Those Trump Panama Hotel Documents? Might Include DOD Grift

Remember how I observed that the takeover of Trump Panama, even as Trump staffers madly shredded documents, by a guy who bought into the troubled hotel just as Trump became President, might have more to do with leverage over Trump than the mostly empty building?

These people are all douchebags and the brawling side show is fairly amusing. But it does seem that Fintiklis bought into something far more than a mostly empty hotel, and he’s now using it as leverage against the Trump family business.

The fight over the Trump Panama hotel seems to be as much about the fight over records that may show whether Ivanka knew she was involved in money laundering with Russian mobsters and Colombia narcotics traffickers as it is over who gets to run the mostly empty hotel.

The Daily Beast and Sparrow Media report that some of those papers the Trump folks may have been shredding might pertain to $17,000 spent by DOD after Trump became President.

Pentagon officials spent more than $17,000 at the Trump Ocean Club hotel in Panama in the first half of 2017, according to documents obtained by a government watchdog group.  The money was spent to cover general lodging expenses, according to the documents. It isn’t clear why.

The Panama Hotel expenditures make up 12% of the $138,093.23 DOD spent in total, and the rest of the expenditures are for more locations which we knew Trump was grifting us for: Mar-a-Lago, Bedminster, and Las Vegas. Maybe those other locations will reveal some DOD personnel were at meetings we didn’t otherwise know (though we’ve known Mar-a-Lago to host some key NatSec meetings).

But it’s unclear who got sent to stay at the Trump hotel in Panama.

Trump and his spawn will only make about $600 out of this — so it’s not like their grift is paying their bills. But it may provide clear evidence of grift.

Thug, Mob, Rogue: Trump Organization’s Own Description of Its Panama Hotel

While Trump and his son-in-law (and a number of his cabinet members) have clearly been profiting personally from Trump’s presidency (see my NYT op-ed on Jared’s woes), thus far their pursuit of self-interest hasn’t caused any international incidents (moving the US embassy to Jerusalem has come closest).

The scuffle between the Trump organization and the majority owner of the Panama City Trump hotel might just change that.

The problems go back aways (I’ll lay out some of the timeline below). But the short version is that the majority owner of the property, Orestes Fintiklis, got the other owners to vote to fire the Trump Organization in October, claiming the diminished brand and (importantly) a bad sales strategy is part of why the property is at less than 30% occupancy. The Trump Organization (screaming RICO) tried to force the matter into arbitration in December. And Fintiklis has now sued in SDNY to prevent that.

Things started getting crazy a week ago Thursday, when Fintiklis tried to fire the Trump employees, then cut off power, and then got the Panamanian government to side with him and arrest a Trump employed security guard. Significantly, the two sides are fighting over the control room and Fintiklis alleges that Trump employees are shredding documents.

Two people familiar with Fintiklis’s account said that, after his arrival, hotel employees barricaded office doors with furniture, and they added that documents were shredded. The two people said Trump Organization employees — including an executive who flew down from New York City — also blocked access to a control room that houses servers and surveillance-camera monitors.

This room, the two people said, is shared by the hotel operation and the managers of the residential side of the building, which is no longer operated by the Trump Organization.

I find that interesting given the Reuters report, from last November, describing how Ivanka put a Brazilian money launderer with ties to Russian organized crime, Alexandre Ventura Nogueira, in charge of many of the advanced sales in the project.

A Reuters investigation into the financing of the Trump Ocean Club, in conjunction with the American broadcaster NBC News, found Nogueira was responsible for between one-third and one-half of advance sales for the project. It also found he did business with a Colombian who was later convicted of money laundering and is now in detention in the United States; a Russian investor in the Trump project who was jailed in Israel in the 1990s for kidnap and threats to kill; and a Ukrainian investor who was arrested for alleged people-smuggling while working with Nogueira and later convicted by a Kiev court.

Three years after getting involved in the Trump Ocean Club, Nogueira was arrested by Panamanian authorities on charges of fraud and forgery, unrelated to the Trump project. Released on $1.4 million bail, he later fled the country.

He left behind a trail of people who claim he cheated them, including over apartments in the Trump project, resulting in at least four criminal cases that eight years later have still to be judged.


When first approached by Reuters, Nogueira declined to answer questions. Writing on October 4, he said in an email: “Anything I would say could also damage a lot of important and powerful people. I am not sure I should do that.”

