Rick Gates became the first member of the Trump campaign to publicly admit to crimes. The prosecution, however, has maintained that while Gates committed embezzlement, that doesn't make Manafort any less guilty of the crimes he's accused of.
Gates admitted that at Manafort's behest, they later created a loan agreement for Lyovochkin's payment, though no loan existed.
The appearance by Gates, who pleaded guilty and is cooperating with Special Counsel Robert Mueller, sent a jolt through the courtroom in Alexandria, Virginia, where Manafort's lawyers have branded him as a liar and a thief who embezzled millions of dollars and can't be trusted.
Gates also said he lied to accountants working on Manafort's taxes, to conceal foreign bank accounts that prosecutors say Manafort used to hide tens of millions of dollars from the IRS.
He also said he lied in a deposition in a civil case against Manafort involving a private equity fund and wrote a letter saying his friend Steve Brown, who is facing fraud prosecution in a NY federal court, had income that didn't exist.
Bookkeeper: Manafort didn't disclose foreign accounts to her
Prosecutors said that Manafort used tax-free income stashed in Cyprus accounts to support a lavish lifestyle. This courtroom sketch depicts Paul Manafort , fourth from right, standing with his lawyers in front of U.S.
Similar to prior witnesses, Ms Laporta testified Mr Gates and Mr Manafort were in lockstep but that Mr Manafort was in charge.
Manafort's defence hinges on pinning the blame on Gates, who they accuse of embezzling millions of dollars from Manafort.
Lawsuits filed by Deripaska in 2014 describe how Gates failed to respond to requests forinformation on the investment around the same time.
Manfort worked without pay on President Donald Trump's campaign from March 2016 to August 2016, serving as campaign manager starting in early June.
"Gates is going to do and say whatever the prosecutors want him to say, which is why I wouldn't believe a word that comes out of his mouth", Kerik said in a Tuesday morning tweet. The usually bearded Gates appeared in court clean-shaven on Monday. 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.
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Gates told jurors that he siphoned off the money without Manafort's knowledge by filing false expense reports. His case is the first to go to trial arising from Special Counsel Robert Mueller's investigation into Russian interference in the 2016 USA election.
Reporters in the courtroom said that Manafort stared intently at Gates while he testified against him, but that Gates avoided looking at his former partner.
Gates kept his focus on prosecutor Greg Andres as he answered his questions.
Asked whether the money in the accounts was Manafort's income, Gates said, "it was".
Manafort, a flamboyant figure in Washington for decades, became known for his consulting and lobbying work for ethically questionable global leaders like Ukraine's Viktor Yanukovych.
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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. When a banker asked about $1.5 million debt that Manafort's company owed to a Cyrus entity called Peranova Holdings Limited, Gates produced a backdated document showing it was forgiven.