Paul Manafort, who served as President Donald Trump’s campaign manager for five months in 2016, is now facing a number of bank and mortgage fraud charges as Department of Justice special counsel Robert Mueller’s investigation digs deeper into Manafort’s past.
Last year, Manafort was charged with laundering millions of dollars in foreign money through U.S. real estate among many other charges relating to his work for foreign governments.
At the time, Mueller’s team detailed how Manafort worked with an aide, Richard Gates, to misrepresent the nature of his income and the planned usage of the properties to obtain millions of dollars in mortgages.
When Mueller’s team first announced charges against Manafort and Gates, the allegations dealt mainly with Manafort and Gates’ alleged conduct surrounding the handling of foreign money and what that money was used for.
But, late last week, Mueller accused Manafort of committing a “series of false and fraudulent representations” to obtain a $9+ million mortgage from The Federal Savings Bank, a privately held bank in Chicago that focuses on mortgage lending.
Now, Manafort and Gates face nine separate bank fraud charges relating to alleged misrepresentations made to several different lenders in order to defraud the financial institutions of $20 million.
According to the indictment, between approximately 2015 and at least January 2017, “Manafort, with the assistance of Gates, extracted money from Manafort’s United States real estate by, among other things, using those properties as collateral to obtain loans from multiple financial institutions. Manafort and Gates fraudulently secured more than twenty million dollars in loans by falsely inflating Manafort’s and his company’s income and by failing to disclose existing debt in order to qualify for the loans.”
Manafort was originally charged with conspiracy against the United States, money laundering, failure to file reports of foreign bank and financial accounts, working as an unregistered agent of a foreign principal, making false statements to the DOJ, and other charges covering a period of approximately 2006 through at least 2016.
Manafort allegedly used the shell companies to buy luxury real estate. Then, borrowed millions of dollars using those same properties as collateral, thereby obtaining cash without reporting and paying taxes on the income.
But the new charges further detail the steps that Manafort and Gates allegedly took to get those loans, including allegedly doctoring profit and loss statements for one of Manafort’s companies.
From the indictment:
When the income from Ukraine dwindled in 2014 and 2015, Manafort, with the assistance of Gates, obtained millions of dollars in mortgages on the United States properties, thereby allowing Manafort to have the benefits of liquid income without paying taxes on it. Manafort and Gates defrauded the lenders in various ways, including by lying about Manafort’s and DMI’s (one of Manafort’s companies) income, lying about their debt, and lying about Manafort’s use of the property and the loan proceeds. For example, Manafort and gates submitted fabricated profit and loss statements (P&Ls) that inflated income, and they caused others to provide doctored financial documents.
The “DMI” referenced in that excerpt is DMP International, a company Manafort created to “engage in work for foreign clients, in particular political consulting, lobbying, and public relations for the Government of Ukraine, the Party of Regions, and members of the Party of Regions.”
Earlier this week, NBC News reported that Mueller’s team is investigating whether Manafort promised a White House job to Stephen Calk, the CEO of The Federal Savings Bank, in order to get several mortgages from the bank. In a previous filing in Manafort’s case, Mueller accused Manafort of altering DMP International’s P&L statements to get loans from Federal Savings.
The new indictment does not identify the lenders that Manafort allegedly defrauded, referring only to Lender A, B, C, and D.
But the indictment does detail how Manafort and Gates allegedly committed fraud against the lenders, including allegedly falsely stating income, the previously mentioned doctored income statements, and lying about hundreds of thousands in credit card debt that negatively impacted Manafort’s credit score.
From the indictment:
In 2016, Manafort sought a mortgage on property in Bridgehampton, New York from a financial institution. In connection with his application, Manafort falsely represented to the bank that DMI would be receiving $2.4 million in income later in the year for work on a “democratic development consulting project.” To support this representation, Gates, on Manafort’s behalf, provided the bank with a fake invoice for $2.4 million, directed “To Whom It May Concern,” for “[s]ervices rendered per the consultancy agreement pertaining to the parliamentary elections.” The bank, unwilling to rely on the invoice to support Manafort’s stated 2016 income, requested additional information. The bank was unable to obtain satisfactory support for the stated income, and the loan application was denied.
Then:
Manafort applied to a second bank, Lender D. Between approximately July 2016 and January 2017, Manafort, with the assistance of Gates, sought and secured approximately $16,000,000 in two loans from Lender D. Manafort used the Bridgehampton property as collateral for one loan, and the Union Street property for the other.
Manafort and Gates made numerous false and fraudulent representations to secure the loans. For example, Manafort provided the bank with doctored P&Ls for DMI for both 2015 and 2016, overstating its income by millions of dollars. The doctored 2015 DMI P&L submitted to Lender D was the same false statement previously submitted to Lender C, which overstated DMI’s income by more than $4 million. The doctored 2016 DMI P&L was inflated by Manafort by more than $3.5 million. To create the false 2016 P&L, on or about October 21, 2016, Manafort emailed Gates a .pdf version of the real 2016 DMI P&L, which showed a loss of more than $600,000. Gates converted that .pdf into a “Word” document so that it could be edited, which Gates sent back to Manafort. Manafort altered that “Word” document by adding more than $3.5 million in income. He then sent this falsified P&L to Gates and asked that the “Word” document be converted back to a .pdf, which Gates did and returned to Manafort. Manafort then sent the falsified 2016 DMI P&L .pdf to Lender D.
“Lender D” also questioned $300,000 in credit card debt that Manafort was carrying on an American Express card. The debt was more than 90 days delinquent, which “significantly” affected Manafort’s credit rating.
According to the indictment, Manafort allegedly lied to the lender, stating that he’d lent the card to Gates, who planned to pay him back. Manafort then supplied the lender with a letter from Gates, who falsely stated that he would pay Manafort back the money in question.
All told, Manafort and Gates face nine charges of bank fraud or bank fraud conspiracy, among the 32 charges the pair face collectively.
To read the new indictment in full, click here.
