Gates admits using money embezzled from Manafort to fund extra-marital affair

Rick Gates said Manafort ordered shielding of millions in offshore accounts.

All eyes were on Rick Gates Tuesday as the government's star witness testified against his former boss, Paul Manafort, in special counsel Robert Mueller’s federal tax trial against the former campaign chairman for President Donald Trump.

During the first part of his testimony on Monday, Gates admitted to shielding millions of dollars in over a dozen offshore accounts from United States tax collectors – all at Manafort’s direction, according to Gates.

PHOTO: Rick Gates leaves federal court in Washington, Feb. 23, 2018.
Rick Gates leaves federal court in Washington, Feb. 23, 2018.
Jose Luis Magana/AP, FILE

On trial in Alexandria, Virginia, Manafort is accused of evading taxes on $60 million earned in overseas lobbying and consulting work for a Russian-backed Ukrainian political party. Manafort has pleaded not guilty to all charges.

Follow along for updates.

5:30 PM – Gates testimony wraps for the day, but will continue Wednesday

After a full day of questioning, Rick Gates will return to the stand Wednesday morning for about an hour more of cross-examination, according to Manafort’s attorneys.

By the conclusion of Tuesday’s testimony, Gates had been on the stand for more than seven hours.

5:15 PM – Gates: ‘I am trying to change'

Rick Gates wants jurors to know he’s a changed man.

As defense attorneys for Paul Manafort seek to discredit the government’s star witness, Gates is fighting back, insisting he’s ready to tell the truth.

“I’m here to take responsibility,” Gates said in court Tuesday afternoon.

When Manafort’s defense counsel questioned Gates' character and asked Gates whether he would expect jurors to believe him, Gates said, “I do,” adding, “I have accepted responsibility and I am trying to change.”

4:00PM – During cross-examination, Gates reveals ‘secret’ life

As Manafort’s defense attorneys begin cross-examination of Mueller’s star witness, Rick Gates admitted to using money embezzled from Manafort to finance a London apartment he used to engage in an extra-marital affair.

During his testimony on Monday, Gates admitted to embezzling “several hundred thousand” dollars from Manafort. On Tuesday, Gates said he did so by “[adding] numbers to my expense account.”

Accused of living a “secret” life by Manafort’s defense team, Gates admitted to “having a relationship” a number of years ago in London and taking “trips to Europe” with money accrued from false expenses.

Gates accepted a plea deal from the special counsel in February, admitting to felony counts of conspiracy against the U.S. and lying to federal authorities.

2:30 PM – Special counsel wraps up questioning of Gates, on to cross-examination

After sitting through nearly six hours of questioning from the special counsel prosecutors, Rick Gates is on to cross-examination, where Manafort’s attorneys are expected to paint Gates as the true culprit behind their client’s alleged criminal activity.

During opening remarks last week, a defense attorney representing Manafort accused Gates of being “willing to say anything to save himself,” and insisted that Manafort’s only crime was “placing his trust in the wrong person,” referring to Gates.

2:15 PM – Special counsel questions Gates about Trump transition

During the final moments of Rick Gates’ questioning with special counsel prosecutors, Gates illustrated the dynamics of the Trump transition team and how Manafort sought to influence Trump’s inaugural committee after leaving the campaign.

Gates, who served on the Trump inaugural committee, testified Tuesday that Manafort contacted Gates during the transition period and insisted that Gates support a Chicago-based bank executive named Stephen Calk for nomination to become President Trump’s Secretary of the Army.

“We need to discuss Steve Calk for Sec. of Army,” read an email from Manafort to Gates that was shown to jurors in court on Tuesday. “I hear the list is being considered this weekend.”

Calk was given a position on the Trump campaign’s economic advisory council, but never became Trump’s nominee to be Secretary of the Army.

In April of 2018, ABC News reported that Democrats on the House Oversight Committee requested documents from Calk related to a reported loan agreement with Manafort that was premised upon Manafort’s support in appointing Calk to Secretary of the Army.

PHOTO: This courtroom sketch depicts Rick Gates, right, answering questions by prosecutor Greg Andres as he testifies in the trial of Paul Manafort, seated second from left, at the Alexandria Federal Courthouse in Alexandria, Va., Aug. 6, 2018.
This courtroom sketch depicts Rick Gates, right, answering questions by prosecutor Greg Andres as he testifies in the trial of Paul Manafort, seated second from left, at the Alexandria Federal Courthouse in Alexandria, Va., Aug. 6, 2018.
Dana Verkouteren via AP

1:30 PM – Manafort trial in recess after morning of Gates testimony

As court breaks for lunch, jurors have been told to expect more testimony this afternoon from Gates, who has spent the morning session outlining how he and Manafort dodged American tax collectors by using offshore bank accounts funded by a Ukrainian political party.

In an effort to “reduce his overall tax liability,” Gates further explained how Manafort ordered his bookkeepers to report some of his Ukrainian income as loans. Gates testified that Manafort ordered him to create fake loan agreements for loans “that didn’t exist.”

In 2014, as Manafort’s business clientele in Ukraine suffered the departure of former President Victor Yanukovych, Gates on Tuesday showed the court an email from Manafort lamenting a tax estimate, which read, “WTF… How could I be blindsided like this? This is a disaster.”

With prosecutors winding down their questioning, the defense should expect to cross-examine Gates within the next few hours.

11 AM – Gates describes how Manafort’s Ukrainian cash cow was put to pasture

When former Ukrainian President Viktor Yanukovych left office and fled to Russia in 2014, business dried up for Manafort – that’s when the former Trump campaign chairman turned to alleged fraud to bankroll his luxurious lifestyle, Rick Gates testified Tuesday.

As special counsel prosecutors peppered Gates with questions, the former deputy campaign manager for Donald Trump calmly explained how he created fraudulent invoices at Manafort’s direction.

"Paul Manafort didn't provide original invoices most of the time,” Gates said Tuesday morning.

As his testimony wore on, Gates described in depth the process by which he, Manafort, and an accountant coordinated to move money in and out of their offshore accounts in order to hide income from U.S. authorities.

After he and the accountant prepared the bill amount, “Paul Manafort would then give verbal approval to the bank,” Gates said in court.

10:15 AM – Gates lays out Manafort’s accounts in Cyprus

Addressing a packed courthouse in Alexandria, Virginia, Rick Gates began his Tuesday testimony by explaining the intricacies of setting up offshore accounts in Cyprus, where Manafort allegedly kept millions of dollars hidden away from the IRS.

Gates showed jurors contracts between Manafort and his Ukrainian patrons, illustrating how the Ukrainian businessmen wired money into Manafort’s accounts in Cyprus.

Gates, donning a dark blue suit and light blue tie, glanced briefly towards Manafort before turning back toward the attentive jury of 12.

ABC News' Katherine Faulders and Allison Pecorin contributed to this report.

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