By Nathan Layne

(Reuters) - U.S. prosecutors on Thursday sought to limit the fallout from a witness accused of lying in the trial of two nephews of Venezuela's first lady, urging the jury to convict the men of engaging in a multimillion-dollar drug deal to help their family stay in power.

During closing arguments in Manhattan federal court, Assistant U.S. Attorney Brendan Quigley acknowledged that the unusual development regarding the witness, Jose Santos-Pena, "looms large" over the trial but asked jurors to focus on other evidence against Franqui Francisco Flores de Freitas and Efrain Antonio Campo Flores.

Lawyers for the two men, nephews of Cilia Flores, wife of Venezuelan President Nicolas Maduro, shot back that the witness "infects every aspect" of the trial.

"Without him, what is their case?," David Rody, a lawyer for Flores de Freitas asked the jury.

Two days ago, prosecutors took the unusual step of ripping up a cooperation agreement with the witness after the defense presented evidence it said showed he had lied and was secretly dealing drugs.

It was a setback for the government in a case with potential implications for relations between the United States and Venezuela's socialist government.

Prosecutors have accused Flores de Freitas, 31, and Campo Flores, 30, of trying to use one of Venezuela's airports to send hundreds of kilograms of cocaine to the United States via Honduras. Their arrests in November were the result of a sting operation involving paid informants; no drugs were ever shipped.

Prosecutors said their goal in part was to obtain cash to counteract money they believed the United States was supplying to the opposition before Venezuela's December 2015 National Assembly elections. Maduro's Socialist Party lost its parliamentary majority after the vote.

On Thursday, Quigley said the jury should focus on text messages and phone recordings which showed that the nephews were "eager and enthusiastic to do drug deals."

"The evidence in Venezuela comes not from Santos-Pena's mouth," Quigley said.

Lawyers for the defendants have argued that their clients were not sophisticated enough to carry out such a large narcotics deal and were entrapped by informants out to please the U.S. Drug Enforcement Administration, which was paying them handsomely to lure in high-profile marks.

"These guys make a good living ratting out other people," Rody told the jury.

(reporting by Nathan Layne; Editing by Noeleen Walder and Grant McCool)