Manafort Trial: Gates Explains How They Concealed Income

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Gates is expected to be the government's star witness in its case against Manafort.

Gates, 46, is already facing up to five 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.

Prosecutors on Monday went through a list of overseas corporations and Gates testified that all of them were controlled by Manafort and contained income earned by his political consulting work. They were the first two people indicted by Mueller's grand jury.

The charges largely predate his five months on the Trump campaign but were the first to go to trial arising from Special Counsel Robert Mueller's investigation into Russian interference in the 2016 U.S. election.

Special counsel Robert Mueller is investigating whether any Trump aides colluded with an alleged Moscow plot to help elect him as USA president, and whether there was any obstruction of justice. They said Mr. Gates did everything from approve expense reimbursements to draft business plans.

Undercutting Gates' credibility is the foundation of Manafort's defence.

When the trial broke for lunch Tuesday, 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 or unbothered by the morning's testimony. He said he was aware Manafort was acting as an unregistered foreign agent in lobbying for Ukraine.

Finally, before the court recessed for lunch, Gates said that he helped Manafort convert a $1.5 million 2012 loan from Peranova Holdings into income while applying for a loan in 2016.

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On day five of the trial in Alexandria, Virginia, Gates was asked by the prosecutor whether he had committed any crimes with Mr Manafort, and he said: "Yes".

"I assisted Mr. Manafort in filing false tax returns", Gates testified.

Gates is cooperating with the investigation as part of a plea bargain with the prosecution, whilst Paul Manafort denies all charges- which include tax fraud; bank fraud; and failing to report foreign bank accounts.

On Monday, another witness for the prosecution-former Manafort accountant Cynthia Laporta-testified that in 2006, Manafort received a $10 million loan from Russian oligarch Oleg V. Deripaska, who had close ties to Russian President Vladimir Putin. But Trump has shown interest in the proceedings, tweeting support for Manafort and suggesting that he had been treated worse than gangster Al Capone.

Since the trial started before US District Judge T.S. Ellis last Tuesday, Manafort's lawyers have kept their cross-examinations brief and at times refrained from attempting to rebut damaging testimony in detail.

There were hundreds of emails showing Manafort approved payments out of the Cypriot accounts, he said. In exchange for his plea, Gates agreed to testify against Manafort.

By that standard, Ellis told the court, Charles Koch and George Soros would be considered oligarchs.

Some of the maneuvers were at the request of Gates, while others implicated Manafort, Laporta testified.