The Questionable Math Behind Manafort’s Extravagant Home Renovations
There were the Oriental rugs worth $934,000, the four Range Rovers, the antiques—even $1.37 million in clothes. The federal indictment of Paul Manafort, President Donald Trump’s former campaign chairman, accuses him of laundering millions in foreign payments to pursue a “lavish lifestyle” in the U.S., especially in the Hamptons, where he has a house.
What it doesn’t explain—or highlight—are the stratospheric payments he made to home improvement companies when his renovation work was estimated at far less.
Special Counsel Robert Mueller, in his indictment, says that a Hamptons firm got $5.4 million in wire transfers from Cyprus over 71 payments. But building permits over the same period examined by Bloomberg show that renovations by Manafort’s Hamptons’ contractor were estimated to cost $1.2 million. That’s less than a quarter of what was ultimately sent—an apparent discrepancy that could draw scrutiny from investigators.
The indictment identifies the company as “Vendor A, Home Improvement Company in the Hamptons, New York,” but doesn’t specify what the work was for or where—so there may be another explanation for the huge gap between money transferred and spent. A Manafort spokesman, Jason Maloni, declined to address this point, saying only that Manafort had entered a not guilty plea and looks forward to his trial.
Public records raise sharp questions about how the money was spent.
A company called SP & C Home Improvement is listed as the general contractor on renovation projects for both the Hamptons and a Brooklyn property owned by Manafort’s family. The company’s owner, Stephen Jacobsen, who moved to Florida several years ago, rejected numerous attempts to seek his comment.
Building permits in Southampton estimate that the cost of SP & C’s renovations would come to $687,000. In Brooklyn, the work is estimated to cost $527,900 though it isn’t clear whether SP & C or another contractor completed the project. Either way, the estimates fall more than $4 million short of the amount “Vendor A” was paid.
Manafort’s payments to some other vendors are substantial too, even for a man who is said to favor $7,500 suits.
Manafort paid one Hamptons’ landscaper $655,500, over two and a half years. He wired $112,825 to an audio, video and control system integration and installation company, also in the Hamptons, and he dropped $623,910 on a New York antique dealer, according to the indictment.
No one answered the door at Manafort’s house in the Hamptons nor at his house in Florida. On a recent visit to the Brooklyn brownstone, renovations were under way in the basement and upper floors. A project manager declined to answer questions.
Manafort, 68, an international political consultant, was accused along with his right-hand man, Rick Gates, of lying to U.S. authorities about their work in Ukraine, laundering millions of dollars, and hiding offshore accounts. Both pleaded not guilty on Oct. 30.
Aside from Mueller’s inquiry, the New York attorney general and Manhattan district attorney are investigating Manafort’s real estate transactions, and federal prosecutors in New York have also been probing potential bank fraud involving loans on his Brooklyn brownstone from Chicago-based Federal Savings Bank, according to a source familiar with the matter.
Federal Savings Bank officials didn’t respond to several messages seeking comment.
The federal indictment provides some detail about Manafort’s spending in the U.S., such as how much he paid various vendors, who are identified only by location and type. None of the vendors were charged or accused of wrongdoing. Manafort didn’t pay taxes on the income used to make the purchases, the indictment said.
It is well known that real estate can be an effective way to launder money because many transactions involve opaque entities and clean large sums of money in a single transaction.
Money launderers can use remodeling projects to wash money by overpaying for services rendered, or by paying for improvements that increase the resale value, said Andrew Stone, a fraud analyst at HomeAdvisor, a company that connects homeowners with contractors.
“This effectively integrates ill-gotten gains into the financial system,” he said.
Ross Delston, a Washington attorney and money laundering expert, said large payments in round-dollar amounts can be a red-flag, even more so if they are linked to specific contracts. Nearly all of Manafort’s payments to vendors end in zero—such as $6,500, $75,000 or $375,000, according to the indictment.
In the case of a home contractor, payments would include the cost of labor and materials, and “it would be surprising if all payments for materials ended in round-dollar figures,” Delston said.
A longtime acquaintance of Manafort’s said he was just “a big spender.” The person who requested anonymity to maintain relationships added: “If you pick 10 people and had to ask who would spend $1.3 million on clothes, I’d pick Paul.”
There are plausible explanations for discrepancies between an estimate and the actual cost on building permits. Surprises come up and clients change their minds, said Carl Sabatello, the owner of a company that did renovation on Manafort’s Florida house. When clients start adding finishing materials like tiles and fixtures, a job can easily cost twice the original estimate, he noted.
The permit records in Southampton didn’t provide a complete description of the renovations Manafort made to his property. However, some records were available and show that SP & C estimated that building a pool house would cost $420,000.
During an inspection in April 2013, the Southampton assessor determined that the replacement cost of the pool house was $132,172, a less than a third of the quoted price. A pergola, estimated to cost $35,000, would cost $16,550 to replace by the assessor.
Lisa Goree, Southampton’s sole assessor, said renovation costs aren’t necessarily reflected in a home’s assessed value. “He could spend $1 million on a statue in front of the house,” she said. "It doesn’t mean we’re going to increase the assessment by a million dollars.”
There is also a gap between renovation estimates on Manafort’s Florida 3,300-square-foot house—located in a gated community overlooking a golf course and palm-lined canal—and the amount paid to a “Vendor J, a contractor in Florida,” according to the indictment. He wired $432,487 to the Florida contractor; building permits estimate that renovations on his Palm Beach Gardens house would cost about $140,000.
The permits show that Manafort hired Sabatello Companies to enlarge the guest house, remodel a master bathroom and put on a new roof.
“They properly paid us, and we paid all our subcontractors,” Carl Sabatello, who believes he’s Vendor J, said, declining to discuss specifics on the job.
He said federal investigators had asked the company for information about Manafort and his renovations. “We provided it and haven’t heard anything else from any government agency,” he said.
— With assistance by Stephanie Baker