IRS agent testifies that Manafort had $16.5M U.S. in unreported income

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U.S. President Donald Trump's one-time campaign aide Rick Gates testified for a third day on Wednesday at the trial of his former boss Paul Manafort, whose lawyers chipped away at his credibility for admitting he lied and stole money.

Gates faces more cross-examination Wednesday in federal court in Alexandria, Va. Manafort is accused of overseeing an elaborate offshore tax-evasion and bank fraud scheme, and Gates has offered a first-hand account of its workings.

The 46-year-old, who has pleaded guilty to conspiracy and is cooperating with the government, began the day by describing how he helped Manafort evade United States taxes on millions of dollars earned from political consulting work they did in Ukraine.

Manafort had $16.4 million in unreported income between 2010 and 2014, according to an IRS agent who said tax returns filed by Manafort were also false because he did not indicate he had foreign accounts. Gates said the money he took was sent to his account in the United Kingdom and was never disclosed to his accountants or the USA government.

He scoffed at the idea that Gates had repented for his actions, noting that prosecutors have said they won't oppose his bid for probation and getting him to acknowledge he had not repaid the money he had taken from Manafort.

Now the trial will likely move into gritty tales of bank fraud.

Gates, who is awaiting sentencing, told jurors that he embezzled hundreds of thousands of dollars from Manafort by filing false expense reports.

"Were these payments for your secret life?"

Rick Gates has finished his testimony in the financial fraud trial of his former boss, Paul Manafort, after one last effort by defense lawyers to erode his credibility.

On Tuesday, Downing asked how the jury could believe Gates "after all the lies you told and fraud you committed".

Gates told the court in Alexandria, Virginia, that he had met with government lawyer Greg Andres and Federal Bureau of Investigation agents 20 times and been told only to tell the truth, without any guarantee that he will be spared prison.

She essentially connected the dots of testimony from previous witnesses - vendors, Manafort's bookkeeper and accountants, and Gates - but did so in a way that presented direct links between one witness's part of the story and another's. "I have taken responsibility".

Both Manafort and Gates were indicted previous year on charges of bank and tax fraud as part of Special Counsel Robert Mueller's probe.

The veteran Republican operative is not on trial for anything he did while serving for three months in 2016 as chairman of Trump's presidential campaign.

The email exchange about Calk occurred after Manafort left the Trump campaign but while Gates was active on the Trump inauguration committee.

In a heated moment under cross examination by attorney Kevin Downing, Gates acknowledged that it is "possible" he submitted personal expenses for reimbursement from the committee.

The accountant testified she was unaware if the loan was recognized as income or ever paid back.

During cross examination, Manafort's attorneys pointed out Gates' extramarital affairs, including a woman in London who may have had a hand in the financial crimes Gates to which admitted, Politico reported.

In one email, Manafort wrote "WTF" and "not happy" about tax payments he was going to have to make, Gates said.

The face-off between longtime business associates and former senior members of the Trump campaign drew scores of people who waited in line for hours outside the courthouse and then jammed into both the courtroom and an overflow room that contained a video feed of the proceedings.

He was forced to step down amid questions about his lobbying work for Ukraine's former pro-Russian leader Viktor Yanukovych.

Neither were charged in connection with their Trump campaign work.

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