Rick Gates departs Federal District Court, Wednesday, Feb. 14, 2018, in Washington. Paul Manafort, the former campaign chairman for President Donald Trump, and his business associate Rick Gates were in federal court on Wednesday for a routine status conference. Both were indicted in October on charges stemming from foreign lobbying work in Ukraine. (AP Photo/Alex Brandon)
Rick Gates has been co-operating with the Mueller investigation and may avoid jail time as a result © AP

Paul Manafort’s former deputy testified on Monday that his former boss kept millions of dollars hidden in Cypriot accounts, telling jurors in Mr Manafort’s fraud trial that the pair had committed crimes together.

Rick Gates, who worked alongside Mr Manafort for a decade, first in Ukraine and later on Donald Trump’s presidential campaign, said the income and accounts were hidden from Mr Manafort’s tax accountants.

“We didn’t report the income or the fact that the accounts existed,” said Mr Gates, who pleaded guilty to conspiracy and lying to the government in February.

Mr Gates’ testimony is a central element of the case brought against Mr Manafort as a result of an investigation into links between the Trump campaign and the Russian government by Robert Mueller, special counsel.

Mr Manafort is accused of failing to declare offshore bank accounts and income he earned from consulting for Ukraine’s pro-Russian former president, Viktor Yanukovych. Prosecutors also allege that, when the money dried up after Mr Yanukovych was ousted in 2014 and fled to Russia, Mr Manafort fraudulently obtained bank loans in the US.

Earlier this year, the special counsel’s office brought similar charges against Mr Gates. Since his guilty plea, he has been co-operating with the investigation and may avoid jail time as a result.

Mr Gates admitted his own wrongdoing as he appeared on the stand in a blue suit and gold tie. He said he had lied on his own tax returns, in mortgage and credit card applications, and to the government. He confessed to stealing hundreds of thousands of dollars from Mr Manafort’s consulting company by filing false expense reports.

The government said Mr Gates would testify for another three hours on Tuesday, after which attorneys for Mr Manafort will cross-examine him. They have indicated they will aim to show Mr Gates is an untrustworthy witness who is responsible for any issues with their client’s tax returns.

In opening statements last week, Thomas Zehnle, a lawyer for Mr Manafort, said his client “trusted that Rick Gates was keeping track of it and communicating with the tax accountants and book-keeper to keep it all straight. Unfortunately, Paul’s trust was misplaced.”

Mr Gates corroborated testimony from previous witnesses, including Mr Manafort’s tax accountants and book-keepers. He said Mr Manafort had directed him to record incoming cash as income or loans depending on which would be most advantageous from a tax perspective.

“He was able to defer the ability to pay the increased tax on his tax returns,” said Mr Gates, who worked for Mr Manafort’s consulting firm, Davis Manafort Partners, from 2006. He testified that Mr Manafort was in regular contact with the tax preparers.

When Mr Gates’ plea deal was announced in February, Mr Manafort said he had “hoped and expected my business colleague would have had the strength to continue to battle to prove our innocence”.

Mr Manafort looked directly at his former protégé in court on Monday, at times with his arms crossed. Mr Gates appeared to avoid his gaze.

Get alerts on Paul Manafort when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article