Federal grand jury indicts Trump campaign manager Manafort and aide Gates

Paul Manafort, former campaign manager and foreign policy advisor to Donald Trump and Manafort’s long-time business associate Richard W. Gates III surrendered their passports and themselves Monday morning to the FBI.

Monday morning the District Court for District of Columbia unsealed a federal grand jury indictment dated Oct. 27 against Paul J. Manafort Jr., and Richard W. Gates III for conspiracy against the United States, conspiracy to launder money and making false statements. Manafort and Gates pleaded not guilty.

Manafort was released on a $10 million bond. Gates was released on a $5 million bond after pleading innocent to charges that he laundered millions through his overseas shell companies, using the money to buy antiques, cars, real estate, antique rugs, fancy clothes and yard work. Both have been ordered to be under house arrest.

The investigation is connected to Special Counsel Robert S. Mueller III’s probe of possible coordination between the Trump campaign and Russia during last year’s election. Manafort and Gates are the first two to be arrested in the investigation.

Outside the federal courthouse in Washington, where Manafort had just pleaded innocent, his attorney, Kevin Downing, said there was “no evidence” his client or the Trump campaign had colluded with the Russian government. Downing added that charges on money laundering were “ridiculous.”

Trump tweeted that events of which Manafort was accused had happened years ago, were fake news. Manafort had been hired, according to White House press secretary Sarah Huckabee Sanders, for activities that took place outside the campaign, “to handle the delegate process, which he did, and was dismissed shortly after.”

Ex-Trump foreign affairs advisor George Papadopoulos, admitted in a secret plea deal on Oct. 5 to lying to special agents of the FBI. Papadopoulos has been working with Mueller’s investigators for months as a “proactive cooperator.”

Papadopoulos is awaiting sentencing.

On Monday, the White House through, Sarah Huckabee Sanders, said that Papadopoulos had held “an extremely limited volunteer position” with “no actions done in any official capacity for the campaign.”

However, on Monday, the Los Angeles Times reported that in a meeting with the Washington Post newspaper editorial board, candidate Trump was asked who advised him on foreign policy, Trump ran off a list mentioning Papadopoulos second, referring to him as an “energy and oil consultant, an excellent guy.”

News anchors and pundits this week speculated that Papadopoulos might be a bigger problem to Trump in that he may have been “wearing a wire” as a confidential informant for some time.

Manafort and Gates face counts that also include failure to register as foreign agents and seven counts of failure to file reports of foreign bank and financial accounts.

Following is a summary of the government’s charges and allegations against the pair, to which the defendants are entitled to a presumption of innocence. Manafort and Gates for years worked as lobbyists and political consultants. Some of the charges related to such work for Russia-leaning organizations in Ukraine.

Between 2006 and 2016, Manafort and Gates pocketed $75 million received for lobbying for agents of the former president of Ukraine, Victor Yanukovich and his party of regions and hid it in offshore companies, the Grenadines and elsewhere.

Furthering the scheme, Manafort and Gates funneled millions of dollars of payments into the hidden shell companies and bank accounts, “falsely and repeatedly reporting to their tax preparers and to the United States that they had no foreign bank accounts.”

In furtherance of their scheme, Manafort and Gates concealed their work and earnings from Ukraine and its leaders and political parties. Because Manafort and Gates directed a campaign to lobby United States officials on behalf of the government of Ukraine, president of Ukraine and political parties in Ukraine, they were required to report to the United States their work and fees. They did not, and lied when federal Dept. of Justice sent inquiries about their activities.

“Manafort used his hidden overseas wealth to enjoy a lavish lifestyle in the United States without paying taxes on that income,” according to the indictment. Manafort, without reporting the income to his tax preparer spent millions of dollars on luxury goods, and services for himself and his extended family. He paid for the items by wiring payments from the offshore accounts directly to the vendors in the United States. Manafort also used the accounts to buy multi-million dollar properties in the United States. Manafort then borrowed millions of dollars using the valuable properties as collateral, thereby laundering the money, obtaining cash without reporting and not paying taxes on the income.

Gates helped Manafort to obtain money from the offshore accounts, which he helped Manafort to open. “Like Manafort,” the indictment said, “Gates used money from these offshore accounts to pay for personal expenses, including his mortgage, children’s tuition and interior decorating his residence in Virginia.”

Manafort laundered more than $18 million. the indictment alleges, which was used by him to buy property, goods, and services in the United States, income that he concealed from the United States Treasury, the Dept. of Justice and others. Gates transferred in excess of $3 million from the offshore accounts to others he controlled. Manafort and Gates owned or controlled 17 entities in the United States and a dozen Cypriot entities, which they used in their scheme, the indictment alleges. They also owned or controlled two foreign entities in the Grenadines and one in the United Kingdom.

 

The scheme

Between in or around 2008 and 2017, in the District of Columbia and elsewhere, Manafort and Gates “devised and intended to devise and executed and attempted to execute a scheme and artifice to defraud and to obtain money and property by means of false and fraudulent pretenses, misrepresentations and promises from the United States, banks and other financial institutions. As part of the scheme, Manafort and Gates repeatedly gave false information to bookkeepers, tax accountants and legal counsel among others, according to indictment allegations.

From 2008 to 2014, Manafort sent wires of money totaling over $12 million to 19 vendors in the United States and for personal items. For example, $655,500 from various companies in Cyprus to “Vendor F” a landscaper in the Hamptons, New York. In another example, he sent $62,750 from Lucicle Consultants Limited, a Cypriot company to “Vendor O” for buying a Mercedes Benz vehicle. In another example, he wired $20,000 from companies in Cyprus and Grenadines to “Vendor S” for housekeeping in New York.

Real estate purchases

Manafort used money in 2012 from companies in Cyprus to buy a condominium and a brownstone building, plus a house in Virginia for a combined total of $6,400,000. He did not report the income used for the real estate purchases on his 2012 tax return and later used the properties fraudulently to obtain loans. For example, on the Howard street property in New York, which he let out as a rental, he represented to the bank instead that the house was a second home for his daughter’s family to get more favorable terms as an owner-occupied property.
The indictment charges that Manafort and Gates caused false and misleading letters and a cover story to be submitted to the Dept. of Justice when the DOJ tried to find out whether they had acted as agents of a foreign principal under the Foreign Agents Registration Act (FARA) without registering.

Should Gates and Manafort be convicted on a count of money laundering, they would forfeit to the United States any property, property, real or personal, which constitutes or is derived from the money laundering scheme, including the property in New York and Arlington, Virginia, and a life insurance policy. Should the property for forfeiture be sold, or become otherwise unavailable, the government would take other property if the defendants were convicted.

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