ALEXANDRIA, VA — Rick Gates on Tuesday morning helped prosecutors connect the dots on two of their two main allegations against his former boss, Paul Manafort.
Manafort was wiring money directly from his Cyprus account to vendors to hide his income, and he was reporting some of his income as loans on his taxes, according to Gates.
Both tactics were used with the goal of reducing Manafort’s taxable income, Gates testified.
Gates discussed his involvement in authorizing a number of payments to Manafort vendors, many of whom were previous witnesses in the government’s case.
Sometimes vendors were paid through Manafort’s domestic accounts. More frequently he was involved in vendor payments wired from the Cyprus account.
Gates said that Manafort informed him not to notify his bookkeeper, Heather Washkuhn, of the payments from Cyprus.
Not reporting these wire transfers to the bookkeeper meant they were not disclosed on Manafort’s business records. “In essence,” Gates said, this decreased Manafort’s income.
Prosecutors also discussed with Gates his role in helping Manafort’s accountants prepare Manafort’s taxes. Gates was in charge of responding to their queries, but Manafort was in the loop on the details, Gates said.
Gates said Manafort’s accounting firm advised them to report some income as loans.
“The idea of exchanging income for loans, and putting those loans on the books, enabled Manafort to reduce his tax liability” Gates said.
Gates also admitted to creating fake loan agreements for loans that did not exist. He said he did so at Manafort’s “direction.”