Sentencing Memo Paints Manafort as Someone Who ‘Repeatedly and Brazenly’ Broke Law

Federal prosecutors on Saturday portrayed Paul Manafort, President Trump’s former campaign chairman, as a hardened, remorseless criminal who “repeatedly and brazenly” violated a host of laws over more than a decade and did not deserve any breaks when he is sentenced in coming weeks.

The prosecutors’ sentencing memo, filed in one of the most high-profile cases mounted by the office of the special counsel, Robert S. Mueller III, and unsealed on Saturday, painted a damning portrait of Mr. Manafort, 69, a political consultant who led Mr. Trump’s campaign during a critical five-month period in 2016.

The memo involved one of two federal cases against Mr. Manafort. Prosecutors did not recommend a sentence, instead citing sentencing guidelines of up to 22 years for a wide-ranging conspiracy involving obstruction of justice, money laundering, hidden overseas bank accounts and false statements to the Justice Department. But the two charges Mr. Manafort pleaded guilty to in the case carry a maximum sentence of 10 years.

.. Over all, the prosecutors said, Mr. Manafort’s behavior “reflects a hardened adherence to committing crimes and lack of remorse.” Despite his age, they said he “presents a grave risk of recidivism.” They noted that under advisory sentencing guidelines, Mr. Manafort would face a sentence of 17 to 22 years.

.. The prosecutors reached far back into Mr. Manafort’s career in their efforts to portray him as a calculating lawbreaker. They noted that the Justice Department first warned him in 1986 about flouting the lobbying law known as the Foreign Agents Registration Act, or FARA.

At the time, Mr. Manafort was a director of the Overseas Private Investment Corporation under President Ronald Reagan, and he was faced with a choice: “either resign his political appointment” or “cease all his activities on behalf of foreign principals,” according to the filing.

He chose to resign.

But the prosecutors said that “in spite of these clear warnings and the personal ramifications to him for not adhering to the law, Manafort chose to violate the FARA statute and to get others to as well” in his Ukrainian lobbying.

Mr. Mueller’s team also made no recommendation on whether Mr. Manafort’s sentence in the Washington case should run concurrently with his sentence in the Virginia case. After a lengthy trial in Alexandria, Va., in August, a jury convicted Mr. Manafort of eight felonies including tax fraud and bank fraud — crimes prosecutors said Mr. Manafort committed “for no other reason than greed.”

Sentencing guidelines in that case would call for a prison term of 19 to 24 years.

The order of his sentencing dates may work against Mr. Manafort. He is scheduled to be sentenced first for the financial crimes by Judge T. S. Ellis III of the United States District Court for the Eastern District of Virginia in Alexandria, and then by Judge Jackson in Washington.

Some allies of Mr. Manafort had hoped that Judge Ellis would have the last word because he seemed more sympathetic to the defense than Judge Jackson, and he might order the sentences to run concurrently.

 

Michael Cohen Deals a Blow to His Former Boss

President Trump’s former, longtime personal lawyer directly implicated him in a federal crime

The conviction of his former campaign chairman Paul Manafort on tax evasion and bank fraud charges undercut Mr. Trump’s assertion that his was a campaign and a presidency that would “drain the swamp” of the unsavory professional political class.

Mr. Manafort was and is of precisely that political class. The actions for which he was convicted had nothing to do with his work for the president, yet the optics are, to say the least, unhelpful for Mr. Trump.

Mr. Trump can and will distance himself from both Mr. Manafort and the felonies of which he now has been convicted. Indeed, after landing in West Virginia for a campaign rally, Mr. Trump expressed sympathy for Mr. Manafort but said “this has nothing to do with Russian collusion.” He continued to describe the hunt for a Russian connection as a “witch hunt.”

It will be much harder to create distance from Mr. Cohen.

.. For Mr. Trump and his presidency, there are a few silver linings in that dark cloud. One is that Mr. Cohen apparently doesn’t have an agreement to cooperate with prosecutors or special counsel Robert Mueller. So his brief statement in court may be all that is heard on the matter.The second is that, by agreeing to a plea deal, Mr. Cohen guaranteed there won’t be a trial in which his assertion can be hashed out in detail and in full public view.

Finally, campaign-finance violations can seem to voters to be obscure and of concern mostly to the distant political class.

