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Rick Gates, testifying in Manafort trial, admits to affair, London apartment

Gates' ongoing testimony on Tuesday — Day 6 of Manafort's fraud trial — comes a day after he testified to years of crime and deceit.
Rick Gates departs after a bond hearing at U.S. District Court in Washington
Rick Gates, a former campaign aide to President Donald Trump, departs federal court in Washington in December 2017.Joshua Roberts / Reuters file

ALEXANDRIA, Va. — Rick Gates, the prosecution's star witness in the federal fraud trial of Paul Manafort, testified Tuesday that he once had an extramarital affair that involved maintaining a London apartment.

The topic came up as Kevin Downing, Manafort's attorney, tried to paint Gates as self-motived and untrustworthy by hammering away at his admitted practice of filing doctored expense reports.

Downing asked about "the secret life of Rick Gates," inquiring whether Gates had kept an apartment in London and if he had engaged in an extramarital relationship there.

"I admitted to a previous relationship," Gates said, adding that he maintained a flat for about two months. The affair occurred about 10 years ago.

In his first day on the stand Monday, Gates admitted he had embezzled money from Manafort, a former Trump campaign chairman, by creating false expense reports on his own behalf. He didn't state an exact dollar amount, but estimated it to be "in the hundreds of thousands."

Downing on Tuesday asked Gates about his methods, pressing him on how he had embezzled the money.

“Did you have a scheme you developed?” Downing asked.

Gates said that he didn’t, that he "just added numbers to the reports."

Downing also asked if Gates had submitted personal expenses to President Donald Trump's inaugural committee.

"It's possible," Gates, who was a Trump campaign aide, replied.

Later, when Downing was asking Gates about $120,000 in wire transfers to a company Gates had created, Gates admitted, “in this case it was Mr. Manafort's money."

Then things got heated.

Downing asked Gates if the payments were for his "secret life." Gates said they weren't.

“In essence, I was living beyond my means,” he said.

“So this is for your secret life?” Downing repeated. Gates answered that it wasn’t secret, since his wife knew.

Asked about the origins of the money, Gates said, "This is money taken from Mr. Manafort," adding, "I already said."

Downing, not letting up, said "embezzled." Gates, however, refused to use the same term, repeating that he’d taken money from Manafort.

"Why won’t you say embezzlement?" Downing asked Gates, who then answered, after the third exchange. "It was embezzled from Mr. Manafort."

Moments later, asked by Downing if he had returned the Money to Manafort, Gates said, “I have not.”

In addition, Downing, in a sustained effort to undercut Gates' credibility, asked the witness about the terms of his plea, under which charges in Virginia were dropped in exchange for his cooperation, and his conversations with special counsel Robert Mueller's team.

"When did you first start providing false and misleading information to the special counsel?” Downing asked.

"I didn’t provide false and misleading information,” Gates answered, adding that there were previous “instances where I struggled” to recall facts, saying he had a “bad memory.”

"Just a bad recollection?" Downing asked.

"To some extent, yes," Gates said.

But Gates admitted to Judge Judge T.S. Ellis that he had indeed lied to the special counsel's office before reaching the plea agreement, which included a charge of making a false statement.

Downing asked Gates about being offered the plea agreement “even though you knowingly, intentionally lied?”

“Is that correct, one of the most important things for you to do is tell the truth?” Downing asked.

“Yes,” Gates answered, adding that he had met with the special counsel's office 20 times to prepare for his time on the witness stand.

It was also revealed during Tuesday's court proceedings that Manafort tried to procure a Trump administration job for a Chicago banker, which appears to confirm NBC News' exclusive reporting from earlier this year.

In February, NBC News reported that the special counsel's team was investigating whether Manafort promised Stephen Calk, CEO of the Federal Savings Bank, a job in the Trump White House in return for $16 million in home loans.

Tuesday's testimony and court evidence showed that Manafort, in an email after he had left his post as chairman of the Trump campaign, requested that Calk be considered for secretary of the Army. Manafort also asked for an inauguration invitation for Calk and his son.

Last month, court filings by prosecutors said that it was Manafort who first launched Calk into the Trump orbit with a campaign position as a financial adviser. Prosecutors say that post was part of a quid pro quo agreement for loans.

Gates' earlier testimony on Tuesday, meanwhile, centered on how Ukrainian businessmen paid Manafort for his consultancy work. Gates was asked about 11 Cypriot accounts, and he testified that they were all owned by Ukrainian businessmen.

He told the jury that Manafort loaned himself money between two Cypriot accounts because "he was trying to decrease his taxable income." Gates said these loans were actually income.

Gates explained that Manafort's financial difficulties worsened in 2014, when Viktor Yanukovych, the president of Ukraine, was no longer in power and his Party of Regions disintegrated. Manafort worked a political consultant to Yanukovyvh and the party for nearly a decade.

When Yanukovych lost power, that “decreased the income stream” significantly for Manafort, and his financial situation “substantially decreased” from prior years, Gates testified.

“Was he having difficulty paying his bills?” prosecutor Greg Andres asked.

“He was,” Gates answered.

Gates' testimony on Tuesday — the sixth day of Manafort's fraud trial — came a day after he testified that he'd committed crimes with Manafort.

Gates, a former business partner of Manafort, testified that he began working with Manafort directly in October 2006, and the pair conspired from 2008 to 2015.

Gates said Monday that over the years, Manafort directed him to make payments through wire transfers. The income and the accounts, however, were not reported.

Gates said that he did not report 15 foreign offshore bank accounts to the government. In addition, he testified, he did not submit the required forms at Manafort's direction. Gates said the money in these accounts was earned from Manafort's political campaign work.

Mueller’s team, which is investigating Russian interference in the 2016 election, says Gates was heavily involved in helping hide millions of dollars overseas. Gates pleaded guilty to reduced charges in February and agreed to cooperate with the government.

The tax and bank fraud charges in the current trial — the first of two Manafort is scheduled to face — however, have nothing to do with Manafort's work on the Trump campaign. Instead, prosecutors for Mueller have accuse Manafort of hiding at least $30 million that he earned while representing Ukraine and Yanukovych, an ally of Russian President Vladimir Putin.

Both Gates and Manafort were indicted last October by a federal grand jury on 12 charges, including conspiracy against the U.S. Manafort has pleaded not guilty to all charges.

Upon departing the court house Tuesday, Manafort's lawyer was asked by a reporter how he thought it went with Gates on the stand.

"Mr. Manafort had a great day," Downing said.