How the Russia Investigation Entangled a Manafort Protégé
Rick Gates’s rapid ascent into President Trump’s orbit as Paul Manafort’s partner, and his sudden ejection from it, underscore how the Russia inquiries have shaken the administration.
Nearly everywhere Paul Manafort went, it seemed, Rick Gates followed, his protégé and junior partner. Election campaigns in Eastern Europe and Africa. Business ventures with a Russian tycoon. The upper ranks of Donald J. Trump’s presidential campaign.
Mr. Gates survived Mr. Manafort’s purge last summer amid allegations that his mentor had taken millions of dollars from Kremlin allies, retaining a central role on Mr. Trump’s campaign and transition team. But Mr. Gates, 45, soon followed in Mr. Manafort’s footsteps once again: In April, amid new questions about Russian interference in the 2016 election, he was abruptly forced out of a lobbying group formed to advance President Trump’s agenda.
Now, Mr. Gates has been drawn into the burgeoning federal investigations into diplomatic and financial dealings between Russian interests and the president’s inner circle. In a newly disclosed memo, a lawyer for the Trump campaign ordered members of the president’s transition team to preserve records relating to five Trump associates, among them Mr. Manafort — already known to be a subject of the investigation — and Mr. Gates. The memo indicates that transition lawyers believe Mr. Gates’s actions are under scrutiny by the Justice Department or the House or Senate Intelligence Committees — or soon will be.
As investigators examine Mr. Manafort’s financial and political dealings at home and abroad, they are likely to run into Mr. Gates wherever they look. During the pair’s heady days in Ukraine, it was Mr. Gates who flew to Moscow for meetings with associates of Oleg Deripaska, a Russian oligarch. His name appears on documents linked to shell companies that Mr. Manafort’s firm set up in Cyprus to receive payments from politicians and businesspeople in Eastern Europe, records reviewed by The New York Times show.
Following an inquiry from the Department of Justice, Mr. Gates and Mr. Manafort are also now weighing whether to register under the Foreign Agents Registration Act in connection with an effort in Washington several years ago to burnish the image of a pro-Russian political party in Ukraine.
Mr. Gates said late Thursday night that federal investigators had not been in contact with him. He has not been accused of any wrongdoing and, in recent interviews, he said that criticism of him and Mr. Manafort was based on flawed news media reports and documents whose authenticity the two men question.
“Everything was done legally and with the approval of our lawyers,” Mr. Gates said. “Nothing to my knowledge was ever done inappropriately.”
Mr. Gates’s rapid ascent into Mr. Trump’s orbit, and his sudden ejection from it, is just one example of how the Russia-related controversies have shaken the Trump administration. The federal investigations are also casting a harsh light on the crossroads of Washington lobbying and international deal making, where Mr. Manafort made his fortune — and Mr. Gates once hoped to follow.
“I don’t know if it is a Greek tragedy, but it is certainly ironic,” said John Weaver, a Republican political consultant. Mr. Weaver feuded with a former business partner of Mr. Manafort’s and Mr. Gates’s when their work with Mr. Deripaska, the Russian oligarch, vexed the 2008 presidential campaign of Senator John McCain.
The investigations into Mr. Manafort’s relationships overseas, Mr. Weaver said, are “the only reason Rick Gates isn’t in the West Wing and why Paul Manafort doesn’t have a thousand clients in Washington.”
The two men met nearly three decades ago when Mr. Gates landed an internship at Black, Manafort, Stone, Kelly, a high-powered Washington consulting firm.
The firm specialized in running Republican campaigns and then lobbying the politicians they had helped elect. In Washington, Mr. Manafort worked to smooth the rough edges of various dictators and strongmen, among them Ferdinand Marcos of the Philippines and Mobutu Sese Seko of the Democratic Republic of Congo. The Trump Organization was also a client, employing the firm to lobby the Treasury Department on casino transaction rules and to guide Mr. Trump’s ill-fated New York-Washington airline venture.
Mr. Manafort left the firm the same year Mr. Gates started there. But Mr. Gates worked closely with another rising Republican lobbyist, Rick Davis, and in 2006 joined him and Mr. Manafort at their new company, Davis Manafort.
From an office in Kiev, the Ukrainian capital, the firm was working a variation on Mr. Manafort’s Washington business model. While rebranding Ukraine’s Moscow-aligned president, Viktor F. Yanukovych, as a reformist candidate who favored closer ties to the European Union, they sought investment deals with politically connected industrialists in Eastern Europe. One of them was Mr. Deripaska, the Russian aluminum magnate and an ally of President Vladimir V. Putin, who has been denied a visa to the United States, apparently because of allegations linking him to organized crime — charges Mr. Deripaska has denied.
When Mr. Davis left the company to manage Mr. McCain’s 2008 campaign, Mr. Gates took over his duties in Eastern Europe, meeting with potential business partners, developing deals, and negotiating contracts. He often flew to London or Paris, according to a former colleague in the Kiev office, and made at least two business trips to Moscow.
Foreign capitals, of course, have long been a lucrative destination for American political consultants: Big-name campaign operatives can earn a small fortune working for controversial or disreputable candidates, largely out of sight of the American news media. Mr. Yanukovych’s operation boasted numerous veterans of both George W. Bush’s and John Kerry’s presidential campaigns.
“Rick was Paul’s business guy,” said Tad Devine, a Democratic political consultant who worked with Davis Manafort on the Ukraine campaigns. (He quit in 2012, after Mr. Yanukovych jailed a former rival for the presidency.) Working for Mr. Yanukovych, Mr. Devine said, helped position Mr. Gates and his bosses to do business in the country.
