Former Manafort partner Gates to testify next in fraud trial

Kevin Downing attorney for Paul Manafort walks to the Alexandria Federal Courthouse in Alexandria Va. Monday Aug. 6 2018 for President Donald Trump's former campaign chairman Manafort's tax evasion and bank fraud trial. (AP

Rick Gates Set to Testify Against Ex-Boss Paul Manafort

Former Trump campaign aide Rick Gates took the stand Monday to testify against his former boss, Paul Manafort, who's been charged with tax fraud and bank fraud in special counsel Robert Mueller's probe.

The government's star witness in the trial of Paul Manafort admits he embezzled hundreds of thousands of dollars from the former Trump campaign chairman.

Gates, who also served on Trump's campaign, pleaded guilty in February and agreed to cooperate with prosecutors under a deal that could lead to a reduced sentence.

Gates testified that Manafort directed him to report overseas income as loans in order to lower taxable income and that at Manafort's request, did not disclose foreign bank accounts, which is required by law. Later, they say, when that income dwindled, Manafort launched a different scheme, shoring up his struggling finances by using doctored documents to obtain millions more in bank loans. While Gates had already admitted to knowingly hiding foreign accounts for Manafort, there are still a lot of details about alleged fraud in Manafort's indictment that prosecutors will want to ask him about. "Outside of business we did not socialize".

Gates also admitted he embezzled money from his boss - something Manafort's attorneys have alleged for months. A lawyer in Cyprus nicknamed "Dr. K", for whom Manafort did some political consulting work, helped them set up the accounts, Gates said.

In the beginning of a hugely anticipated courtroom showdown, Gates told jurors that he siphoned off the money without Manafort's knowledge by filing false expense reports. "At Mr. Manafort's request. we did not disclose the foreign bank accounts".

Special counsel Robert Mueller is investigating whether any Trump aides colluded with an alleged Moscow plot to help elect him as U.S. president, and whether there was any obstruction of justice.

The jury has heard how Manafort made tens of millions of dollars for political work with pro-Russian politicians in Ukraine. When Robert Mueller began investigating Russian interference previous year, Manafort's questionable lobbying work - the sort of activity that has historically rarely been investigated in Washington - was put under a microscope, exposing him and his associates.

But Gates, described by witnesses as Manafort's "right-hand man", is expected to provide the most damning testimony about Manafort's state of mind as well as his own role in the crimes.

Manafort's defense hinges on convincing a jury that it was Gates, not Manafort, who committed all of these crimes, and that Manafort is a victim of Gates. In questioning Laporta on Monday, a prosecutor asked the accountant about a $10 million loan purportedly received by Manafort from Russian businessman Oleg Deripaska in 2006.

U.S. District Judge T.S. Ellis III, who repeatedly interrupted prosecutors last week as they tried to present evidence about Manafort's lavish life - including $900,000 in expensive suits and a $15,000 ostrich jacket - clashed again with prosecutor Greg Andres on Monday when Andres delved into the status and identities of the Eastern Europeans who made payments to Manafort.

During that part of Gates' testimony, he said that he lied in a deposition - part of an unrelated case - about the private equity firm run by Manafort's consulting group. Laporta said she didn't believe the loan had actually been forgiven.

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