Later, Nogueira agreed to meet. In a lengthy interview, he described his contacts with the Trump family and his role in the Ocean Club project. He said he only learned after the Ocean Club project was almost complete that some of his partners and investors in the Trump project were criminals, including some with what he described as connections to the “Russian mafia.” He said he had not knowingly laundered any illicit money through the Trump project, although he did say he had laundered cash later in other schemes for corrupt Panamanian officials.

The role Nogueira played is similar to the one Sergey Millian played for a Trump property in LA, which basically amounts to artificially inflating the sales so as to be able to get the loans for the underlying property.

Two Democrats on the House Foreign Affairs Committee, Ranking Member Eliot Engel and Norma Torres, have decided to take this opportunity to ask the Trump Organization if it knew the Panama facility was being used as a money laundering vehicle.

With the possibility that Fintiklis will gain control of the facility before any records of money laundering get shredded, I want to look at the timeline the Trump Organization lays out in their statement on the fracas.

Just before the 2016 election, Fintiklis, who is Cypriot though has a residence in Florida, bought into a majority share in the hotel from the original owners. The Trump Organization could have blocked that sale but, no, they could not, because otherwise the hotel would go under.

In October 2016, the original developer of the Hotel, Newland International Properties Corp., notified Trump Hotels that it was actively negotiating a bulk sale of its remaining 202 units to a company controlled by Mr. Fintiklis. Because the Co-Ownership Regulations for the Hotel preclude any one person from owning more than ten units without Trump Hotels’ consent, Trump Hotels could have blocked the sale as a matter of right. Concerned, however, about the future of the Hotel and the fate of the Hotel’s highly dedicated and loyal staff, Trump Hotels agreed to allow the sale to proceed on one condition: that Mr. Fintiklis agree that he would not in any way attempt to interfere with Trump’s management of the Hotel or take any other steps to terminate its management agreement.

So weeks after Trump became President, Fintiklis agreed to the terms of the sale and eventually finalized the purchase in August.

In February 2017, Mr. Fintiklis agreed, in writing, to these terms and, in August 2017, closed on the purchase of the units, becoming the owner of 202 of the 369 hotel units.

At that time, last August, Fintiklis spoke in rosy terms of the deal, including the hotel operator (that is, Trump).

We are excited to welcome such an iconic property to our investment portfolio and we look forward towards working with the local team, the hotel operator and the Panama community, to establish the Property as the premier hotel in the country and the entire region.

The Trump Organization accuses Fintiklis of orchestrating a conspiracy to remove Trump Hotels from the property.

Unfortunately, within weeks of the closing, it became apparent to Trump Hotels that Mr. Fintiklis had other motives. Rather than abide by the clear terms of the agreement he had signed, Mr. Fintiklis had been conspiring with others to remove Trump Hotels as manager and fire most, if not all, of its loyal and dedicated employees. Looking back, it is now apparent that Mr. Fintiklis, in flagrant violation of the commitments he had made, never had any intention of keeping his word and had been plotting a takeover and termination of Trump Hotels all along.

On October 14, 2017, Mr. Fintiklis furthered his fraudulent scheme, calling a meeting of the hotel condominium under the false pretense of a “meet and greet” and used that moment to hold unlawful votes and declare Trump Hotels in default of the management agreement. Within minutes of the meeting concluding Mr. Fintiklis sent Trump Hotels a default notice and filed for arbitration to terminate the management agreement. Clearly, Mr. Fintiklis had been concocting and planning this scheme for months.

The Trump folks, too, emphasize that part of this fight is over the facility’s computer system.

Together, Mr. Fintiklis and Mr. Lundgren, over the past several days, have resorted to thug-like, mob style tactics, repeatedly attempting to force their way into Trump Hotels’ offices, infiltrate and disrupt its computer systems and threatening and intimidating any employee of the Hotel that resisted.

Now, the Trump Organization made less than a million dollars off management fees for this facility in the last year or so.

In his most recent personal financial disclosure, Trump said his company had received $810,000 in management fees over the preceding 15 ½ months.

They are not getting rich off this facility, certainly not rich enough to sustain the legal fight already brewing over retaining the contract.

These people are all douchebags and the brawling side show is fairly amusing. But it does seem that Fintiklis bought into something far more than a mostly empty hotel, and he’s now using it as leverage against the Trump family business.

