Manafort Record ‘Littered With Lies’–Prosecutor

Closing arguments began on Wednesday in the trial of former Donald Trump campaign chairman Paul Manafort on charges of bank and fax fraud.

“When you follow the trail of [Paul] Manafort’s money, it is littered with lies,” prosecutor Greg Andres told a federal jury in northern Virginia on Wednesday in closing arguments in the bank and tax fraud trial of Manafort, President Trump’s onetime campaign chairman. “Mr. Manafort lied to keep more money when he had it, and he lied to get more money when he didn’t,” Andres said, the Washington Post reports. Prosecutors allege Manafort failed to pay taxes on millions he made from his work for a Russia-friendly Ukrainian political party, then lied to get loans when the cash stopped coming in.

The case is being prosecuted by the special counsel investigating Russian interference in the 2016 U.S. presidential election. The strength of the special counsel’s case against Paul Manafort is the overwhelming documentary evidence — bank records, tax returns, emails, invoices, profit and loss statements. Throughout the trial, Judge T.S. Ellis III derided prosecutors for focusing on Manafort’s extravagant spending on suits and home improvements. The defense, which presented no witnesses, was scheduled to make its closing arguments later on Wednesday.


Rep. Collins Ends Re-Election Bid After Indictment

In an about-face, U.S. Rep. Chris Collins (R-NY) is ending his re-election bid days after he was charged with insider trading. He was indicted Wednesday on charges he passed inside information about a biotechnology company to family members so they could profit from illicit trades. Collins had said he would remain on the ballot and fight the charges.

In an about-face, U.S. Rep. Chris Collins (R-NY) is ending his re-election bid days after he was charged with insider trading, the Associated Press reports. Collins was indicted Wednesday on charges he passed inside information about a biotechnology company to family members so they could profit from illicit trades. He had said he would remain on the ballot and fight the charges. Collins, who stays he will remain in office, reversed himself Saturday. He denied wrongdoing. Collins’ decision to end his re-election bid appeared to boost Democrats’ chances of taking in a solidly Republican district.

The indictment charges Collins and two others, including his son, with conspiracy, wire fraud and other counts. Prosecutors say the charges relate to a scheme to gain insider information about a biotechnology company headquartered in Australia. It is unclear whether Collins’ name can be removed from the November ballot at this point and whether Republican Party officials will be able to nominate another candidate for the seat. The area backed Donald Trump over Hillary Clinton by nearly 25 percentage points in 2016, when Collins beat his Democratic challenger by more than 2-1. Collins was an early supporter of Trump’s presidential campaign and has been one of Trump’s most ardent defenders. House Democratic Leader Nancy Pelosi said Collins should resign immediately.


Trump Ally Collins Indicted in Insider-Trading Scheme

Rep. Christopher Collins (R-NY), an early backer of President Trump, was charged with participating in an insider-trading scheme to sell shares of an Australian biotechnology company before the public disclosure of a failed drug trial. He intends to stand for re-election.

Rep. Christopher Collins (R-NY) was charged with participating in an insider-trading scheme to sell shares of an Australian biotechnology company before the public disclosure of a failed drug trial. Federal prosecutors in Manhattan accused Collins, 68, of tipping off his son last summer about the results of a multiple-sclerosis drug trial completed by Innate Immunotherapeutics Ltd. , a biotechnology company based in Sydney, the Wall Street Journal reports. Collins was a member of Innate’s board of directors and one of the company’s largest shareholders, holding 16.8 percent of its stock, the indictment said. Collins, who serves the 27th district near Buffalo and Rochester, was the first member of Congress to endorse Donald Trump in 2016. Collins’s stature grew after Trump won the GOP nomination.

The indictment says Collins passed the confidential results to his son, Cameron Collins, so he could trade on the tip. Prosecutors say his son sold nearly 1.4 million Innate shares and gave the information to at least four people, including his fiancée and her father, Stephen Zarsky. Zarsky then sold all of his Innate shares and shared the tip with at least three other individuals, including his brother and sister, before the public release of the trial results, according to the indictment. Innate announced the failed drug trial after U.S. markets closed on June 26, 2017. The next day, Innate’s stock dropped more than 90 percent. In total, the trades allowed the defendants and alleged co-conspirators to avoid more than $768,000 in losses, the indictment said.  Collins said he would remain on the ballot in November.


Manafort Created ‘Cash Out of Thin Air,’ Prosecution Says

As the trial of Paul Manafort, President Trump’s former campaign chairman, begins in Virginia, the prosecution accuses Manafort of filing falsified loan applications. The defense is putting the blame on former Manafort business partner Rick Gates.

