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Rick Gates says Paul Manafort directed him to help lender

PAUL Manafort’s longtime deputy has told jurors that after his boss resigned as Donald Trump’s campaign chairman in August 2016 he directed him to use his position to provide favours to one of his lenders.

On the second day of his testimony, Rick Gates was shown emails from Mr Manafort telling him to use his influence to provide favours to Stephen Calk, the founder and CEO of Federal Savings Bank, one of the banks that extended Manafort a loan in 2016.

Mr Calk’s name was added to a list of national economic advisers to the campaign. Then, in November 2016, Mr Manafort wrote to Mr Gates, saying: “We need to discuss Steve Calk for Sec of the Army. I hear the list is being considered this weekend.”

Mr Gates also testified that he spent years disguising millions of dollars in foreign income as loans to lower the former Trump campaign chairman’s tax bill.

Mr Gates, the government’s star witness, recounted how he and Mr Manafort used offshore shell companies and bank accounts in Cyprus to funnel the money, all while concealing the accounts and the income from the IRS.

“In Cyprus, they were documented as loans. In reality, it was basically money moving between accounts,” Mr Gates said during his second day of testimony in the financial fraud trial of his former boss.

media_cameraFormer Trump campaign official Rick Gates and his former boss Paul Manafort. Picture: AFP

Prosecutors summoned Mr Gates, described by witnesses as Mr Manafort’s “right-hand man,” to give jurors the first-hand account of a co-conspirator they say helped Mr Manafort carry out an elaborate offshore tax-evasion and bank fraud scheme.

Mr Manafort’s defence lawyers have sought to paint Mr Gates as an embezzler, liar and the instigator of any criminal conduct. They have several times tried to impugn his credibility before the jury.

media_cameraThis courtroom sketch depicts Rick Gates, right, testifying during questioning by prosecutor Greg Andres, standing at left, as former Trump campaign chairman Paul Manafort, far left, sits with his lawyer Kevin Downing. Picture: AP

Mr Gates walked into a packed courtroom a day after he calmly acknowledged having embezzled hundreds of thousands of dollars from Mr Manafort and said the two had committed crimes together by stashing money in foreign bank accounts and falsifying bank loan documents.

Mr Manafort and Mr Gates were the first two people indicted in special counsel Robert Mueller’s investigation into potential ties between Russia and the Trump campaign. But Mr Gates pleaded guilty months later and agreed to co-operate in Mr Mueller’s investigation of Mr Manafort, the only American charged by the special counsel to opt for trial instead of a guilty plea.

media_cameraRick Gates, a former campaign official for US President Donald Trump. Picture: AFP

Mr Gates, who said he has met with the government 20 times ahead of his testimony, is expected to face a bruising cross-examination later today as defence lawyers try to undercut his credibility and pin the blame on him. In a reflection of Mr Gates’ importance to the prosecution’s case, a cart of about a half dozen green-and-white document boxes bearing his name was rolled into the courtroom ahead of his testimony.

The face-off between longtime business associates and former senior members of the Trump campaign drew scores of people who waited in line for hours outside the courthouse and then jammed into both the courtroom and an overflow room that contained a video feed of the proceedings.

media_cameraFormer Trump campaign chairman Paul Manafort (L). Picture: Getty

In early testimony this morning, Mr Gates related his role in setting up offshore bank accounts for Mr Manafort, a complex arrangement that was requested by wealthy and powerful Ukrainian businessmen who bankrolled Mr Manafort’s political consulting work in the country.

Mr Gates laid responsibility squarely at Mr Manafort’s feet, bolstering the prosecution’s case that Mr Manafort was in full control of his finances and directing Mr Gates’ actions. He recounted how Mr Manafort negotiated the offshore payment structure in person with Ukrainian oligarchs, and then Mr Gates would then codify the details in writing.

Mr Gates also described to jurors how he repeatedly submitted fake financial documents at Mr Manafort’s behest as his former boss became concerned he was paying too much in taxes and, later, that his funds were drying up.

media_cameraThen Republican presidential candidate Donald Trump (L) and his daughter Ivanka Trump (R) working with former campaign manager Paul Manafort (2nd R) at the Republican National Conventio. Picture: AFP

In one note read to the jury, Mr Gates says Mr Manafort wrote “WTF” and “not happy” about tax payments he was going to have to make.

The decision to have Mr Gates implicate himself on the stand in the filing of false bank and mortgage documents was clearly strategic, with prosecutors hoping to take some of the steam out of an aggressive cross-examination. Mr Gates repeatedly acknowledged his role in deceiving tax preparers, banks and other financial professionals about Mr Manafort’s finances.

In one instance, he acknowledged having produced a fake loan forgiveness letter between Mr Manafort’s consulting company and a Cypriot entity he controlled. Prosecutor Greg Andres pointed out that he had created a “loan forgiveness letter between Mr. Manafort and Mr. Manafort.” “Yes,” Mr Gates agreed.

During the testimony, Mr Manafort did not stare Mr Gates down as he did on Monday. Instead, he glanced up at his former protege periodically but mostly stared intently at documents displayed for the jury on a screen in front of him. Mr Gates remained focused on Andres and the jury.

media_cameraPresident Donald J. Trump has backed Paul Manafort. Picture: Getty

When the trial broke for lunch, Mr Manafort looked back at his wife, sitting in the front row, smiled and winked at her, followed by a quick shake of his head, seeming to indicate he was unfazed or unbothered by the morning’s testimony.

So far, that testimony has provided jurors with a damning account.

Mr Gates has read off the names of more than a dozen shell companies he and Mr Manafort set up in Cyprus, St. Vincent and the Grenadines and the United Kingdom to stash the proceeds of Mr Manafort’s Ukrainian political consulting work.

He has also told jurors that he and Mr Manafort knew they were committing crimes for years as part of the offshore payment structure.

He also described in details how he falsified loan applications and other documents to help Mr Manafort obtain more in bank loans.

In addition to those crimes, Mr Gates revealed other criminal conduct. Mr Gates, who is awaiting sentencing, told jurors that he siphoned off the money without Mr Manafort’s knowledge by filing false expense reports. 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 Mr Manafort’s direction.

media_cameraChicago mobster Al Capone. Picture: AP
media_cameraPaul Manafort booking photo. Picture: AFP

The case against Mr Manafort has nothing to do with either man’s work for the Trump campaign and there’s been no discussion during the trial about whether the Trump campaign co-ordinated with Russia — the central question Mr Mueller’s team has tried to answer. But Mr Trump has shown interest in the proceedings, tweeting support for Mr Manafort and suggesting he has been treated worse than gangster Al Capone.

US District Judge T.S. Ellis III, who has clashed with prosecutors as he urged them to hurry up presenting their case, has largely allowed the prosecution to question Mr Gates uninterrupted.

Originally published as Trump insider’s explosive testimony

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