A longtime business partner of President Donald Trump's former campaign chairman has detailed how he helped Paul Manafort hide millions of dollars that he earned from Ukrainian clients.
In his first day as a star witness in Manafort's trial, Rick Gates testified on August 6 in a U.S. court outside Washington that wealthy Ukrainian businessmen paid Manafort millions of dollars for his political consulting work in Ukraine through wire transfers to accounts based mostly in Cyprus that were set up for Manafort.
Prosecutors allege that Manafort committed tax fraud by failing to report a "significant percentage" of the more than $60 million they say he received from his Ukrainian clients.
Gates testified about the payment scheme he said Manafort directed him to use, saying that Manafort had told him "the Ukrainian businessmen...had directed him to set up Cyprus accounts" as cover for their payments.
"At Mr. Manafort's request, we did not disclose foreign bank accounts" to U.S. tax authorities, said Gates, who himself is a former senior Trump campaign aide who pled guilty earlier this year to conspiracy charges and is cooperating with prosecutors in hopes of getting a reduced sentence.
Gates testified that both he and Manafort had control over the foreign bank accounts where the Ukrainian money was deposited.
Another person given control over the accounts, Gates testified, was Konstantin Kilimnik, a political consultant and close business associate of Manafort who was indicted in June on charges of intimidating witnesses in connection with Manafort's case.
In court filings, U.S. Special Counsel Robert Mueller has accused Kilimnik of having ties to Russian intelligence services, an allegation he has denied.
Beyond directing that payments from Ukrainian clients be deposited into Cyprus bank accounts, Gates testified that Manafort told him to report his overseas income as loans to lower Manafort's taxable income -- a point that supported previous testimony provided by Manafort's accountant.
"When income came into the company, Mr. Manafort directed whether it would be treated as income...or loans," Gates said. Reporting earned income as a loan is considered tax fraud under U.S. law.
Accountant Cindy Laporta, who has previously testified that both Manafort and Gates doctored financial statements and backdated loans, on August 6 was asked about a $10 million loan that Manafort purportedly received from Russian billionaire Oleg Deripaska in 2006.
Deripaska is a Russian aluminum tycoon with close ties to the Kremlin who engaged in various business deals with Gates and Manafort. He was sanctioned by the United States this year because of his association with the Kremlin.
Laporta testified that she had seen no evidence that Manafort's "loan" from Deripaska was ever paid off.
Gates, during the course of his much-anticipated testimony on August 6, admitted to helping Manafort doctor financial statements, hide foreign income, and cheat on his taxes -- all of which are crimes under U.S. tax laws.
Gates said he was also aware that Manafort was acting as an unregistered foreign agent in lobbying for Ukraine in Washington -- another crime that Manafort has been charged with in a separate case by Mueller.
Manafort has pleaded not guilty to the charges and his attorneys have signalled that they may seek to pin blame on Gates, whom they accuse of embezzling millions of dollars from Manafort.
Gates admitted to stealing hundreds of thousands of dollars from Manafort through false expense reports during court testimony on August 6.
Manafort was Trump's campaign chairman from May to August 2016, when he stepped down amid questions about his lobbying work for Ukraine's former Moscow-friendly president, Viktor Yanukovych.