He's been busy...
Robert Mueller’s new indictment of Paul Manafort and Rick Gates, explained
The pair are accused of a dizzying array of financial crimes — which puts even more pressure on them to flip.
By Andrew Prokopandrew@vox.com Updated Feb 22, 2018, 9:03pm EST
Special counsel Robert Mueller is turning up the heat on Paul Manafort and Rick Gates even higher.
On Thursday, a Virginia grand jury indicted Manafort and Gates on a combined 32 counts, alleging a dizzying array of tax, financial, and bank fraud crimes, some of which took place as recently as last year. Mueller alleges that Manafort laundered more than $30 million with Gates’s help.
These new charges will be considered in a separate venue from the combined 12 counts of conspiracy, money laundering, financial, and false statements charges Mueller filed against the two men through a Washington, DC, grand jury last October.
Now, like the first set of charges against the pair, the new charges don’t have anything to do with the topic of Russian interference with the 2016 campaign, which is Mueller’s central concern.
But the special counsel’s goal is likely to increase the pressure on one or both of them to flip and cooperate with the Russian interference probe, because the indictment comes after weeks of reported discussions between Gates and Mueller’s team about a possible plea deal — discussions that, it seems, have not yet ended in an agreement, despite reports one was imminent. Even early Thursday evening, there were conflicting reports about just what was going on with Gates or which lawyer even represents him at this point, and concrete answers on that front remain elusive.
The bigger picture from these new charges, though, is that Manafort and Gates are now in even more trouble and are contemplating a far longer potential sentence should they be convicted. And that could drive one or both of them to flip, should they have information incriminating President Trump or his team that Mueller would want.
What Mueller’s new indictment against Manafort and Gates alleges: the big picture
The new charges refer to a “scheme” from Manafort and Gates that had two separate parts. Mueller alleges:
Between about 2006 and 2015 — the “first part of the scheme,” Mueller writes — Manafort and Gates generated tens of millions of dollars from their work for Ukrainian politicians and Ukraine’s government and tried to hide it from US authorities. They did so by saying the money came from “loans” from offshore corporate entities they controlled, and Manafort used his offshore accounts to buy real estate.
But between about 2015 and at least January 2017, “the Ukraine income dwindled” because of the downfall of the country’s president. So during that period, which Mueller calls “the second part of the scheme,” Manafort and Gates “fraudulently secured more than twenty million dollars in loans,” the indictment alleges. They used the real estate Manafort had purchased with his offshore funds as collateral and lied about their company’s income and their existing debt to lenders.
Overall, the indictment alleges that Manafort, with Gates’s “assistance,” laundered $30 million and concealed it from the US government, while Gates himself obtained more than $3 million, which he also concealed.
The basics of what Mueller dubs the “first part of the scheme” were mostly known already from last fall’s indictment. What’s added here are several charges specifically related to taxes. These may be coming later because, per an earlier report from the Daily Beast’s Betsy Woodruff, there is a “time-consuming” process for getting those charges approved by the Justice Department’s Tax Division.
The new charges include crimes allegedly committed much more recently
However, the allegations said to be the “second part of the scheme” are new. Mueller alleges that in the year before and even during the presidential campaign, Manafort used misrepresentations, false statements, and doctored documents to repeatedly get multimillion-dollar loans from financial institutions.
Mueller alleges, among other things:
That in October 2016, Manafort and Gates altered a document to claim their company would make $3.5 million, when it was in fact set to lose $600,000, and that they sent that doctored document to a lender
That in March 2016, Manafort and Gates gave a document to a different lender overstating their income by more than $2 million — and worked with a “conspirator” working at the lending company to get an approval
That, also in March 2016, Manafort and Gates butted heads with their bookkeeper, who refused to allow them to claim $2.4 million in income they hadn’t received — leading Gates to falsify the document himself and submit it to yet another lender
That in 2016, Manafort falsely claimed a condo he was using as a rental property as a second home, and wrote in an email that he was doing so “in order to have the maximum benefit,” and tried to falsely convince a bank appraiser that his son-in-law lived there
And that Manafort falsely told a lender that $300,000 he had in credit card debt had in fact been incurred because he “lent his credit card to a friend” who would soon pay him back — that friend being Gates
Overall, the indictment paints a picture of two men desperate for millions in loans — apparently to prevent Manafort’s financial house of cards from collapsing once the Ukraine money stopped coming in — and unscrupulous about how they’d get them.
As to why the new charges were filed in Virginia — rather than in DC along with the first set of charges — Mueller writes that he concluded that, based on the evidence he has, “venue for these charges does not exist in the District of Columbia” (apparently because neither man actually lived in the city). He adds that he could only have brought the charges in DC “if the defendants were willing to waive venue,” but that one defendant (Manafort) refused to do so, “as is his right.”
Manafort and Gates have not yet entered their plea for the new charges. They pleaded not guilty to all the charges filed last fall. But the big question, of course, is whether they’ll continue to hold firm going forward.
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