By Nathan Layne and Karen Freifeld

NEW YORK (Reuters) - Donald Trump's former campaign chairman Paul Manafort breached his plea deal by lying to federal investigators, U.S. prosecutors said in a court filing, signaling a potential setback to the special counsel's probe into Russia's meddling in the 2016 U.S. presidential election.

Manafort said in the same filing on Monday that he disagreed with Special Counsel Robert Mueller's assertion that he had lied, but both sides agreed the court should move ahead and sentence him for his crimes.

Without a pardon, the 69-year-old Manafort could spend the rest of his life in prison, experts said.

The surprise development comes at a critical time for Mueller, who is expected to finalize a report in the coming months on the findings of his 18-month probe into Russia's election meddling and possible collusion with the Trump campaign.

While not a fatal blow, the dissolution of Manafort's plea agreement means Mueller is losing the contributions of a witness with deep ties to Russia and who ran the Trump campaign as it took off in mid-2016.

"It’s bad for the overall Mueller investigation," said Patrick Cotter, a criminal defense lawyer in Chicago and former assistant U.S. attorney in New York. "He's got one less witness today."

Still, Cotter said, it did not mean Manafort’s cooperation had not been of any value, noting that he may have led Mueller to other sources of information.

Manafort was a long-time Republican political consultant who made tens of millions of dollars working for pro-Kremlin politicians in Ukraine before joining the Trump campaign in March 2016, promising to work for free.

Manafort attended a meeting at Trump Tower in June 2016 with a group of Russians offering "dirt" on Democratic candidate Hillary Clinton, who lost in an upset to Trump in the vote that November.

His long-standing relationship with an oligarch close to Russian President Vladimir Putin was another reason Manafort's cooperation was seen as important to Mueller's probe.

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Manafort started cooperating in September after pleading guilty in a federal court in Washington to conspiracy against the United States - a charge that included a range of conduct from money laundering to unregistered lobbying. He also admitted that he tried to tamper with witnesses.

Mueller said in the filing that after signing the plea agreement "Manafort committed federal crimes by lying to the Federal Bureau of Investigation and the Special Counsel’s Office on a variety of subject matters."

Prosecutors did not provide details of the alleged lies but said they would do so before sentencing.

Manafort's attorneys said Manafort met with the government on several occasions and made "an effort to live up to his cooperation obligations," according to the joint filing, which was submitted to U.S. District Judge Amy Berman Jackson in Washington.

Rudy Giuliani, who represents Trump in the Russia probe, said Mueller’s team had crossed an ethical line between a search for the truth and exerting too much pressure on Manafort.

"They are trying not to get a witness to sing, but to compose," he said in an interview with Reuters on Monday night.





ANGLING FOR PARDON?

The breakdown in the plea deal means that Manafort will almost certainly be hit with a harsher sentence - both for the crimes he pleaded guilty to in Washington and for his conviction in August in a separate case in Virginia on bank and tax fraud.

Manafort was likely facing about 10 years in prison - a statistical life sentence given his age - for the eight guilty counts in the Virginia case alone, sentencing experts have said.

"The consequences are potentially devastating for Manafort," said Washington attorney Shanlon Wu, who represented Manafort’s former associate Rick Gates before he pleaded guilty and became a star witness for prosecutors in Manafort's Virginia trial.

But the development also raised speculation that Manafort may be seeking to curry favor with Trump or protecting other associates who worked on the campaign.

Trump has been vocal in his support for Manafort, lauding him as a "very good person" during the Virginia trial. And when asked directly about the prospect of pardoning his former campaign chairman, Trump has not ruled it out.

"It seems to me he's angling for the pardon," said David Weinstein, a former federal prosecutor in Miami.

Giuliani, who said he regularly talks to Manafort lawyer Kevin Downing, said Manafort told prosecutors "at least 10 times that he has no information on wrongdoing by the president."

Giuliani, who last week called for an end to the Russia probe, denied he was making a case for a pardon of Manafort. "This has nothing to do with a pardon," he said.

Russia denies U.S. allegations it hacked Democratic Party emails and ran a disinformation campaign. Trump denies any campaign collusion and has repeatedly called the investigation a political witch hunt.





(Reporting by Nathan Layne and Karen Freifeld in New York; Additional reporting by David Alexander and Eric Beech in Washington; Editing by Kevin Drawbaugh, Peter Cooney & Kim Coghill)