The fight over the Trump Panama hotel seems to be as much about the fight over records that may show whether Ivanka knew she was involved in money laundering with Russian mobsters and Colombia narcotics traffickers as it is over who gets to run the mostly empty hotel.

Which is a reminder that it’s not just Robert Mueller who has Trump by the nuts.

Jared’s Clearance and the Foreign Policy Version of Conspiracy to Defraud America

I confess there is no multi-day Trump story I’ve looked forward to more than the problem with Jared Kushner’s clearance. And it is officially here. Last night, the NYT described how Jared is butting heads with John Kelly over whether he’ll lose clearance under Kelly’s post-Rob Porter mandate that people who can’t be cleared won’t be kept around anymore.

Kushner, frustrated about the security clearance issue and concerned that Mr. Kelly has targeted him personally with the directive, has told colleagues at the White House that he is reluctant to give up his high-level access, the officials said. In the talks, the officials say, Mr. Kushner has insisted that he maintain his current level of access, including the ability to review the daily intelligence briefing when he sees fit.

Today CNN and WaPo weigh in, with CNN nodding towards the conflict this will present Trump.

Though a source familiar with the situation said Kushner has not yet appealed to the President directly about his access to highly classified information, those close to Trump believe he would be inclined to grant his son-in-law access if asked. This source pointed to the fact that Kushner is part of the President’s family and has outlasted all of his rivals in Trump’s inner circle, including former chief of staff Reince Priebus, former chief strategist Steve Bannon, former campaign manager Corey Lewandowski and former deputy campaign manager David Bossie.

Trump, however, has given Kelly his full support in efforts to reform the White House’s system of security clearances, and has told his chief of staff that changes need to be made to bring the system into order, according to a person who has spoken to him about the matter. Kelly has interpreted that as a wide-ranging mandate that would include Kushner, a person familiar with the matter said. The person said Trump and Kelly would likely discuss the matter this week, if they haven’t already, before Kelly’s self-imposed Friday deadline.

WaPo brings the appropriate level of skepticism over whether Kushner can really do his Fake Peace Plan job without clearance.

It is not clear how Kushner could perform his job without a high-level security clearance.

He holds a broad range of responsibilities, from overseeing peace efforts in the Middle East to improving the efficiency of the federal government. And he is the administration’s interlocutor with key allies, including China and Saudi Arabia, where he has developed a personal relationship with the young crown prince, Mohammed bin Salman.


And apart from staff on the National Security Council, he issues more requests for information to the intelligence community than any White House employee, according to a person with knowledge of the situation, who spoke on the condition of anonymity to describe private discussions.

More importantly, WaPo includes a series of false bravado quotes from Jared’s defense attorney, Abbe Lowell, who bizarrely offered up his judgement that Jared is speaking with foreign officials “properly.”

“My inquiries to those involved again have confirmed that there are a dozen or more people at Mr. Kushner’s level whose process is delayed, that it is not uncommon for this process to take this long in a new administration, that the current backlogs are being addressed, and no concerns were raised about Mr. Kushner’s application,” he said in a statement.


Lowell said Kushner’s job is “to talk with foreign officials, which he has done and continues to do properly.”

I’ve come to think of Kushner’s clearance process in similar terms to the way I’ve thought of the bail process Mueller has used with Paul Manafort and Rick Gates: While Gates ultimately did make bail, Manafort is still (!) almost four months after his arrest, struggling to show enough liquidity free of taint from his money laundering to alter his release conditions. The process of making bail (and having to serially beg to attend his kids’ soccer events) seems to have been one of the factors that brought Gates to the point of flipping, but along the way, he probably gave Mueller’s team far more leverage in plea negotiations, because they know how little Gates actually has to pay a defense attorney to oversee the flip (indeed, that may lie behind the confusion over Gates’ current legal representation).

Kushner’s liquidity problems are literally an order of magnitude greater than these men. But unlike them, he made the idiotic decision to work in the White House, and thereby to undergo the scrutiny of sworn statements laying out all the financial vulnerabilities and foreign entanglements that might make him susceptible to blackmail.

Which brings me back to my description of how Mueller is leveraging “conspiracy to defraud the United States” (what I will henceforward refer to as ConFraudUS*) charges to prosecute political influence peddling for which our regulatory system has completely collapsed. With the Internet Research Agency indictment, Mueller charged ConFraudUS because the trolls bypassed a campaign finance system that no longer works. With Manafort and Gates, Mueller charged ConFraudUS because they bypassed Foreign Agents Registration Act requirements that have never been enforced.