Rick Gates Delivers a Public Lesson on Money Laundering and Political Corruption

.. his time on the witness stand provided an invaluable public lesson in how tax evasion, money laundering, and political corruption work.

.. The ability of rich people such as Manafort and his oligarchic clients to shuffle money across borders, beyond the purview of tax collectors and law-enforcement authorities, is a huge and intractable problem. In many places, these practices are

  • denuding tax bases,
  • corrupting a large class of professional enablers, and
  • undermining public confidence in the political and financial systems.

.. roughly $7.6 trillion, or eight per cent of the world’s financial wealth, was held in offshore tax havens. In some countries, the proportion is much higher; in the case of Russia, it is more than half.

.. . In the United States, he has estimated, the annual tax loss is about thirty-five billion dollars.

.. It is only when there is a prominent court case or a leak—such as the 2016 Panama Papers, which exposed the dealings of the law firm Mossack Fonseca—that a light is shined on this system’s hidden mechanics. What Gates provided this week was a firsthand account of how the illicit game is played.

.. Manafort’s consulting firm was paid by Ukrainian businessmen close to Viktor Yanukovych, who was elected President in 2010. Many of these figures already had bank accounts in Cyprus

..  Gates described how he and Manafort used a Cypriot law firm to establish bank accounts in the name of shell companies that they controlled but weren’t publicly associated with.

“Did these companies sell a product?” Andres asked Gates.

“No,” he replied.

“Did they have any employees?” Andres asked.

“No,” Gates repeated. “The purpose of the companies was to accept payments and to make payments.”

.. The Cypriot law firm Chrysostomides “handled everything,” Gates said, including listing the names of locals, rather than the two Americans, as the directors of the shell firms into which the fees from Ukraine flowed.

.. he arranged to have money wired from the Cypriot accounts to vendors in the United States from whom Manafort had bought expensive clothes

.. problems arose, Gates said. So, again using the Cypriot law firm, he and Manafort transferred some money to bank accounts in the Grenadines, a chain of small islands in the Lesser Antilles. But, when the banks in the Grenadines were asked to transfer money to companies in the United States, they demanded invoices for the payments—something that the Cypriot banks hadn’t bothered with. At Manafort’s direction, Gates said, he created “modified invoices” and gave them to the banks.

.. “About 50% of the wealth held in tax havens belongs to households with more than $50m in net wealth,” Zucman, of Berkeley, noted in an article last year. “These ultra-rich represent about 0.01% of the population of advanced economies.”
These were the type of people whom Manafort was working for in Ukraine, and it’s pretty clear from the life style he adopted that he wanted to join their ranks.
.. he allegedly resorted to bank fraud rather than modify his spending patterns.
Gates described how, in 2015, together with Manafort’s accountants, he helped put together bogus financial documents that Manafort then used to obtain bank loans.

.. toward the end of Andres’s questioning of Gates, the prosecutor showed the witness an e-mail that Manafort wrote to Gates in November, 2016, shortly after Trump was elected. By that stage, Gates was working for Trump’s Presidential transition team. “We need to discuss Steve Calk for Sec of the Army,” Manafort’s e-mail said. “I hear the list is being considered this weekend.”

.. When he joined the Trump campaign, he’d long been known as the ultimate swamp creature. Thanks to Mueller and Gates, we now know more about how that swamp operates.

 

 

 

Rick Gates Testifies He Committed Crimes With Paul Manafort

testified that he knew about what the prosecutors allege is a multiyear tax and bank fraud scheme by Mr. Manafort because “I was the one who helped organize the paperwork.”

.. Mr. Manafort’s allies argue that Mr. Gates can be discredited as a morally bankrupt and untrustworthy narrator who owes his professional career to Mr. Manafort, yet siphoned millions from his accounts. Then, faced with the prospect of prison and huge fines, Mr. Manafort’s allies say, he blamed Mr. Manafort for financial machinations that he himself executed. The defense also signaled Monday that it may allege extramarital affairs by Mr. Gates in a further attempt to attack a man who Mr. Manafort’s friends say took advantage of his boss.

