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Mueller’s indictment of Manafort was written to terrify K Street

Special Counsel Robert Mueller's indictment includes a staggering amount of detail about how Manafort and Gates laundered tens of millions of dollars to cover up their work for Ukraine over the course of nearly a decade.

by Christina Sterbenz
Oct 31 2017, 11:45am

Special Counsel Robert Mueller has maintained a low profile ever since he took over the FBI’s investigation into whether the Trump campaign paired up with the Russian government to win the U.S. election.

That changed Monday when he personally signed his probe’s first public charges against Trump’s former campaign chairman Paul Manafort and his longtime political lobbying pal, Rick Gates.

The 31-page indictment, filed on Oct. 27 but unsealed on Monday, includes a staggering amount of detail about how Manafort and Gates laundered tens of millions of dollars to cover up their work for Ukraine over the course of nearly a decade.

“The most interesting thing about it is the level of detail it contains,” said William Fick, a founding partner at the white-collar crime boutique defense firm Fick and Marx, told VICE News. “They don’t have to do that. And the fact that they are doing that could be a way to send a message to the public and others within the scope of the investigation.”

Within hours of the indictment becoming public, both Manafort and Gates pleaded not guilty to all 12 counts, including conspiring against the U.S. and to launder money, acting as unregistered foreign agents of Ukraine, and making multiple false and misleading statements. Manafort’s lawyer scoffed at the charges, calling the money laundering allegation “ridiculous.” Gates’ public defender couldn’t be reached for comment.

Foreign agents

The indictment charges both Manafort and Gates for “knowingly and willfully” lobbying on behalf of Ukraine — more specifically, the Party of Regions, the pro-Russian political base of Ukraine’s ousted president Viktor Yanukovych — for nearly a decade without telling the U.S. government. That puts them in criminal violation of the Foreign Agents Registration Act (FARA), which requires that anyone working politically on behalf of a foreign country register with the Department of Justice.

As Mueller is well aware, FARA is a notoriously toothless law and has only been successfully prosecuted once since reforms crippled it in 1966 by allowing lobbyists to register after the fact.

“This is sort of like a FARA lawyer’s dream and nightmare.”

To bring money laundering charges in the first place, prosecutors must demonstrate an illegal motive, like drug trafficking. Mueller’s indictment, however, directly links Manafort and Gates’ alleged schemes to their desire to conceal their work as foreign agents. Experts who spoke to VICE News had never seen money laundering linked to FARA violations before.

READ: Here’s why Ukraine paid Manafort insane amounts of money

“This is sort of like a FARA lawyer’s dream and nightmare,” said Joshua Ian Rosenstein, partner at Sandler Reiff, a Washington, D.C.-based political law firm specializing in the regulation of advocacy. “Even though criminal prosecutions are extraordinary, I have never seen an indictment that relies so heavily on FARA.”

The indictment also brings another charge related to FARA: making five false and misleading statements to the DOJ, each of which could carry a sentence of up to 5 years in prison. All in all, the two FARA charges alone could put Manafort and Gates behind bars for as long as 30 years, if they’re convicted.

FARA also requires disclosure whether or not the country paid for the work. But Manafort and Gates received tens of millions of dollars from at least 2005 to 2016. To conceal the funds from the U.S. government, they funneled millions through offshore accounts, according to the indictment. Manafort also allegedly laundered millions more by purchasing real estate and luxury goods, like $1 million in rugs.

“The amount of money is sort of quite extraordinary,” Fick said.

Those financial crimes likely acted as a trail of breadcrumbs for federal investigators.

“Disaster for the defendants”

While the DOJ brings charges in these cases, the FBI often lends a hand in gathering intelligence. Agents start with the allegations that already exist and work backward, according to Bob Anderson, who served as executive assistant director of the FBI’s counterintelligence unit until December 2015. For example, Manafort’s questionable ties to Russia forced him to resign from the Trump campaign back in August 2016.

“Probably one of the first things you’ll start bumping into is the unregistered agent charges. And then from there you’ll start following all the money,” Anderson said. “That’s usually when it becomes just a complete disaster for the defendants.”

Mueller also didn’t need to include the level of detail surrounding the alleged financial crimes, like detailing over $12 million in wire transfers, including dates, account names, and countries of origin. Counts of money laundering or tax fraud, for example, often mirror the language of the statute and don’t reveal much detail, which comes out in court anyway.

“That level of detail is somewhat unusual,” Fick said. “It’s a way for the prosecution to show they have a substantial amount of evidence.”

Political theater

While the money laundering and conspiracy charges could stand on their own without the FARA violations, tying them together adds a political element to the case. Mueller gets to say: “Look these people are bad. Not only are they trying to rip off the U.S. government and not pay their taxes — which people sometimes understand — but they were conspiring with a foreign government, especially Russia,” said Ron Oleynik, head of the international trade practice at law giant Holland & Knight.

But foreign money — or influence, at least — makes its way into the U.S. political structure on a regular basis, sometimes regardless of political lines. Almost a month after he resigned from Trump’s Cabinet in March, former National Security Adviser Mike Flynn disclosed over half a million dollars of work he did before Election Day as a foreign agent of Turkey. Earlier this year, former Democratic senator from South Dakota turned lobbyist Tom Daschle also registered as a foreign agent of Turkey.

The Manafort and Gates indictment is sure to rattle K Street, which has become comfortable with the kind of lucrative foreign lobbying the two engaged in. Tony Podesta resigned from the Podesta Group — another lobbying firm that failed to disclose the extent of its work for Ukraine — on Monday in the wake of these charges.

“This is a big deal, not only because of the breadth of the charges, but because they’re all intrinsically tied to unreported work for a foreign principal,” Rosenstein said. “It’s really going to be a wakeup call to the advocacy community, who have been putting FARA issues on the back burner for a long time.”

READ: Paul Manafort’s neighbors are mad about his AirBNB

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