Rick Gates, the star witness in special counsel Robert Mueller's fraud and conspiracy trial against former Trump campaign chairman Paul Manafort, took the stand Monday to testify that he committed crimes with his former business partner.
In a blow to the case being laid out by Manafort's defense team, Gates then told prosecutors that Manafort directed him to report overseas income as loans as a way to lower his taxable income.
Since their opening statement last week, Manafort's lawyers have sought to blame Gates for breaking finance laws, framing him as a liar who abused Manafort's trust and embezzled millions of dollars from him.
Gates, clad in a blue suit and sporting an uncharacteristically clean-shaven face, did admit in court that he stole hundreds of thousands of dollars from Manafort by filing false expense reports.
But while sitting just a few feet from Manafort, Gates testified that Manafort worked with him to commit financial crimes, including filing false tax returns. Manafort directed him to commit other crimes, Gates said, such as not disclosing foreign bank accounts and omitting information from a court deposition. Manafort reportedly stared directly at Gates, while Gates avoided eye contact with Manafort.
Gates listed 15 foreign entities that he said were not reported to the government. He told prosecutors that the money in those accounts came from Manafort's work as a consultant and lobbyist in Ukraine for ex-leader Viktor Yanukovych and his pro-Russian Party of Regions.
Prosecutors have alleged that Manafort made millions of dollars for his efforts in Ukraine, but resorted to bank fraud after Yanukovych was deposed in 2014, which dried up Manafort's cash flow and made it difficult to maintain his pricey spending habits.
Gates pleaded guilty in February to lying to investigators and conspiracy against the United States, and struck a plea deal to fully cooperate with the special counsel. His potential sentence was drastically reduced to nearly six years, and the special counsel holds the power to petition the court to further reduce his sentencing time based on his cooperation.
In court on Monday, Gates said that under sentencing guidelines he could face as few as 57 months for his crimes.
Manafort has pleaded not guilty to the 18 criminal counts against him in the Virginia federal criminal case, as well as similar charges in a case set to go to trial in September in Washington district court. Mueller's team lodged charges against Manafort in both cases, though neither are directly related to the special counsel's ongoing probe of potential coordination between the Trump campaign and Russia.
The absence of a direct connection between so-called collusion and Manafort's alleged crimes has not gone unnoticed by Trump. He tweeted on the Aug. 1 — the second day of Manafort's trial — that "these old charges have nothing to do with Collusion - a Hoax!"
In fact, in a February 2018 indictment, the special counsel accused Manafort of hiding his ties to foreign bank accounts as recently as 2016.
In a follow-up Twitter post two hours later, Trump compared Manafort's treatment by federal authorities with notorious mobster Al Capone.
Gates was questioned in court on Monday by U.S. attorney Greg Andres, who has taken a leading role in questioning witnesses and fielding both questions and criticisms from presiding Judge T.S. Ellis.
Gates follows more than a dozen witnesses brought in by the U.S. attorney to testify against Manafort. Prosecutors have highlighted dozens of invoices, email threads and financial statements to bolster their accusations that Manafort filed false tax returns and committed bank fraud to maintain his lavish spending habits.
The most serious charges against Manafort are nine counts of bank fraud and conspiracy. If convicted, Manafort could be sentenced to as much as 30 years in prison for each count.
Reuters and NBC News contributed to this report.