Indictment: Manafort Didn’t Report Huge Offshore Accounts

By Alison Bennett (Bloomberg BNA)

The extensive nature of Paul Manafort’s indictment for failing to report tens of millions in offshore accounts means an investigation may have started well before Special Counsel Robert Mueller took it over, a criminal tax attorney told Bloomberg Tax.

Manafort, President Donald Trump’s former campaign manager, and his business partner Richard Gates III were indicted Oct. 27, the first charges filed in Mueller’s investigation of Russia’s ties to the 2016 presidential election. The election wasn’t mentioned in the 31-page indictment ( United States v. Manafort , D.D.C., No. 1:17-cr-00201, indictment 10/27/17 ).

“It’s a very detailed indictment and not all indictments are that detailed. It’s a signal that they’ve been working on this for quite some time,” Steven Toscher of Hochman Salkin Rettig Toscher & Perez P.C., said Oct. 30.

Manafort and Gates surrendered to authorities Oct. 30 on tax and conspiracy charges, and later pleaded not guilty to all charges. Both were placed under house arrest.

Willful Failure Alleged

The indictment alleges that Manafort “unlawfully, willfully, and knowingly” failed to file Report of Foreign Bank and Financial Accounts (FBAR) forms for 2011 to 2014. The accounts were used to launder money he earned working for Ukrainian politicians with ties to Russia in undisclosed lobbying efforts, it says.

Toscher said the document shows that the government is taking its nine-year crackdown on Americans hiding money overseas to a new dimension.

FBAR violators are typically “people using offshore accounts to hide the earning of income. This obviously is much more involved than that,” Toscher said. “These are charges of tax fraud and conspiracy against the United States. My reading of the indictment is that the monies earned working for the government of the Ukraine were not reported on any tax return.”

According to the indictment, Manafort and Gates engaged in schemes to use the offshore accounts—through which more than $75 million passed—without paying taxes on the money. It says millions of dollars in wire transfers were made to the U.S. Manafort is accused of laundering more than $18 million, allegedly to buy property, goods, and services.

Years of Nonfiling

The document alleges that Manafort failed to file the required FBARs—on which taxpayers must report foreign accounts of $10,000 or more. Gates didn’t file the required disclosures for 2011 to 2013, the indictment says.

In addition to the charges for failing to file FBARs, the indictment includes allegations of conspiracy, money laundering, being an unregistered agent of a foreign principal, and making false and misleading statements.

Caroline Ciraolo, also a partner at Kostelanetz & Fink and a former acting assistant attorney general in the Department of Justice Tax Division, said the case is further proof of “a steady drumbeat of investigations and prosecutions with regard to secret foreign accounts and assets.”

Although she couldn’t comment directly on the Manafort case, Ciraolo warned that the government “has gained a tremendous amount of expertise. The landscape has changed dramatically.” She emphasized recent comments by Internal Revenue Service Criminal Investigation Chief Don Fort that his division is forming a unit that specializes in international tax crimes.

A spokesman for the special counsel’s office didn’t immediately respond to a request for comment.

With assistance from Andrew Harris in Washington (Bloomberg).

To contact the reporter on this story: Alison Bennett in Washington at abennett@bna.com (Bloomberg BNA)

To contact the editors responsible for this story: Meg Shreve at mshreve@bna.com (Bloomberg BNA); David Glovin at dglovin@bloomberg.net (Bloomberg)

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