UPDATE: Day Seven trial exhibits available here.
Rick Gates returned to the witness stand Wednesday morning to continue answering questions under cross-examination by Paul Manafort's defense attorney Kevin Downing.
Washington Post live updates:
9:25 a.m.: Gates wasn’t actually asked about having an affair. He admitted that on his own. [from Tuesday]
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[A]s soon as Downing asked about “the secret life of Rick Gates,” the witness volunteered, “There was a period of time, almost 10 years ago, when I had a relationship, yes. ”
When asked whether he took “unauthorized expenses” from Manafort to fund the “separate, secret life,” Gates replied, “yes, I acknowledge I had a period of time where I had another relationship.” But Gates said most of the money he spent on the affair came from his legitimate bonuses or from his family, and that most of the money he embezzled he shared with his wife.
10:25 a.m.: Gates disclosed offshore accounts to FBI in 2014, thought he was truthful
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Notably, Gates said he disclosed to the FBI some of the Cyprus and Grenadines bank accounts that he and Manafort used to receive payments from their Ukrainian benefactors. He said Manafort told him they should be “open and provide the information” in response to the bureau’s questions. Gates testified that he told the FBI that they opened the accounts so they could easily get payments from the people they worked for in Ukraine.
The testimony is important because prosecutors have sought to demonstrate that Gates and Manafort hid their connection to the accounts and did not report them on required forms. That is the basis for some of their charges. Their disclosing the accounts to the FBI in 2014 cuts against the idea that they were hiding them. Gates also testified that he and Manafort talked after their interviews, and Manafort indicated that he had been truthful in his own conversation with the bureau.
10:33 a.m.: In rebuttal questioning, prosecutors show Gates hid income from offshore accounts in 2014 FBI interview
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Special counsel Greg Andres then came back to the lectern. He started by rebutting the idea that Gates and Manafort were honest with the FBI in 2014, when agents were investigating their former Ukraine client Viktor Yanukovych.
Gates agreed that the agents did not ask about tax returns and that most of the Cyprus accounts at issue were already closed at that point.
He said he did not tell the agents about any hidden income from those accounts.
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11:16 a.m.: Defense suggests Gates had four extramarital affairs between 2010 and 2014
Rick Gates stepped down from the witness stand just before 11 a.m. Wednesday after a stunning suggestion from one of Paul Manafort’s defense attorneys: Gates might have had four extramarital affairs.
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After prosecutors asked Gates about his pretrial prep with special counsel lawyers, and Gates testified he had “no doubt at all” that his plea agreement would be shredded if he lied on the witness stand, Downing probed more into what he referred to a day earlier as Gates’s “secret life.”
The defense attorney pointed to about $3 million in transactions, from 2010 to 2014, that he has suggested represent money Gates embezzled from Manafort. He noted an extramarital affair that Gates admitted to Tuesday. Then he asked: Did Gates recall telling the special counsel’s office “that you actually engaged in four extramarital affairs?”
Prosecutors objected, asking why that question was relevant. Downing said it might speak to the idea that Gates’s lying on the witness stand would result in his plea agreement being torn up. The lawyers convened at Judge T.S. Ellis III’s bench for a lengthy conversation that was shrouded in white noise piped through the courtroom.
When the conference broke up, Downing did not ask the same question.
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11:32 a.m.: Gates testimony ends, forensic accountant expected to follow money trail
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Morgan Magionos, an FBI forensic accountant, is expected to testify for about two hours, talking about tracing payments from Ukraine through Cyprus to Paul Manafort’s clothiers and home improvement contractors in the United States.
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12:31 p.m.: Judge again spars with prosecutors
After a lengthy break, Judge T.S. Ellis III again sparred with prosecutors over the pace of the trial and evidence they want to admit. Such heated arguments have been a common occurrence in the trial.
The latest dispute centered on charts that prosecutors want to show jurors demonstrating the flow of money from Paul Manafort’s offshore accounts to specific purchases he made in the United States.
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12:53 p.m.: Forensic accountant takes stand to track Manafort’s money
Morgan Magionos is the FBI forensic accountant who traced Paul Manafort’s financial affairs as part of the investigation and connected the foreign bank accounts to domestic spending activity.
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Magionos found 31 foreign bank accounts spanning 2010 to 2014 that listed Manafort, Rick Gates or Konstantin Kilimnik as the beneficial owners.
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2:13 p.m.: Manafort moved off-shore accounts from Cyprus to St. Vincent & the Grenadines, accountant says
FBI forensic accountant Morgan Magionos is now testifying that by July 2014, when Manafort was interviewed by the FBI, he had closed all his bank accounts in Cyprus for which he was listed as a “beneficial owner.” Instead, he had opened accounts in St. Vincent and the Grenadines where Russian business associate Konstantin Kilimnik was listed as the owner and employees of his Cypriot lawyer, Kypros Chrysostomides, were given signature authority.
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2:46 p.m.: Emails show Manafort transferring money from off-shore accounts to buy real estate, clothes, cars
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Magionos sifted through various invoices and documents showing that overseas money tied to Paul Manafort was used to pay for purchases at Alan Couture, Big Picture Solutions, Land Rover of Alexandria and other vendors.
