Manafort lawyer: 'So many lies' Gates can't keep up

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Both sides agreed ahead of time to limit discussion of the campaign so as not to prejudice the jury, though they had agreed to allow testimony about the overlap of a bank loan with Manafort's role in the campaign.

That area of questions could come first thing Wednesday morning, when Gates returns to the stand to face more of Downing's inquisition. "Because on the one hand, Gates stole money from him, but on the other hand he clearly learned everything that Manafort taught him".

The 46-year-old, who has pleaded guilty to conspiracy and is cooperating with the government, began the day by describing how he helped Manafort evade U.S. taxes on millions of dollars earned from political consulting work they did in Ukraine. They have tried several times to impugn his credibility before the jury. In prosecutors' questioning, then in a combative cross-examination from the defense team, Gates revealed the extent to which he had siphoned money from his boss and committed a host of other misdeeds.

"They were documented as loans, but in reality they were funds moving between the accounts".

Downing brought up a document that he said suggested Gates underreported his income on his US taxes by about $3 million.

The aggressive questioning was aimed at shifting blame from Manafort onto Gates, who pleaded guilty in Mueller's investigation and agreed to co-operate with investigators by testifying in the financial fraud trial. Gates is considered the prosecution's star witness.

The trial is the first stemming from special counsel Robert Mueller's 14-month investigation of Russian interference in the 2016 election and possible collusion between the Trump campaign and the Kremlin.

Although the allegations of collusion between Donald Trump and Russian Federation are not at issue in this trial, any significant blows to the government's case are likely be seized on by the president's defenders, including conservative media, to support his contention that Mueller's investigation is a "rigged witch-hunt".

Prosecutors showed contracts laying out that Manafort would be paid $4 million a year in quarterly installments of $1 million, all channeled through Cyprus.

The email exchange about Calk occurred after Manafort left the Trump campaign but while Gates was active on the Trump inauguration committee.

He has pleaded guilty to helping Manafort hide payments from Manafort's consulting work with pro-Russia politicians in Ukraine to dodge taxes.

Gates, who was working on Trump's transition team, testified that Manafort had suggested Stephen Calk as a candidate for Army secretary two weeks after Trump was elected. Gates was indicted on similar charges to Manafort, which were dropped after he agreed to plead guilty to lesser charges of conspiring against the USA and lying to the government officials in exchange for this testimony. The charges are not related to Manafort's work with the Trump campaign.

The face-off between longtime business associates and former senior members of the Trump campaign drew scores of people who waited in line for hours outside the courthouse and then jammed into both the courtroom and an overflow room that contained a video feed of the proceedings. In addition, he testified, he did not submit the required forms at Manafort's direction. Courtroom illustration courtesy of Bill Hennessy. Gates testified that he'd followed Manafort's instructions as they set up Cypriot and other foreign bank accounts, moved money from Ukrainians into the United States, made sure Manafort's name was scrubbed from the accounts, then lied to the IRS and banks.

Mr Gates told jurors that he had been "tasked" by his boss "to determine how we could lower the taxes".

In one email, Manafort wrote "WTF" and "not happy" about tax payments he was going to have to make, Gates said.

"No, they're not", Gates said.

Downing also asked Gates if he talked to the special counsel's office about his time at the Trump campaign.

"I did it as a favor to Mr". Manafort broke his stare only to review government exhibits on a small monitor in front of him.

During his testimony Monday, Gates admitted he had embezzled money from Manafort by creating false expense reports on his own behalf.