Paul Manafort’s Lawyers Attack Rick Gates in Bid to Undercut His Credibility

For the prosecution, testimony by Rick Gates, a top campaign aide to President Trump, was critical to show that Paul Manafort purposefully defrauded the bank and tax authorities.

ALEXANDRIA, Va. — Lawyers for Paul Manafort attacked the government’s star witness as a thief, serial adulterer and possible forger as part of an aggressive effort to undercut prosecutors on Wednesday at his trial.

The defense lawyers also proposed novel situations under which their client’s tax avoidance may have been less extreme than prosecutors asserted. Mr. Manafort, President Trump’s former campaign chairman, failed to disclose and pay taxes on nearly $16.5 million in income, according to an I.R.S. revenue agent.

But his lawyers suggested that the actual amount of unreported income could have been smaller, partly because his companies might have been able to claim an “embezzlement deduction” on the money that his longtime deputy, Rick Gates, has acknowledged stealing through falsified expense reports.

Mr. Manafort’s defense hinges on discrediting Mr. Gates, the main witness for prosecutors, and suggesting he was to blame for financial improprieties. The degree to which Mr. Manafort is relying on that strategy became evident on Wednesday when his lead lawyer, Kevin Downing, accused Mr. Gates of having four extramarital affairs and lying about them.

Mr. Downing suggested that such a lie could invalidate a plea deal that Mr. Gates reached with the special counsel’s office to reduce his potential punishment in exchange for his cooperation in the case against his former boss, and possibly others. Mr. Manafort’s trial is the first to stem from the special counsel investigation into Russia’s election interference and possible coordination by Trump associates.

Mr. Downing offered no evidence of either the affairs or Mr. Gates’s misrepresentation of them, and the judge, T. S. Ellis III, cut off the questioning before Mr. Gates could directly respond. Mr. Gates had admitted to a single affair a day earlier under questioning by Mr. Manafort’s lawyers.

Prosecutors returned to the subject on Wednesday in an effort to show that Mr. Manafort knew of the relationship and was unbothered by it.

Mr. Gates testified that he and Mr. Manafort had discussed the relationship — which he said occurred more than a decade ago and lasted five months — and that Mr. Manafort did not fire him and also remained supportive of him. Additionally, Mr. Gates said that his wife was also aware of the affair, during which he lived with his paramour in an apartment in London.

Mr. Gates testified that he discussed the affair with the special counsel’s office during preparatory sessions for the trial, prompting Mr. Downing to ask whether Mr. Gates told investigators that he actually engaged in four extramarital affairs.

When the lead prosecutor for the special counsel’s office, Greg D. Andres, objected, challenging the relevance of the question, Mr. Downing asserted that Mr. Gates may have lied about the number of affairs under oath, which could invalidate his plea agreement.

Mr. Gates pleaded guilty in February to lying to federal investigators and conspiracy to commit fraud, but he has yet to be sentenced. Under federal sentencing guidelines that the judge is not required to follow, his plea would result in a prison sentence of four years and nine months to six years. But as part of his testimony, Mr. Gates said prosecutors have agreed not to object if his defense lawyer argues that he should receive probation. The most serious of the 18 felony charges against Mr. Manafort carry a maximum of 30 years in prison.

Mr. Manafort and Mr. Gates had been quite close. Mr. Manafort, 69, served as both a boss and mentor for Mr. Gates, 46. When Mr. Manafort was brought on to help run the Trump campaign, he brought on Mr. Gates as his deputy. When Mr. Manafort was forced out amid allegations about his work in Ukraine, Mr. Gates continued working with the campaign, and then served as the executive director of Mr. Trump’s inaugural committee.

Mr. Manafort’s allies regarded Mr. Gates’s decision to cooperate with prosecutors as an ultimate betrayal.

Over three days of testimony this week, Mr. Manafort glared continuously at Mr. Gates in the witness box, his fists perched underneath his chin. Mr. Gates kept his gaze fixed on the floor in front of him.

Mr. Gates provided hours of damning testimony against Mr. Manafort related to their decade of work together on behalf of Russia-aligned Ukrainian politicians and oligarchs. Mr. Gates accused Mr. Manafort of deliberately hiding income from the Ukraine work in foreign bank accounts to evade federal taxes, as well as personally directing the falsification of financial statements to obtain bank loans.

The defense, in response, has worked to cast Mr. Gates, not Mr. Manafort, as the driving force behind the financial improprieties. Another defense lawyer seemed to suggest on Wednesday that Mr. Gates may have forged his boss’s signature on documents related to foreign bank accounts that the special counsel says were used to hide income.

Mr. Manafort’s team scored a minor victory when an F.B.I. forensic accountant admitted under defense questioning that Mr. Manafort’s signature on at least one financial document looked “a little bit different” than a signature on a document seized from Mr. Manafort’s home.

Judge Ellis seemed incredulous of the accountant’s assessment of discrepancies between versions of Mr. Manafort’s signature, but concluded “it is up to the jury whether they look the same.”

Prosecutors also presented an overview of how Mr. Manafort received, concealed and moved money from foreign bank accounts to evade taxes.

The F.B.I. forensic accountant, Morgan Magionos, testified that Mr. Manafort or others operating on his behalf opened 31 bank accounts in Cyprus, St. Vincent and the Grenadines and Britain. Created in the names of shell companies, the accounts held a total of more than $60 million from 2010 to 2014 that was deposited by Ukrainian oligarchs who had hired Mr. Manafort as a political consultant, she said.

During those years, Mr. Manafort avoided paying taxes on $16.47 million of that money by transferring it directly to vendors, testified Michael Welch, the I.R.S. revenue agent. He also testified that Mr. Manafort failed to check a box on his tax returns indicating that he controlled foreign bank accounts. “He should have marked the box ‘yes,’” Mr. Welch said.

A prosecutor said that the special counsel plans to offer eight more witnesses and conclude its case this week, which would allow Mr. Manafort’s lawyers to begin presenting his defense next week.

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