Mueller Squeezes Manafort and Gates With New Tax ChargesBy , , and
U.S. adds fraud accusations to laundering and lobbying counts
Actions seen strengthening case as U.S. moves toward trial
Former Trump campaign chairman Paul Manafort and his onetime deputy, Rick Gates, were indicted on tax and bank fraud charges as U.S. Special Counsel Robert Mueller mounted a fresh attack to strengthen his legal pressure against the men.
Mueller used a new 32-count indictment in Alexandria, Virginia, to raise the legal stakes against the duo, who were initially indicted on Oct. 27 in Washington on charges of laundering millions of dollars and failing to register as foreign agents for their political consulting work over a decade in Ukraine.
The second indictment complicates the legal defense for both men and appears to signal that plea negotiations have been fruitless. Gates had been weighing a guilty plea, according to several reports. Mueller, who is investigating Russian interference in the 2016 election, has charged a total of 19 people and picked up the tempo of his public actions in recent days.
“Manafort and Gates generated tens of millions of dollars in income as a result of their Ukraine work,” the new indictment said. “From approximately 2006 through the present, Manafort and Gates engaged in a scheme to hide income from United States authorities, while enjoying the use of the money.”
The men are accused of filing false tax returns in each year from 2010 to 2014, and of conspiring to defraud three banks of more than $22 million through loans secured by Manafort’s properties. At one bank, a conspirator helped in the fraud, the indictment said. It also charged that as their political consulting income dwindled in Ukraine in 2014 and 2015, Manafort and Gates defrauded banks to allow Manafort “to have the benefits of liquid income without paying taxes on it.”
The men lied to the banks about the income and debt of Manafort’s firm, while falsifying the stated use of the property and loan proceeds, prosecutors said.
One lender, identified as Bank B, had a conspirator who helped Manafort when he applied for a $5.5 million loan secured by a Brooklyn brownstone in March 2016 -- around the time he joined the Trump campaign in an unpaid capacity, according to the indictment. When a phony profit-and-loss statement was submitted, the conspirator replied: “Looks Dr’d. Can’t someone just do a clean excel doc and pdf to me??” The bank received a new submission.
It’s not clear that Manafort received the $5.5 million loan. But the description in the indictment of another, $3.4 million loan from Lender B matches one that Manafort took from Rhode Island-based Citizens Bank, according to public records. Citizens Bank declined to comment through a spokesman.
The latest court filing increases to $30 million the amount of money that Manafort is accused of laundering, compared with $18 million in the original indictment. The amount that Gates is accused of hiding remained at $3 million.
The two were initially charged in an Oct. 27 indictment with failing to register as agents in the U.S. for political consulting they did for Ukraine and pro-Russian leaders. They were also accused of conspiring to launder millions of dollars, hiding offshore bank accounts, and failing to register under the Foreign Agents Registration Act, or FARA. Manafort laundered money from overseas to buy houses, cars, clothes, antiques and landscaping services, the U.S. said.
Manafort and Gates pleaded not guilty and were set to stand trial sometime this year, probably September or October, according to the judge. The new charges could upend that schedule.
“Paul Manafort is innocent of the allegations set out in the newly filed indictments and he is confident that he will be acquitted of all charges,” Jason Maloni, a spokesman for Manafort, said in an emailed statement. “The new allegations against Mr. Manafort, once again, have nothing to do with Russia and 2016 election interference/collusion. Mr. Manafort is confident that he will be acquitted and violations of his constitutional rights will be remedied.”
On Thursday, Gates hired Tom Green, a longtime Washington criminal defense lawyer whose resume dates to the Nixon-era Watergate scandal. Green has represented high-profile politicians and helped negotiate a plea deal for disgraced former U.S. House Speaker Dennis Hastert. Three of Gates’s lawyers exited the case after Green replaced them.
In recent weeks, Mueller has ratcheted up his investigation, charging 13 Russians on Feb. 16 with conducting a social-media disinformation campaign to help Trump’s chances in the 2016 presidential election. Four days later, Mueller’s office announced a guilty plea from a London-based lawyer who worked with Manafort and Gates on a report that largely supported the 2011 conviction of former Prime Minister Yulia Tymoshenko of Ukraine, despite widespread criticism that it was politically motivated.
Manafort had worked as a longtime adviser to Tymoshenko’s rival and successor, then Prime Minister Viktor Yanukovych.
The new indictment against Manafort and Gates is the first in the Mueller investigation to accuse anyone of tax charges.
Prosecutors filed the new tax case in Virginia because they lacked jurisdiction to do so in Washington, and one of the men failed to give them permission, according to a filing by Mueller. Had both men given permission, they “would have faced a single indictment in one district, and not two indictments in adjacent districts,” according to the filing.
The men hid overseas assets from their tax preparers and failed to file Reports of Foreign Bank and Financial Accounts, prosecutors allege. Even after news reports surfaced about millions of dollars paid for his work in Ukraine, Manafort denied in October 2016 that he had foreign accounts, the U.S. said.
A year later, after Manafort’s home had been raided by FBI agents, the tax preparer for Gates asked if he had any foreign accounts in 2013 and 2014. According to the indictment, Gates, too, said no.
The two men also doctored a loan application to a bank, converting a $600,000 loss on their business in 2016 to a $3.5 million gain. When the bank questioned Manafort about an unpaid $300,000 American Express bill, Manafort told them he’d lent the card to Gates, who had incurred the charges and not repaid them.
The criminal case is U.S. v. Manafort, 17-cr-201, U.S. District Court, District of Columbia (Washington). Manafort’s civil suit is Manafort v. U.S. Department of Justice, 18-cv-11, U.S. District Court, District of Columbia (Washington).
— With assistance by Paul Cox