Hiding foreign bank accounts

Furthermore, in each of MANAFORT’s tax filings for 2008 through 2014, MANAFORT represented falsely that he did not have authority over any foreign bank accounts. MANAFORT and GATES had repeatedly and falsely represented in writing to MANAFORT’s tax preparer that MANAFORT had no authority over foreign bank accounts, knowing that such false representations would result in false MANAFORT tax filings. For instance, on October 4, 2011, MANAFORT’S tax preparer asked MANAFORT in writing: “At any time during 2010, did you [or your wife or children] have an interest in or a signature or other authority over a financial account in a foreign country, such as a bank account, securities account or other financial account?” On the same day, MANAFORT falsely responded “NO.” MANAFORT responded the same way as recently as October 3, 2016, When MANAFORT’S tax preparer again emailed the question in connection with the preparation of MANAFORT’s tax returns: “Foreign bank accounts etc.?” MANAFORT responded on or about the same day: “NONE.”

Americans who hold assets in offshore bank accounts are required to disclose information about those holdings to the federal government, including for tax purposes. The indictment alleges that Mr. Manafort and Mr. Gates violated those laws.

Defrauding lenders

After MANAFORT used his offshore accounts to purchase real estate in the United States, he took out mortgages on the properties, thereby allowing MANAFORT to have the benefits of liquid income without paying taxes on it. Further, MANAFORT defrauded the banks that loaned him the money so that he could withdraw more money at a cheaper rate than he otherwise would have been permitted.

The indictment shows how the investigators’ deep scrutiny of Mr. Manafort’s financial dealings helped them uncover additional alleged offenses that resulted in charges. For example, Mr. Manafort “used his hidden overseas wealth to enjoy a lavish lifestyle in the United States, without paying taxes on that income,” according to the indictment, by having his overseas entities buy real estate and then taking out mortgages on those properties, freeing up cash.

The indictment details several such transactions in which Mr. Manafort is accused of falsely telling the bank he was either living in the properties or was using the borrowed funds for construction, thereby gaining access to a lower interest rate.

Conspiracy against the United States

From in or about and between 2006 and 2017, both dates being approximate and inclusive, in the District of Columbia and elsewhere, the defendants PAUL J. MANAFORT JR., and RICHARD W. GATES III, together with others, knowingly and intentionally conspired to defraud the United States by impeding, impairing, obstructing, and defeating the lawful governmental functions of a government agency, namely the Department of Justice and the Department of the Treasury, and to commit offenses against the United States, to wit, the violations of law charged in Counts Three through Six and Ten through Twelve.

The first charge against Mr. Manafort and Mr. Gates is conspiracy, a powerful tool used by prosecutors. Two people are guilty of the crime of conspiracy if they agreed to commit a crime and took any step toward that goal. Conspiracy charges also permit prosecutors to hold each defendant responsible for the actions of the others within a plot. Here is a primer on how conspiracy charges may fit into the Trump-Russia probe.

An unusual basis for money laundering charges

(a) transport, transmit, and transfer monetary instruments and funds from places outside the United States to and through places in the United States and from places in the United States to and through places outside the United States, with the intent to promote the carrying on of specified unlawful activity, to wit: a felony Violation of the FARA, in Violation of Title 22, United States Code, Sections 612 and 618 (the “Specified Unlawful Activity”), contrary to Title 18, United States Code, Section 1956(a)(2)(A); and (b) conduct financial transactions, affecting interstate and foreign commerce, knowing that the property involved in the financial transactions would represent the proceeds of some form of unlawful activity, and the transactions in fact would involve the proceeds of Specified Unlawful Activity, knowing that such financial transactions were designed in whole and in part (i) to engage in conduct constituting a Violation of sections 7201 and 7206 of the Internal Revenue Code of 1986, and (ii) to conceal and disguise the nature, location, source, ownership, and control of the proceeds of the Specified Unlawful Activity, contrary to Title 18, United States Code, Section 19S6(a)(1)(A)(ii) and l956(a)(1)(B)(i).

Money laundering charges require that the financial transactions involved be designed to conceal that funds came from an underlying unlawful activity. Typically, such charges are pegged to a crime like drug trafficking. Here, prosecutors say, the underlying activity is instead the failure by Mr. Manafort and Mr. Gates to register as a foreign agent while conducting lobbying activities for Ukraine that were otherwise lawful in and of themselves. That is an aggressive move by Mr. Mueller’s team.

Mueller is going after Manafort’s assets

52. Pursuant to Fed. R. Crim, P. 32.2, notice is hereby given to the defendants that the United States will seek forfeiture as part of any sentence in accordance with Title 18, United States Code, Sections 981(a)(1)(C) and 982(a)(1) and(a)(2), and Title 28, United States Code, Section 2461(c), in the event of the defendants’ convictions under Count Two of this Indictment.

As part of the pressure Mr. Mueller and his team are putting on Mr. Manafort, they are signaling in this indictment that if he is convicted of various charges, the government will seek to seize various properties and a life insurance policy linked to those charges — or any other assets he may have, if those are no longer available. This gives Mr. Manafort an additional incentive to cooperate as part of a plea deal that could allow his family to keep some of those assets.

Where will Mueller go next?