Feds seek $3M from Paul Manafort over failing to disclose offshore accounts

The Justice Department is suing Paul Manafort, the former Trump campaign chair, for almost $3 million in penalties related to his alleged failure to file reports disclosing more than 20 bank accounts he controlled in foreign countries, including Cyprus, the United Kingdom and St. Vincent and the Grenadines.

According to the civil suit filed in federal court in West Palm Beach, Fla., on Thursday, the Treasury Department assessed the penalties against the longtime lobbyist and political consultant in July 2020, exactly five months before then-President Donald Trump pardoned his former adviser on criminal tax, bank fraud, conspiracy and obstruction of justice convictions. That case was pursued by special counsel Robert Mueller, whose probe of alleged Russian influence on Trump’s 2016 campaign was the focus of intense and bitter criticism from Trump.

An attorney for Manafort expressed disappointment in the Justice Department’s decision to file the case, which was brought near Manafort’s legal residence in Palm Beach Gardens, Fla.

“Today’s civil lawsuit seeks a money judgment against Mr. Manafort for simply failing to file a tax form,” the lawyer, Jeffrey Neiman, said in a statement. “Mr. Manafort was aware the Government was going to file the suit because he has tried for months to resolve this civil matter. Nonetheless, the Government insisted on filing this suit simply to embarrass Mr. Manafort.”

The Justice Department declined to comment on the suit.

Manafort told POLITICO earlier this month that he was planning to head back to work soon doing what he called “general business consulting.”

During a 2018 jury trial in Alexandria, Va., on some of the various criminal charges, Manafort was found guilty of failing to file a Foreign Bank Account Report for 2012, but the jury failed to reach a verdict on the same charge for 2013 and 2014. Jurors split 11-1 in favor of convicting Manafort on those counts, according to the verdict sheet and juror interviews.

The Justice Department’s suit signals that federal attorneys have concluded that Trump’s pardon does not cover the 2013 and 2014 charges, as well as the other eight counts the jury failed to reach a unanimous verdict on.

On the same day Trump left office in January 2021, a former Mueller deputy, Andrew Weissmann, published a legal commentary on the Just Security website arguing that Trump’s pardon of Manafort was poorly worded and failed to cover the charges he was never convicted on in Virginia. Noting that Manafort was sent home from his seven-and-a-half-year prison sentence after serving just two years, Weissmann argued that the punishment of Manafort was so modest that the Justice Department should consider re-prosecuting him on the 10 mistried charges in Virginia as well as other charges dismissed after he agreed to a plea deal with Mueller’s team to avoid a second trial in Washington.

“Reimposing appropriate punishment — one imposed by two courts — is thus not only fair in a system wedded to the rule of law, but may increase the chance of finally learning the truth,” Weissmann wrote, indicating that he believed Manafort knew more than he had previously acknowledged about Trump’s connections to Russia. Weissmann noted that Manafort admitted to all the charges against him as part of the plea deal and also agreed to waive any applicable statutes of limitations.

Weissmann declined to comment on the lawsuit filed on Thursday.

Justice Department lawyers seemed to take a broader view of the Trump pardon than Weissmann. About a month later, government attorneys cited the pardon as they told a federal judge that they were dropping efforts to complete forfeitures of three properties owned by Manafort, including his luxurious Long Island estate.

“The department has determined that due to President Trump’s full and unconditional pardon of Paul Manafort, it is necessary to dismiss the criminal forfeiture proceedings involving the four assets which were the subject of the ongoing forfeiture ancillary proceedings,” Justice Department lawyers wrote. The decision cleared the way for a Chicago bank that gave Manafort loans backed by the properties to foreclose and resell them. (The bank said late last year that it expected to turn a multimillion-dollar profit on the Manafort loans after selling off the collateral.)

Although the Justice Department could have tried to prosecute Manafort over the allegedly unfiled financial disclosures, the new court filing may signal that department attorneys concluded that a civil lawsuit was a more appropriate way to seek to further penalize the former Trump campaign official than initiating a new criminal prosecution.

The new suit says Manafort failed to comply with a requirement to report all foreign accounts under one’s control if the total balance in the accounts exceeds $10,000. While the suit contends that Manafort failed to report 22 foreign accounts in 2013, the complaint acknowledges that 19 of those accounts had a “zero balance” by the middle of the following year. Two of the accounts had a balance of less than $200,000 at that time, while one had a balance of about $443,000, the suit alleges.

All of the accounts were in the names of offshore companies that Manafort controlled or had signature authority over with the banks involved, according to the complaint. During the criminal cases several years ago, prosecutors alleged that Manafort used the accounts to park funds he earned from his political consulting work in Ukraine, but transferred some of the money to pay his bills in the U.S. for real estate, landscaping and expensive custom clothing. He also failed to pay taxes on much of the money that remained overseas or the sums he used to pay debts here, prosecutors alleged.