Gates, 46, is already facing up to six years in prison under the terms of a plea deal he struck with prosecutors in February when he pleaded guilty to two charges of conspiracy and lying to the Federal Bureau of Investigation.
He claims he worked with Manafort to knowingly falsify tax returns, while also failing to report foreign bank accounts and failing to register as a foreign agent.
The testimony is poised to pack even more drama into the courtroom than the 78 minutes Gates was on the witness stand a day earlier, as Manafort's defense team will get the chance to cross-examine Gates - and they've made clear the crux of their defense will be to blame Gates for Manafort's alleged crimes.
"At Mr. Manafort's request. we did not disclose the foreign bank accounts". They were the first two people indicted by Mueller's grand jury.
Now the former mentor and his protege are facing off 10 feet apart in a packed federal courtroom as Manafort, Trump's onetime campaign manager, stands trial on financial fraud charges, with Gates the government's star witness against him. Laporta, who testified under an immunity deal with the government, acknowledged that she agreed under pressure from Gates to alter a tax document for one of Manafort's businesses. Gates also said that they sometimes characterized payments as loans to mask income.
Undercutting Gates' credibility is the foundation of Manafort's defence.
"Yes", Laporta said, "of course" she would call Manafort if she suspected Gates was enriching himself with Manafort's money.
"Rick Gates had his hand in the cookie jar, and he couldn't take the risk that his boss might find out", Manafort defense attorney Thomas Zehnle said in his opening statement last week.
President Donald Trump calls the investigation a political "witch hunt", and has argued Mr Manafort is being treated worse than Al Capone.More news: Look Back on Meghan Markle's Dad Drama and More Famous Family Feuds
More news: Paul Manafort, ex-Trump campaign chief, to begin trial
More news: Facebook identifies campaign to interfere in USA midterm elections
"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.
In just a little over an hour of questioning, Gates told the prosecution that Manafort directed him to open up accounts in Cyprus so that the Ukrainian politicians who paid Manafort's DMP International consulting firm for its campaign work could funnel millions of dollars to him.
He said that Manafort knew it was illegal not to report his foreign bank accounts to the Treasury Department but asked Gates to help him deceive his accountants so he could hide income and pay less in taxes.
During the testimony, Manafort did not stare Gates down as he did on Monday.
He testified that Mr Manafort had directed him to lower taxable income by reporting overseas income as loans, according to United States media.
All told, prosecutors allege that Manafort failed to report a "significant percentage" of the more than $60 million they say he received from Ukrainians.
On Monday, U.S. District Judge T.S. Ellis repeatedly clashed with prosecutors about the relevance of such testimony and once again urged them to speed things along. One accounting trick saved Manafort $500,000 in taxes, she said. He also described in details how he falsified loan applications and other documents to help Manafort obtain more in bank loans.
But the prosecution's witnesses have also testified that they generally believed that Gates was carrying out Manafort's wishes when he gave false information to Manafort's accountants.