Follow the money: Probable cause Paul Manafort committed a crime

It appears that Special Counsel Robert Mueller is pursuing the lesson of Watergate: “follow the money.”

Remember how Trump campaign chairman Paul Manafort said that he would work for free?

Yeah, that probably didn’t happen. He appears to have been paid in ways that may involve money laundering, possibly through Russian oligarchs.

Back in May, federal investigators subpoenaed records related to a $3.5 million mortgage that former Trump campaign manager Paul Manafort took out on his Hamptons home just after leaving the campaign. Feds Subpoena Records for $3.5M Mystery Mortgage on Manafort’s Home:

On August 19, 2016, Manafort left the Trump campaign amid media reports about his previous work for a pro-Russian political party in Ukraine, including allegations he received millions of dollars in payments.

That same day, Manafort created a holding company called Summerbreeze LLC. Several weeks later, a document called a UCC filed with the state of New York shows that Summerbreeze took out a $3.5 million loan on Manafort’s home in the tony beach enclave of Bridgehampton.

Manafort’s name does not appear on the UCC filing, but Summerbreeze LLC gives his Florida address as a contact, and lists his Bridgehampton home as collateral.

A review of New York state and Suffolk County records shows the loan was made by S C 3, a subsidiary of Spruce Capital, which was co-founded by Joshua Crane, who has partnered with Donald Trump on real estate deals. Spruce is also partially funded by Ukrainian-American real-estate magnate Alexander Rovt, who tried to donate $10,000 to Trump’s presidential campaign on Election Day but had all but the legal maximum of $2,700 returned.

President Donald Trump’s former campaign chairman Paul Manafort also received millions of dollars in loans from businesses tied to Trump soon after he resigned from the campaign last August after a scandal, according to this report in April. Former Trump Campaign Chairman Paul Manafort Got $13 Million In Loans From Trump-Tied Businesses:

Manafort stepped down on August 19 after allegedly receiving $12.7 million in off-the-book payments from Ukraine’s former President Viktor Yanukovych—an ally of Russian President Vladimir Putin. The same day he resigned, The New York Times reports that papers show Manafort created the shell company Summerbreeze L.L.C.

In September, Summerbreeze received a $3.5 million loan from Spruce Capital. The investment firm’s co-founder Joshua Crane helped develop Trump International Hotel & Tower in Honolulu, Hawaii, in 2006. Then, in November, the firm secured a $9.5 million loan from the Federal Savings Bank of Chicago, founded and chaired by Stephen M. Calk, a senior economic adviser to Trump during his campaign. The bank usually specializes in loans to help military veterans buy homes.

Collateral for the Federal Savings Bank loan included a summer home in the Hamptons owned by Manafort and valued at more than $11 million. Since returning to the U.S. after advising the Ukrainian presidential campaigns of Viktor Yanukovych from 2004 to 2010, Manafort has used shell companies to invest millions of dollars in properties in New York, Florida, Virginia, and Los Angeles.

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[T]he former campaign chair’s finances have come under scrutiny as U.S. agents working in the treasury department’s Financial Crimes Enforcement Network began combing over his offshore accounts in Cyprus early this year.

Banking sources told NBC News in late March that some transactions in Manafort-linked accounts led to an internal investigation at a Cypriot bank into potential money laundering. Manafort closed the accounts after questions from bank officials, the sources said.

Manafort stepped down from Trump’s campaign in August 2016 after the Ukrainian government’s National Anti-Corruption Bureau accused him of receiving $12.7 million in off-the-books cash payments from the government of former President Viktor Yanukovych.

The payments were documented in a handwritten ledger they said were kept by Yanukovych who was ousted following protests in 2014. Yanukovych subsequently sought exile in Russia.

In late March, Serhiy Leshchenko, a Ukrainian member of parliament, revealed documentshe said prove Manafort tried to hide payments from Yanukovych and presented a contract showing a $750,000 payment for computers made between Manafort and a shell company registered in Belize. Leshchenko said the payment matched those listed on the ledger.

That wasn’t conclusive evidence that Manafort received any payments listed on the ledger. But on Wednesday, the AP reported it has obtained financial records that confirm at least $1.2 million in payments to Manafort’s consulting firm in the United States that match those on the ledger.

