Manafort's right-hand man testifies against him in tax fraud case

In the telling of Manafort's legal team, any problems with his financial paperwork were either mistakes or the fault of Gates, who they say was stealing from Manafort and is now cooperating with investigators to cover his tracks.

"In Cyprus, they were documented as loans".

The witness also testified he had helped the defendant file false tax returns, concealing 15 foreign accounts from the United States government despite knowing it was illegal.

Some observers who watched Gates' testimony on Monday said they thought he was credible. But prosecutors hadn't offered direct evidence that Manafort controlled the accounts until Gates provided that inside view.

The current federal trial in the Eastern District of Virginia is based on alleged tax and bank fraud, while next month's Washington, D.C. trial deals with allegations of conspiracy, money laundering, and acting as an unregistered foreign agent.

But she said she believed Manafort was directing Gates' efforts to disguise loans and hide income, noting that Manafort was copied on her email traffic with Gates. The charges are not related to Manafort's work with the Trump campaign.

Andres said he was entitled to show the jury why Manafort was getting tens of millions of dollars in payments.

Nonetheless, jurors were told of more than $900,000 in expensive suits, a $15,000 ostrich jacket and lavish properties replete with expensive audio and video systems, a tennis court encircled by hundreds of flowers and, as one witness put it, "one of the bigger ponds in the Hamptons". But court watchers had been eagerly awaiting Gates, who both the prosecution and defense seem to be hoping will be at the center of their case.

The defendant's lawyers say Rick Gates embezzled millions of dollars from Mr Manafort's consulting firm.

"I was the one who helped organize the paperwork and initiate the wire transfers, " Gates said.

This courtroom sketch depicts Rick Gates, right, answering questions by prosecutor Greg Andres as he testifies in the trial of Paul Manafort, seated second from left, at the Alexandria Federal Courthouse in Alexandria, Va., Monday, Aug. 6, 2018.

He also said Manafort helped four Ukrainian businessman elect a pro-Russia president in Ukraine in 2010 in exchange for millions that were paid to Manafort through shell companies.

The prosecution in the first trial resulting from the Robert Mueller special counsel investigation sure is lucky that the verdict will be handed down by a jury instead of Judge T.S. Ellis III.

He testified that Mr Manafort had directed him to lower taxable income by reporting overseas income as loans, according to U.S. media. But Trump has shown interest in the proceedings, tweeting support for Manafort and suggesting that he had been treated worse than gangster Al Capone.

Prosecutors brought it up to paint Gates as being up-front and forthcoming about his criminality; Manafort's defense brought it up to attack Gates' credibility, paint him as untrustworthy and paint Manafort as Gates' victim.

Manafort has a second trial scheduled for September involving allegations that he acted as an unregistered foreign agent for Ukrainian interests and made false statements to the USA government.