Manafort’s Son-In-Law Accuses Him Of Misleading Court In Bankruptcy Legal Tussle

October 4, 2017 5:58 p.m.

Former Trump campaign chairman Paul Manafort and his son-in-law are engaged in an ugly legal battle that escalated last week with the son-in-law, Jeffrey Yohai, alleging that Manafort was part of a conspiracy to mislead a federal bankruptcy court.

It’s not clear whether their ongoing tussle in a federal bankruptcy court in California will be of interest Special Counsel Robert Mueller’s Russia probe, which reportedly is examining Manafort’s financial practices. Regardless, it illuminates the complex legal and financial situations Manafort has wrapped himself up in over the years. His mounting legal bills are reportedly one of the reasons Manafort recently switched to a different law firm for representation in the Mueller probe.

In this case, Manafort and Yohai are at an impasse over how to handle the sale of a property in Los Angeles to a company backed by Manafort, in order to rescue it from foreclosure.  Yohai’s wife, Manafort’s daughter Jessica, filed for divorce against Yohai in March.

The recent bankruptcy filings were first reported on by USA Today Wednesday morning.

Later Wednesday, USA Today added the following update [Browndorf is Matthew Browndorf, the managing partner of the law firm helping Manafort with the transaction at the heart of the case]:

Get TPM in your inbox, twice weekly.
Your subscription could not be saved. Please try again.
Your subscription has been successful.

Browndorf said the bankruptcy judge overseeing the case ignored the allegations at a hearing on Wednesday. The judge gave Manafort extra time to finalize the loans he needs to buy the properties out of bankruptcy.

Back in March of 2016, Yohai bought four upscale single family homes in Los Angeles, through four companies, using a $4.4 million loan from the private lender Genesis Capital, according to USA Today. Manafort’s New York town home was put up as collateral for the loan, USA Today reported.

Yohai’s plans to renovate and then resell the properties apparently did not work out, and in December of 2016, one of the companies — which is attached to a property known as the Stradella property—filed for bankruptcy, according to court filings.

In June, however, a deal was pitched in a court filing to the bankruptcy court, in which a new company would agree to buy the Stradella property for $7.8 million, and that would be used to pay off the Genesis loan. A sister company was also formed to buy some of the other properties and their loans, according to the filings

By August, it appears according to court documents, the Stradella company had negotiated an extension on the deal to give the new company more time to do its “due diligence” before finalizing the transaction. As part of the extension, the loan payments to Genesis would continue but at a higher amount, the filings said.

Yohai filed a declaration with the court last week suggesting things had gone south, however. He said that he was having trouble confirming that the new company had raised enough money to make the $7.8 million purchase of the Stradella property. He also claimed that when he agreed to the deal in June, he believed he would own half the new company purchasing the Stradella property.

In recent weeks, however, “it is now clear to me that” the new companies “do not presently have a loan commitment sufficient to close the proposed sale deal” and control of the new companies “has been misrepresented to me,” Yohai said in the filing.

“I am informed and believe and upon said information and belief assert that Paul Manafort [and others associated with the new companies] have all conspired this Court and Genesis as to their true intentions and motivations,” Yohai said.

Filings this week from a managing director and lawyer associated with the new companies rebutted Yohai’s account. The managing director, Mohit Agarwal, said the company “has always been forthcoming with this Court and Genesis as to its intentions and has been transparent relative to its efforts to consummate the transaction proposed by the Purchase and Sale Agreement.”

Bruce Baldinger, the attorney who oversaw the creation of the new companies, meanwhile provided an email exchange from February that seemed to show that Manafort requested and was granted sole ownership. Yohai was among the recipients on the emails.

Late update: This story has been updated to reflect an update in the USA Today report.

Latest Muckraker
Comments are now Members-Only

Non-members are still able to read comments, but will no longer be able to participate. To join the conversation, sign up now and get:

30% Off Annual Prime Membership

TPM strives to build as inclusive a community as financially possible. We offer FREE memberships to those experiencing financial hardship and FREE memberships for students.

View all options
Masthead Masthead
Founder & Editor-in-Chief:
Executive Editor:
Managing Editor:
Associate Editor:
Investigations Desk:
Audience Development Editor:
Editor at Large:
General Counsel:
Head of Product:
Director of Technology:
Associate Publisher:
Front End Developer:
Senior Designer: