By David Voreacos and Andrew Harris, Bloomberg News
Rick Gates, the political consultant accused of money laundering with Donald Trump’s former campaign chairman, has a longstanding personal and business relationship with a California man accused of fraud, prosecutors said.
That man, Steven Brown, is represented by one of the lawyers defending Gates against money laundering and conspiracy charges — a potential conflict of interest since one may have to testify against the other, according to Special Counsel Robert Mueller’s office. Prosecutors asked a judge to review whether attorney Walter Mack can represent both Gates and Brown, who was charged in New York last year with defrauding investors in feature and documentary films.
Gates and Brown “are believed by the government to have had a long-term personal and business relationship that creates areas of potential factual overlap between the two cases,” according to the filing Monday in federal court in Washington.
“Gates and Brown appear to have shared multiple financial and business interests.”
Mueller asked Judge Amy Berman Jackson to hold a hearing to ask Gates questions to determine whether he’s aware of the risks of Mack having “divided loyalties” by representing both men. The filing offers fresh insights into the activities of Gates, who was charged along with ex-Trump campaign chairman Paul Manafort.
In a separate filing on Monday, prosecutors also asked U.S. District Judge Kimba Wood to hold a hearing in Manhattan to determine if Brown wants to waive the potential conflict posed by Mack’s representation of Gates.
Mack declined to comment, citing a gag order in the case against Gates and Manafort. He said in an email that he’ll “reserve whatever comments I may have on the topic to the courtroom or to court permitted filings.” Another lawyer, Shanlon Wu, also represents Gates.
Manafort and Gates, his right-hand man, are accused of lying to U.S. authorities about their work in Ukraine, laundering millions of dollars and hiding offshore accounts.
Both pleaded not guilty on Oct. 30 and are under home confinement.
Brown, of Santa Monica, California, was indicted in June 2016 with two other men on charges that they defrauded investors of $12 million. Prosecutors also charged that Brown and one of his co-defendants laundered the proceeds of their crime.
Gates and Brown invested together in stocks and movies, and Gates transferred money at Brown’s behest to pay for personal expenses, according to the filing by Mueller’s prosecutors in Washington. They have a partnership, MAP Global Holdings LLC, with $6.6 million in assets including a Swiss documentary and two other films, according to the filing.
They are also partners in GB Consulting LLC, which began in 2013 with a brokerage account that held 1.75 million shares of Energy Today Inc. stock. The shares had a face value of $24.5 million at the time and were valued by a bank at $14 million. In
March 2014, Gates withdrew all the shares, when they had a value of $6.125 million, Mueller’s prosecutors wrote.
Gates, of Richmond, Virginia, apparently didn’t disclose those entities, and certain liabilities, in his financial statement as part of his bail package, prosecutors said.
Brown and his co-defendant, James David Williams, also discussed with Gates the possibility that certain Ukrainian clients would invest in a print and advertising fund for film distribution, prosecutors said. Previous “investments of this type” had allegedly been obtained through fraudulent means and resulted in stolen investor funds, according to the filing.
Williams pleaded guilty on Sept. 21, admitting that from 2002 to 2016, he conspired to defraud investors in the production and marketing of feature films. Williams’s attorney, Anthony Cecutti, didn’t immediately respond to a call seeking comment.
Prosecutors said they don’t believe that Gates was directly involved in, or a victim of, Brown’s alleged crimes.
Brown’s bail is secured in part by his brother, Marc Brown, prosecutors wrote. Gates has also proposed using Marc Brown as surety for his bail. In an interview with Mueller’s office on Nov. 16, Marc Brown “listed as a reason for seeking to support Gates that they belonged to the same fraternity (although they did not attend the same college)” and he felt “duty bound to help Gates.”
The case is U.S. v. Gates, 17-cr-201, U.S. District Court, District of Columbia (Washington).