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.




New Details About Wilbur Ross’ Business Point To Pattern Of Grifting

A multimillion-dollar lawsuit has been quietly making its way through the New York State court system over the last three years, pitting a private equity manager named David Storper against his former boss: Secretary of Commerce Wilbur Ross.

.. The pair worked side by side for more than a decade, eventually at the firm, WL Ross & Co.—where, Storper later alleged, Ross stole his interests in a private equity fund, transferred them to himself, then tried to cover it up with bogus paperwork.

.. It is difficult to imagine the possibility that a man like Ross, who Forbes estimates is worth some $700 million, might steal a few million from one of his business partners. Unless you have heard enough stories about Ross.

.. Two former WL Ross colleagues remember the commerce secretary taking handfuls of Sweet’N Low packets from a nearby restaurant, so he didn’t have to go out and buy some for himself.

.. One says workers at his house in the Hamptons used to call the office, claiming Ross had not paid them for their work.

Another two people said Ross once pledged $1 million to a charity, then never paid.

..  Many of those who worked directly with him claim that Ross wrongly siphoned or outright stole a few million here and a few million there, huge amounts for most but not necessarily for the commerce secretary. At least if you consider them individually. But all told, these allegations—which sparked lawsuits, reimbursements and an SEC fine—come to more than $120 million.

.. If even half of the accusations are legitimate, the current United States secretary of commerce could rank among the biggest grifters in American history.

.. Those who’ve done business with Ross generally tell a consistent story, of a man obsessed with money and untethered to facts. “He’ll push the edge of truthfulness and use whatever power he has to grab assets,” says New York financier Asher Edelman. One of Ross’ former colleagues is more direct: “He’s a pathological liar.”

.. Such machinations now seem pathetic. But his billionaire status was not lost on another person obsessed with his net worth. Donald Trump termed Ross a “legendary Wall Street genius” and named him to his cabinet.

“In these particular positions,” Trump explained to a crowd of supporters, “I just don’t want a poor person.”

.. The future cabinet secretary’s private equity funds were underperforming—one on track to lose 26% of its initial value and another two dribbling out mediocre returns—and the accusations were starting to pile up. Roughly two months before the 2016 presidential election, the SEC announced WL Ross was paying a fine and refunding $11.9 million it allegedly skimmed from its investors, including interest.

.. the firm was also charging its investors on money that it had lost. Here’s how it worked: If WL Ross made an investment of, say, $100 million that declined dramatically, in the final years of the fund the firm was supposed to charge management fees on the actual value of the investment, not the $100 million starting point. However, WL Ross allegedly continued collecting fees on the amount invested

.. When approached about the discrepancy, Wilbur Ross initially insisted his firm was calculating the fees correctly

.. What makes it all more than a typical “he-said, she-said” dispute is the number of similar complaints against Ross.

..  alleging that he and his firm charged at least $48 million of improper fees

.. It would be like a restaurant owner telling his employees that they can eat for free—while taking the meal money out of their paychecks.

..  Of the top seven firm leaders listed on the 2006 website, none of them have the same roles today.

.. the majority—consisting of Storper, Mullin, David Wax and Pamela Wilson—are all actively waging legal battles against their former boss, Wilbur Ross.

.. In a presidential cabinet plagued by ethical problems, it can be easy to forget about Wilbur Ross. Most of the attention tends to center around obvious abuses, like Scott Pruitt getting a $43,000 sound-proof booth in his office or Tom Price wasting $341,000 on jet travel. But while Ross’ antics are more complicated, they involve far more money.

.. The central matter in all of Ross’ legal issues is his own credibility. “Lying on an ethics disclosure form, to Congressional and Senate committees, and falsely reporting compliance with an ethics plan, is neither ‘commonplace’ nor part of the accepted rough-and-tumble world of politics,” David Storper, Ross’ former right-hand man, argued in a court filing. “They are just lies.” Adds another onetime colleague: “This is a public servant who can’t tell the truth.”