Paul Manafort’s efforts to make sure his wife could continue living in the couple’s Palm Beach Gardens home should he go to prison fizzled after special counsel Robert Mueller III filed court papers last week asking a judge to throw out the deal because Manafort lied.

The special counsel in the Russia investigation in November accused Manafort, President Donald Trump’s former campaign chairman, of violating his plea agreement by repeatedly lying to federal investigators, according to court records filed by the special counsel’s office last week. One of Manafort's lawyers is also suspected of briefing Trump’s lawyers on his client’s discussions with federal investigators, according to the New York Times.

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At a court hearing in September, Manafort pleaded guilty to years of financial crimes intended to hide his money from the IRS. And he promised to tell the government about “his participation in and knowledge of all criminal activities," including his work on the Trump campaign as well as his Ukrainian political work.

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Also in the plea deal, Manafort agreed to forfeit his $22 million real estate portfolio. The 5,231-square-foot home in BallenIsles — legally the couple’s homestead — was the only property in Manafort’s property holdings that prosecutors had agreed not to seize.

With that promise, Manafort went a step further to protect his wife’s interest and took his name off the deed on Oct. 30 — leaving her the sole owner of the homesteaded residence.

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But that move and the homestead exemption now may not be enough to keep prosecutors from seizing the home, experts say. Although Florida has some of the strongest safeguards for homeowners, property — including those with homesteads — can be seized if the government can prove it was purchased with the proceeds of a crime.

"If the government can show the property was purchased from illegal activity, then the government can go against the property," said attorney Frank Rubino, a Miami, criminal defense lawyer who specializes in federal white-collar cases. "The homestead (exemption) is not protection."

Ruth Madoff, wife of Bernie Madoff, faced a similar predicament in 2009 when federal prosecutors went after the couple's assets to compensate victims of her husband's $65 billion Ponzi scheme. The same year, Mrs. Madoff, the sole owner of the couple's 8,800-square-foot home in Palm Beach, put a homestead exemption on the property.

The Manaforts paid $1.5 million for their home in BallenIsles in 2007. The same year Manafort’s consulting firm received a $455,000 wire transfer from the party of Ukrainian Prime Minister Viktor Yanukovych. Manafort, who failed to register to represent a foreign government, had been hired to improve the image of Vladimir Putin-backed Yanukovych.

Proving Manafort used illegal money to purchase the home could be difficult. It could be easier to prove that Manafort used money he laundered through overseas shell companies and banks to pay for extensive renovations to the home.

A 31-page indictment against Manafort filed in 2017 accused Manafort of using money he laundered through banks in Cyprus, the Grenadines and United Kingdom to pay for his lavish lifestyle, including unnamed vendors in Florida. At about the time he withdrew $432,487 from a bank in Cyprus, the couple paid a Palm Beach Gardens contractor to redesign their master bathroom and build an addition to a guest house, according to court records.

Even if dirty money was used to purchase or renovate the home, there is still the question of whether Mrs. Manafort knew. If she did not, the government could still attempt to seize Manafort's half-interest in the home, Rubino said. But they would not be able to collect that interest as long as Mrs. Manafort owns the home.

What are the chances of that?

"I think in the eyes of the court she would be an innocent third party," said John Tierney, Palm Beach Garden criminal defense attorney who specializes in federal court cases.

Either way, the status of the Palm Beach Gardens home was secure — until Manafort angered crossed the Mueller team by allegedly lying to investigators. Now, it remains a question mark until a judge decides whether to vacate the plea deal.



Unlike the misery Madoff inflicted on the more than 2,000 victims who sought reimbursement from the sale of Madoff's assets, in the Manafort case, the IRS and federal government are the victims, Tierney said.

"There was a time when the federal government was more aggressive about forfeitures," Tierney said. "Even if they could prove the money was tainted, once they took all the other properties ... I don't believe they will ever go after that even if they could."

While the government may spare Manafort's home, he likely won't be so lucky when it comes to his sentence, Tierney added. Mueller's team has until Friday to disclose how they say Manafort lied.

"The worst thing you can do is to double-cross them," Tierney said about plea deals that hinge on cooperating with prosecutors. "You not only don't get the reduction, you can get charged with obstruction and you get an enhancement."

cstapleton@pbpost.com

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