What the first indictments in the Mueller investigation reveal

David Dayen explains the complicated money-laundering schemes indulged in by Paul Manafort, former campaign chair for Donald Trump and one of the three people indicted today by special counsel Robert Mueller. What we are going to see in the days to come is increasing attention to the connections between corrupt US politicians, banks and businesspeople, foreign governments, and shady international organized crime figures.

But the ways in which illegally obtained money is laundered and tax avoided is far more widespread and Dayen explains how it works.

The indictment outlines a fairly common money-laundering technique: create an offshore company to accept foreign money and use that company to purchase American property. Then take a loan out against that property. The loan enables the person to have full access to the money without having paid taxes or disclosed the source of the income. Money laundering in the New York City real estate world has become so ubiquitous that it is likely driving up the price of high-end properties. A recent Treasury Department estimate suggested nearly a third of all such properties were obtained suspiciously.

So the dubious home equity loans were critical to the scheme. They became the manner in which Manafort converted Ukrainian earnings into cash he could use in the U.S., while avoiding taxes or reporting.

FROM 2012 TO 2016, Manafort took out seven home equity loans worth approximately $19.2 million on three separate New York-area properties, owned through holding companies registered to him and his son-in-law Jeffrey Yohai, a real estate investor. The properties include a condo on 27 Howard St. in Manhattan, a condo in Trump Tower, and a four-story, two-unit brownstone in Brooklyn at 377 Union St.

One of the key tools that Mueller will use to pressure people is to charge them with lying to federal investigators, a charge that carries heavy penalties and is hard for people indulging in shady activities to avoid committing. This is what has already been done to get a guilty plea from George Papadopoulus, a former Trump campaign aide. The idea is to get them to plead guilty to this charge and then offer a plea bargain for a reduced sentence if they are willing to provide information and testify against others.

One puzzling question that has been raised is why Manafort decided to become chair of the Trump campaign at all. If you are engaged in massive money laundering schemes with shady foreign individuals, your best bet is to keep a very low profile. Why would he sign on to the Trump campaign that was clearly an attention magnet like nothing we have seen before? Josh Marshall tries to address this question.

In days to come be prepared to have your eyes glaze over with arcane details about shady accounting practices. What they will reveal is how riddled the tax laws are that enable the wealthy to avoid paying taxes.


  1. jrkrideau says

    why Manafort decided to become chair of the Trump campaign at all.
    If Trump wins, it’s a licence to print money.

    Whether or not he would have real influence with the Orange Chief after the election he can sell the appearance of influence to people in Russia and the various ‘stans, particularly since most of the kleptocrats there are already aware that Trump has a “relaxed” approach to money laundering.

    Even if Trump does not win, the prestige of the job and the association with the Trump name/organization might have increased his credibility to do deals.

    He’s gotten away with dubious deals for 30 or 40 years so why expect things to go south now? Clearly he had no idea of the overall stupidity and incompetence that the Trump crew could display. I mean, if you tried to sell the current White House as a sit-com everyone would say it was too over the top to sell.

    Marshall’s point that he may well have been desperate for money could well be true and just increased his willingness to take the risk.

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