The unsealed indictment of Paul Manafort on Monday is the first to be produced by U.S. Department of Justice special counsel Robert Mueller’s investigation into Russia’s actions in the 2016 elections.
The charges stem from Manafort’s work on behalf of the Ukrainian government, and his alleged attempts to hide the proceeds of that arrangement in foreign accounts that were used to pay for real estate and other personal items. Manafort, the former chair of President Donald Trump’s election campaign, along with a co-defendant, his business partner Richard Gates, were charged with, among other things, money laundering conspiracy, failure to report foreign accounts, and false or misleading statements regarding their status as foreign agents.
Both pleaded not guilty in federal court in Washington, D.C., on Monday.
What’s missing in the 12-count indictment are clear ties to Russian efforts to meddle in last year’s presidential election on behalf of Trump. Not to worry, according to a number of former DOJ prosecutors and white-collar attorneys: this appears to be simply the first step in a complex investigation.
“This is a starting point; this is how you build the case,” said one former federal prosecutor who spoke on background because of the sensitive nature of the active investigation.
The former prosecutor’s comments were echoed by others, some of whom declined to go on the record. While opinion on the decision to bring these charges isn’t uniform—other former prosecutors questioned the decision to bring ostensibly non-Russia investigation charges first—the indictment represents a substantial and significant standalone case.
“It’s a big case, it’s a serious case, and it is not dissimilar to many of the off-shore account cases DOJ has been doing for past 10 years,” said Ballard Spahr partner Peter Hardy.
Hardy, a former federal prosecutor who contributes to the firm’s Money Laundering Watch blog, said prosecutors’ ability and decision to bring an overlapping matrix of charges makes the complaint more thorny for the defense.
The money laundering charges are held up on the government proving an underlying crime. Even if the defense were able to “knock some holes” in the money laundering theory, being able to bring foreign bank and financial account and other non-laundering charges preserves the government’s money-focused complaints.
“In some ways, it is a serious and complex case, but also it’s a somewhat traditional money laundering and tax evasion indictment, in the way it’s put together and the allegations it makes,” Hardy said.
Hughes Hubbard & Reed partner John Wood said he was surprised at the “eye-popping” amount of money that Manafort and Gates were attempting to keep hidden.
“Everyone’s known for several months now that there was a pretty strong case against Manafort under the Foreign Agents Registration Act,” he said. “The other charges in here are a lot more serious than for a failure to register.”
For Wood, the allegations relate to the Russian investigation largely because it strengthens Mueller’s hand.
“To the extent that either Manafort or Gates or both are in a position to cooperate with Mueller’s investigation, Mueller has a lot of leverage over them right now,” Wood said.
Not that all of Monday’s action by Mueller and his team seemed like an abstraction of the Russia investigation. The indictment and subsequent cooperation agreement with former Trump foreign policy adviser George Papadopoulos represented a tangible connection between a Trump campaign official and alleged Russian actors.
Papadopoulos pleaded guilty to a single count of making false statements to the Federal Bureau of Investigation. But the indictment paints a picture of an aide in regular contact with people he believed had substantial contacts within the Russian government.
“Now there’s a link to the campaign,” said Hogan Lovells partner Peter Spivack. “The question is how close or far that link goes.”
The sequencing of Monday’s actions are also likely meant as a message to other potential targets and cooperators, according to Cole Schotz member Michael Weinstein.
“It sends a signal to a lot of other people that the special prosecutor has information, has records, and has multiple leads to pursue,” he said. “This is what you’re up against, and you may want to consider your options.”
For Manafort, there is a window of opportunity to decide how to deal with Mueller, according to Weinstein, and what Weinstein called a heavy-handed indictment that threatens decades in potential jail time.
“If I’m Manafort, I’m looking at my options,” Weinstein said, including the potential for cooperating.
“What does he have to trade away, what is the value of that trade, and when does he pull the trigger,” Weinstein said of Manafort.