The Bail Fight that Manafort and Gates Can’t Win

Three weeks after their indictment, Paul Manafort and Rick Gates are still fighting over their bail conditions.

That was most recently demonstrated by the government’s response to Gates’ request for permission to (basically) serve as house husband, with leave to spend over two hours every day to ferrying his kids to school while purportedly under house arrest, a motion the court denied. The government objected to the request because “To date, only the defendant’s signature secures his bond (together with his house arrest),” though the problem might be more accurately described as Gates fucking around with bail negotiations, probably because he can’t substantiate his assets in such a way that they can be posted for bail.

In a telephone call late on the afternoon of November 15, 2017, defense counsel informed the government that they intended to make a bail modification motion and sought the government’s position. The government responded that it was not able to take a position until it had the opportunity to review the defendant’s motion.


Although more than two weeks have passed since the defendant’s arrest, he has not completed any paperwork to post his house, or any other property, and has failed to answer a series of questions about his assets.


Only yesterday did the defendant offer to arrange interviews of his two proposed non-family-member sureties, both of whom apparently live outside the Washington, D.C. area.3 Finally, the government continues to have concerns about the accuracy of the defendant’s account of his net assets, which has evolved from the representation that he had “limited assets that include only a single home,” ECF#21 at 5; to his most recent Personal Financial Statement, which included a securities/brokerage account valued at more than $1.3 million and a total net worth of more than $3.4 million.

3 Those interviews are now scheduled for Thursday, November 16, 2017. Counsel has noted that one proposed surety already serves as a surety for a relative who is currently charged in the United States District Court for the Southern District of New York, a circumstance that, at least at first blush, raises certain concerns.

Though it was even more clearly laid out in the government’s November 5 opposition to Manafort’s request to change his bail conditions, in which the government laid out the difficulties of finding $10 million that Manafort can post for bail. In that they laid out three different line items in Manafort’s assets, two of which he wants to post for bail, that the government believes are inflated.

A. 5th Avenue, New York, NY (claimed net asset value $3 million):

The government does not presently have sufficient information to assess the claimed net asset value of this property, or even to be confident that the property has equity in it at all. Based on communications with Manafort’s counsel, the government understands that the $3 million net asset value is based on a fair market value of $6 million, reduced by a $3 million mortgage on the property obtained from UBS. This fair market value is not, however, backed by an appraisal or even any open source estimates (which in many cases may not be particularly accurate). Rather, Manafort provided the government with an open source estimate for a different unit in the building, listed as approximately $4.5 million, which Manafort believes is below the fair market value of his own unit, which is on a higher floor. Meanwhile, the government has searched open source real estate value estimators and found one that lists the value of Manafort’s own unit as $2.5 million, and another that lists the value as $2.7 million.

Until an independent appraisal of the property is obtained, the government cannot agree that this property is appropriate as a security.


C. St. James Drive, Palm Beach Gardens, FL (claimed net asset value $1.5 million):

Based on the information available to the government, we are comfortable with the use of this property as security, although the open source estimate provided to the government by Manafort shows a fair market value of $1.25 million rather than $1.5 million. As a condition of using this property as security, Manafort and his wife should be required to waive any homestead exemption that may be available under Florida law and to agree not to encumber the property in any way.


Although Manafort has provided the government with a spreadsheet listing his total assets at approximately $28 million, the government has yet to substantiate Manafort’s net worth. Indeed, we continue to have questions about that sum. For example, with respect to a property held by Manafort in Brooklyn, he asserted the value at $9 million, when a recent appraisal comes in at substantially lower (in the $5 to $6 million range). The spreadsheet provided by Manafort also lists values of other assets, such as securities, that do not match information available to the government or that cannot be substantiated at this time. Additionally, in prior years, through at least 2014, Manafort reported a $6 million asset in Ukraine on his tax returns; Manafort has claimed that it lost all value. In short, the government seeks to further understand the full extent of Manafort’s wealth.

They’re doing this while appearing quite reasonable (for example, letting Manafort’s wife and daughter serve as sureties, not to mention letting them stay out of jail altogether). It seems increasingly clear why: because the very process of trying to negotiate bail, for both men, is involving a whole lot of disclosure — which presumably replicates documentation the government has collected on its own — of further money laundering. In just those three paragraphs, for example, the government has laid out almost $10 million in money that Manafort has either vanished or lost as his money laundering vehicles lose value.

