HONOR AMONG THIEVES

Rick Gates: I Robbed Paul Manafort While the Two of Us Did Crimes Together

The government’s star witness says he helped Paul Manafort con banks and the IRS after also secretly stealing a fortune from him.

Photo Illustration by The Daily Beast

Paul Manafort’s former business partner told a Virginia federal court on Monday that he committed crimes with his former employer, while also robbing Manafort of hundreds of thousands of dollars.

Rick Gates made his much-anticipated appearance in the trial of Manafort, Trump’s former campaign manager who is charged with hiding millions in income from the IRS and defrauding banks to get better terms on a mortgage. Federal prosecutor Greg Andres asked Gates if he’d committed crimes with his former employer, and which Gates replied “yes,” Gates said he and Manafort controlled 15 separate offshore companies based in Cyprus and used, prosecutors claim, to help Manafort cheat on his taxed and defraud banks.

The government claims that Manafort hid millions of dollars in income in offshore Cypriot companies and used them to defraud mortgage lenders and U.S. tax authorities. Several vendors have testified that Manafort used international wire transfers to pay for luxury clothes, audiovisual equipment, landscaping and contracting services to the tune of millions of dollars with international wire transfers from Cyprus-based companies.  

Gates also admitted to embezzling hundreds of thousands of dollars from Manafort in the course of working for his political consulting business from 2006. He said he stole money from the company, jointly owned by Manafort and his wife, Kathleen, by accepting reimbursements for exaggerated expenses created with fake expense reports. In addition to embezzlement, Gates confessed to a host of other crimes ranging from credit card fraud to perjury in a previous deposition for a civil suit.

Gates also told the jury that he was appearing in court as a result of a plea agreement with Special Counsel Robert Mueller’s office in which he admitted to fraud charges and lying to the FBI in exchange for his assistance with the Russia inquiry.

The defense is likely to seize on Gates’s confessions, particularly to embezzling money from his former employer. As the prosecution’s star witness, Gates is able to tie hours of abstract financial and accounting testimony from previous witnesses to the alleged criminal conspiracy launched by Manafort. But as an admitted liar who stole from his boss, the jury could also see him as an unreliable and self-interested witness, albeit one who would endanger his deal with the government if he lied on the stand. The direct examination of Gates will resume tomorrow at 9:30 a.m.

Defense attorneys have thus far offered little challenge to exhibits and other witnesses who showed that fraudulent loan documents and loan forgiveness paperwork helped Manafort cut his tax bill and get preferable terms on a mortgage. Instead, they plan to argue that it was Gates who orchestrated the financial crimes without his former employer’s knowledge. Gates’s admission of joint control over the foreign bank accounts and his demonstrated willingness to defraud his boss are likely to be the subject of intense cross examination from the defense.

But prosecutors have introduced evidence that links Manafort to potential knowledge of the crimes which benefited him. On Friday, prosecutor Uzo Andres produced a backdated loan agreement in the amount of $900,000 forged by Gates that bore Manafort’s signature. Manafort’s accountant, Cindy Laporta, testified under an immunity agreement with the government that the forged paperwork cut Manafort’s tax bill by between $400,000 and $500,000.