This Is How Manafort Allegedly Laundered Money Through Real Estate

Paul Manafort
October 30, 2017 11:01 a.m.

One cornerstone of former Trump campaign chairman Paul Manafort’s elaborate alleged tax evasion scheme was his use of offshore bank accounts to purchase luxury real estate properties and subsequently take out cash mortgages on them, according to a federal indictment unsealed Monday.

The lucrative, multi-state scheme allowed Manafort, who was hit with 12 felony counts including fraud, “to have the benefits of liquid income without paying taxes on it,” per the indictment.

The 31-page document details a years-long circular arrangement in which the longtime GOP operative allegedly would use the funds from one mortgage to fund his next real estate project and keep his head above water. It also alleges that Manafort lied to banks about the terms of these loans so that he then could receive more money at more favorable rates than he would’ve received otherwise.

Above: Manafort made these wire transfers from accounts in Cyprus towards purchasing real estate.

In one instance, Manafort allegedly funneled $2,850,000 in cash from an entity he owned in Cyprus to purchase a condominium in Manhattan’s SoHo neighborhood, which he rented out for thousands of dollars a week through Airbnb and other rental companies. Because he could get a bigger loan on the mortgage he applied for if he used the property as a residence rather than a rental, he allegedly falsely told the bank that lended to him that his daughter and then-son-in-law lived there. He allegedly directed the son-in-law and his business partner, Rick Gates, to assist with this cover-up, and ultimately received a loan for $3,185,000 (Gates was indicted on 11 counts alongside Manafort).

Manafort also allegedly funneled $3 million in cash from an entity in Cyprus to purchase a brownstone in the posh Carroll Gardens neighborhood of Brooklyn and then set about renovations that would convert the building from a multi- to a single-family home. A bank promised more money for “construction loans” that were to be spent on renovations that would make the property more valuable, according to the indictment. Though Manafort ultimately received a $5 million loan after promising the bank he would use $1,400,000 of it solely for construction, he “never intended to limit use of the process to construction” as the contracts required, per the indictment.

He allegedly wrote to his tax preparer weeks before receiving those funds that the  influx of cash would allow him to pay off a separate mortgage in full, and Manafort ultimately used hundreds of thousands of dollars from the construction loan to make a down payment on a separate property in California, according to the indictment.

The SoHo and Carroll Gardens properties are among four that the U.S. government said Manafort would be required to forfeit if he is convicted for his alleged crimes. Another apartment in Arlington, Virginia and his home in the Hamptons are also on that list.

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