Federal prosecutors clashed with defense attorneys Tuesday over rival portraits of Paul Manafort, who the government asserted built a fortune on a foundation of “lies.” The former Trump campaign chairman’s attorneys said their client had simply placed his “trust in the wrong person,” USA Today reports. Manafort attorney Thomas Zehnle  pointed the finger at the government’s star witness and former Manafort business partner, Rick Gates, who was described as the source of virtually all of Manafort’s trouble. “This case is about taxes and trust,” Zehnle said of the bank and tax fraud case against his client. “This is about Mr. Manafort placing his trust in the wrong person.”

Gates pleaded guilty this year to conspiracy and lying to the FBI. As part of his deal with the government, he agreed to cooperate with investigators. He headlines a list of 35 potential witnesses against Manafort. Zehnle asked Manafort to stand before the jury, describing him as once representing the “pinnacle” of American politics – a consultant to “presidents and senators.” He did not mention President Trump. Prosecutors presented a blistering account of Manafort’s business dealings, alleging that he used a web of deceit and secret bank accounts to acquire tens of millions in income for his consulting work in Ukraine for more than a decade, between 2005 and 2014. Assistant U.S. Attorney Uzo Asonye claimed that Manafort propped up a “lifestyle of extravagance” by falsifying applications for millions of dollars in loans. When Manafort’s work for the pro-Russian leadership faction in Ukraine began to dry up in 2015, Asonye asserted, Manafort sought bank loans using falsified loan applications, creating “cash out of thin air.” A jury of six men and six women, along with four alternates, was selected in less than four hours.


Manafort Trial May Feature Very Little on Russia

The case is expected to include tales of lavish spending, secret shell companies and millions of dollars of Ukrainian money flowing through offshore bank accounts and into the political consultant’s pocket. There is not likely to be much discussion of the Trump campaign’s dealings with Russia.

The trial of Paul Manafort, President Trump’s onetime campaign chairman, will open this week with tales of lavish spending, secret shell companies and millions of dollars of Ukrainian money flowing through offshore bank accounts and into the political consultant’s pocket, the Associated Press reports. What’s likely to be missing: answers about whether the Trump campaign coordinated with the Kremlin during the 2016 presidential election, or possibly any mention of Russia at all. Manafort’s financial crimes trial, the first arising from special counsel Robert Mueller’s investigation, will center on his Ukrainian consulting work and only briefly touch on his involvement with the president’s campaign.

The trial, scheduled to begin Tuesday with jury selection in Alexandria, Va., will give the public its most detailed glimpse of evidence Mueller’s team has spent the year accumulating. It will feature testimony about the dealings and foreign ties of a defendant Trump entrusted to run his campaign during a critical stretch in 2016 convention. It will unfold at a delicate time for the president as Mueller’s team presses for an interview and as Trump escalates his attacks on a “witch hunt.” Adding to the intrigue is the expected spectacle of Manafort’s deputy, Rick Gates, testifying against him after cutting a plea deal with prosecutors, and speculation that Manafort may be holding out for a pardon from Trump. “Perhaps he believes that he’s done nothing wrong, and because he’s done nothing wrong, he’s unwilling to plead guilty to any crime whatsoever — even if it’s a lesser crime,” said Jimmy Gurule, a Notre Dame law professor and former federal prosecutor. “Obviously, that’s very risky for him.”


Sessions Cites Immigrant Crimes Based on ID Thefts

Attorney General Jeff Sessions visited Boston to announce crimes by illegal immigrants that he said were aided by getting driver’s licenses through the Massachusetts Registry of Motor Vehicles.

U.S. Attorney General Jeff Sessions visited Boston to throw a spotlight on what he called “theft from America” by 25 mostly illegal immigrants charged with massive government fraud blamed on shoddy oversight by the state Registry of Motor Vehicles (RMV), the Boston Herald reports. “Operation Double Trouble” accounted for $200,000 in heisted Medicare, unemployment and public housing benefits. One of the suspects is a convicted killer who escaped from prison in Puerto Rico. Sessions charged that “teachers, truck drivers, construction workers are going to work and paying taxes that are being stolen from the public treasury by fraudsters and criminals,” adding that, “this kind of fraud is a theft from our seniors, a theft from our taxpayers, and a theft from the needy — theft from America.”

