Manafort stares daggers at Rick Gates, as partner-turned-witness details book-cooking

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Manafort trial resumes after Rick Gates admits to crimes

Paul Manafort's former business partner will be back on stand after admitting to embezzling hundreds of thousands of dollars; Peter Doocy reports.

Ex-Trump campaign chairman Paul Manafort stared coldly at Rick Gates as his business partner-turned-witness testified against him Tuesday in federal court, implicating him in an alleged scheme to commit tax and bank fraud with millions made through political work in Ukraine.

Gates, who testified a day earlier that he and Manafort committed fraud together, is considered the star witness in the high-profile case by Special Counsel Robert Mueller's team.

Manafort on Tuesday was seen with his arms folded, staring daggers as his former deputy testified as part of a plea deal. Manafort only broke his stare to review government exhibits on a small monitor in front of him.

Gates, who left the courtroom on Monday without so much as making eye contact with his ex-partner, would only look at the prosecutor during Tuesday's questioning.

Rick Gates takes the stand in Manafort trial

Gates testifies that he and Manafort conspired to commit bank and tax fraud; Peter Doocy reports from Alexandria, Virginia.

Under questioning, Gates said when Manafort did consulting work for Ukrainian politicians, he would send the money he made to accounts in Cyprus. When they wired the money from Cyprus to the United States, Gates said, Manafort would list it as a "loan” to reduce his taxable income.

According to Gates, Manafort also reduced his taxable income by wiring money directly from those accounts in Cyprus to expensive vendors in the states for construction projects and fancy clothes.

Gates also testified that Manafort in 2014 expressed frustration to him about the amount he owed in taxes.

“Not happy. I just saw this. WTF,” Manafort wrote in an email to Gates, according to testimony, after learning accountants had added liabilities.

Manafort, 69, faces tax evasion and bank fraud charges as he is accused of hiding a “significant percentage” of income earned from his Ukrainian work from the IRS.

MANAFORT CASE JUDGE ADMONISHES 'DISRUPTIVE' REPORTERS DURING TRIAL

Manafort has pleaded not guilty to the charges.

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On Tuesday, Gates testified that the Podesta Group and Mercury Public Affairs worked with Manafort on a public relations effort for Ukrainian politicians, and at one point these firms prepared a memo to former Ukrainian President Viktor Yanukovych.

Once Yanukovych left power, though, Gates testified, “it decreased the income stream” for Manafort. Gates testified that in 2015, Manafort was having trouble paying his bills.

The Podesta Group, a powerful lobbying firm, was led by Tony Podesta, brother of Hillary Clinton campaign chairman John Podesta.

Gates also said Tuesday that before the special counsel’s probe, the FBI wanted to interview them about a separate matter in Ukraine.

Gates testified that Manafort ordered Gates to travel abroad to tell a Ukrainian businessman and government official about Manafort’s upcoming FBI interview about the matter.

Also on Tuesday, the prosecution for the first time brought up Gates and Manafort’s time on the Trump campaign, as well as Gates work on the Trump inaugural committee.

Gates testified that Manafort sent him an e-mail during the transition saying they needed to talk about banker Stephen Calk for secretary of the Army.

Calk is the founder and CEO of The Federal Savings Bank of Chicago, which lent Manafort millions of dollars. Manafort is accused of falsifying documents to apply for the loan.

Held in Alexandria, Va., the Manafort trial is the first for Mueller since his appointment to oversee the Russia investigation in May 2017. It started on July 31 and is expected to last about three weeks.

But Mueller’s team is running into trouble; the famously prickly judge in the case, U.S. District Judge T.S. Ellis III, has been lashing out at the prosecution.

After jurors were dismissed Monday in the trial Monday, Ellis got into an extended verbal debate -- lasting about 10 minutes -- over the merits of the prosecution, the length of the case and even the eye contact of prosecutor Greg Andres.

Ellis specifically pushed Andres on why the prosecution was moving slowly with Gates, as well as why the prosecution is focusing on the link between wealthy Ukrainian politicos and Manafort. Ellis argued that the connection was not the basis of the case.

“What matters are the allegations that he made money from them and didn’t report it,” Ellis said. “You don't need to throw mud at these people.”

Both Manafort and Gates were indicted last October, accused in a multimillion-dollar money-laundering conspiracy tied to lobbying work for a Russia-friendly Ukrainian political party.

Mueller dropped the 22 tax and bank fraud charges against Gates after the former business partner of Manafort agreed to plead guilty and cooperate with prosecutors.

In a courthouse conversation with a fellow attorney on Tuesday, Manafort lead prosecutor Assistant U.S. Attorney Uzo Asonye was overheard discussing Ellis’ push to expedite the trial.

Asonye indicated the prosecution was struggling with Judge Ellis’ demand to quicken the pace.

“He wants us to pick up the pace,” Asonye said. “I don’t know if I can.”

Fox News’ Serafin Gomez, Jake Gibson and The Associated Press contributed to this report.