Defense attorneys for former Trump campaign manager Paul Manafort last week made a point of asking trial witnesses about Rick Gates’ intelligence, signaling a key element in their strategy to pin blame on Mr. Manafort’s former business partner for what federal prosecutors say was massive bank and tax fraud.
As the trial enters its second week, legal analysts say the case appears to turn on Gates, who defense attorneys want jurors to believe was the real orchestrator of the fraud and embezzled from Mr. Manafort. They also argue that Gates bungled the embezzlement, creating an easily followed paper trail of misspelled words.
Gates, who has agreed to plead guilty to lying to investigators in special counsel Robert Mueller’s Russia election-meddling probe, is expected to testify Monday or Tuesday in U.S. District Court in Alexandria, Virginia, in what is shaping up as a pivotal moment.
“If you take Gates apart, you will likely win the case,” said Andrew Stoltmann, a federal litigator who has handled white-collar criminal cases. “It is a high-stakes gamble but well worth it.”
Mr. Manafort’s trial — the first to emerge from the Mueller investigation — focuses on charges unrelated to the Trump campaign and deals with Mr. Manafort’s political consulting and lobbying work for Ukraine’s formerly pro-Russia government.
Gates, who also was part of the Trump campaign, now is working with prosecutors. They want him to detail orders from Mr. Manafort to create shell companies and fraudulent documents shielding tens of millions of dollars in income from his work in Ukraine from the IRS.
One witness who testified Friday appeared to support that claim. When asked who in Mr. Manafort’s circle was responsible for financial decisions, accountant Philip Ayliff, replied without hesitation, “Mr. Manafort.”
But another prosecution witness, Cindy Laporta, told the courtroom that Gates instructed her to falsify tax documents, misrepresenting a $900,000 business loan as income, to lower Mr. Manafort’s tax burden by as much as $400,000. Ms. Laporta seemed to indicate that Gates operated at the direction of Mr. Manafort.
Defense attorneys will take a crack at her testimony Monday as they try to bolster their argument that Mr. Manafort was too busy managing overseas campaigns to monitor his finances and relied on Gates.
They say Gates, who worked closely with Mr. Manafort running the campaigns of pro-Russia politicians in Ukraine for nearly a decade and, briefly, President Trump’s 2016 presidential campaign, embezzled millions of dollars from his former mentor, forged financial documents to cover it up and then quickly copped a deal with prosecutors to pin his crimes on Mr. Manafort.
Mr. Stoltmann said it is always a risk to center a criminal defense around discrediting one witness. But in this case, he said, he likes the strategy because defense attorneys likely have “a great deal of material” on Gates.
‘Only a fool’
Gates’ testimony is seen as so critical to the defense that when prosecutor Uzo Asonye told U.S. District Judge T.S. Ellis III on Wednesday that he might not be called, journalists rushed out of the courtroom to report the disclosure. That appeared to amuse Judge Ellis.
“That’s news to me and about 25 others who scurried out of here like rats on a sinking ship,” the judge said.
Mr. Asonye walked back his claim the next day, telling Judge Ellis that he has “every intention” of calling Gates.
The defense’s case hinges so much on Gates that attorneys were notably reserved in cross-examining prosecution witnesses last week and asked only a handful of questions. Most of the few inquires Mr. Manafort’s attorneys have thrown at witnesses have centered on whether they had any interaction with Gates.
Joshua Dressler, who teaches criminal law at Ohio State University, said the relatively short cross-examinations highlight the importance of Gates.
“I assume they did not feel they had questions that would help, so it’s better to let it go and not emphasize the witness in the minds of the jurors,” Mr. Dressler said. “The key for the defense at this point is Gates.”
Defense attorneys already have begun to set up their Gates strategy, claiming he masterminded the complicated scheme to embezzle millions of dollars from Mr. Manafort and used complicated financial documents and suspicious invoices to cover it up. They point to Gates’ changing stories while cutting a deal with the special counsel.
The defense team also argues that Gates’ simple mistakes made it easy for federal investigators to spot phony documents.
During the trial Wednesday, Maximilian Katzmann, a high-end men’s clothing salesman, testified about a bill purportedly from the company he worked for, Alan Couture, to a company called Global Endeavour. But Mr. Katzman noted that “Couture” was misspelled, his company’s ZIP code was wrong and he never did business with Global Endeavour.
Manafort attorney Jay Nanavati asked Mr. Katzman whether he was aware of Gates’ “level of education and spelling abilities.” Mr. Katzman said he was not and that he had never met Gates, although he sometimes emailed him when he couldn’t reach Mr. Manfort.
Gates has a bachelor’s degree in government from the College of William & Mary and a master’s degree in public policy from George Washington University.
On Friday, before preparing to cross-examine Mr. Ayliff, defense attorney Thomas Downing told Judge Ellis that he planned to ask questions on whether the accountant kept records in case of an audit. “Only a fool” would hide accounts from his tax preparer because it increases the risk of being caught through an audit, said Mr. Downing, pointing to what the defense likely intends to highlight as another error by Gates.