Accountant Cindy LaPorta told a U.S. District Court judge he was "correct" when he asked whether she was testifying under the immunity deal due to concerns that she might be prosecuted. LaPorta was Manafort's accountant in 2014 and 2015 after the retirement of Philip Ayliff, who had testified earlier on Friday.
She told prosecutors that she participated in filing a false tax return after Rick Gates, Manafort's longtime business partner, asked the accounting firm to change a loan amount so Manafort's could afford to pay his 2014 income taxes.
LaPorta said she knew the loan amount was wrong when preparing Manafort's tax return. "You can't pick and chose what's a loan and what's income," she said.
She added: "I very much regret it."
LaPorta, the second accountant of firm Kositza, Wicks & Company to take the stand in Manafort's fraud and conspiracy trial, is one of five witnesses granted so-called "use immunity" in the case. That would bar their testimony from being used against them in a criminal prosecution.
Earlier, the lawyers from special counsel Robert Mueller's Russia probe called Ayliff back to the stand after he testified Thursday afternoon that Manafort signed tax forms claiming to have no foreign bank accounts from 2011 to 2014.
Manafort, Trump's campaign chairman from May to August 2016, is on trial on 18 counts, including failing to file foreign bank account reports, bank fraud, conspiracy and filing false income tax returns.
LaPorta's testimony compounds the attention Gates is sure to receive as the star witness testifying against Manafort in the trial.
Manafort's lawyers sought to establish Gates as the true culprit behind any omissions or mistakes on Manafort's tax filings. "This is about Mr. Manafort placing his trust in the wrong person," defense attorney Thomas Zehnle said in his opening statement.
Gates, who was charged along with Manafort in a separate criminal case in Washington, has already pleaded guilty to one count each of lying to investigators and conspiracy against the United States. He agreed to cooperate with the special counsel as part of his plea deal.
Ayliff, reading from exhibits presented by prosecutors, said Manafort himself signed letters of engagement with the accounting firm. Ayliff said the letters cautioned that "the law provides various penalties that may be imposed when taxpayers understate their tax liability."
Ayliff also told prosecutors his firm asks clients "about foreign accounts every year" — a policy LaPorta confirmed in her testimony, news outlets reported.
The shift in focus toward the former Trump campaign chief's tax practices on Friday follows a slew of witnesses discussing Manafort's ostentatious spending habits on clothes, cars, real estate and home decor. Numerous witnesses also testified that Manafort paid them through wire transfers from banks located in Cyprus.
U.S. District Judge T.S. Ellis, who is presiding over the case in Alexandria, Va., has voiced concerns throughout the trial that the parade of evidence demonstrating Manafort's expensive tastes and hefty invoices for personal amenities could unfairly prejudice the jury against him.
"It isn't a crime to have a lot of money and be profligate in your spending," Ellis said during prosecutor Uzo Asonye's opening statement on Tuesday.
Ellis has expressed his impatience with the pace of the court proceedings, at times interrupting prosecutors with calls to hasten their case.
Ellis' push to move things forward appears to be paying dividends: Prosecutors and Manafort's lawyers sped through jury selection, opening statements and the first witness — all on the first day of the trial.
Prosecutors said Wednesday they expect to finish their case by next week, which could put them ahead of schedule in a trial that had been expected to last up to three weeks.
While both the Virginia and D.C. cases are based on charges lodged against Manafort by the special counsel, neither is specifically focused on Mueller's appointed task of investigating potential coordination between the Trump campaign and the Russian government.