.. “Rick Gates owes everything to Paul. Paul made Rick a lot of money,” said Hector Hoyos, a longtime friend and former business partner of Mr. Manafort’s who remained in contact with him after his indictment. “But Rick is not the strong-valued guy that Paul is. Rick will go wherever the wind takes him, and it just goes to show you that there is no such thing as loyalty and friendship anymore,” Mr. Hoyos said in June

.. The men spent countless hours together traveling the world, and by all accounts got along quite well. But in some ways they are a study in contrasts. Prosecutors have detailed the lavish lifestyle on which Mr. Manafort spent his riches, while Mr. Gates, by contrast, lived less ostentatiously. When he wore a suit, he still carried a backpack.

.. Even as he detailed Mr. Manafort’s financial crimes, Mr. Gates worked in a bit of praise for his former boss.

“Probably one of the most politically brilliant strategists I’ve ever worked with,” he said of Mr. Manafort.

.. While Mr. Gates was the one who demanded accountants give him copies of financial statements in PDF format so he could convert them to Word and alter them, some of the falsified documents bear Mr. Manafort’s signature.

.. Mr. Manafort told the accountants that he had no foreign bank accounts, although prosecutors claim that millions of dollars flowed through his accounts in Cyprus and St. Vincent and the Grenadines

.. Judge T.S. Ellis III of the United States District Court in Alexandria said prosecutors had proved both that Mr. Manafort personally denied that those accounts existed and that he controlled them.

.. Mr. Manafort left the firm the year Mr. Gates arrived. But they continued traveling in the same circles as Mr. Gates impressed remaining partners, whom he occasionally chauffeured between the firm’s Alexandria offices and meetings in Washington.

“Very smart. Good work ethic. He was a guy I thought would go places someday,” said Charlie Black, a co-founder of the firm, who offered Mr. Gates the internship at the recommendation of a friend, and then hired him full-time afterward. “I didn’t know where he would end up, but I always liked him. I still do.”

.. The accountant, Cynthia Laporta, testified that in 2006, Mr. Manafort received a $10 million loan from Oleg V. Deripaska, a Russian oligarch close to President Vladimir V. Putin. Ms. Laporta said she saw no evidence it was ever repaid.

And Mr. Gates testified that Konstantin V. Kilimnik, a Russian who prosecutors claim is tied to Russian intelligence, had signatory authority over some of Mr. Manafort’s accounts in Cyprus.

 

Paul Manafort Trial: Gates Admits Having Affair as Defense Attacks Him

When one of the defense lawyers tried to suggest to Mr. Manafort’s tax accountant Monday that Mr. Gates had kept Mr. Manafort in the dark about his own finances, the accountant, Cynthia Laporta, pushed back.

“In most instances, it was clear that Mr. Manafort was aware what was going on,” she testified.

Mr. Gates’s statements reinforced that picture. He said that Mr. Manafort knew it was illegal not to report his foreign bank accounts to the Treasury Department but asked Mr. Gates to help him deceive his accountants so he could conceal income and pay less in taxes.

“I assisted Mr. Manafort in filing false tax returns,” Mr. Gates testified. “We didn’t report the income or the fact that the accounts existed.”

.. He said that some of Mr. Manafort’s income was disguised as loans from 15 shell companies that Mr. Manafort controlled, most of them in Cyprus.

..  Once that income dried up, the government alleges, Mr. Manafort, with Mr. Gates’s help, falsified financial records so he could obtain bank loans to maintain his opulent lifestyle.
..  Gates testified that Mr. Manafort also was paid $4 million a year to help Mr. Yanukovych govern after he was elected president in 2010.
.. while Mr. Yanukovych ran on a platform of integrating with the European Union, while also maintaining good relations with Russia, he eventually pivoted toward Moscow
.. Mr. Gates also said that two American lobbying firms — the Podesta Group and Mercury Public Affairs — assisted with their policy consulting efforts. Mr. Mueller’s team has referred cases related to the firms’ work to federal investigators in the Southern District of New York.
.. Mr. Manafort asked Mr. Gates to help arrange inauguration tickets and administration posts — including secretary of the Army — for a banker from whom Mr. Manafort is accused of fraudulently seeking loans, Mr. Gates testified.

.. Emails presented during Mr. Manafort’s trial showed that he sought the favors for Stephen M. Calk, the founder and chief executive of The Federal Savings Bank of Chicago. The bank began issuing loans that eventually totaled $16 million to Mr. Manafort in the days after Mr. Trump’s election based on false information provided by Mr. Manafort.

..  Mr. Gates said he was involved in discussions about nominating Mr. Calk to an economic advisory council.

