Paul Manafort is standing trial on an 18-count indictment in Virginia, which will be referred to as the “Virginia trial.” This is a separate case from his September trial in Washington, D.C., which will be referred to as the “D.C. trial,” to help keep the facts clear going forward. The D.C. trial is the same type of case as the Virginia trial but was filed in a different jurisdiction than the charges he faces in Virginia due to some laws requiring trials being held where a crime was alleged to have taken place. The Virginia trial, which has just kicked off, has nothing to do with anything directly related to Donald Trump. However, it is going to be pivotal to special counsel Robert S. Mueller III’s investigation into Trump and the Russian election meddling case.
To understand the case at hand, it is important to understand who Manafort is and how he found himself in such a legally actionable position. The Virginia case is about financial crimes related to Manafort’s work as a lobbyist and adviser abroad. Manafort, who began working on political campaigns in 1976 for Gerald Ford, has a long history in RNC politics. He also worked on Ronald Reagan’s campaigns with Roger Stone, which is when he became a player in beltway politics. He and Roger Stone formed their own consulting, lobbying, and PR firm after their Reagan success. The meat and potatoes of their income was derived from work abroad, often for oppressive and dictatorial regimes. The pair did still maintain a presence in U.S. politics, notably working the 1996 presidential campaign for the RNC.
Manafort and Stone worked for people that most of their colleagues wouldn’t work with, which is in part why they could charge exorbitant fees for their services. Their client roster included but was not limited to Jonas Savimbi of Angola and Ferdinand Marcos of the Philippines. While the money was good, working for leaders of that nature is generally not a long-term path to walk. Governments are overthrown, NATO gets involved, or assassinations happen. There are any number of ways oppressive regimes end, and end abruptly.
Seeking more stable and lucrative clients, the firm began focusing on Russia and the former Soviet states. They sold themselves as being capable of teaching politicians, and the ultra-wealthy, how to master and profit from democratic political structures. One of their earliest and biggest clients was Russian billionaire Oleg Deripaska, which is a name that is important to remember moving forward. Work for Deripaska was stable and profitable, but there was more money to be made in the Ukraine, and it was the work done for Deripaska that helped open the door to that opportunity.
Manafort became significant in politics in the region when he began working for the Party of Regions and its leader Viktor Yanukovych, who were the opposition party. He is considered to have been significant in helping the party regain power. By 2010, Manafort was their adviser for domestic politics and lobbying in the U.S. It is alleged by the Mueller investigation that Manafort earned $60 million for his part in the party’s resurgence and his continuing counsel as can be seen in the D.C. trial indictment filing hosted at Court Listener. The problem with that is that he did not register in the U.S. as a foreign agent, and he is alleged to have not paid taxes on that income, as reported by The New York Times.
In 2014, Manafort was out of favor with Yanukovych, who was forced out of power and is alleged to have in part blamed Manafort for it. With his lucrative income gone and not returning, he ran into problems with Deripaska, in which Deripaska alleged that Manafort cheated him out of millions of dollars, which he filed a lawsuit to recover. The Deripaska lawsuit is what tipped off the FBI that Manafort’s dealings abroad may need to be looked at.
For the next two years, Manafort was working, but not in a manner that was making him the kind of money he was accustomed to in the Ukraine. During this period, he had significant cash flow problems, which allegedly led to him taking out mortgage loans based on faulty declarations he provided to banks. In 2016, Roger Stone got Manafort hired on by Trump as a campaign consultant, as per The New York Times, but he quickly became the campaign chairman and chief strategist until he had to be fired when news of his past activities became nightly news, according to The Washington Post.
This brings everything to the current day, with Manafort facing 18 charges in the Virginia trial indictment, which can be seen at Court Listener. The 18 charges against Manafort can be viewed as charges related to bank fraud for the fraudulent information provided to secure mortgages, and the other charges are related to his failures to report income and pay taxes on them. Both of these also feed into a more complex web of offshore bank accounts and businesses used to shield assets.
The four bank fraud charges are based on activity from 2015-2017 and come along with five counts of conspiracy to commit bank fraud. The first charge alleges Manafort attempted to secure a $3.4 million loan on a condo he had in New York City. He fraudulently listed it as his second residence, but it was actually a rental. He failed to disclose he already had mortgage debt on it, and when confronted about it by the bank, then fraudulently stated that the debt was forgiven. The second charge relates to submitting a fraudulent income statement from his consulting firm for a loan, which showed income $4 million higher than was accurate.
The third charge alleges that he submitted false information to secure a $5.5 million loan on a Brooklyn brownstone, stating that the property had no debt against it, which it did, and a false income statement from an associate that padded his firm’s income by an extra $2 million. The fourth charge concerns an attempt to secure $16 million in loans by using fraudulent income statements, and claiming that $300,000 of debt on his American Express card was a loan to Rick Gates.
That leaves four counts for filing false income tax returns, and five counts of failure to disclose assets held in foreign banks. Information related to these charges is what ties back to the D.C. trial. The reason that the Virginia trial is important to the D.C. trial is that Manafort can face in the range of 70 – 100 years in prison for these crimes. Being able to use that as leverage, with the D.C. trial still looming, to get cooperation that can be used in the case that the Mueller investigation is building against Trump is how analysts expect this to play out.
The trial is expected to last in the range of two to three weeks, with Mueller calling up to 35 people as potential witnesses against Manafort. The star witness is expected to be Rick Gates, whom Manafort claimed the $300,000 Amex debt he ran up went to as a loan and was an employee of Manafort’s consulting firm and his top aide in Ukraine. Gates already struck a plea deal with Mueller for his crimes, as he was charged at the same time as Manafort. Tad Devine, who was an adviser to Bernie Sanders’ presidential campaign, and also a Manafort employee in Ukraine, is on the witness list as well. Judge T.S. Ellis III will be hearing the case and has stated that due to the overwhelming evidence submitted against Manafort, it is possible he will spend the rest of his life in prison, as reported by Politico.
What is going to be as important as the trial itself is what happens after it has been concluded. Trump can pardon Manafort, and that idea has been floated by Trump and his counsel Rudy Giuliani, as per The New York Times, but that would be unwise. If Manafort is pardoned and then called to testify in relation to those crimes at a later date, he cannot plead the fifth. If he refuses to testify, he can be jailed for contempt. If he perjures himself, he can be jailed for that as well, as those would be new crimes not covered by the pardon, so for Trump, it would be a poor choice.
It must also be considered that even if Trump pardoned Manafort, that would only cover federal crimes, and it has been alluded to that should he be pardoned, state charges would be brought against him, which Trump would not be able to pardon, meaning Manafort could still go to jail anyway, while racking up another round of legal expenses. Even if the jury sides with Manafort in the Virginia trial, he will still have to get through the D.C. trial, and then potentially a state trial if he wins. The Virginia case is step one, but it is a very important step.