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The AP also revealed in March that Manafort signed a $10 million annual contract with Russian aluminium magnate Oleg Deripaska, a close Putin ally, in 2006. Documents they obtained detailed wire transfers and political strategy memos written by Manafort in 2005 to influence U.S. politics, business and news coverage in favour of Putin.

In leaks about several ongoing investigations at the FBI and other intelligence agencies, Manafort has been named as being under investigation for his ties to Russia. He is alleged to have contacted Russian officials during the 2016 campaign.

The day after Paul Manafort met with staff of the Senate Intelligence Committee on July 26, the FBI conducted predawn raid of former Trump campaign chairman Manafort’s home:

FBI agents raided the home in Alexandria, Va., of President Trump’s former campaign chairman, arriving in the pre-dawn hours late last month and seizing documents and other materials related to the special counsel investigation of Russian meddling in the 2016 election.

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Using a search warrant, agents appeared the day Manafort was scheduled to testify before the Senate Judiciary Committee and a day after he met voluntarily with Senate Intelligence Committee staff members.

The search warrant requested documents related to tax, banking and other matters. People familiar with the search said agents departed the Manafort residence with a trove of material, including binders prepared ahead of Manafort’s congressional testimony.

Pro Tip: A search warrant, as opposed to a subpoena, means that prosecutors went before a federal judge and made the case to the judge that probable cause exists to believe that Manafort has committed a federal crime. The Washington Post’s description of a “pre-dawn raid” needs clarification. A “no-knock” search warrant served in the dead of night is a rarity, and used for known violent and dangerous offenders. I am going to assume that this was the usual “knock and announce” search warrant served after 6:00 a.m. The warrant was made necessary because Manafort was determined to be an uncooperative witness, and prosecutors had a reasonable belief that evidence might be destroyed or altered and needed to be secured. It is interesting timing, though not necessarily related, that this raid came hours after Manafort had met with the Senate Intelligence Committee.

Investigators in the Russia inquiry have previously sought documents with subpoenas, which are less intrusive and confrontational than a search warrant.

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“I think it adds a shock and awe enforcement component to what until now has followed a natural path for a white-collar investigation,” said Jacob Frenkel, a former federal prosecutor. “More so than anything else we’ve seen so far, it really does send a powerful law enforcement message when the search warrant is used. . . . That message is that the special counsel team will use all criminal investigative tools available to advance the investigation as quickly and as comprehensively as possible.”

NOTE: Neither in Watergate, nor in Iran-Contra, nor in the Clinton impeachment has the special counsel (or special prosecutor) executed a search warrant, as opposed to a subpoena for documents. This elevates this investigation to a whole new level.

Manafort has been voluntarily providing documents to congressional committees investigating Russia’s election interference. The search warrant indicates that investigators may have argued to a federal judge that they had reason to think Manafort could not be trusted to turn over all records in response to a grand jury subpoena.

The raid also could have been intended to send a message to Trump’s former campaign chairman that he should not expect gentle treatment or legal courtesies from Mueller’s team members, who already have begun combing through Manafort’s complicated financial past.

The documents seized in the raid include materials Manafort already had provided to Congress, said people familiar with the search, and the significance of what was obtained remained unclear Wednesday evening.

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Sen. Richard Blumenthal (D-Conn.), a member of the Judiciary Committee and a former U.S. attorney, called the search “a significant and even stunning development,” noting that such raids are generally reserved for “the most serious criminal investigations dealing with uncooperative or untrusted potential targets.”

“A federal judge signing this warrant would demand persuasive evidence of probable cause that a serious crime has been committed and that less intrusive and dramatic investigative means would be ineffective,” he said in a statement.

Mueller has increased legal pressure on Manafort, consolidating under his authority unrelated investigations of various aspects of Manafort’s professional and personal life.

Manafort’s allies fear that Mueller hopes to build a case against Manafort unrelated to the 2016 campaign, in hopes that he would provide information against others in Trump’s inner circle in exchange for lessening his legal exposure.

What Mueller is doing is the classsic “Al Capone” prosecution: get him on tax fraud and/or money laundering. In the national security aspect of the investigation, there may be sources and methods that Mueller is required to protect and does not want to expose in a prosecution.