In the old days, to pursue the kind of quid pro quo we see outlines of, in which Trump officials (from George Papadopoulos’ proposed business with Sergei Millian to the possibility Kushner might get bailed out by the Russian Direct Investment Fund, which is itself a cut-out for the sanctioned Vnesheconombank, whose head, Sergey Gorkov, Kushner met in December 2016), you’d pursue bribery. But post-Bob McDonnell, bribery is a far tougher charge to make stick, as Mueller prosecutor Andrew Goldstein, who worked on the Sheldon Silver prosecution team, knows well.

What if, however, you could charge people whose meetings seamlessly tie the foreign policy decisions of the United States with discussions of their own financial interests, with ConFraudUS? That might make it easier to charge someone whose foreign policy decisions don’t serve the US interest but might enrich them for the quid pro quo entailed.

Which is why I’m interested in the report that Mueller has shown increased interest (almost certainly tied to Steven Bannon’s public pronouncements that, “It goes through Deutsche Bank and all the Kushner shit”) in Jared’s foreign financial dealings, how he has mixed his business interests and US foreign policy.

One line of questioning from Mueller’s team involves discussions Kushner had with Chinese investors during the transition, according to the sources familiar with the inquiry.
A week after Trump’s election, Kushner met with the chairman and other executives of Anbang Insurance, the Chinese conglomerate that also owns the Waldorf Astoria hotel in New York, according to The New York Times.

At the time, Kushner and Anbang’s chairman, Wu Xiaohui, were close to finishing a deal for the Chinese insurer to invest in the flagship Kushner Companies property, 666 Fifth Avenue. Talks between the two companies collapsed in March, according to the Times.

Mueller’s team has also asked about Kushner’s dealings with a Qatari investor regarding the same property, according to one of the sources. Kushner and his company were negotiating for financing from a prominent Qatari investor, former prime minister Hamad bin Jassim Al Thani, according to The Intercept. But as with Anbang, these efforts stalled.

Lowell’s false bravado in this report is even more ridiculous than that in the clearance stories.

A representative for Kushner declined to comment prior to the publication of this story. After publication, Kushner attorney Abbe Lowell told CNN in a statement, “Another anonymous source with questionable motives now contradicts the facts — in all of Mr. Kushner’s extensive cooperation with all inquiries, there has not been a single question asked nor document sought on the 666 building or Kushner Co. deals. Nor would there be any reason to question these regular business transactions.”

Lowell may not have turned over any documents relating to 666 Fifth Avenue. But Deutsche Bank got subpoenas even before Bannon started running his mouth (albeit in a separate EDNY probe). Moreover, the key detail under my imagined ConFraudUS charge would be whether Kushner did things — like try to get Chinese investors visas — that didn’t serve or indeed violated the interests of the United States. Admittedly, the President gets largely unfettered control over the foreign policy of the United States (though Trump has defied Congress in areas where they do have some control). But to the extent Jared pursued his own business interests during the transition, he wouldn’t be able to claim to rely on presidential prerogative.

Which brings me back to Jared’s long struggle to get a security clearance.

Abbe Lowell may not have turned over the financial documents on 666 Fifth Avenue that would show how susceptible Jared’s debt woes make him to foreign influence. But he has serially provided that evidence in support of Jared’s almost certainly futile attempt to convince the FBI he should get a permanent TS/SCI security clearance.

I laid this out yesterday at the very end of my Democracy Now appearance:

I think—the reason why Kushner’s business deals are important, we’ve talked—and in the intro, this wasn’t the only example of—there’s the Don Jr. We’ve talked about how poorly Trump’s people have separated his business interests from the interests of the country. The same is even more true for Jared Kushner, whose family business is basically bankrupt. And over and over again, he’s been shown to be in negotiations with entities, including Russians, but also Chinese and Middle Eastern. So, you know, he’ll go in and say, “OK, we’ll talk about this grand peace plan,” which is not about peace at all, “but, oh, by the way, can you bail out our 666 Park Avenue building, which is badly underwater?” And I think Mueller could make the same argument he’s made with the IRA indictment and the Manafort indictment, and say that Jared Kushner is pretending to be serving America’s foreign policy interests, but in fact he is just doing his own bidding. He’s just trying to bail out his own company. So I wouldn’t be surprised if he’s moving towards a very similar indictment on conspiracy to defraud the United States, having to do with his conflicts of interest.