Massachusetts Gov. Charlie Baker defended the RMV, saying the state has “significantly beefed up” the fraud unit and worked with Homeland Security on the case. He called catching the cheats “a high priority.” He also said the REAL ID program, which requires proof of citizenship, has been a big help. State Rep. Shaunna O’Connell the state agency must “work more closely with state police and not let offenders walk out the door. They also need to be more proactive in mining their own database to look for people who have stolen identifications.” Court documents show one of the first stops made by the 25 accused identity thieves was the RMV to obtain a driver’s license once they had another person’s name, date of birth and Social Security number.


Ex-NY Senate Leader Skelos is Convicted Again

Former New York State Senate Majority Leader Dean Skelos was convicted of public-corruption crimes after a retrial in which the onetime powerful lawmaker took the stand in his own defense,

Former New York State Senate Majority Leader Dean Skelos was convicted of public-corruption crimes after a retrial in which the onetime powerful lawmaker took the stand in his own defense, reports the Wall Street Journal. A federal jury also found Skelos’s son Adam guilty. Skelos, a Nassau County Republican, and his son were on trial for a second time. In 2015, a different jury found Skelos guilty of all eight criminal counts, including bribery and extortion.  A federal appeals court vacated his conviction after a U.S. Supreme Court ruling narrowed the definition of some public-corruption crimes.

Robert Khuzami, deputy U.S. Attorney in Manhattan, said the verdict sends “the resounding message that political corruption will not be tolerated.” During the retrial, federal prosecutors argued that Dean Skelos had won jobs and payments for Adam by threatening companies that relied on the state for legislation, contracts and other benefits. Skelos claimed he had asked longtime friends for favors only to help his troubled son. Testifying on his own behalf, Skelos, 70, said, “I’ve asked many people to help Adam,” choking up while discussing his son’s substance-abuse and behavior problems. Another powerful former state lawmaker, Sheldon Silver, was convicted by a Manhattan jury in May after a similar retrial


How Soccer Corruption Gets Kicked into the Shadows

As France and Croatia prepare for battle in this weekend’s World Cup Final, a new report warns there is little hope that efforts to end systemic bribery and kickbacks in the Fédération Internationale de Football Association (FIFA) will succeed. A Michigan law professor says it’s time for Switzerland to force the organization to become accountable.

As millions of fans gear up for this weekend’s World Cup Final, a new report warns there is little prospect that efforts to clean up soccer corruption inside the Fédération Internationale de Football Association (FIFA) will succeed.

“After more than a century of scandals and a broad array of Potemkin-like reform maneuvers carefully packaged in pleasant press releases, it is clear that, absent accountability, FIFA will continue to operate as it has, seeking maximum personal profit for those at the top of football,” writes Bruce W. Bean, a law professor at the Michigan State University-School of Law.

In a report published in The Palgrave Handbook on the Economics of Manipulation in Sport, and posted online this week, Bean offers a somber assessment of the chances for eliminating the chicanery that has plagued the professional football (soccer) industry since at least 1974, with the election of FIFA president Joao Havelange (who has been called the “Father of FIFA Corruption”).

 The report is unlikely to faze fans of the world’s most-watched athletic event, except possibly for the Olympics, as they prepare for Sunday’s final match between France and Croatia. (England and Belgium square off in a contest for third place Saturday)—and it is even less likely to surprise critics who have been calling futilely for reforms for decades.

But, in his review of the history of efforts to eradicate FIFA corruption, Bean provides a timely reminder of what happens when huge amounts of money become entangled with sport.

Soccer accounts for almost 40 percent of the $80 billion in annual revenues from sports worldwide. FIFA reported that it earned $4.8 billion alone for the four-year cycle ending with the 2014 Rio World Cup, with a profit of $2.6 billion.

The organization’s top executives have reaped personal windfalls as a result. In 2015, FIFA’s president earned a salary of $3.9 million, and the general secretary went home with $2.2 million.

The extraordinary wealth has contributed to giving FIFA “the impunity of a sovereign, rogue nation,” Bean writes.

As one example, ahead of the 2014 World Cup in Brazil, FIFA successfully demanded the country change its 10-year-old law banning the sale of alcohol at football matches for the event.

But its vast global reach is also what makes prosecuting FIFA executives so difficult. FIFA is organized under the Civil Code of Switzerland, but it has had presidents from seven different countries.

Bean notes the Swiss government has not been cooperative in prosecuting corruption allegations, often claiming that its reach cannot extend to criminal activities in other countries—a reluctance that Bean says has earned it the well-deserved title of the “Nirvana for Sports Criminals.”

