Downing said an admission of that kind by Gates could lead the special counsel's office to tear up his plea agreement, which is contingent on his truthful testimony during the criminal trial of Manafort, Trump's former campaign chairman.
"He always had control over the accounts", Gates said of Manafort, and the income was not reported to his bookkeepers, his accountants or the U.S. tax authorities.
"After all the lies you've told, and the fraud you've committed, you expect the jury will believe you?"
On Tuesday, Gates did connect one part of the bank fraud charges against Manafort to his role in the Trump campaign.
Gates struggled so badly to give a straight answer that eventually Judge T S Ellis III was forced to intervene. Downing pressed him on the specifics of their business relationship: which payments to Gates were authorised and which were not. Gates also worked on the campaign.
"You told me you were on top of this", he wrote Gates in April 2015. Gates said he was responsible for collecting all relevant documents for the loan applications.
Another email from February 2016 had Manafort conversing with Gates about a loan forgiveness letter that both Gates and an accountant have testified was fraudulent.
After saying Monday that he committed crimes with Manafort, including concealing offshore accounts to avoid reporting them to the USA government at tax time and claiming false income to get loans, Manafort defense attorney Kevin Downing asked the witness, "This jury is just supposed to believe you after all the lies that you've told and the fraud you've committed?" He told jurors how he disguised millions of dollars in foreign income as loans in order to lower Manafort's tax bill. After Yanukovych lost power in 2014, "I would say it decreased the income stream", Gates, wearing a blue suit, told the court matter-of-factly.
Prosecutors will likely draw Gates back to those facts and away from his own misbehavior on redirect examination.
Gates, who testified Monday and returned to the witness stand Tuesday, detailed years of alleged lawbreaking at Manafort's political firm and admitted to stealing money from secret overseas bank accounts.
When Trump asked Perlmutter, a friend and confidante, to help put together his government in December 2016, he agreed to be an outside adviser, selected veterans as his focus, and roped in two other friends, Palm Beach doctor Bruce Moskovitz and lawyer Marc Sherman, Arnsdorf says.
Prosecutor Greg Andres had objected to the defense using the affair against Gates, saying the Fourth Circuit Court of Appeals has ruled "that if somebody cheats on their wife or whatever, it's not necessarily indicative of truthfulness".
Gates denied Downing's suggestion he used money stolen from Manafort's Cypriot accounts to pay for a trip to Las Vegas, audio equipment and groceries from a Whole Foods in Virginia. But he was consistent in saying he was now telling the truth and that there was a "strong record" to support his key assertions: that Manafort directed him to hide money from the IRS and fake financial documents to get bank loans. "Mr Manafort had the same path".
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. This time, however, Manafort himself provided Gates the template to be used for vendor payments, according to the witness.
However, when Andres returned to the podium for another chance to question Gates, Gates said that Manafort did reach out to a Ukrainian businessman before his Federal Bureau of Investigation interview to get more information about the entity that the businessman used to pay him and to make sure that it was "clean", meaning it was only used to pay Manafort. Manafort broke his stare only to review government exhibits on a small monitor in front of him. He also committed credit card and mortgage fraud, falsified a letter for a colleague involved in an investment deal and made false statements in a deposition at Manafort's direction.
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