Gates also admitted in the Eastern District of Virginia courtroom to an extramarital affair 10 years ago and keeping an apartment in London, saying he falsified hundreds of thousands of dollars in expense reports because "I was living beyond my means". In addition, he pleaded guilty to making false statements to investigators.
Gates testified Tuesday that Manafort hit the roof when faced with an enormous tax bill. Gates said he was responsible for collecting all relevant documents for the loan applications.
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 United States taxes on millions of dollars earned from political consulting work they did in Ukraine.
Manafort to Gates in 2015, "WTF?" 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.
Rick Gates, the government's star witness, recounted how he and Manafort used more than a dozen offshore shell companies and bank accounts in Cyprus to funnel the money, all while concealing the accounts and the income from the IRS.
When Downing questioned why Gates had embezzled money from his boss, he used it as an opportunity to issue a public apology. He said there were 15 secret accounts.
After Gates struggled to recall precisely what he had told Mueller's team, Downing asked if he had been confronted with "so many lies" that he can't keep his story straight. The defense moved on. 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.
Gates is cooperating in hopes of a lighter prison sentence.
Prosecutors summoned Gates to give jurors the first-hand account of a co-conspirator they say helped Manafort carry out an elaborate offshore tax-evasion and bank fraud scheme.
"They were documented as loans, but in reality they were funds moving between the accounts". These accounts, Gates added, predated his tenure at Manafort's DMP International.
Defense lawyer Kevin Downing guided Gates on a tour through the wide array of lies he's told, and sought to paint him as a man not to be trusted.
In other testimony, Gates recounted how he converted a PDF of a profit-and-loss statement to a Microsoft Word document so he could doctor it to inflate the business' income. He agreed to cooperate with federal prosecutors and has pleaded guilty to conspiracy and lying to the FBI. He's expected to go for at least another hour in questioning with Manafort's attorney's.
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".
Judge T.S. Ellis III then asked Gates to clarify if those "loans" were actually just income-specifically payment for services-earned and not declared by Manafort. Gates testified that Manafort asked him to float Calk, who was on Trump's economic advisory council, for Secretary of the Army. However, the Manafort case - as President Donald Trump has been quick to point out - focuses on Manafort's business dealings and has no direct connection to Manafort's work with the Trump campaign.
Mr Gates told jurors that he had been "tasked" by his boss "to determine how we could lower the taxes". But he said most of the money he spent on the affair came from his legitimate bonuses or from his family, and that most of the money he embezzled he shared with his wife.
When asked if he took "unauthorized expenses" from Manafort to "fund your separate secret life", Gates replied, "yes, I acknowledge I had a period of time where I had another relationship".
Prosecutor Greg Andres pointed out he had created a "loan forgiveness letter between Mr. Manafort and Mr. Manafort".
Undercutting Gates' credibility is the foundation of Manafort's defense.