AMY GOODMAN: And, of course, interesting that Kushner also hasn’t managed to get top security clearance, when he’s a senior adviser to President Trump, as Porter didn’t because he beat his wives, etc. And then you’ve got Donald Jr. now in India promoting Trump businesses, as, of course, Donald Trump is the president of the United States. And he’s standing with the prime minister of India as he does this, promoting the Trump brand, Marcy.

MARCY WHEELER: Exactly. I mean, if Trump and his son and his son-in-law are pretending to be doing the business of the United States but are instead just trying to enrich themselves, again, I don’t think it’s a—you know, we’ve talked about the Emoluments Clause and how you go after the Trump campaign—the Trump officials for their egregious conflicts of interest. And, frankly, it extends into his Cabinet. But what Mueller seems to be doing, with some very good appellate lawyers, by the way, is to be laying out this framework that if you are pretending to be doing something in the interest of the United States but are actually doing something else, serving somebody else’s bidding, whether it’s Russia, pro-Russian Ukrainian political party, or whether it’s your own family business, then they’re going to go after you for a conspiracy charge. And I wouldn’t be surprised if these conspiracy charges all kind of link up at the end, in this kind of grand moment of—I think that’s where he’s headed.

Remember, Trump and his spawn never really thought they’d win the election. Instead, they seemed interested in, among other things, a Trump Tower in Moscow and refinancing 666 Fifth Avenue. But if they made deals with Russians in hopes such personal financial benefits would result, a ConFraudUS charge might be a way to prosecute them for it.

*I originally shortened this “CTDTUS,” but following Peter Crowley’s suggestion, I’m instead using “ConFraudUS.”


[Note: At the top of this post there is an embedded video of Marcy’s interview with Democracy Now. It isn’t rendering properly on all browsers and operating systems and may appear as a blank space. You can watch the video or listen to audio at this link. /~R]

10 Years of emptywheel: Key Non-Surveillance Posts 2011-2012

Happy Birthday to me! To us! To the emptywheel community!

On December 3, 2007, emptywheel first posted as a distinct website. That makes us, me, we, ten today.

To celebrate, over the next few days, the emptywheel team will be sharing some of our favorite work from the last decade. I’ll be doing probably 3 posts featuring some of my most important or — in my opinion — resilient non-surveillance posts, plus a separate post bringing together some of my most important surveillance work. I think everyone else is teeing up their favorites, too.

Putting together these posts has been a remarkable experience to see where we’ve been and the breadth of what we’ve covered, on top of mainstays like surveillance. I’m really proud of the work I’ve done, and proud of the community we’ve maintained over the years.

For years, we’ve done this content ad free, relying on donations and me doing freelance work for others to fund the stuff you read here. I would make far more if I worked for some free-standing outlet, but I wouldn’t be able to do the weedy, iterative work that I do here, which would amount to not being able to do my best work.

If you’ve found this work valuable — if you’d like to ensure it remains available for the next ten years — please consider supporting the site.



DOJ Points to David Passaro’s Trial as Proof We Investigate Torture, But It Actually Proves John Yoo Should Be Tried

I’v written a lot about the David Passaro case — the only one associated with the CIA (he was a contractor training Afghans) to be prosecuted for abuse. This post summarizes a lot of the problems with his case and its use to claim that the US ever held itself responsible for torture.

One Year After Collateral Murder Release, DOD’s Networks Are Still Glaring Security Problem

I’ve done a ton of posts on how the government complains about leaks even while it fails to close gaping security holes in its networks. This was one of the first. A day later I noted that DOD wasn’t aspiring to fix these problems until 2013; as it would turn out, Edward Snowden managed to download NSA’s crown jewels before they would fix them.

The Drone War on Westphalia

For Independence Day in 2011, I wrote a post arguing that the damage the use of drones will do to sovereignty will pose a real problem, particularly with regard to the consent of the governed. In a follow-up I argued against invoking “national security” to defend policies that weaken the nation.

Pakistani Bounty Claims: Adnan Farhan Abd Al Latif and TD-314/00684-02

In the first of a bunch of posts on Adnan Farhan abd al Latif, I showed that the intelligence report on which his detention relied — which Judge Henry Kennedy had originally deemed unreliable — probably was used to detain a bunch of people turned over with bounties.

49% of Michigan’s African Americans to Lose Their Right to Self-Governance

As the country started focusing on MI’s disastrous policy of  emergency managers, I was the first to note the moment when half of Michigan’s African Americans lost their right to local self-governance.