Magionos also testified about strings of emails showing Paul Manafort messaging his lawyers about making wire transfers from offshore accounts to vendors. Magionos testified that the payments from foreign bank accounts went to purchase real estate or other expenses for Manafort, his business, DMP International, and his family and related entities.
2:56 p.m.: Prosecutors now matching off-shore wire transfers to Manafort’s luxury vendors
Prosecutors are continuing to methodically trace how money flowed from Paul Manafort’s overseas accounts to purchase luxury clothing, rugs, landscaping and other goods and services in the United States.
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The data-heavy testimony has dragged at times. Most jurors are still taking notes and assiduously reading the computer screens, but a few have rubbed their eyes, or leaned back and crossed their arms. At one point, after prosecutor Greg Andres presented a chart showing how money from two of Manafort’s foreign accounts flowed through several other accounts before it was ultimately used to buy a home in New York City, Judge T.S. Ellis III interrupted to clarify that his purpose was to show Manafort did not report all his income on his tax returns.
Andres said it was, and confirmed that prosecutors were not alleging, at least in this trial, that the flow of money through various accounts was otherwise illegal.
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3:18 p.m.: Manafort took in $60 million over five years, including $31 million from Ukrainian politicians in 2012
A forensic accountant from the FBI closed her direct testimony by saying that between 2010 and 2014 over $60 million flowed through Paul Manafort’s overseas accounts and he spent $15 million of that on homes, clothes and other personal purchases.
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Prosecutors say Manafort paid taxes on only about half of his foreign income. He is also accused in Washington, D.C., federal court of failing to register as a foreign agent for his work in Ukraine. He did register in June 2017, but Magionos testified that in those filings, he understated his foreign income significantly.
4:11 p.m.: FBI accountant acknowledges discrepancies in handwriting of Manafort banking documents
On cross-examination, one of Paul Manafort’s attorneys, Richard Westling, tried to undermine the credibility of the documents FBI accountant Morgan Magionos used to conduct her analysis of Manafort’s foreign banking activity. Westling flashed various documents on the screen showing signatures presumed to be Manafort’s, but pointed out discrepancies in the handwriting.
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4:25 p.m.: Is that Manafort’s signature? Or that? Prosecutors, judge ponder handwriting on Manafort documents
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In response, prosecutor Greg Andres projected to the jury two different pages of a bank document seized from Manafort’s home, showing two signatures from two different dates that appeared to be Manafort’s. Andres asked Magionos if she thought they looked different, and she said they did.
Ellis interrupted.
“I’m sorry, you’re saying those don’t look the same? That’s what you’re saying?” he asked incredulously.
She confirmed she thought the signatures looked different.
4:29 p.m.: Prosecutors call a witness who has watched the whole trial, angering Judge Ellis (UPDATE: who earlier permitted it)
Next up for prosecutors is IRS Revenue Agent Michael Welch, who was assigned in April to help prosecutors prepare for trial. Welch testified that he examined Paul Manafort’s business and tax records and, as with the last witness, prepared charts summarizing what he had found.
Welch’s appearance on the stand triggered another heated confrontation between Judge T.S. Ellis III and prosecutors. After going through Welch’s qualifications, prosecutors asked if he could be treated as an “expert” witness — meaning he, unlike other witnesses, will be allowed to offer his professional opinion in court. Ellis said he could do so. Assistant U.S. Attorney Uzo Asonye then revealed that Welch had been seated in the courtroom for the duration of the proceedings.
Ellis erupted, saying that he typically bars all witnesses — save the case agent — from observing the proceedings, and thought he had done so in this case.
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“I want you to remember, don’t do that again. When I exclude witnesses, I mean everybody,” Ellis growled.
UPDATE: Asonye said he believed the transcript would back him up that in this case, Ellis had allowed both the case agent and the expert to remain. “I don’t care what the transcript said; maybe I made a mistake,” Ellis snapped. “Don’t do it again.”
The transcript, provided by CNN, does in fact show that Ellis allowed the expert to stay in court.
5:13 p.m.: IRS agent: Manafort did not pay taxes on $16.4 million in Ukrainian income
Prosecutors are using IRS agent Michael Welch to state clearly what they argued in opening statements and have had witnesses testify on for several days now — Paul Manafort did not pay taxes on all of the income he earned in Ukraine between 2010 and 2014.
Welch testified that Manafort had $16.4 million in unreported income between 2010 to 2014. The IRS agent said that the tax returns Manafort filed in those years were also false because he didn’t indicate he had foreign bank accounts.
“They failed to check the box that Mr. Manafort had a foreign bank account,” Welch said, later adding, “He should have marked the box, ‘Yes.'”
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Under cross-examination, defense attorney Kevin Downing raised questions about an “embezzlement deduction” Manafort might have been able to take and whether he might have been able to spread out reported income as a way to explain discrepancies. Welch testified those would be possibilities, but it didn’t change his assessment that Manafort filed false tax returns and failed to report income.
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Prosecutor Greg Andres told the judge the government intends to call eight more witnesses — each of whom will testify for an hour or less. He said the government expects to rest by Friday. Testimony resumes at 9:30 a.m. Thursday.
Paul Manafort trial Day 7: Gates finishes, judge dings prosecutors (again), accountant takes stand (WaPo)