.. Mr. Gates, 46, admitted Monday that he was guilty of a long list of crimes, including stealing hundreds of thousands of dollars from Mr. Manafort’s accounts by inflating his business expenses. He said that while he was helping Mr. Manafort hide income to evade taxes, and later to inflate his income to obtain bank loans, he was doing essentially the same on his own behalf.

..  In exchange for his cooperation, the government in February agreed to dismiss 22 criminal charges stemming from his involvement in the scheme for which Mr. Manafort is now on trial.

.. sentencing guidelines recommend a prison term of up to six years, he testified that prosecutors have agreed not to object if his defense attorney argues that he should receive probation.

Prosecutors say Manafort’s wealth was fueled by lies to IRS and banks

prosecutors charged that his personal fortune was propped up by years of lies to tax authorities and banks.

.. “A man in this courtroom believed the law did not apply to him,” Assistant U.S. Attorney Uzo Asonye told the jury. “Not tax law, not banking law.”

.. The defense, in rebuttal, said that Manafort was a victim of the deceptions of his former partner, now a government witness, and that any failure to pay taxes was inadvertent.

.. Manafort faces 18 charges of financial fraud, as prosecutors say he failed to pay taxes on some of the millions of dollars he made working as a strategist for a political party in Ukraine, and then lied to banks to get loans when those payments stopped.

.. Manafort collected more than $60 million between 2010 and 2014 from his Ukraine work, where President Viktor Yanuko­vych, an ally of the Kremlin

.. When Yanukovych had to flee Ukraine for Russia in 2014, Manafort’s “cash spigot” was shut off, the prosecutor said, and the political strategist set out to generate money by lying to banks on loan applications.

.. Asonye’s efforts to paint Manafort as a free-spending tax cheat were interrupted more than once by U.S. District Judge T.S. Ellis III, who noted “it isn’t a crime to be profligate in your spending.”

.. The prosecutor said the charges boil down to “one simple issue: Paul Manafort lied.”

.. Manafort’s defense lawyer Thomas Zehnle said the case was about “taxes and trust,” and that the real liar was not Manafort, but his former right-hand man, Rick Gates.

.. “Mr. Manafort placed his trust in the wrong person,” Zehnle said, arguing that his client built “one of the most successful political consulting and government relations shops in Washington,” while also working on “the global stage.”

.. Zehnle said Manafort’s work for Yanukovych was to “bring the country closer to Western democracies after decades of Soviet rule” — toward the European Union and away from Russia. That comment was met with audible sneers from a few members of the gallery. Protests in Ukraine were first triggered in late 2013 by Yanukovych’s decision to not sign an E.U. association agreement, an embrace of the West that Russia opposed.

.. Zehnle said Manafort also never intentionally deceived the IRS about his income and that his client made mistakes, not realizing he needed to file certain forms and make certain declarations.

“This is not a case where someone flew to Switzerland and stashed money in an account,” Zehnle said. The lawyer also said that earlier in the investigation, Manafort willingly sat down with FBI agents investigating the misuse of funds in Ukraine

.. Manafort’s defense strategy appears aimed at the credibility of Gates, the star witness against him, by accusing Manafort’s ­onetime protege and partner of embezzling millions of dollars.

“Rick Gates had his hand in the cookie jar, and he couldn’t take the risk that his boss might find out,” Zehnle said. He said Gates prevented other people involved in Manafort’s finances — accountants and bookkeepers — from sharing information about the accounts with each other.

.. Manafort had hired great people, he said, and had “substantial resources. . . . I was really impressed by him.”

Devine said Yanukovych won the presidency in 2010 because of the “excellent campaign that Paul ran.” Devine said he produced TV commercials and wrote speeches for Yanukovych, earning $500,000 and a bonus of $100,000 when Manafort’s client won.

.. While working on the campaign, Devine met other Manafort associates who have since come under investigation, including Gates and Konstantin Kilimnik, a Russian citizen. At the time, Devine said, Kilimnik worked as a translator. Prosecutors have said Kilimnik has ties to Russian intelligence, and they accused him and Manafort of trying to tamper with witnesses earlier this year.

Devine said Manafort was clearly the boss in his relationship with Gates, though they were partners.

“Paul was in charge,” Devine said. “Rick worked for Paul.”