Gates Says He Stole From Firm to Pay for Affair

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Rick Gates, under cross examination at the tax evasion and bank fraud trial of his former boss Paul Manafort, admitted that he had "another relationship" involving first-class flights and luxury hotels, but denied these were funded with money embezzled from Manafort.

Manafort also included Calk on a list he emailed to Gates of people he wanted to invite to Trump's inauguration. At one point, as Gates had trouble recalling the details of his confession, Downing asked him, "Have they confronted you with so many lies that you can't even remember them?"

Noah added, "It's like if at the end of "Karate Kid", Daniel-san kicked the shit out of Mr. Miyagi".

For the first time, the jury heard about the extent that Manafort and Gates had worked for the Trump campaign. Defense attorney Kevin Downing pushed as hard as he could for the last two hours of Tuesday's proceedings to get a rise out of Gates, who refused to engage with more than flat, passionless responses. Gates was indicted on similar charges to Manafort, which were dropped after he agreed to plead guilty to lesser charges of conspiring against the US and lying to the government officials in exchange for this testimony.

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. 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. Gates said the money in these accounts was earned from Manafort's political campaign work. In prosecutors' questioning, then in a combative cross-examination from the defense team, Gates revealed the extent to which he had siphoned money from his boss and committed a host of other misdeeds.

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Gates said prosecutors agreed not to pursue charges on those matters, and dropped a second indictment against him accusing him of bank and tax fraud.

When Yanukovych lost power, Gates testified that "decreased the income stream" significantly for Manafort, and his financial situation "substantially decreased" from prior years.

Manafort's accountant was asked about a purported $10 million loan from Russian oligarch Oleg Deripaska.

On Tuesday, Gates did connect one part of the bank fraud charges against Manafort to his role in the Trump campaign. Gates testified that he'd followed Manafort's instructions as they set up Cypriot and other foreign bank accounts, moved money from Ukrainians into the U.S., made sure Manafort's name was scrubbed from the accounts, then lied to the IRS and banks. Regarding a trading company Manafort had started with a partner in 2011, he asked with deep scepticism: "You're asking the jury to believe Mr Manafort authorised another US$250,000 as a bonus?"

The defense team's cross-examination hasn't yet undercut the prosecution's assertion that Manafort knew about and directed Gates to lie to a raft of financial professionals and on official forms over several years.

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Gates said it was a "very common method" for Dr. K and that, once the money was moved into the accounts, Manafort decided what to do with it.

Presented with a copy of his plea agreement, Gates said he conspired with Mr Manafort to falsify his tax returns.

"WTF", Manafort wrote in a 2015 email, after learning how much he'd have to shell out to Uncle Sam, Gates said. Gates did not have a chance to respond to those allegations Monday.

In other testimony, Gates recounted how he converted a PDF of a profit-and-loss statement to a Microsoft Word document so he could doctor it to inflate the business' income. When the trial broke for lunch, 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 by the morning's testimony.

In another heated exchange, Downing tried to press Gates into explicitly saying that he had embezzled money from Manafort.

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