Rick Gates, a long-time business associate of US President Donald Trump’s former campaign chairman Paul Manafort, has testified at Mr Manafort’s fraud trial that they committed crimes.
Mr Gates, whose testimony in federal court in Alexandria, Virginia, was continuing, was expected to be a star witness in the government’s case.
He pleaded guilty in February and agreed to co-operate with prosecutors under a deal that could lead to a reduced sentence.
Mr Manafort’s lawyers have signalled they will seek to blame Mr Gates and have accused him of embezzling millions of dollars from Mr Manafort.
Mr 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 go to trial arising from Special Counsel Robert Mueller’s investigation into Russian interference in the 2016 US election.
On the witness stand, Mr Gates testified that he and Mr Manafort knowingly committed several crimes. He said that, at Mr Manafort’s request, he failed to report 15 foreign financial accounts he and Mr Manafort controlled to the US government – even though they knew that was illegal.
He also testified that Mr Manafort directed him to send millions in foreign cash as phony “loans” to his US companies, so he could avoid tax liabilities.
The jury has heard how Mr Manafort made tens of millions of dollars for political work with pro-Russian politicians in Ukraine. Mr Gates was Mr Manafort’s partner in the consultancy.
Mr Mueller is also investigating possible co-ordination between Trump campaign members and Russian officials in the election campaign, but the charges against Mr Manafort do not address that.
The jury had heard testimony on Friday and Monday from accountant Cynthia Laporta, who described how Mr Manafort and Mr Gates doctored financial statements and backdated loans.
In questioning Ms Laporta on Monday, a prosecutor asked her about a $US10 million loan ($13 million) purportedly received by Mr Manafort from Russian businessman Oleg Deripaska in 2006.
Ms Laporta, looking at a summary of loans to Mr Manafort and his businesses, said she could not see any indication that the loan from Mr Deripaska had been repaid.
Since the trial started before US District Judge T.S Ellis last Tuesday, Mr Manafort’s lawyers have kept their cross-examinations brief and at times refrained from attempting to rebut damaging testimony in detail.
But Ms Laporta’s testimony raised the stakes for Mr Manafort, legal experts said.
Testifying under immunity, she was the first witness to admit she knew accounting manoeuvres Mr Manafort and Mr Gates requested of her were wrong and could be crimes. One accounting trick saved Mr Manafort $US500,000 ($645,000) in taxes, she said.
Ms Laporta detailed multiple examples in which Mr Manafort and Mr Gates sought to doctor financial records, first to lower Mr Manafort’s taxable income, and later to inflate it so he could get bank loans.
Some of the manoeuvres were at the request of Mr Gates, while others implicated Mr Manafort, Ms Laporta testified.
Similar to prior witnesses, Ms Laporta testified that Mr Gates and Mr Manafort were in lockstep but that Mr Manafort was in charge.