A series of reports and initiatives have been formulated to try and amend the corruption evident within the FIFA organization—with limited success.

An Independent Governance Committee (IGC) was established in 2011 to assess FIFA’s response to allegations of corruption in the past. and to make recommendations going forward. The makeup of the committee was not entirely independent, as was intended, and involved FIFA paying committee members $5,000 a day for their work.

The IGC published its first report in March 2012, which included recommendations to create an audit and compliance committee, add independent chairs for independent committees, establish term limits for FIFA executive members, amongst others. The IGC said in this report that FIFA’s cooperation with the investigation left a lot to be desired.

“Overall, the answers by FIFA regarding the handling of alleged misconduct were not fully satisfactory to the IGC,” the report, cited by Bean, said.

“Based on the discussion of specific examples, FIFA has—in the opinion of the IGC—shown a lack of proactive and systematic follow-up on allegations.”

The IGC released a final report in 2014 saying it was concerned about how seriously senior FIFA officials were taking the recommendations, adding that an outside, independent body should continue to work with FIFA to help enact reform.

Near the end of 2014, the chair of the Investigative Chamber of the Ethics Committee, Michael Garcia, submitted the Garcia Report to Hans-Joachim Eckert, FIFA’s head of adjudication of ethical matters. The 450-page report was withheld from the public in lieu of a 42-page summary prepared by Eckert.

Eckert’s report concluded that the 2018 and 2022 World Cup locations were not chosen on the basis of bribery—which was a hotly contested discussion—and that cash was not given to voting members in exchange for votes. Garcia responded by demanding the publication of the full report, and then resigning after his demand was not met.

In fact, half of the 22 FIFA Executive Committee members who voted in 2010 to choose Russia as the site of the 2018 World Cup, have been accused of corruption related to the process.

In 2015, the Americans became involved in the “cesspit of corruption” when U.S. Attorney General Loretta Lynch revealed a 47-count indictment charging football officials from CONCACAF, the Caribbean, Central and North American Confederation, and from CONMEBOL, the South American Confederation, with numerous crimes involving kickbacks and bribery amounting to $150 million.

But that only earned criticism of the U.S. for involving itself in the football world, with Russian President Vladimir Putin saying it was an attempt to “extend U.S. jurisdiction to other states.”

By the end of 2017, 24 out of 26 defendants being tried in the U.S. had pled guilty.

But the lesson drawn by Bean is that only the Swiss government has the legal authority and clout to end FIFA’s pattern of corruption.

Switzerland, which is home to at least 65 international sports organizations, should apply its own rules of corporate governance to the association, amending them as necessary to exert jurisdiction over FIFA’s worldwide activities, wrote Bean.

“The football world deserves an honest FIFA,” he wrote. “Switzerland must pioneer the way to bring accountability to so-called not-for-profit entities.”

Marianne Dodson is a TCR news intern. She welcomes comments from readers.


Trade Fraud: The ‘Wild New Frontier of White Collar Crime’

Federal prosecutions of importers for fraud increased by 900 percent between 2000 and 2016, according to a study in the Oregon Review of International Law. But the government has barely scratched the surface of criminal activity that has cost millions of dollars in lost revenue and endangered the health of Americans, say the authors.

Federal prosecutions of shady importers have increased 900 percent over the past 16 years, but officials can barely cope with a swelling volume of trade fraud that costs the government millions of dollars in lost revenue and endangers consumer safety, according to a study in the Oregon Review of International Law.

“Countries’ borders are too vast, the volume of imports too great, global customs inspections too porous, and law enforcement resources too few for effective monitoring or deterrence,” the study said.

After compiling a database of trade fraud cases between 2000 and 2016, the authors examined 47 criminal and civil cases involving hundreds of defendants, ranging from “mom and pop” businesses to large conglomerates who had been prosecuted by the Department of Justice.

They concluded that the only way to tame what they described as the “wild, new frontier of white-collar crime” was to develop interagency teams that focused on bringing cases under the False Claims Act, a law enacted enacted in 1863 at the height of the Civil War to combat suppliers of fraudulent goods to the Union Army—and amended several times since.

“For many crimes, criminal prosecution is the only way to protect the public from perpetrators,” said wrote the authors. “However, for white-collar frauds against the government, this is not true.

“The FCA’s stiff penalties, treble damages and heightened mens rea requirement carry a big bang for the buck and can deter future wrongdoing effectively.”

