JERUSALEM - The key witness in a corruption probe of Prime Minister Ehud Olmert made a dramatic courtroom appearance Tuesday, telling prosecutors that he handed cash-stuffed envelopes to the Israeli politician and suspected some of the money went to fund Olmert's fondness for fine hotels, first-class flights and luxury goods.

In sometimes emotional testimony, Jewish-American businessman Morris Talansky told the court that he turned over about $150,000 (€95,000) to Olmert at meetings in New York and Jerusalem over a 15-year period.

He said he believed most of the money was for political campaigns, but that Olmert also sought money for vacations and unidentified personal expenses.

Talansky, 75, said there were no records of how that money was spent. "I only know that he loved expensive cigars. I know he loved pens, watches. I found it strange," Talansky told the court with a shrug. In one case, he said, he walked to a bank to withdraw thousands of dollars in cash as Olmert waited in a luxury hotel.

Police are investigating whether Olmert illicitly took up to $500,000 (€340,000) from Talansky in illegal campaign contributions or bribes before becoming prime minister. Olmert has said the funds were legal campaign contributions and has promised to step down if indicted.

Tuesday's revelations were likely to further hurt the already unpopular Olmert. The investigation is the fifth that police have launched into Olmert's affairs since he took office in 2006, and there is widespread speculation that the savvy former attorney and Jerusalem mayor might not be able to weather the latest charges.

The white-haired Talansky, who is not a suspect in the case, appeared slightly nervous in the packed courtroom. He took off his jacket and tie and drummed his fingers on a table.

Throughout the questioning, Talansky repeatedly voiced admiration for Olmert, saying he was drawn to a brilliant, up-and-coming politician when he was running for Jerusalem mayor in the early 1990s. But he said he had grown disillusioned with the Israeli leader in recent years.

Olmert had the "ability to reach out to the American people, the largest and richest community of Jews in the world," Talansky said. "That's why I supported the man. That's why I overlooked, frankly and honestly, a lot of things. I overlooked them, maybe I shouldn't have."

During the questioning, Talansky said much of the money was raised in New York "parlor meetings," where Olmert would address American donors who would then leave contributions on their chairs.

Altogether, Talansky said he passed about $150,000 (€95,000) to Olmert in donations and loans, some or all of which were not repaid.

It was unclear how much of this was his own money, though he said at one point he used his personal credit card to pay a $4,700 (€3,000) hotel bill for a three-day stay at the Ritz Carlton in Washington in 2004.

Olmert called him to say his own credit card was "maxed out," Talansky testified. "He asked if he could borrow my card and he said it was part of a loan."

The donations took place before and during Olmert's 10-year tenure as Jerusalem mayor, which ended in 2003, and his subsequent term as trade minister. Olmert became prime minister in early 2006.

Throughout the period in question, Olmert was a leading politician in the hardline Likud party. In late 2005, Olmert bolted the Likud to help form the centrist Kadima Party, which he now leads.

Talansky described Olmert as a politician with magnetic appeal and insisted that Olmert never gave him anything in return for his support.

"He was articulate, he was intelligent. I felt that he would be a leader that I would have hoped to be if I had the talent," Talansky said, adding that Olmert would warmly greet him during their meetings in Jerusalem.

"He would always come out and greet me. A hug, a big hug. He hugged me. I remember for my 70th birthday he sent me a very beautiful card. He invited me to his son's wedding."

"I had a very close relationship with him, but I wish to add at this time that the relationship of 15 years was purely of admiration," he added. "I never expected anything personally. I never had any personal benefits from this relationship whatsoever."

Talansky said Olmert preferred cash over checks for reasons connected to Likud fund-raising regulations - a habit that arose suspicions. "Cash disturbed me. I couldn't understand it and I accepted the answer simply because I saw something bigger, hopefully, out there," he said.

He also said Olmert also asked for a number of loans. Talansky mentioned one loan of $25,000 to $30,000 (€16,000 to €19,000) for a trip to Italy and another loan for $15,000 (€9,500).

Olmert asked for the second loan during a stay at Regency hotel in New York, refusing to take a check and asking for cash, Talansky said.

Talansky said he walked to a bank four blocks away and withdrew the money. When he handed over the cash to Olmert, he asked to be repaid as soon as possible. "Famous last words," Talansky said, explaining that he was never repaid.

The last payment, he said, was about $72,500 (€46,000) for Olmert's Likud primary campaign in 2003. He said there had been no contact since Olmert became prime minister, except for a single meeting at a social function.

Since Olmert has not been indicted, Tuesday's testimony was not part of a formal court proceeding against him. Instead, the court was taking Talansky's testimony because he resides in the U.S. and authorities are concerned he might not return to Israel to testify in the future.

Olmert's lawyers tried to delay Talansky's testimony. But the American businessman, an ordained rabbi who has spent his career as a fund-raiser for Jewish causes, wanted to testify so he could return home to Long Island, New York. Talansky broke into tears, saying he missed his wife, when prosecutors told him he may have to remain in the country.

There was no immediate comment from Olmert's office.

Ahead of the testimony, State Attorney Moshe Lador told reporters not to jump to conclusions and called media reports "incorrect and irresponsible."

"There is no decision. We are at the height of the investigation. The case could develop in different directions down the road - there is a possibility that the whole case could be dropped, and there is also a possibility that another decision will be made in the case," Lador said.

Police have said the charges span a 12-year period when Olmert was mayor of Jerusalem and minister of industry and trade. Detectives have raided Jerusalem city hall and the trade ministry and have grilled Olmert twice.

Olmert's longtime assistant, Shula Zaken, and former law partner Uri Messer also have been questioned. The probe is expected to take months.