Gates’ movie ties being probed by Mueller; lawyer could pose conflict

Rick Gates gets into a car as he leaves the federal courthouse in Washington on Nov. 2.
Rick Gates gets into a car as he leaves the federal courthouse in Washington on Nov. 2. AP

Robert Mueller’s team is requesting a special hearing in its case against Paul Manafort and Rick Gates due to a potential conflict posed by a lawyer who represents both Gates and a movie producer in a separate New York fraud case.

Gates and the producer, Steven Brown, share “multiple financial and business interests,” according to the motion filed by Mueller. As first reported by McClatchy, the two have worked together on several films including this year’s Walk of Fame, starring Clint Eastwood’s son Scott. Brown and two other men are accused of defrauding would-be film investors of more than $12 million.

Mueller’s team says that Gates and Brown are business partners in at least two entities, one of which is believed to be connected to film production work — and that Gates failed to disclose the shared entities in the personal financial disclosure he submitted to the federal government, something that could prove problematic for him legally.

What prompted the call for a special hearing, though, is that the two share the same lawyer – Walter S. Mack. Mueller wants to determine whether Gates is aware of the potential risks of such an arrangement.

“It is at least possible that Gates or Brown could become a witness for the government,” the filing reads, “or that information Mr. Mack learned from Brown or Gates could be relevant to the defense of the other.” Federal prosecutors in the New York case filed a similar motion today.

While Mueller’s team said it did not appear that Gates was involved in the alleged movie fraud, it did find evidence of transfers between Gates and both Brown and his co-conspirator, James David Williams. One of the transfers involved an entity, Bade LLC, through which Gates had been paid by the Republican National Committee for work done on the Trump campaign’s behalf during the 2016 election. Gates also proposed Brown’s brother, Marc, as a potential financial guarantor for his bail.

The fact that Gates didn’t initially disclose the financial entities he shares with Brown could give the government leave to modify Gates’ bail, according to former federal prosecutor Jaimie Nawaday.

“In this case, the government might seek to toughen the bail terms and send a message to the defendant that the government is paying close attention to whether the defendant has fully disclosed his assets, " Nawaday said.

In recent weeks, Gates has sought permission from the government to vote in the Virginia election, take his children to school and go home for Thanksgiving.

Last month Williams pleaded guilty to fraud, identity theft and money laundering in the New York case, and appears to be a cooperating government witness.

Today’s filing shows that Mueller is well into all the aspects of Gates’ sideline as a movie producer and that his investigation into possibe collusion between the Trump campaign and Russia during the 2016 election isn’t likely to be wrapped up soon, as President Trump has urged.

“There’s a constantly expanding scope of the Mueller investigation,” said Ross S. Delston, a Washington lawyer and money laundering expert. “This kind of unfolding of the facts could never be quick.”

Gates and Manafort were charged last month with money laundering, failing to disclose foreign bank accounts and of “false and misleading statements” in connection with foreign lobbying disclosure forms the pair filed years late for work done in the Ukraine.

The two raked in millions of dollars from Ukrainian and Russian oligarchs, according to the indictment; the foreign lobbying work was done on behalf of a pro-Moscow Ukrainian political party.

As part of that work, Manafort’s former lobbying firm paid the producer Brown $40,000 for political and media outreach in 2012 and 2013.

Federal prosecutors have now found that Brown and Williams discussed with Gates the possibility of arranging Ukrainian investment in a fund for film distribution that would be run by Brown and Williams.

Brown, Williams and the Republican fundraiser Jerry Seppala were accused of using the millions in fraudulent funds for lavish personal expenses, including vacations, a Jaguar, payments on a yacht loan and initial payments on a $3.5 million California home. In a separate civil suit, they were ordered in March to pay back $10.5 million to one of the defrauded investors, reality hunting star Bill Busbice Jr.

They also used spent some of the funds on a politically-oriented nonprofit called the Bipartisan Coalition for American Security that was co-chaired by former U.S. Sens. Joseph Lieberman (D-Conn.) and Scott Brown (R-Mass.) and whose advisory board was led by Elliot Broidy, a national deputy finance chair for the Republican National Committee.

Prosecutors in the New York case are requesting a hearing to determine whether to waive the potential conflict posed by Mack’s representation of Gates and Brown, to ensure that Brown is aware of the risks and has sufficient time to “digest and contemplate those risks” and consult an outside lawyer.

Peter Stone is a special McClatchy correspondent.