Star witness Gates to begin testimony Monday at ex-Trump aide's trial

ALEXANDRIA, Va. (Reuters) - The longtime business partner of Paul Manafort, U.S. President Donald Trump’s former campaign chairman, on Monday began testifying for prosecutors against Manafort at his trial on fraud charges.

FILE PHOTO: Former U.S. President Donald Trump campaign aide Rick Gates departs after a status conference at the U.S. District Court following his indictment on tax fraud and money laundering charges in the special counsel's investigation into alleged Russian meddling in the 2016 U.S. presidential election in Washington, U.S., November 2, 2017. REUTERS/James Lawler Duggan/File Photo

The federal trial jury in Alexandria, Virginia, had heard testimony on Friday and Monday from accountant Cynthia Laporta, who described how Manafort and his associate Rick Gates doctored financial statements and backdated loans.

Gates is expected to be a star witness in the government’s case, having pleaded guilty in February and agreed to cooperate with prosecutors under a deal that could lead to a reduced sentence. Manafort’s attorneys have signaled they will seek to blame Gates and have accused him of embezzling millions of dollars from Manafort.

Manafort has pleaded not guilty to 18 counts of bank and tax fraud and failing to disclose foreign bank accounts. The charges largely predate his five months on the Trump campaign but were the first to arise from Special Counsel Robert Mueller’s investigation into Russian interference in the 2016 U.S. election.

The jury has heard how Manafort made tens of millions of dollars for political work with pro-Russian politicians in Ukraine. Gates was Manafort’s partner in the consultancy.

Mueller is also investigating possible coordination between Trump campaign members and Russian officials in the election campaign, but the charges against Manafort do not address that.

In questioning Laporta on Monday, a prosecutor asked the accountant about a $10 million loan purportedly received by Manafort from Russian businessman Oleg Deripaska in 2006. Laporta, looking at a summary of loans to Manafort and his businesses, said she could not see any indication that the loan from Deripaska had been paid off.

Since the trial started before U.S. 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.

But Laporta’s testimony raised the stakes for Manafort, legal experts said. Testifying under immunity, she was the first witness to admit she knew accounting maneuvers Manafort and Gates requested of her were wrong and could be crimes. One accounting trick saved Manafort $500,000 in taxes, she said.

Laporta detailed multiple examples in which Manafort and Gates sought to doctor financial records, first in order to lower Manafort’s taxable income and then later to inflate his income so that he could get bank loans.

Some of the maneuvers were at the request of Gates, while others implicated Manafort, Laporta testified. Similar to prior witnesses, Laporta testified that Gates and Manafort were in lockstep but that Manafort was in charge.

Reporting by Nathan Layne, Sarah N. Lynch and Karen Freifeld in Alexandria, Virginia, Warren Strobel; editing by Grant McCool

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