ALEXANDRIA, Va. — Paul Manafort’s former business associate Richard Gates testified on Tuesday that his former boss directed him to wire money directly from Cyprus-based accounts to pay U.S. vendors and that he created fake invoices for those transactions.
Gates, the prosecution’s star witness who took the stand for the second consecutive day in the criminal trial against President Trump’s former campaign chairman, admitted to drafting invoices from luxury clothing stores and landscapers to make it look like Global Endeavor, a company in Cyprus that Manafort owned, was footing the bill instead of Manafort.
“Fair to say it was a fake invoice?” prosecutor Greg Andres asked as Gates reviewed an invoice for $42,000 that gave the appearance of being sent from Alan Couture, a high-end New York City clothing store, to Global Endeavor.
“Yes,” replied Gates, a former Trump campaign adviser.
The trial is considered the first courtroom test of special counsel Robert Mueller‘s Russia investigation. Gates pleaded guilty in February as part of a deal with Mueller’s team.
Government attorneys last week highlighted Manafort’s lavish spending habits, which included the purchase of a $15,000 ostrich jacket from Alan Couture, in an effort to prove he hid from the IRS income he earned while working as a political consultant in Ukraine. Prosecutors also say Manafort stashed assets in overseas accounts and falsified documents to obtain bank loans when the money dried up.
Gates said on Tuesday that when payments were made to vendors the money would come from both Cyprus and U.S. accounts. But when Andres asked if Gates would report those payments to Manafort’s bookkeeper, Heather Washkuhn, Gates said the U.S. payments were reported, but not the ones from the Cyprus accounts.
“How did this benefit Mr. Manafort?” Andres asked.
By not reporting the wire transfers, Gates explained, the payments were never disclosed on Manafort’s U.S. business records, essentially lowering the amount of income that should have been reported on his federal tax returns.
Manafort stared straight at Gates as his former associate said he was directed by Manafort to disguise millions of dollars in income as loans from a shell company in Cyprus owned by Manafort.
Gates said the money was documented as loans from Cypriot companies, “but in reality it was money moving between the accounts.”
Judge T.S. Ellis interrupted at one point to ask if the money recorded as a loan was compensation for work being done in Ukraine.
Gates said it was.
The witness was not seen making eye contact with Manafort, who was dressed in a black pinstripe suit for the sixth day of his trial.
Defense attorneys will get their chance to cross-examine Gates later on Tuesday. Gates testified on Monday that he stole “several hundred thousand” dollars from Manafort over the years by filing false expense reports.