Meanwhile Bloomberg has a piece — the long overdue counterpart to my (still) favorite piece of Manafort journalism, the Weekly Standard piece showing it is impossible to spend $1 million on antique rugs in Alexandria — that lays out the discrepancies between the amounts the indictment say Manafort spent on his homes in the Hamptons and Florida and what his contractors reported would be spent.

Special Counsel Robert Mueller, in his indictment, says that a Hamptons firm got $5.4 million in wire transfers from Cyprus over 71 payments. But building permits over the same period examined by Bloomberg show that renovations by Manafort’s Hamptons’ contractor were estimated to cost $1.2 million. That’s less than a quarter of what was ultimately sent—an apparent discrepancy that could draw scrutiny from investigators.


Building permits in Southampton estimate that the cost of SP & C’s renovations would come to $687,000. In Brooklyn, the work is estimated to cost $527,900 though it isn’t clear whether SP & C or another contractor completed the project. Either way, the estimates fall more than $4 million short of the amount “Vendor A” was paid.


During an inspection in April 2013, the Southampton assessor determined that the replacement cost of the pool house was $132,172, a less than a third of the quoted price. A pergola, estimated to cost $35,000, would cost $16,550 to replace by the assessor.

Lisa Goree, Southampton’s sole assessor, said renovation costs aren’t necessarily reflected in a home’s assessed value. “He could spend $1 million on a statue in front of the house,” she said. “It doesn’t mean we’re going to increase the assessment by a million dollars.”

There is also a gap between renovation estimates on Manafort’s Florida 3,300-square-foot house—located in a gated community overlooking a golf course and palm-lined canal—and the amount paid to a “Vendor J, a contractor in Florida,” according to the indictment. He wired $432,487 to the Florida contractor; building permits estimate that renovations on his Palm Beach Gardens house would cost about $140,000.

Incidentally, a friend told me one of her friends has been at the Hamptons property, and was led to believe it was actually owned by Manafort’s nephew.

I feel like Mueller’s prosecutors are playing with these two men as cats play with balls, just patiently batting them around, waiting for the inevitable admission that they can’t make bail because they don’t have assets they can put up because everything they own has been laundered. At which point, after getting the judge rule over and over that they’re flight risks, I suppose the government will move to throw them in the pokey, which will finally get them to consider flipping.

Update: Totally unrelated, but totally related, Global Witness has an investigation of how Trump has partnered with a whole lot of mobsters who use his Panama property as a laundering vehicle.

Update: Here we are Monday and Gates and Manafort still haven’t found anything liquid to put up as bail. Not only that, but in a filing raising a potential conflict with one of Gates’ money laundering expert lawyers, prosecutors reveal Gates is trying to have his partner from a movie-related firm’s brother serve as surety while also doing so for the partner.

Marc Brown, the brother of defendant Steven Brown, was proposed by Gates as a potential surety despite the facts that they seemingly do not have a significant relationship, they have not had regular contact over the past ten years, and Marc Brown currently serves as a surety for his brother Steven in his ongoing criminal prosecution in New York. In an interview with the Special Counsel’s Office on November 16, Marc Brown listed as a reason for seeking to support Gates that they belonged to the same fraternity (although they did not attend the same college) and that, as such, he felt duty bound to help Gates. Of note, Marc Brown’s financial assets were significantly lower, almost by half, than previously represented by Gates.

25 replies
  1. Domye West says:

    Very informative. I wonder what the $6million Ukrainian asset is/was. I love that they will/might have to admit that they can’t make bail because everything was laundered.

    OT: You said almost a week ago that some news was going to drop in the very near future, maybe implicating the Pres. I am getting heart palpitations waiting!

    • orionATL says:

      don’t know. maybe here:

      “… pdaly says:

      November 16, 2017 at 8:42 pm

      Seems to me Assange is growing desperate, with the news of Mueller’s investigation rolling up some of the Trump network,  that his  (Assange’s) options for a pardon under Trump are dwindling. Wonder why Assange doesn’t just contact Mueller (or did he?) to cut a deal while the Mueller investigation is still unfolding?


      emptywheel says:

      November 16, 2017 at 9:38 pm

      Yeah, I think that’s where he is…. “

  2. earlofhuntingdon says:

    Toying with a mouse, near but so far from its hole in the wall.

    One would think that two Beltway movers and shakers, who claim multi-million dollar portfolios, would find it easier to pony up in order to avoid months in prison, orange jump suits, shackles on the way to and from hearings, bad prison food, thin blankets, and sharply pointed objects appearing unexpectedly while showering or waiting in line for chow.

