Gates said he helped Manafort hide secret bank accounts in the United Kingdom, Cyprus and the Grenadines.
That is expected to continue on Wednesday - and then prosecutors are expected to have an opportunity to question Gates again and try to rehabilitate him.
While businesses can deduct losses from theft, Welch said on redirect by one of the prosecutors: "If money is stolen from money that is untaxed, there is no deduction".
HuffPost Illustration/Getty Images Paul Manafort.
The case has little to do with either man's work for the Trump campaign and there's been no discussion during the trial about whether the Trump election effort coordinated with Russian Federation - the central question Mueller's team has tried to answer.
"I'm here to tell the truth and take responsibility for my actions", Gates said in response to a question from Downing about his trustworthiness.
Under questioning, Gates said he may have submitted personal expenses for reimbursement by Trump's inaugural committee, which he helped operate. He also admitted to embezzling money from other employers in the past.
But Downing wasn't able to re-ask Gates the question about four extramarital affairs.
"Downing, I'd say I made many mistakes, over many years".
U.S. District Judge T.S. Ellis III has interrupted prosecutors throughout the trial to encourage them to speed things along.
Kevin Downing, right, attorney for Paul Manafort, leaves federal court after attending the trial on tax evasion and bank fraud of the former Donald Trump campaign chairman in Alexandria, Va., on Tuesday.
Paul Manafort was concerned after a 2014 Federal Bureau of Investigation interview that one of the companies used to pay the former Trump campaign chairman for his Ukrainian political consulting work wasn't "clean".
In addition, Gates has admitted to other criminal conduct.
Manafort, a longtime Republican political consultant, is the first person to be tried on charges brought by Special Counsel Robert Mueller's investigation into Russian interference in the 2016 USA presidential election.
In a final back and forth between lawyers over Gates's credibility, the focus turned to his decision to plead guilty and cooperate with special counsel Robert Mueller's investigation, which Manafort's defence have portrayed as an attempt to save his own skin. He told jurors how he disguised millions of dollars in foreign income as loans in order to lower Manafort's tax bill.
Lawyers for Manafort used the opportunity to scrutinize Gates' personal foibles, asking if he had a "secret life" from 2010 to 2014.
Gates did stumble a few times on the stand. He told jurors he embezzled from Manafort by filing false expense reports.
Rudy Giuliani, a lawyer for Trump, on Wednesday again called for Mueller to end his inquiry "without further delay".
Manafort's defense team says it was actually Gates who committed the financial crimes, without Manafort knowing, and Manafort's lawyers also have sought to exploit the guilty plea that Gates has accepted after he was indicted on related charges. But then prosecutor Greg Andres invoked Trump's name, and Gates' and Manafort's work on the campaign became more explicitly tied to the alleged crimes at the heart of the trial. After a sidebar with the judge, Downing moved onto another topic.
It is possible Weissmann is preparing to Manafort's next trial in D.C. - which touches on issues similar to those in Virginia but delves more deeply into Manafort's work in Ukraine and the us registration requirements associated with it. Weissmann made a filing in that case as recently as Monday. But Trump has shown interest in the proceedings, tweeting support for Manafort and suggesting he has been treated worse than gangster Al Capone. Gates said he was responsible for collecting all relevant documents for the loan applications.
So as Manafort worked for Trump for free as his financial world collapsed around him, just what kind of payoff was he expecting?