Yulia Tymoshenko warned us about Paul Manafort years ago.
In a civil complaint, the former Ukrainian prime minister accused Manafort—who would go on to chair Donald Trump's 2016 presidential campaign—of conspiring with Ukrainian and Russian partners to launder dirty money through "a labyrinth of shell companies" in the U.S.
These companies, it claims, "were solely used for purposes of furthering the unlawful objectives" of people like Dmytro Firtash, a Ukrainian businessman indicted in 2009 for U.S. racketeering and money laundering, and Russian crime boss Semyon Mogilevich, who made the FBI's "Most Wanted" list for suspected fraud, racketeering, and money laundering.
Documents filed in the civil action reveal many similar allegations to those Manafort and Gates are now facing at the hands of U.S. Department of Justice special prosecutor Robert Mueller.
On Monday, a federal grand jury indicted the former Trump-campaign chairman and Rick Gates, a Manafort business associate, for conspiracy to launder money, making false statements, failing to register as an agent of foreign principal, and failing to file reports on foreign bank accounts. (For a detailed breakdown of the charges, see Popehat.) They pleaded not guilty Monday afternoon.
The DOJ indictment accuses Manafort and Gates of "extensive lobbying" in the U.S. on behalf of Ukrainian interests and "in connection with the roll out of a report concerning the Tymoshenko trial commissioned by the Government of Ukraine."
Manafort and Gates paid $4 million to law firm Skadden Arps to monitor and report on the Tymoshenko proceedings, ostensibly on behalf of an "independent" European Centre for a Modern Ukraine (which they had helped set up), the indictment says. And it claims that "between at least 2006 and 2015, Manafort and Gates acted as unregistered agents of the Government of Ukraine, the Party of Regions (a Ukrainian political party whose leader Victor Yanukovych was President from 2010 to 2014), Yanukovych, and the Opposition Bloc (a successor to the Party of Regions that formed in 2014 when Yanukovych fled to Russia), generating "tens of millions of dollars in income as a result" and "launder[ing] the money through scores of United States and foreign corporations, partnerships, and bank accounts."
The work was done through Davis Manafort Partners (DMP), which Manafort co-founded in 2005, and DMP International (DMI), founded in Manafort and his wife Kathleen in 2011. Rick Gates worked for both entities Through these agencies, Manafort and Gates helped propel Viktor Yanukovych to the Ukrainian presidency and oversaw a "watchdog" report on the prosecution of his opposition.
Tymoshenko, who served as prime minster from 2007 through 2010, was not just an enemy of Tanukovych's but also of Firtash and Mogilevich. In an agreement with Russia, she helped cut Firtash's company out as a profitable middleman in natural-gas deals between the two countries.
Tymoshenko's suit against Firtash and unnamed Yanukovych officials was first filed in U.S. court in April 2011, when Yanukovych was still president. Later amended complaints were eventually filed—the second in November 2014, after Yanukovych had been forced to flee Ukraine amid protests over his administration's corruption and thuggery—and also named Manafort and his partners at CMZ Ventures.
The suit accused Manafort, Firtash, and the other defendants of financing politically motivated and "unlawful investigations and prosecutions of Tymoshenko" and her associates through secret payments to Yanukovich and others in his administration or control. Their money-laundering and shell-company scheme "was the proximate cause of Tymoshenko's damages, since it provided the necessary funds to make the unlawful payments to the Ukraine prosecutors and other corrupt administration officials," the complaint alleges.
Documents show that in December 2008, Manafort met with Firtash in the Ukraine, where Firtash agreed to an initial capital investment of $100 million in a global fund managed—for an initial fee of $1.5 million—by CMZ Ventures. An email sent by Gates in January 2009 summarizes the meeting, noting that Firtash's company "is still totally on board and a wire will be forthcoming either the end of this week or next week as a partial payment on the 1.5 [million]."
CMZ Ventures was jointly controlled by Manafort, Zackson, and Arthur and Karen Cohen. The suit claims this crew "defraud[ed] innocent third party real estate owners, investors and businesses… through sham real estate development and sales proposals that lured said third parties into thinking that defendants were making legitimate investments."
CMZ expressed interest in and made bids on flashy New York development projects like the Drake Hotel and St. Johns Terminal. But none of these deals went through—and they were never supposed to, claims Tymoshenko. The bids were merely a ploy to confer legitimacy on CMZ Ventures and attract more investors, whose money could be funneled into one of myriad U.S. and Panamanian accounts.
Former CMZ employees filed a New York labor-practices complaint against the company in 2009, accusing leaders of failing to pay them, not withholding payroll taxes or keeping proper records, not reimbursing them for travel costs, and "frequent creation of new Limited Liability Companies which serve as shell companies."
Scott Snizek, who would eventually join Tymoshenko's lawsuit, even sent Sens. Charles E. Schumer (D-N.Y.) and Kirsten Gillibrand (D-N.Y.) a letter begging them to look into "corporate wrongdoings in our own backyard" committed by Manafort and company, whom he described as figures "well-known and falsely respected by the public." His warning went unheeded.
And, in September 2015, Tymoshenko's suit was dismissed by a U.S. District Judge for lack of jurisdiction.
But in that suit lie the seeds of the current DOJ complaint against Manafort. The conspiracy Tymoshenko alleged may be worth revisiting.
Like the DOJ indictment, Tymoshenko's suit raised questions about law firm Skadden Arms and one of its partners, Gregory B. Craig, former White House counsel to Barack Obama. Documents seized from a former Yunukovych prosecutor's home included an August 2012 email from Craig to Manafort about the report, and an early draft of the Skadden report that had been annotated by Ukrainian government officials.
Tymoshenko theorized that Manafort and Gates had been commissioned to steer the investigation "away from certain sensitive areas (such as the massive, politically-motivated violations of human rights and suppression of political dissent) and towards less dangerous subjects (relatively minor procedural irregularities in the Tymoshenko investigations and prosecutions)."
Emails included Tymoshenko's case also show Gates and Manafort doing business with Russian oligarch Oleg Deripaska, who was denied entry to the U.S. in 2006 because of his alleged ties to organized Russian crime. The meeting between Deripaska and Manafort "is significant in that it confirms that Manafort had direct contacts with high-level Russian figures who were… under investigation by the FBI and [DOJ] for alleged money laundering and other criminal activities," it notes.
And according to Tymoshenko and co-defendants, there's no way Manafort didn't know what he was doing. As "a key advisor to former-President Yanukovych and other Ukraine political figures since 2003, he knew exactly how Firtash and his affiliated companies and co-conspirators were able to skim billions of dollars from the natural gas deals between Russia and Ukraine. He also knew that the monies were used to acquire ownership and control of various U.S.-based companies in furtherance of" racketeering, their suit states.
In doing so, "Manafort gave Firtash and his European-based co-conspirators the opportunity to participate with the U.S.-based defendants in a new Racketeering Enterprise focused on corporate acquisitions, money laundering and other racketeering activities in the United States, where it continues to operate," said the amended complaint in November 2014.
If only we had taken it seriously then.
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