Taking note of the fierce contemporary debate between free trade advocates and protectionists, the authors said both sides should be able to agree that import fraud must be “aggressively pursued.”

“No one has the right to lie about what they are bringing into a country,” they wrote.

According to the study authors, Pamela Bucy Pierson of the University of Alabama School of Law and a former Assistant U.S. Attorney, and Benjamin Patterson Buey, an attorney with Frohsin, Barger & Walthall, a white-collar law firm, the primary motivation for unscrupulous importers was avoiding taxes. But in the process, they facilitated the purchase of goods that endangered the health of whoever bought them.

One example in the cases they examined was an importer who claimed to sell flounder and grouper that that was in fact “Vietnamese catfish laced with prohibited antibiotics.”

While the study conceded that it was impossible to completely isolate and block the flow of adulterated drugs, food or fake goods in an economy that imports some $2.71 trillion worth of products annually , they called on the Department of Justice to adopt a more pro-active strategy to “enhance” the effectiveness of FCA prosecutions.

Their recommendations included:

  1. Team up with other federal agencies responsible for border security and trade, such as Customs and Border Protection, Homeland Security, and the Commerce Department, to create an inter-agency task force devoted to fighting trade fraud;
  2. Hire and train dedicated U.S. Attorneys to specialize in investigating trade fraud;
  3. Enhance the transparency of international shipping records by developing a centralized repository to facilitate the investigation of fraud allegations by informers;
  4. Make information about trade fraud cases more readily available to the public and investigators by creating central databases similar to those created for Medicare fraud.

Noting that increased inspections alone wouldn’t address the scope of the problem, the authors said curbing dishonest trade required the use of sophisticated techniques such as “forensic accounting to trace monetary transactions, grants of immunity to obtain testimony, analysis of paper trails, piercing of fictitious organizations, and dissecting layers of fraudulent transactions.”

The study said fraudulent imports can cost American jobs, citing the example of a family-run lighting business forced to cut its staff after a competitor bought cheap lighting in China, falsified the country of origin, and avoided paying import duties—enabling him to undercut prices.

The impact of the FCA on healthcare is illustrative. Until the FCA was amended in 1987 to stiffen penalties and widen its scope, few cases of health care fraud were successfully prosecuted. But by 2016, there were 501 such cases, and nearly $2.5 billion realized in recoveries, the authors said.

“The FCA’s effectiveness is due, in large part, to the public-private partnership it creates between individuals, qui tam relators, (insider informants who reveal fraudulent practices) and the U.S. Department of Justice,” the study said.

Such insiders are crucial to unearthing some of the world’s most complex transactions.

“While all white-collar crime is difficult to detect, trade fraud is harder,” the authors said. “(It) is hidden in layers of organizations, concealed in byzantine electronic communications, and obscured by money laundering.”

A full copy of the study can be downloaded here.

TCR News Intern John Ramsey assisted in the preparation of this summary. Readers’ comments are welcome.


1.3M Pieces of Cohen Evidence Goes to Feds

More than 1.3 million pieces of potential evidence seized from President Trump’s personal lawyer and fixer Michael Cohen earlier this year were turned over to federal prosecutors Monday. Cohen, in an interview with ABC News, appeared to distance himself from the president.

More than 1.3 million pieces of potential evidence seized from President Trump’s personal lawyer and fixer Michael Cohen earlier this year were turned over to federal prosecutors Monday, USA Today reports. The bulk transfer was reported by court-appointed special master Barbara Jones, who has been reviewing the material to determine if any of it should be withheld from authorities as privileged communications between attorney and client. The information was seized in April as part of a federal inquiry into Cohen’s business dealings. Among the transactions federal investigators are reviewing is a $130,000 hush money payment that Cohen made to porn star Stormy Daniels, who has claimed to have had an affair with Trump. The payment was authorized on the eve of the 2016 presidential election.

The disclosure comes after Cohen, in an interview with ABC News, appeared to distance himself from the president. Cohen said that he did not share Trump’s animosity toward Justice Department special prosecutor Robert Mueller and did not dismiss the possibility of cooperating with the investigation into Russian interference in the 2016  election. “My wife, my daughter and my son have my first loyalty and always will,” Cohen said. “I put family and country first.” After the FBI’s raid on Cohen offices and home, Trump seemed to raise the prospect that the government was seeking to turn the attorney into a witness against him. Asked how he might respond if the president or his legal team tries to discredit him, Cohen said, “I will not be a punching bag as part of anyone’s defense strategy. I am not a villain of this story, and I will not allow others to try to depict me that way.”