Gates Paid Himself Bonuses From Offshore Accounts: Trial Update

Paul Manafort’s former right-hand man, Rick Gates, testified Tuesday about how he helped his boss conceal millions of dollars and defraud banks to get loans. The tension in the courtroom isn’t likely to let up as Gates faces questioning from Manafort’s lawyers, who say that Gates was responsible for any crimes.

Manafort attorney Kevin Downing began his cross-examination of Gates by questioning him about unauthorized bonuses he paid himself through his boss’s offshore accounts, part of an effort by the defense to paint Gates as a liar whose credibility is damaged.

Downing, a former tax prosecutor, also cited a false statement Gates made to the special counsel’s office earlier this year before pleading guilty to one count of conspiracy against the U.S. and one count of making a false statement to the government.

These incidents are being used to reinforce the defense’s position that this case is about “taxes and trust,” as Manafort attorney Thomas Zehnle said in his opening statement last week. The defense contends that Gates repeatedly violated Manafort’s trust and can’t be trusted by the jury.

Downing suggested that Gates paid himself as much as $3 million in bonuses and unauthorized expenses from bank accounts allegedly controlled by Manafort in Cyprus, much more than the hundreds of thousands that Gates admitted to in earlier testimony.

“When did you first start giving false and misleading information to the special counsel’s office,” Downing asked.

Gates said that he provided false information because he couldn’t remember specific events. He then pleaded guilty and began cooperating with prosecutors, meeting with them numerous times in preparation for the trial.

Downing questioned several expenses Gates paid with money from the Cypriot accounts, alleging that a “substantial amount” of them represented personal expenses and not charges associated with Gates’s role as an employee of Manafort’s political consulting firm.

Pressed by Downing and Judge T.S. Ellis III, Gates admitted that many of the expenses weren’t approved by Manafort.

“I submitted expense reports over several years that were not authorized,” Gates said.

Gates closed his direct testimony with a flourish, answering questions from prosecutor Greg Andres about the Trump campaign, the New York Yankees and Stephen Calk, founder of Federal Savings Bank in Chicago.

Prosecutors asked for the first time about Manafort’s role on the Trump campaign. Gates said Manafort joined as convention manager in March 2016, and he followed his boss. Manafort became campaign chairman in May 2016 and left in August 2016. Gates Stayed on and then joined the inauguration committee.

At the time, Manafort had applied for loans from Federal Savings Bank, which lent him $16 million. Calk was nominated to the transition team’s economic advisory council, and then Manafort made a request.

“Rick, we need to discuss Steve Calk for Secretary of Army,” Manafort, after he had left the campaign, wrote to Gates by email on Nov. 24, 2016. “I hear it’s being considered this weekend.”

A month later, Manafort sent an email to Gates with the subject line: “Urgent: Inaugural Invitation Lists.” Among those on the list were Stephen Calk and Stephen Calk Jr.

Andres asked if Manafort was seeking inaugural tickets for Calk. Gates said yes. The prosecutor asked Gates where Manafort was working the time. Gates said he didn’t know.

Gates also testified about problems that Manafort had in 2016 paying for New York Yankees season tickets he held since 2006. The tickets cost between $210,000 and $225,000, Gates said.

“I was still on the campaign at the time,” Gates said. “It was very work intensive. He asked me to sign a letter to attribute the cost to me and not to him.”

Andres finished his examination of Gates, and the judge took a break before Downing, the Manafort attorney, began his cross-examination.