” Kevin M. Downing, one of Manafort’s lawyers, demanded.

“Yes,” Gates responded. "I'm here to tell the truth. I took responsibility for my actions."

In two days of often-riveting testimony, Gates told the court that he had helped Manafort use a shadowy network of offshore shell companies and bank accounts to avoid paying millions of dollars in U.S. taxes. He also admitted to stealing hundreds of thousands of dollars from Manafort’s company while they were advising politicians in Ukraine.

Gates worked for Manafort for years and was indicted with him for multiple financial crimes in October as part of special counsel Robert S. Mueller III’s investigation into Russian interference in the 2016 election and other crimes. It’s the first trial on charges brought by Mueller.

The financial charges against Gates were dropped after he agreed to cooperate with prosecutors in February, and pleaded guilty to conspiracy and making false statements. He is expected back on the witness stand on Wednesday.

Prosecutors are a little more than half through presenting their case against Manafort for tax evasion, bank fraud and conspiracy.

Although defense lawyers also grilled previous prosecution witnesses, it was clear Tuesday that they had saved their fiercest attacks for Gates in hopes of convincing the jury that he could not be trusted.

"When did you first start providing false and misleading information to the office of special counsel?" Downing said as he began about two hours of cross-examination.

At another point, when Gates stumbled over a question about his statements to the special counsel's office, Downing pounced. "Have they confronted you with so many lies that you can't remember it?" he asked.

Gates sought to maintain the same calm tone he had used with prosecutors, even when the cross-examination dipped into salacious territory. Gates barely glanced at Manafort, who stared in his direction most of the day.

“There was another Richard Gates, isn’t that right? A secret Richard Gates?” Downing asked. He added, “As part of your secret life, did you maintain a flat, is that what you call it in London?"

Gates admitted there was "a period of life when I had another relationship."

Downing also suggested that Gates stole money from Trump’s inauguration committee, where he served as deputy chairman, as well as from Manafort’s company.

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Gates did not deny it.

"I don't recall," he said. "It's possible."

It was clear from the trial’s first day that Gates would be crucial to Manafort’s legal defense. In opening statements to the jury, his lawyers had talked about pinning the alleged crimes on Gates.

But Gates also has been key to the special counsel’s office, a co-conspirator who prosecutors say could give a first-hand account of Manafort’s alleged elaborate tax evasion and bank fraud scheme.

Gates has served as a decoder of documents for the jury, explaining which initials referred to which Ukrainian businessmen who had funded Manafort’s lucrative consulting work there. And since Gates often had communicated directly with Manafort, he could testify to his boss’ intentions.

"Did you provide false information to a bank?" asked Greg Andres, one of the prosecutors working for Mueller.

"Yes," Gates replied.

"Did Manafort know?"

"Yes."

"How did you know?"

"Because he requested certain information to be changed."

Gates’ testimony illustrated the vast machinery that he and Manafort allegedly used to evade taxes. They worked with a lawyer in Cyprus, Kypros Chrysostomides, nicknamed “Dr. K,” who arranged shell companies and other entities there. Later, Gates helped set up new accounts in the Caribbean.

These shell companies did nothing except funnel money, Gates said, and some of the cash was used to pay for Manafort’s lavish lifestyle, while avoiding taxes.

“Did they sell any products?” Andres asked.

“No.”

“Did they have any employees?”

“No.”

Gates said Monday that he didn't socialize with Manafort outside of work, but the two men did not appear to have a typical employer-employee relationship.

Manafort often drafted Gates to help manage his personal financial affairs, dealing with accountants and arranging payments for his luxury lifestyle — one that involved multiple homes, expensive wardrobes and high-priced carpets.

He even relied on Gates to convert documents between Word and PDF formats. In October 2016, Gates said he sent a profit and loss report for the first half of that year, which showed a net loss of $600,000.

"How do I convert into non-PDF doc Word document?" Manafort asked Gates in an email.

Gates knew that meant Manafort was going to make "some change" to it, he said. He sent Manafort a Word version, and Manafort soon returned the document, which showed a net income of about $3 million.

"Rick, you are the quarterback," Manafort wrote in one email to Gates. "All information needs to go through you."

But Manafort could be scathing when he thought Gates fell short. He sent Gates an email in April 2015 when he was surprised by the size of his tax bill.

“Rick, I just saw this,” he wrote. “WTF? How could I be blindsided like this? You told me you were on top of this. We need to discuss options. This is a disaster.”

Laughter broke out in the packed courtroom.

5 p.m.: The story was updated with additional details from the trial.

The story was originally posted at 12:50 p.m.

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