The drama came at the end of Gates's testimony in the trial of his former boss and mentor Manafort, an ex-Donald Trump campaign chairman accused of bank fraud and tax evasion.
Gates embezzled hundreds of thousands of dollars from Manafort by filing exaggerated - and at times, completely fabricated - expense reports, Downing forced him to admit Tuesday.
According to Gates, Manafort, who had by then left the campaign, asked Gates in various ways to use his position on Trump's team to do favors for Stephen Calk, a banker who had loaned Manafort millions of dollars - loans that Mueller's team alleges were consummated under false pretenses.
"He requested certain things be changed in some of those documents", Gates said, including claiming certain properties as primary residences instead of rentals and inflating his income for collateral.
Gates struck a deal with special counsel Robert Mueller in February, pleading guilty to one count of conspiracy against the United States and one count of making false statements to the Federal Bureau of Investigation.
The case is being prosecuted by the special counsel investigating Russian interference in the 2016 US presidential election. Manafort's trial is the first on charges brought by Mueller's office, who is also investigating whether Trump campaign members coordinated with Russian officials.
Manafort's former bookkeeper Heather Washkuhn testified last week that Manafort falsely reported to Federal Savings Bank that his company DMP International pulled in $3 million the first nine months of 2016 when it actually lost more than $1 million from January through November. Manafort also included Calk on a list he emailed to Gates of people he wanted to invite to Trump's inauguration.
An FBI forensic accountant, Morgan Magionos, told jurors that bank records from Cyprus, St. Vincent and the Grenadines and the United Kingdom revealed the accounts were connected to Manafort and his associates.
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Gates also testified on Tuesday how he and Manafort hid income earned for political work in Ukraine, explaining their efforts to set up companies in Cyprus so they could easily be paid by Ukranian businessman who held bank accounts there.
"I think Gates was a very poor witness".
In detailed testimony this week, Gates has walked prosecutors through the step-by-step process on how he and Manafort doctored and backdated documents. 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?" He scoffed at the idea that Gates had repented for his actions, noting that prosecutors have said they won't oppose his bid for probation and getting him to acknowledge he had not repaid the money he had taken from Manafort.
Gates testified they were not loans but compensation to Manafort.
Michael Zeldin, a former federal prosecutor, said that in Downing's remaining hour of cross-examination on Wednesday, he needs to keep painting Gates as an unreliable person who can not be trusted. However, Gates also said the agents did not ask about tax returns and "the majority of the Cypriot accounts were closed" at the stage. Gates testified that he and Manafort knew they were committing crimes for years, saying they had stashed money in foreign bank accounts and falsified bank loan documents.
Gates converted the 2015 DMP P&L to a Word document for Manafort, but there were spacing, font, and other discrepancies between that copy and the original.
Gates, who is 46 and married, admitted: "There was a period in my life, about 10 years ago, when I had a relationship, yes".
For most of his testimony, Gates did not look at Mr Manafort, while the defendant stared intently at his former partner.