“You elect Yanukovych, he is going to make it a market economy, so you work to do deals and get foreign investment — and that’s where the real money was,” Mr. Devine said.
One Davis Manafort venture, a private equity fund called Pericles, was set up to buy small companies in Russia and Eastern Europe within industries that had yet to consolidate: cable television, for example, or pharmaceutical manufacturing. The fund’s biggest investor was Mr. Deripaska, the Russian oligarch.
For Mr. Gates, then in his mid-30s, partnering with moguls such as Mr. Deripaska seemed like a route to the kind of financial success enjoyed by Mr. Manafort, a multimillionaire with vacation homes in the Hamptons, N.Y.; Palm Beach, Fla.; and in France. Mr. Gates had read news reports of Mr. Deripaska’s problems with the State Department, but said he was not overly troubled by them; the Russian was already in business with blue-chip American firms like General Motors.
In 2007, Mr. Gates and his wife traded in their $700,000 home in Richmond, Va., taking out a $1.5 million loan for a house in one of the city’s wealthiest neighborhoods, public records show.
“We thought we had a good business model,” Mr. Gates said. “We thought we were going to be successful.”
As it turned out, the fund foundered amid the global economic crisis, and the only deal with Mr. Deripaska devolved into a legal dispute. But today, nearly a decade later, investigators are known to have an interest in the money that Mr. Manafort and his colleagues made in Eastern Europe, how those funds were paid and the offshore conduits such as Cyprus through which that money traveled.
Handwritten ledgers found in a former office of Mr. Yanukovych’s political party indicate that it made $12.7 million in undisclosed cash payments to Mr. Manafort between 2007 and 2012. Other recently disclosed documents suggest that a payment earmarked in those ledgers for Mr. Manafort may instead have been paid through an offshore bank account and as a supposed payment for a computer.
Mr. Manafort has insisted that the ledgers were forged and that he never received any secret cash payments. “Paul’s payments for his work abroad have all come through traceable wire transfers to his U.S. accounts,” said Jason Maloni, a spokesman for Mr. Manafort.
Davis Manafort used shell companies in Cyprus both to receive payments for its political consulting and for business investment activities. Documents reviewed by The Times show that Mr. Gates was among the employees who dealt with the Cypriot law firm that registered those companies.
Mr. Gates explained that Mr. Deripaska had recommended the firm, Dr. K. Chrysostomides & Co. Five shell companies were set up to facilitate anticipated business deals with Mr. Deripaska; four others were for payments received for political consulting services in Ukraine, he said.
Cyprus has long been a popular tax haven for Russian oligarchs and businesses. Mr. Gates said he was told that Davis Manafort clients had instructed the firm to use Cyprus as a financial transfer point, because American banks preferred to work with the island’s European Union-regulated banks rather than those in Eastern Europe. A representative for Mr. Deripaska and his companies did not respond to questions from The New York Times. Mr. Davis, who now works at a private equity firm, did not reply to an email seeking comment.
After protesters forced Mr. Yanukovych from power in early 2014, Mr. Manafort and Mr. Gates began looking for potential political clients elsewhere: Hungary, Uganda, and Kenya. But then another revolution began to crest — the one back home, in the Republican presidential primary.
In the spring of 2016, when Mr. Trump found himself outmaneuvered in the arcane battle for Republican convention delegates, he turned to Mr. Manafort. Mr. Gates came along as his deputy — the man behind the man in charge. In a campaign known for its factionalism, Mr. Gates won over colleagues by managing the mundane but essential work of daily operations. He traveled often with Mr. Trump and forged relationships with Reince Priebus, the future chief of staff, and Brad Parscale, the campaign’s digital director.
“What made him valuable was, people trusted him, No. 1, and No. 2, he was effective,” said Richard F. Hohlt, a longtime Republican lobbyist who worked on Mr. Trump’s transition team.
Those ties enabled Mr. Gates to outlast his mentor last summer, when Mr. Manafort was ousted. Mr. Gates moved to the Republican National Committee, helping iron out joint fund-raising agreements and other contracts with Mr. Trump’s campaign.
Mr. Gates was soon established in Mr. Trump’s circle. Before the first presidential debate, he glad-handed with Michael T. Flynn, Mr. Trump’s top security adviser — now also a subject of the federal investigations — and Sheldon Adelson, the billionaire casino mogul. At an election night party, Mr. Gates hit it off with Thomas J. Barrack Jr., the wealthy Los Angeles investor, who hired Mr. Gates to help run Mr. Trump’s inaugural.
After Mr. Trump was sworn in, Mr. Gates joined Mr. Parscale and other Trump aides to raise $25 million for a new pro-Trump group, America First Policies. Mr. Gates lined up office space adjacent to the Willard Hotel, a Washington power-breakfast spot, and became a frequent visitor to the White House, hoping to join the new Trump era elite.
“He did it to stand on his own,” Mr. Hohlt said. “He wanted his own presence with Trump.”
But his work in Ukraine cast a long shadow. Amid the Russia investigations, reports on Mr. Manafort’s work for Mr. Deripaska rattled colleagues at America First Policies. Mr. Gates was let go.
Mr. Gates said he and Mr. Manafort were being unfairly smeared by Democrats and Mr. Trump’s enemies. “Everybody has tried to take these instances of anyone in the Trump orbit doing something in Russia, and then fast-forwarding however many years, and then saying it is evidence of collusion with Russia on the election,” Mr. Gates said. “It’s totally ridiculous and without merit.”