National

Rick Gates-controlled companies took in cash from fraud-linked accounts

Two companies controlled by Paul Manafort’s former right-hand-man, Rick Gates, received more than $200,000 in 2015 from accounts linked to a multi-million dollar fraud scam, according to filings in a federal lawsuit.

The money was connected to a scheme perpetrated by two movie producers, a Hollywood agent and a Republican fundraiser charged by federal prosecutors with swindling as many as nine investors out of millions of dollars. But the money didn’t go to movies, instead it went to personal expenses, including homes, yacht payments and a Jaguar.

The money flowed in to Gates’ companies during a period when Gates’ and Manafort’s lucrative foreign political work was starting to dry up, according to Gates testimony Tuesday in Manafort’s federal trial on multiple tax and bank fraud charges brought by special counsel Robert Mueller. Manafort was President Donald Trump’s campaign chairman.

It’s not clear what the payments were for. Gates admitted in court on Monday that he had written a letter on Brown’s behalf overstating Brown’s income.

Gates’ lawyer, Tom Green, did not immediately respond to a message seeking comment from McClatchy.

Gates pleaded guilty earlier this year to helping Manafort avoid paying taxes on income earned overseas and lying to the FBI. Gates was offered a reduced sentence for providing assistance to the government and he is considered a crucial witness in the trial against Manafort.

One of the two Gates companies – Bade LLC – was the same entity through which the Republican National Committee paid Gates for his work on behalf of the Trump campaign. Gates also admitted Tuesday under questioning from Manafort’s lawyers that he had embezzled money from one of Manafort’s accounts and moved it to Bade LLC.

“We now know that Mr. Gates was in severe need of income,” said Ross Delston, a D.C.-based lawyer and anti-money laundering expert.

The other entity, Map Global Holdings LLC, is controlled by both Gates and Steven Brown, one of the perpetrators of the movie fraud scheme. Brown pleaded guilty to conspiracy to commit wire fraud in April.

CBV Money Flow.JPG
A chart in a federal lawsuit shows the flow of money from victims of a multi-million dollar movie investing fraud scheme to various accounts and entities, including two controlled by Rick Gates. Federal court filing

As McClatchy previously reported, he and Gates produced several films together and Brown also did political work with Gates and Manafort in 2012 and 2013 on behalf of the Ukrainian Party of Regions – work that Manafort and Gates failed to disclose until 2017.

The 2015 payments to Bade LLC and Map Global Holdings were revealed in a lawsuit brought by one of the defrauded movie investors against lawyers who handled the finances for Brown and his co-conspirators.

Mueller’s team indicated in a March filing that they were aware of Gates’ business relationship with Brown, but never brought charges against Gates connected to the movie fraud.

“Prosecutors don’t typically overcharge the case,” said Jack Blum, a lawyer and former Senate investigator who is an expert on white-collar financial crime and tax evasion. “If you’ve got a crook who you know has committed 100 crimes, you pick the 12 or 15 juiciest ones.”

But even if Gates was given immunity from any crimes connected to the movie fraud, he could still face consequences if he was involved.

“There’s no way the feds could shield Mr. Gates from civil liability brought by defrauded investors,” Delston said.

Paul Manafort joined the Trump campaign in March 2016. Since leaving the Trump campaign, he has been indicted and charged with multiple crimes including; tax fraud, financial fraud and witness tampering.

(This story was updated to correct Steven Brown’s legal status. Brown pleaded guilty to conspiracy to commit wire fraud in April.)

Ben Wieder, 202-383-6125, @benbwieder
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