Rick Gates, a longtime business associate of U.S. President Donald Trump's former campaign chairman Paul Manafort, on Monday testified at trial that he helped Manafort file false tax returns and did not disclose foreign bank accounts.
Gates, 46, is already facing up to six years in prison under the terms of a plea deal he struck with prosecutors in February when he pleaded guilty to two charges of conspiracy and lying to the Federal Bureau of Investigation.
The testimony is poised to pack even more drama into the courtroom than the 78 minutes Gates was on the witness stand a day earlier, as Manafort's defense team will get the chance to cross-examine Gates - and they've made clear the crux of their defense will be to blame Gates for Manafort's alleged crimes.
The prosecution has tried to demonstrate Gates' credibility as a witness, which Manafort's attorneys have been attacking.
In questioning Ms Laporta on Monday, a prosecutor asked the accountant about a $10 million loan purportedly received by Mr Manafort from Russian businessman Oleg Deripaska in 2006.
Gates then admitted that he also turned the tables on Manafort - cheating him out of "several hundred thousand" dollars by submitting false expense reports that were paid out of some of the undisclosed foreign bank accounts in Cyprus.
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Manafort's political activities were not limited to the U.S.by any means: government prosecutors are alleging that he evaded taxes on $15 million worth of income earned while promoting former Ukrainian President Viktor F. Yanukovych.
The jury heard testimony on Friday and Monday from accountant Cynthia Laporta, who described how Manafort and Gates doctored financial statements and backdated loans.
"At Mr. Manafort's request, at different points in the year, we did not disclose the foreign bank accounts", Gates said.
While the case has nothing to do with either man's work on the Trump campaign and the charges mostly pre-date that time, the U.S. president has shown interest in proceedings. Gates' admission, on his first day of testimony under a plea deal with Special Counsel Robert Mueller, is key to rebutting the prime counter-narrative that Manafort is trying to tell the jury: that. Gates also worked for the Trump election campaign.
The second week of the tax evasion and bank fraud trial of Paul Manafort kicked off Monday.
Gates and Manafort were charged with a combined 32 counts of tax and bank fraud in February, after which Gates accepted a plea deal which included testifying against Manafort.
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Gates testified that Manafort told him to report overseas income as loans to lower Manafort's taxable income, supporting the testimony of his accountant.
Some of the manoeuvrers were at the request of Mr Gates, while others implicated Mr Manafort, Ms Laporta testified.
Last week, a tax preparer named Cindy Laporta admitted that she helped disguise $900,000 in foreign income as a loan in order to reduce Manafort's tax burden.
But Laporta's testimony raised the stakes for Manafort.
Laporta said she had grown to distrust the information Gates was providing her, though she didn't know about the embezzlement.
And if Manafort did indeed open those accounts, that inherently means he knew they existed - and that he failed to report them to his tax preparers.
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