Manafort has provided more than 300 pages of documents to the Senate Judiciary Committee and the Senate and House intelligence committees. The information includes notes Manafort took while attending a June 2016 meeting with Donald Trump Jr. and a Russian lawyer at Trump Tower in June 2016.

Emails show that Trump Jr. accepted the meeting and invited Manafort after he was told that the Russian lawyer would provide damaging information about Democrat Hillary Clinton as part of a Russian government effort to assist his father’s campaign.

The special counsel’s office has subpoenaed records and testimony related to the Trump Tower meeting, people familiar with the investigation said.

Last week, the Trump campaign turned over more than 20,000 pages of documents to congressional investigators examining Russian efforts to influence the election. Manafort and Trump Jr. separately turned over hundreds of documents requested by congressional committees.

Manafort had been subpoenaed to appear before the Senate Judiciary Committee on July 26, the day of the raid. Ultimately, however, the subpoena was withdrawn, and he did not testify. The committee chairman, Sen. Charles E. Grassley (R-Iowa), and Sen. Dianne Feinstein (Calif.), the panel’s ranking Democrat, said in a joint statement that they had dropped the demand after Manafort began producing documents.

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In June, Manafort filed Foreign Agents Registration Act paperwork with the Justice Department providing new details about his work in Ukraine. The documents showed that his firm was paid $17.1 million for its work in Ukraine over two years before expenses.

Manafort’s retroactive filing about his Ukraine work came as investigators scrutinized his foreign lobbying and began to aggressively probe his financial past.

During the spring, prosecutors issued subpoenas seeking information about his income sources and financial transactions. One subpoena reviewed by The Washington Post sought information “concerning contracts for work . . . communication or other records of correspondence” related to about two dozen people and businesses that appeared to be connected to Manafort or his wife, including some who worked for Manafort while he was a political consultant in Ukraine.

The subpoena was issued by a federal grand jury in the Eastern District of Virginia, where Manafort’s consulting business has been located. Also named in the subpoena were various corporations formed in Cyprus. Manafort appeared to have routed money he earned in Ukraine and in business dealings with a Russian business magnate through Cyprus-based bank accounts.

After Mueller was appointed, his team took over the Manafort investigation that was underway in Virginia.

State authorities in New York also have issued subpoenas seeking information about Manafort’s real estate loans.

UPDATE: Bloomberg News reports today With Bank Subpoenas, Mueller Turns Up the Heat on Manafort:

Mueller’s team of investigators has sent subpoenas in recent weeks from a Washington grand jury to global banks for account information and records of transactions involving Manafort and some of his companies, as well as those of a long-time business partner, Rick Gates, according to people familiar with the matter.

The special counsel has also reached out to other business associates, including Manafort’s son-in-law and a Ukrainian oligarch, according to one of the people. Those efforts were characterized as an apparent attempt to gain information that could be used to squeeze Manafort, or force him to be more helpful to prosecutors..

As for the son-in-law aspect of the investigation, POLITICO reports, Feds sought cooperation from Manafort’s son-in-law:

Federal investigators sought cooperation from Paul Manafort’s son-in-law in an effort to increase pressure on President Donald Trump’s former campaign chairman, according to three people familiar with the probe.

Investigators approached Jeffrey Yohai, who has partnered in business deals with Manafort, earlier this summer, setting off “real waves” in Manafort’s orbit, one of these people said. Another of these people said investigators are trying to get “into Manafort’s head.”

Manafort, who is a focus of the broad federal and congressional investigations into Russian meddling in the 2016 presidential campaign, is also under investigation for his business and real estate transactions, including some that involve Yohai.

That probe has accelerated in recent weeks, according to one of the people familiar with it.

It is unclear if investigators have secured cooperation from Yohai, who also hasn’t been accused of wrongdoing. A lawyer for Yohai didn’t respond to a request for comment.

A Manafort spokesman declined to comment. A spokesman for special counsel Robert Mueller also declined to comment.

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People close to Manafort reiterated Wednesday that he has no plans to become a cooperating witness.

That may change after Donald Trump turned to one of his media sycophants, the National Enquirer, to attack Paul Manafort’s character and credibility. Trump Advisor Sex Scandal — Paul Manafort’s Sick Affair. Funny how the National Enquirer fails to mention that Donald Trump has done the same thing many times in his life.