ALEXANDRIA, Va. (CN) – Returning to the stand to testify against Paul Manafort, Rick Gates walked the jury Tuesday morning through the money problems that threatened the lavish lifestyle to which his erstwhile employer had become accustomed.
Gates had begun his testimony on Monday with some context as to the ostrich jackets and other outsize expenses that prosecutors detailed a week earlier.
He explained that Manafort had earned millions doing lobbying work in the Ukraine for a pro-Russia political party known as the Party of Regions.
But that revenue stream disappeared, Gates testified Tuesday, in 2014 when then-Ukrainian President Viktor Yanukovych was ousted amid widespread protests in the country.
Gates said Manafort had been hoping to do more work for the Opposition Bloc, which was the successor to Yanukovych’s Party of Regions, but work was scarce because the party was not in power.
Indeed the the 2014 parliamentary election was the last Ukrainian election on which Manafort worked, Gates added, and he had never been completely paid for it.
The Opposition Bloc won just 8 percent of the vote in that election, and a series of strategies that Manafort mocked up for the party to move forward is one exhibit that prosecutors have entered into evidence at Manafort’s trial.
“The hope was that this effort would lead to an additional contract,” Gates said Tuesday.
Manafort became “quite upset,” Gates testified, that the party was slow in paying him.
Ultimately, Gates continued, Opposition Bloc leader Serhiy Lyovochkin offered to send along a small portion of what was owed. To Gates’ knowledge, however, Davis Manafort Partners International was never paid in full on the contract.
He said Manafort’s income from his consulting work had “substantially decreased” by July 2015, and it became difficult for Manafort to pay his bills.
Manafort has been a copious note taker since the start last week of his trial in Alexandria, Virginia, but with the latest witness the defendant’s focus appears to have drifted from his notepad.
In his testimony Monday, Gates claimed to have helped Manafort move $30 million from foreign accounts into the United States without declaring it. He said he also hid the existence of foreign accounts from accountants and tax preparers, omitting Manafort’s ownership of foreign bank accounts on the requisite disclosure forms.
A father of four, Gates had been indicted alongside Manafort initially but has been cooperating with Mueller’s office since entering a guilty plea in February.
As Gates testifies, he sits mere feet away from Manafort inside the ninth-floor courtroom where U.S. District Judge T.S. Ellis III is presiding.
Gates counted 15 Manafort-controlled companies that his former benefactor used to funnel his earnings.
Asked by prosecutor Greg Andres why Manafort set up such accounts, Gates responded plainly: so Manafort could avoid disclosing his taxable income.
Gates laid out the standard method by which Manafort would get paid by his clients. He said he and Manafort had been instructed by “Ukrainian businessmen” to establish the accounts in Cyprus, and that Manafort and the client would sit together once the accounts were set up, and a consulting agreement was drafted.
After a Cypriot attorney reviewed the contract, Gates said political consultant Konstantin Kilimnik would conduct a final review, and that it was up to Manafort then to tweak the agreement.
