Gates says Manafort told him to be truthful to Federal Bureau of Investigation

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Rick Gates, the ex-business partner of former Trump campaign chairman Paul Manafort, provided the most explosive testimony yet in the federal government's tax evasion, bank fraud and conspiracy case against Manafort.

"I think the jury will hate (Gates), but they should still convict (Manafort) because of the testimony of other witnesses and the other documents that do put all of this on Manafort".

Gates was hired by Manafort to serve as deputy campaign chairman and later had a role on Mr Trump's inaugural committee.

Manafort also falsely classified another $1.5 million in income as a loan, Welch testified - while adding that Manafort never indicated he had foreign bank accounts on his tax returns.

"No doubt at all", Gates said. "You told me you were on top of this", he wrote Gates in April 2015.

Paul Manafort hid more than 30 offshore accounts in three types of currencies from the IRS, according to an Federal Bureau of Investigation forensic accountant testifying in the former Trump campaign chairman's trial. He scoffed at the idea that Gates had repented for his actions, noting that prosecutors have said they won't oppose his bid for probation and getting him to acknowledge he had not repaid the money he had taken from Manafort.

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The case has little to do with either man's work for the Trump campaign and there's been no discussion during the trial about whether the Trump election effort coordinated with Russian Federation - the central question Mueller's team has tried to answer. He also admitted to embezzling "several hundred thousand" dollars from Manafort including funds used to finance a London apartment to engage in an extra-marital affair. Gates also had his name removed from some of the legal documents.

When it was his turn to question Gates, defense attorney Kevin Downing went on the offensive, pressing him on what amount of time he would have expected to face in prison had he not agreed to cooperate with the government. Prosecutors allege that he failed to pay taxes on millions he made from his work for a Russia-friendly Ukrainian political party, then lied to get loans when the cash stopped coming in.

Trump was indirectly referenced in multiple ways throughout the testimony, highlighting the risks to the president of Special Counsel Robert Mueller's investigation.

Gates responded yes. "I made many mistakes over many years", he said. He pleaded guilty to charges in February and is cooperating for the possibility of a reduced sentence. He also testified that he pressed the firm's accountants to reclassify loans as income so the company could qualify for more bank loans or get favorable lending rates. Downing asked Gates Tuesday, a rhetorical question everyone present at the trial with any courtroom experience saw coming a mile away.

After Gates described his theft as "unauthorized transactions" instead of embezzlement, Downing prodded him to use the latter term - and Gates ultimately relented, saying, "It was embezzlement from Mr. Manafort".

"When did you start providing false and misleading information to the special counsel's office?" the defence counsel asked bluntly.

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Prosecutors will likely draw Gates back to those facts and away from his own misbehavior on redirect examination.

In one example, Manafort and Gates emailed each other copies of a doctored profit and loss statement they later sent a bank to help Manafort obtain a loan.

The judge in the case, U.S. District Judge T.S. Ellis III, cut Gates off, saying, "this isn't the time for that".

Manafort's conviction would undermine efforts by Trump and some Republican lawmakers to paint Mueller's inquiry as a political witch hunt, while an acquittal would be a setback for Mueller.

Lawyers for Manafort used the opportunity to scrutinize Gates' personal foibles, asking if he had a "secret life" from 2010 to 2014.

An FBI forensic accountant is telling the jury in Paul Manafort's financial fraud trial how she traced millions of dollars of payments for mortgages, home improvements and expensive cars, rugs and clothes back to his hidden foreign bank accounts.

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