Paul Manafort trial Day 7

Clay Curtis
August 8, 2018

Paul Manafort's longtime deputy told jurors Tuesday how he spent years disguising millions of dollars in foreign income as loans to lower the former Trump campaign chairman's tax bill.

The court was not told what Judge T.S. Ellis ruled, but when Downing came back he asked Gates if his "secret life" spanned the period in defense exhibit 17, which spanned several years.

Manafort's lawyer suggested that the affair - which included a London pad, first-class plane trips and luxury hotels - cost up to $3 million. The email exchange occurred after Manafort left the Trump campaign but while Gates was active on the Trump inauguration committee.

"He always had control over the accounts", Gates said of Manafort, and the income was not reported to his bookkeepers, his accountants or the United States tax authorities. "We need to discuss Steve Calk for Sec (retary) of the Army", Manafort wrote to Gates in an email on November 24, 2016.

Gates is cooperating in hopes of a lighter prison sentence. Manafort's lawyer Kevin Downing asked in the courtroom.

In other testimony, Gates recounted how he converted a PDF of a profit-and-loss statement to a Microsoft Word document so he could doctor it to inflate the business' income.

Downing's initial round of questions Wednesday morning focused on 2014 interviews Gates and Manafort gave separately to the FBI about their Ukraine work, which Gates understood to part of an investigation into how their former client, Ukraine ex-President Viktor Yanukovych, handled the country's money. The funds were logged as loans in order to meet later audits in Cyprus that required documentation of transfers between bank accounts.

Under questioning, Gates said he may have submitted personal expenses for reimbursement by Trump's inaugural committee, which he helped operate.

After Gates described his theft as "unauthorized transactions" instead of embezzlement, Downing prodded him to use the latter term - and Gates ultimately relented, saying, "It was embezzlement from Mr. Manafort". But inside the courtroom, trial proceedings had plodded along almost Trump-free.

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At first, Gates merely noted that in March 2016 Manafort hired him to work for "one of the presidential candidates".

In fact, his name was barely mentioned in the first five days of the tax and bank fraud case brought against his former campaign chairman.

Both Gates and Manafort were indicted last October by a federal grand jury on 12 charges, including conspiracy against the U.S. Manafort has pleaded not guilty to all charges. Gates was asked about 11 Cypriot accounts, and he testified that they were all owned by Ukrainian businessmen.

Gate's testimony was part of the prosecution's effort to prove that Manafort was responsible for financial maneuverings that he and other witnesses have testified include filing false tax returns, defrauding banks in borrowing against real estate, and failing to report foreign bank accounts.

Manafort and Gates were the first two people indicted in Mueller's investigation into potential ties between Russian Federation and the Trump campaign.

During the testimony, Manafort did not stare Gates down as he did Monday.

Asked if he got any personal benefit from Mr Manafort's falsified loan applications, Gates responded: "No, I did not". He also committed credit card and mortgage fraud, falsified a letter for a colleague involved in an investment deal and made false statements in a deposition at Manafort's direction.

However, when Andres returned to the podium for another chance to question Gates, Gates said that Manafort did reach out to a Ukrainian businessman before his Federal Bureau of Investigation interview to get more information about the entity that the businessman used to pay him and to make sure that it was "clean", meaning it was only used to pay Manafort.

Four employees at Dr. K's firm established and named the entities - Leviathan Ltd. and Peranova Ltd. are two of the more high-profile examples - where Manafort and Gates held millions of dollars of payments to Manafort's Davis Manafort Partners (DMP) and DMP International from their overseas political clients.

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