The prosecution produced an undated email exchange between Mr Manafort and Mr Gates which outlines the amount of tax the campaign chief might have to pay.
"WTF", Mr Manafort wrote in response, "How could I be blindsided like this".
"We needed to determine how we could lower the taxes", Gates said in his second straight day of testimony in Virginia federal court. Though Manafort left the Trump campaign in August 2016, Gates stayed on, and eventually joined the Trump administration's transition team. He also acknowledged he may have submitted personal expenses to President Trump's inaugural committee for reimbursement.
The defense highlighted the terms of the deal Gates received for testifying in the bank and tax fraud case against Manafort on charges that stem from special counsel Robert MuellerRobert Swan MuellerSasse: US should applaud choice of Mueller to lead Russian Federation probe MORE's Russian Federation investigation. The funds were logged as loans in order to meet later audits in Cyprus that required documentation of transfers between bank accounts, but Gates testified they were in fact compensation to Manafort.
During cross-examination, Paul Manafort's lawyer Kevin Downing focused in on Rick Gates' lies, both to Manafort and to the special counsel's office, and sought to paint Gates as a man who lived what Downing described as "the secret life of Rick Gates". Gates also said Manafort floated banker Stephen Calk's name for consideration as Secretary of the Army, a post he ultimately did not get.
Gates, under questioning by prosecutor Greg Andres, admitted that he padded his expense accounts with phony charges without Manafort's knowledge, siphoning "several hundred thousand" dollars from the secret accounts.
Judge T.S. Ellis III then asked Gates to clarify if those "loans" were actually just income-specifically payment for services-earned and not declared by Manafort.
"I'm here to tell the truth", Gates shot back.
Undercutting Gates' credibility is the foundation of Manafort's defense.
He testified about a complex scheme in which earnings from Manafort's political work in Ukraine would be paid by Ukrainian businessmen using companies in Cyprus to other Cyprus-based companies controlled by Manafort. 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 Manafort's direction.
Downing asked Gates if he's returned any of the money he stole from Manafort or his entities.
One part of Gates' testimony led to some laughter in the courtroom.
Gates, in response to Downing's questions, said that some of his income from his work with Manafort came from transactions Manafort authorized, and some came from unauthorized transactions.
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