Star witness Rick Gates to testify for third day in Manafort trial

And the fact that after loaning Manafort millions of dollars Calk became an economic adviser to Trump casts doubt on Trump's famous pledge to "drain the swamp" and puncture the rampant influence peddling in Washington.

Downing wondered aloud why Gates had shown "perfect recollection" during examination by the government but was now much less precise under cross-examination by Manafort's defence. That area of questions could come first thing Wednesday morning, when Gates returns to the stand to face more of Downing's inquisition.

More broadly, this trial is a direct result of the special counsel's investigation into the Trump's campaign contacts with Russian Federation. And Manafort made millions of dollars working as a political consultant for a pro-Russia party in Ukraine before he worked for the Trump campaign, which could raise questions about Trump's friendly rhetoric towards the country.

Under questioning by prosecutor Greg Andres, Gates walked the six-man, six-woman jury through the foreign bank accounts used by Manafort to receive payments from Ukrainian politicians - money that was not reported to the Internal Revenue Service (IRS).

Downing tried to take it further at a climactic moment of his Gates questioning Tuesday. At one point, as Gates had trouble recalling the details of his confession, Downing asked him, "Have they confronted you with so many lies that you can't even remember them?"

Gates testified that Manafort had instructed him to be "open" with the Federal Bureau of Investigation in that interview about how they were paid.

And those entities, Gates testified, never once did any sort of actual business-they were simply a vehicle for Manafort's funds to escape detection.

Gates said he and Manafort turned to a Cypriot lawyer, whom he referred to in court as "Dr K", who set up bank accounts and shell companies on Manafort's behalf and "handled everything".

The prosecution produced an undated email exchange between Mr Manafort and Mr Gates which outlines the amount of tax the campaign chief might have to pay. Prosecutors have noted that Gates and Manafort were not the targets of the investigation at the time of the interview. Gates said the money in these accounts was earned from Manafort's political campaign work.

Gates pleaded guilty in February and agreed to cooperate with prosecutors under a deal that could lead to a reduced sentence. He's expected to go for at least another hour in questioning with Manafort's attorney's. But inside the courtroom, trial proceedings had plodded along almost Trump-free.

Gates also said Mr Manafort had directed him to report money wired from his foreign bank accounts as loans to reduce Mr Manafort's taxable income. Gates also said Manafort floated banker Stephen Calk's name for consideration as Secretary of the Army, a post he ultimately did not get.

As well as being a senior aide on Trump's election campaign, Gates served as the deputy chairman of the United States president's inaugural committee.

Manafort is charged with 18 counts of bank and tax fraud, and his trial in Alexandria, Va., is the first to be brought on by indictments from special counsel Robert Mueller.

In reality, it was basically money moving between accounts, " Gates said during his second day of testimony in the financial fraud trial of his former boss. Courtroom illustration courtesy of Bill Hennessy.

Undercutting Gates' credibility is the foundation of Manafort's defense. "WTF", Manafort wrote in an email to Gates, according to testimony, after learning accountants had added liabilities.

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. Regarding a trading company Manafort had started with a partner in 2011, he asked with deep scepticism: "You're asking the jury to believe Mr Manafort authorised another US$250,000 as a bonus?" Gates did not have a chance to respond to those allegations Monday.

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