    But these two guys won’t make full disclosure, which they know will be required to stay out of jail. (And so far, no black knights have appeared with checkbook in hand to save them.) As you say, these guys either don’t have enough assets, they are subject to seizure and forfeiture, or they are still trying to hide some of them because of their provenance or to use them later. They know how that will end.

    Manafort and Gates are presumably huddled with their lawyers trying to sort out the limits they could place on their cooperation with Mueller. Mueller, on the other hand, will demand full and complete disclosure and cooperation. There would be sharp teeth in any arrangement, if they are found to have failed to disclose or cooperate, or to lie or make material omissions.

    Depending on a Trump pardon would be iffy: Trump is famous for refusing to keep his promises, no matter how many times he thereby shoots himself in the foot. A federal pardon would still leave them open to state prosecution. Trump would be limited in how much pressure he could apply on, say, New York, to go easy on them, lest Trump expose himself to more claims of obstruction.

    There’s also the question of who else might be outed if they fully cooperate and name names. Some of their likely intimates might react unpredictably, which would make prison unsafe and witness protection an imperfect solution. Their safest course might be to go silently to prison. But what guaranty would they have that their silence would be believed?

  3. orionATL says:

    the picture of the house in the bloomburg piece displays a caricature of an american homestead for the wealthy.

    there’s a nice, traditional pond, but it doesn’t stop there.

    there’s a tennis court

    there’s a swimming pool and lanae and bath house.

    there’s a guest cottage

    there’s a putting green

    there’s a basketball court

    there’s a flat, mowed area in rear left that could be badminton or crochet or volleyball green.

    and, of course, there’s a large rectangular parking lot directly in front of the house with plenty of space for cars parking for parties.

    the entire plat is busily occupied, overstuffed in my view, from survey line to survey line.

    • posaune says:

      Note:  Each of those “improvements” could be a laundering move in itself!

      I’d love to the the building permits/zoning conformance for all of that stuff, esp the accessory structures requiring separate plumbing.  I’ll bet some that stuff was never filed.

      • posaune says:

        Another question here:   let’s say there’s a zoning  violation involving Manafort’s South Hampton home improvements — this is chump change compared to his real problems, of course.  Where in the pecking order would a zoning violation fall ?   What if the real estate title is clouded by such violation and the property cannot be transferred?    Would that compromise the use of the property for bail?  What would the feds have to do to use for bail?

        Just curious.

  4. Ed Walker says:

    The Trump Ocean City Club story is a real problem for Trumpy. He licensed his name to a company that allegedly launders money for drug cartels. Trumpy gets a percentage of profits. That includes profits from the money laundering. Reuters has Ivanka connected to the operation through a guy accused of defrauding people in that building.


    Exclusive: How an alleged fraudster in Panama, working with Donald Trump’s daughter, helped make Trump’s first international hotel venture a success. The broker was in business with a money-launderer and two criminals from the former Soviet Union. Then he fled.

    This might cost Trumpy lots of income.

    • orionATL says:

      seems like this is a situation where it would be real helpful to have some federal and state income tax records available, but alas those records are being audited and could not possibly be released at the moment. maybe later when that audit is finished.

    • Rugger9 says:

      These income sources would be subject to asset forfeiture as well since many of them arise from illegal activity as noted by the GW article.  I’m sure JeffBo will get right on it since he reinstated the full asset forfeiture program.  The Global Witness article is summarized at DKos as well.  As noted above by our noble Earl, there are state charges as well since I’m pretty sure NYS has money laundering statues on the books since it is such a financial hub.

      Manafort and Gates would also be subject to the forfeiture program, since it seems many of these property value issues are tied to money laundering activity by the criminal element.  Between the Panama Papers, the Paradise Papers the GW article and already existing court records, etc., Mueller could snap the trap shut on these two now.

    • earlofhuntingdon says:

      If Trump gets a percentage of profits – rather than a flat fee for licensing his name – that gives him more exposure.  It makes any conduct ongoing rather than a past act; every payment refreshes the date of any crime and creates a pattern of activity.  And it gives Trump motive to have units sold to anybody with cash to buy.

      By way of comparison, former IBM ceo Thomas J. Watson had a lucrative deal with his firm: he earned a 5% commission on every machine it sold or leased around the world.  That applied, for example, to every machine leased to and serviced for the German government from 1933-1945, regardless of the intermediary subsidiary that might have provided or serviced it.

