Phipps is charged with perjury and obstruction of justice in connection with a campaign finance scandal.
Saunders, the former treasurer for Phipps' 2000 campaign, said she manipulated financial statements, with Phipps' knowledge, in an effort to retire the loan of Bobby McLamb, one of Phipps' former aides.
"This is when she started telling me that we can never let anybody know that she knew about paying back Bobby's loan," Saunders said. "Because if it was known, then she would lose her job and then I would lose my job."
Saunders later broke down on the stand when asked why she agreed to cover up the alleged illegal activity.
"I did anything she asked me to," she said.
Saunders told jurors how she handled envelopes of cash from donors who did not want to be identified. On Wednesday, Saunders alleged that Phipps' father, former Gov. Bob Scott, directed her to credit cash contributions to someone else. Saunders said she fraudulently wrote family members' names as contributors.
Saunders testified that when the campaign needed money, she would just contact people connected to the State Fair or former agriculture official Weldon Denny.
The prosecution contends Phipps knew about the illegal actions by members of her staff while defense attorneys claim that the former agriculture commissioner unknowingly became involved in others' mistakes.
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