Star witness Rick Gates’ testimony ends after Paul Manafort lawyer’s attacks

Kevin Downing, right, attorney for Paul Manafort, leaves federal court after attending the trial on tax evasion and bank fraud of the former Donald Trump campaign chairman in Alexandria, Va., on Tuesday.

Gates and Manafort first met with Dr. K to set up the companies in 2007 in Cyprus, Gates testified.

The 46-year-old, who has pleaded guilty to conspiracy and is cooperating with the government, began the day by describing how he helped Manafort evade United States taxes on millions of dollars earned from political consulting work they did in Ukraine.

Paul Manafort's former business partner, Rick Gates, is on the stand for the third straight day in Manafort's bank and tax fraud trial as prosecutors and defense lawyers wage their battle over Gates' credibility. He's expected to go for at least another hour in questioning with Manafort's attorney's.

Gates testified that he had an extramarital affair a decade ago, and also that he embezzled hundreds of thousands of dollars from Manafort. He admitted to committing fraud on a massive scale and extorting money from Manafort, along with assisting his former boss in filing false tax returns and bank fraud. Gates also provided the first witness testimony that overlaps with Trump's presidential campaign.

Mr Andres asked Gates whether he understood that his lies and omissions were illegal.

In detailed testimony, Gates walked prosecutors through the step-by-step process on how he and Manafort doctored and backdated documents. And the fact that after loaning Manafort millions of dollars Calk became an economic adviser to Trump casts doubt on Trump's famous pledge to "drain the swamp" and puncture the rampant influence peddling in Washington.

Manafort, the high-powered political consultant, is facing 18 counts and a maximum 305-year prison sentence if the Eastern Virginia jury finds him guilty.

Asked why he had lied, Gates said he had done so at Mr Manafort's request. He told jurors how he disguised millions of dollars in foreign income as loans in order to lower Manafort's tax bill.

Neither man was charged in connection with their Trump campaign work, but the trial has nonetheless been a distraction for a president who insists Manafort was treated shabbily and who continues to publicly fume about Mueller's investigation into potential ties between his associates and the Kremlin.

The email from Manafort came after Gates informed him that the tax accountants had calculated that Manafort would have an increase in taxes of about $509,000 in 2014.

Gates acknowledged that he did for two months and that he took first-class flights and stayed in "fancy hotels" around Europe, but said the money came from bonuses rather than illicit gains.

Manafort and Gates were the first two people indicted in Mueller's investigation into potential ties between Russian Federation and the Trump campaign.

Gates said he and Mr Manafort had 15 foreign accounts they did not report and they knew it was illegal. Instead, prosecutors for Mueller have accuse Manafort of hiding at least $30 million that he earned while representing Russia's neighboring country of Ukraine and its president, Viktor Yanukovych, an ally of Russian President Vladimir Putin.

Through emails and documents submitted into evidence Tuesday, Gates explained how he and Manafort enlisted the help of a Cypriot lawyer - referred to in court as "Dr. K" because his name, Gates said, was hard to pronounce - to create "shelf" companies to receive payments from Manafort's various Ukrainian political clients for their work. But Trump has shown interest in the proceedings, tweeting support for Manafort and suggesting he has been treated worse than gangster Al Capone.

Gates' admissions throughout the day included having a flat in London so he could cheat on his wife, helping another colleague - who's been indicted in a separate white-collar case - fake an investment document and lying to investigators earlier this year after he began to speak to them about a plea deal.

Asked if had also claimed unauthorised personal expenses from the inaugural committee, Gates replied "It's possible".

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