Why did Jessica Manafort and her husband take out $14 million in puzzling real estate loans only to default on all of them at the same time? ?

UPDATE: In May 2018 it was reported that Jeffrey Yohai, the former son-in-law of Paul Manafort, cut a plea deal with the Justice Department. The guilty plea agreement is under seal but signals Yohai will cooperate with investigators which could add to the legal pressure Manafort is facing.

UPDATE: On Monday, October 30, 2017, Paul Manafort was officially indicted on charges of tax fraud and money laundering. He surrendered to the F.B.I. and pleaded not guilty to charges that he laundered millions of dollars to overseas shell companies, which the F.B.I. claims he used to buy real estate, antique rugs and luxury goods.

ORIGINAL STORY:

In a series of shady real estate deals, Paul Manafort’s daughter and son-in-law took out over $14 million dollars in home equity loans, only to default on all of them months later, ENTITY has learned.

The defaults happened the same month Manafort resigned from Trump’s campaign, adding yet another piece to the scandalous puzzle that is Paul Manafort.

According to legal docs, obtained by ENTITY, Genesis Capital filed a $14 million lawsuit against Jessica Manafort and her husband Jeffrey Yohai on April 7.

The company claims they provided numerous loans to Yohai and Manafort, all under various LLCs, related to four properties in Los Angeles.

But when you dig a little deeper this lawsuit isn’t just about real estate investments gone wrong. The timing of the loans, combined with Paul Manafort’s history of taking out and then defaulting on millions of dollars worth of home loans himself, means we may be seeing cracks into a much larger financial scheme that involved the entire Manafort clan.

A Timeline Of The Loans

May 2015: Yohai took out a loan for $715,000 under “Mt. Yohai LLC” for a property on Nottingham Way in Los Angeles. Yohai defaulted on the loan in August 2016, the same month Manafort resigned from the Trump campaign. A foreclosure auction was scheduled for December 2016, but Mt. Yohai LLC filed for bankruptcy to stop the sale.

The total amount owed on the loan, as of the filing: $878,191.

June 2015: The same month Donald Trump announced he was running for President, Yohai used another LLC, “Blue Jay Way”, to execute a $4.85 million loan for another Los Angeles property (on Blue Jay Way). Yohai defaulted on the loan the same month as the first property, August 2016. A sale was scheduled for December but once again Yohai’s Blue Jay Way LLC filed for bankruptcy.

According to docs he owes a total of $5,737,689 on the loan.

February 2016: Using a third LLC, “Nottingham LLC”, Yohai took out a $3.7 million loan for another L.A. property. He defaulted on the loan again in August 2016, and Nottingham LLC filed for bankruptcy. However, this time the bankruptcy was dismissed without Yohai’s debt being wiped clean. The home was sold at auction for $4 million, leaving $344,539 of debt, according to docs.

March 2016: The same month Paul Manafort officially joined Trump’s campaign Yohai took out a loan for $5.95 million under a new LLC called “779 Stradella LLC” (again named after the street the house is on). He defaulted on the loan in August 2016 and once again stopped the home from being sold off by filing for bankruptcy.

According to docs he owes a total of $7,124,864 on the deal.

In this deal Jessica Manafort signed a commercial guaranty, known as the Manafort Stradella Guaranty, which means she’s also on the hook for the money.

Genesis Capital is demanding damages in the amount of $14,085,285 from Yohai and the full $7.1 million from Jessica Manafort.

Why Is This So Weird?

In early 2017 two lawyers from New York, Julian Russo and Matthew Termine, discovered that Paul Manafort had a history of taking out and defaulting on home equity loans. They found Manafort took out over $19 million in home equity loans in New York over the past five years using holding companies that were registered to himself and his son-in-law … Jeffrey Yohai.

The question is why? Home equity loans, that is loans borrowed against property you already own, are usually used to increase the value of the property you’re borrowing against. But in Manafort’s case some of the loans seemed to exceed the value of the property itself, which is strange.

Between the type and number of loans being issued it appears they could be used to free up cash.

That said, two other issues stand out in Manafort’s dealings. First, one of his home equity loans for a property in Brooklyn — which he defaulted on in June 2016 — was made by Genesis Capital. The same company that issued the four loans to Yohai over the course of 2015 and 2016. Which begs the question, why keep loaning money to a person or people who keep defaulting?

Second, a bank that issued two mortgage loans to Manafort in January 2017 — one for $5.3 million (which matches the defaulted amount to Genesis) and one for $1.3 million — is run by Steve Calk, a Trump campaign supporter and member of the president’s Economic Advisory Council.

Which makes you wonder, why is Manafort and the rest of his family taking out loan after loan after loan and what role, if any, does the Trump connection play?

“You’ve got lots of LLCs, lots of properties, lots of transfers to Manafort, his wife, and his kids,” said Termine, the lawyer who first looked into Manafort’s loan history, to The Intercept. “It didn’t smell good, and then added together, it really doesn’t.”

And Then There’s The Timing Issue

In a nutshell, the current lawsuit against Jessica Manafort and her husband boils down to this: four properties, four loans, four defaults and four LLCs filing for bankruptcy.

What’s interesting however is all four defaults occurred the same month Paul Manafort resigned from Trump’s campaign: August 2016.

By November 2016 a federal lawsuit was filed against Yohai which accused him “operating a Ponzi scheme” in which he lures prominent figures and celebrities he met through Manafort into shady business deals (like Dustin Hoffman).

“Typically, Yohai promises his investors a quick and large return on their investments. When this promised financial performance fails to materialize and investors express their concern, Yohai simply recruits new investors to newly established LLCs — with the same claims of quick success — and repays his earlier investors with these incoming funds,” states the lawsuit.

It’s unclear if Manafort’s ousting from Trump’s inner circle had any effect on Yohai’s alleged real-estate schemes, but it sure is interesting.

And one last weird tidbit: The company suing Yohai and Jessica Manafort, Genesis Capital — which bills itself as “a private specialty finance company providing bridge loans to professional developers” — has a website that’s full of broken links. Including the link to “apply” for a loan.

Paul Manafort is under active investigation by multiple federal agencies including the CIA and FBI for alleged Russian communications and financial dealings. He’s been accused of taking over $12 million in secret payments from Ukraine, which he has denied.

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