      IBM provided delicate, complicated, expensive, and bulky early computers.  They often required customizing for use, frequent service, and constant resupply of such things as millions of punch cards (many of which were themselves customized for a specific purpose – and only available from IBM).

      That technology allowed Germany, for example, to run its complex train system, necessary to deliver its various forms of freight.  It was essential to the obsessive management of population records, throughput and camp operations.

      Mr. Watson was famous for micro-managing, for knowing the intimate details of how “his” machines were used and how profitable each was.  German operations in the thirties and forties were among the most profitable in all of IBM.  Those circumstances would allow a talented investigator to draw reasonable inferences about what Mr. Watson knew and what he helped take place.

      Similarly, one would expect Mr. Trump, the most talented of ceos, to know where his revenues and profits come from, which projects were the most profitable and for what reasons, and who his buyers were – at least by class – so that he could keep chasing their money.  That would allow a talented investigator to draw reasonable inferences about what Mr. Trump knows and what he helped take place.

      • emptywheel says:

        Incidentally, did you know that I was an IBM brat — mom and dad met there, bros went to IBM nursery school, I got a Watson scholarship and summer jobs?

        Obviously well past the Nazi years. But plenty still to repay my debt to society for for all that IBM gave my family.

        • earlofhuntingdon says:

          Life’s complicated, non?  IBM helped give us you and the Mercers; one’s a benefit to humankind.

  5. prostratedragon says:

    Thanks for the rug link, one of the funniest things I’ve read in quite a while, especially the rug dealers’ progression. If one can ignore the stakes, the whole thing is maybe the greatest farce ever.

  6. earlofhuntingdon says:

    Buying and selling real estate is a classic tool used by money launderers.  Hotels and resorts are common vehicles: land and construction costs can be manipulated, occupancy rates, too, can be manipulated over years to establish false fair market values, resulting in whatever resale value is desired.  High-end residential real estate is also a common vehicle: London has been an especially favorable location for this, owing to lax regulations, extraordinary sales prices and frequent uses of anonymous special purpose vehicles, such as offshore trusts and opaque tax-haven corporations.

    • Rugger9 says:

      As a plus, any losses can be explained by market forces without any real challenge, unlike the million dollars of carpets.

      • orionATL says:

        but, but..

        what if those carpets were special.

        what if they were magic carpets?

        useful, say, for flying the coop.

        • Rugger9 says:

          Maybe I’m cynical, but it seems to me that their desperate efforts to get out of house arrest might be tied to some more passports squirreled away somewhere.  Plan B in case they did get raided as they should have expected to happen.  Why stop at three?

          If they run out of stuff to binge-watch in the mean time, boo hoo hoo.

  7. bmaz says:

    Mueller et. al are totally toying with them. As I have said before, from the start, there is a formal process for this, if and when the Govt wants to invoke it, called a Bail  Source Determination, often referred to as a Nebbia determination. There is not a chance in hell Manafort and Gates assets can withstand that. Instead they are just letting these fuckers flail about and seeing what comes of them backing themselves into a corner. It is really fairly amusing.

    • Rugger9 says:

      And probably something they’ve done to others.  Karma’s a Bohemian Interpreter To Chinese Henchman sometimes.

    • prostratedragon says:

      It’s nice to have one’s amateur impressions bolstered by a pro.

      (Tidbit on a string … hilarity ensues!)

    • Avattoir says:

      You should consider doing a post just on this.

      I absolutely agree what’s going on here is Team Mueller is gathering more & more assertions against interest, in turn exposing  Manafort & Gates into offering more & more information beyond the ambit & limits of a Nebbia, all owing to the (no doubt correct) view of the attorneys that their clients can’t withstand that level of scrutiny (I’m having trouble even seeing how they make a qualifying proffer.).

      Quite apart from putting the 2 defendants into the position of having to compete every day with each other’s anxieties over where the other is in relation to dealing with Mueller, leaving the families back home  fretting from cash withdrawal to withdrawal is pythonesque (in more than one meaning of that term).

  8. pseudonymous in nc says:

    Zugzwang: a situation in chess where one has a variety of moves available but all of them weaken one’s position; a situation where one would prefer to pass but is compelled to move.

    This is where things stand for Manafort & Gates. Judge Jackson’s denial of Gates’s motion — “School run? Oh, bless. Post the bond and we’ll talk about it.” — was as arch as it was succinct.

    Tick tock, melon farmers.

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