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How Manafort Broke the Law, According to Rick Gates

The direct and cross-examination of Rick Gates came to an end on Wednesday in the trial of Paul Manafort, President Donald Trump’s former campaign chairman.

The direct and cross-examination of Rick Gates came to an end on Wednesday in the trial of Paul Manafort, President Donald Trump’s former campaign chairman. Gates, who worked with Manafort for over ten years, testified that Manafort directed and participated in bank fraud and tax evasion.

Manafort faces a total of 12 charges, ranging from conspiracy against the United States to unregistered agents of a foreign principal. If found guilty, it could result in up to 80 years in prison.

Gates’ testimony is a large focus of the trial, as stated in the opening arguments. The prosecution argues that Gates committed bank fraud and tax evasion with Manafort’s knowledge and approval, while the defense contended that Manafort’s only crime was trusting Gates with his finances.

Several boxes of evidence labeled “Gates” were rolled in just before the trial commenced Tuesday morning. Large binders full of documents were set out at the prosecution’s table and on the witness stand before the judge, jury and witness entered.

It was this evidence, perhaps more than the witness’s testimony itself, that the prosecution was intent on presenting to the jury. Prosecutor Greg Andres spent much of his time examining Gates asking him to read past emails, contracts, financial statements and other documents to the court, only explaining particular words, phrases or background for clarification.

The paper trail and Gates’ testimony outlines the financial dealings of Manafort over nearly a decade. Offshore accounts and multiple companies were used to send and receive money for his work as a political advisor, according to the government’s evidence. This work brought in millions of U.S. dollars and euros, and Manafort would often sit with the campaign to decide the budgets, according to Gates’ testimony.

Notably, Manafort worked for the Opposition Bloc in Ukraine, a pro-Russia political coalition, as they pushed to create ties between Ukraine and the European Union, according to Gates’ testimony.

When the payment for these services was received, sometimes up to $1 million per quarter, Manafort’s lawyers and Gates would track the funds through the Cyprian audit system. “[Manafort] was aware but not involved” in this specific process, according to Gates.

As time went on, the payments from the Ukrainian political group were not received. A payment expected to be $1 million was only $500,000.

“Mr. Manafort was quite upset the money had not been sent,” Gates said on the stand. In an email to others working for Manafort, Gates requested assistance “to calm Paul down.”

“There were a number of vendors that reached out [about unpaid bills],” Gates said.

When the money was running out, Manafort took matters into his own hands, according to Gates.

Manafort decided to seek a loan to access more money when he was not paid. In order to successfully get the loan, Manafort needed sufficient proof that he could pay it back. Because he did not have enough income in 2016, Manafort falsified documents to show the bank a higher income than was accurate, according to Gates’ testimony and the government’s evidence.

Manafort previously recorded income as a loan to avoid taxes, according to Gates. The “fake loans,” as the prosecution referred to them, had no interest rate, and were set up from one of Manafort’s companies to another, according to Gates’ testimony and the prosecution’s evidence.

Later, when Manafort needed income to prove creditworthiness for the loan, the loan used to dodge taxes was forgiven, backdated, and reported as income to the bank, according to Gates. Manafort was involved in this project, according to Gates, even specifying which letterhead the forgiveness should be written on in emails.

Andres argued this was not enough for Manafort.

Manafort also asked to see the profits and losses (P&L) report, explaining that “we’ll be fine” in an email if he could get the document. Because Manafort’s company had not made any money in the previous year, it would likely not be granted a loan, according to the prosecution.

“We are not going to even come close to the income level of 2014,” Gates told Manafort in an email.

Manafort directed Gates to obtain an editable copy of the document from the accountants. When the accountant explained that this was not possible, Gates sent Manafort a word document converted from the PDF he received from the accountant, leaving alignment and text aberrations in the document, according to the prosecution’s evidence.

Manafort changed the income amount to make the company look far more profitable than it was, as well as the alignment and text issues, before sending it back. The changes would add $4.2 million in falsified income, according to Gates. Gates then converted the document into a PDF and sent to the Bank of California as a part of the loan application. Manafort was copied on the email from Gates to the bank with the falsified document, according to Gate’s testimony and the government’s evidence.

Numerous emails between Manafort and Gates discussing the issue of “bolstering income” were presented to the court.

“He always had control,” Gates said.

The defense then cross-examined Gates, working to discredit him as a witness to the previous events. Kevin Downing of the defense question Gates about the lies in his business and personal lives.

Gates admitted that he stole money from Manafort while working for him, sometimes paying for his personal American Express bill in full with false expense reports. If Manafort could not detect the large amounts of money being stolen from him, the defense argued, how could he have known enough about his finances to execute such elaborate fraud schemes.

Gates also admitted that he lived “a secret life” in London ten years ago, and committed fraud for another client “as a favor.” He also admitted to participating in insider trading.

Downing asked Gates if he should be trusted by the jury without corroboration, though much of his testimony was backed by documents published by the prosecution. Gates said he should be trusted.

Downing also claimed that Gates could be spared from a 290-year prison sentence by the government if the judge agrees to a probation agreement.

“I’m trying to change,” Gates responded. “Mr. Manafort had the same path. I’m here.”

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