Norman Chambliss testified about a series of memos he wrote establishing an illegal loan for Phipps' former aide, Bobby McLamb. Chambliss claimed he worked directly with the Phipps campaign to pay off the loan.
Chambliss also claimed that he set up another illegal loan for the Phipps campaign through Amusements of America, the carnival that later was chosen by Phipps to run the midway at the North Carolina State Fair.
Chambliss told jurors about an all-expenses-paid trip for Phipps to visit the Ohio State Fair. During that trip, Chambliss alleged, a worker for the carnival company gave Phipps an envelope containing almost $14,000.
"It was a group of bills in that envelope that filled it up," Chambliss said. "It was an inch-and-a-half thick of some denominations of bills."
Chambliss was granted immunity for testifying before the State Board of Elections last year, but there is no such agreement for his testimony in this case. He will return to the stand Wednesday morning.
Phipps faces five counts of perjury and obstruction of justice related to her campaign finance scandal.
During opening statements, Wake County District Attorney Colon Willoughby told jurors that Phipps' problems stemmed from a large campaign debt and her efforts to take short cuts to pay it off.
Defense attorney Roger Smith portrayed a scenario in which McLamb and Linda Saunders, another of Phipps' aides, misunderstood the laws and Phipps unknowingly became involved in others' mistakes.
Earlier in the day, a judge denied a defense motion to suppress evidence brought forth from a 2002 State Board of Elections hearing involving Phipps.