Gates, whose testimony in federal court in Alexandria, Virginia, was continuing, was expected to be a star witness in the government's case, having pleaded guilty in February and agreed to cooperate with prosecutors under a deal that could lead to a reduced sentence.
Prosecutors will turn to Gates for first-hand support of their accusations that Manafort concealed millions of dollars in foreign income and later lied when he applied for bank loans.
Manafort's defence attorneys have sought to paint Gates as an embezzler, liar and the instigator of any criminal conduct.
Manafort also told him to wire some of his political consulting income to his bank accounts in the United States, Gates added. They were the first two people indicted by Mueller's grand jury. The testimony came in a trial that started last week, brought by special counsel Robert Mueller's investigative team, that charges Manafort hid $30 million earned for work in Ukraine.
Manafort is charged with bank and tax fraud related to political consulting work he did in Ukraine.
He has also told jurors that he and Manafort knew they were committing crimes for years as part of the offshore payment structure. The prosecution, however, has maintained that while Gates committed embezzlement, that doesn't make Manafort any less guilty of the crimes he's accused of.
"Yes", Laporta said, "of course" she would call Manafort if she suspected Gates was enriching himself with Manafort's money.
Gates - who served on the 2016 Trump presidential campaign with Mr Manafort - told the court he had stolen from other employers, too.
The President is watching proceedings carefully as Mueller appears to be moving closer to his inner circle on multiple fronts and has complained that Manafort has been treated like a mobster - even as the White House has tried to open up some distance between Trump and his former campaign chairman.
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The jury had heard testimony on Friday and Monday from accountant Cynthia Laporta, who described how she said Manafort and Gates doctored financial statements and backdated loans.
In questioning Laporta on Monday, a prosecutor asked her about a $10 million (£7.72 million) loan purportedly received by Manafort from Russian businessman Oleg Deripaska in 2006.
Gates said he conspired with Manafort to falsify tax returns, knowingly failed to report foreign bank accounts and failed to register Manafort as a foreign agent.
Gates also testified that he helped Manafort provide old documents to Citizen's Bank in order to hide the fact that Manafort had a mortgage on his Brooklyn property.
Their partnership took them to the Trump campaign in 2016, with Manafort as chairman and Gates as his deputy.
U.S. District Judge T.S. Ellis III, who has clashed with prosecutors as he urged them to hurry up presenting their case, has largely allowed the prosecution to question Gates uninterrupted.
He said that some of Manafort's income was disguised as loans from 15 shell companies that Manafort controlled, a lot of them in Cyprus. Kerik, on the other hand, isn't putting any weight on Gates' words because of his motivation for testifying.
There were hundreds of emails showing Manafort approved payments out of the Cypriot accounts, he said.