Why Has the Government Story about Who Ordered the UndieBomber to Attack the US Changed?

As part of an effort to justify drone-killing Anwar al-Awlaki, the government publicly blamed him for all of Umar Farouk Abdulmutallab’s attack on the US, blame which should have been shared with others in AQAP. This was the first post where I made that clear.

“The Gloves Come Off” Memorandum of Notification

I discovered that language the government was trying to keep classified in the ACLU torture FOIA was not (as ACLU mistakenly believed) a description about waterboarding, but instead an admission that torture was authorized by the September 17, 2001 Memorandum of Notification that authorized a bunch of other programs. This was a key post in a series of posts on the MON.

US Climate Inaction: Blame Dick Cheney

I believe the US invaded Iraq as part of a Cheney-backed decision to double down on our petroleum-based hegemonic position in the world, in the apparent belief that we can clean up the damage from climate change at some later time. Even our shift to fracking is more about power than the environment. Given how catastrophic the Iraq war was, and given everything that has occurred since — not least our singular abstention from the Paris Accord — I think it a particularly ironic choice.

Lanny Breuer Covers Up Material Support for Terrorism

I wrote a ton about Obama’s failure to prosecute the banks that blew up the world’s economy. One of the most important ones was the post where I laid out Lanny Breuer’s efforts to hide the fact that HSBC had materially supported al Qaeda. Of course, it got no more than a hand slap even as Pete Seda was in prison for closely related actions (Seda’s case ultimately blew up).

Other Key Post Threads

10 Years of emptywheel: Key Non-Surveillance Posts 2008-2010

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.

On the Breadcrumbs Suggesting Feds Flipped Reza Zarrab

In response to last week’s WSJ story on Mike Flynn’s sustained discussions about helping Turkey kidnap Fethullah Gulen, I suggested the far more interesting detail was his involvement in brokering a deal for Reza Zarrab, a Turk accused of laundering gold to benefit Iran. That’s because, in addition to any taint of a quid pro quo, it also implicated Trump’s decision to fire Preet Bharara.

Mostly, the focus has been on the kidnapping part of the story (perhaps, in part, because Republicans tried to attack James Woolsey for his involvement in it a few weeks back). But, because of the timeline, I think the far more interesting side of it is the inclusion of a deal on the Reza Zarrab prosecution — because that implicates Trump’s decision to fire Preet Bharara, substantiating a parallel case to his firing of Jim Comey.


Here’s what the timeline looks like:

November 30: Trump tells Preet he can stay

Mid-December: Flynn has meeting discussing $15 million payoff for doing Turkey’s bidding

March 7: Flynn submits delated FARA registration ending in November

March 11: Trump fires Preet

Given Sessions’ confusion about whether he was really involved in that decision, I would bet there’s a paper trail showing he provided, as he did for the Comey firing, cover for a decision that had already been made.

Today, the Daily Beast has a piece suggesting (albeit backed by a long series of no comments from lawyers) that the Feds may have flipped Zarrab.

Mueller is reportedly looking at a December meeting blocks from Trump Tower where Michael Flynn—shortly before Trump became president and named him national security adviser—was reportedly offered upward of $15 million if he could help Turkey win the extradition of cleric Fethullah Gülen as well as the release of gold trader Reza Zarrab.

Now it appears Zarrab, whose trial for allegedly cheating U.S. sanctions by facilitating gold-for-gas deals between Turkey and Iran is scheduled to begin in just days, may be working with federal prosecutors.

Last month, lawyers for his co-defendant, bank manager Mehmet Atilla, remarked sardonically in court filings that Zarrab, the man at the root of the charges facing their client, had all but vanished, and it seemed “likely that Mr. Atilla will be the only defendant appearing at trial.”

It’s a reasonable suggestion. And one other bread crumb might support it: the tidbit that Mueller’s team added a prosecutor last week, who remains unnamed.

Mueller’s work isn’t just confined to his team of prosecutors, which special counsel spokesman Peter Carr said grew last week to 17 with the addition of an unnamed lawyer.

Zarrab was removed from BOP custody on Wednesday November 8, so the same week that this unnamed additional prosecutor was added to the team.

Mind you, it’s not clear how much Zarrab — who was in jail for the period of the alleged meetings — would know about Flynn’s involvement in any proposed deals. He would, however, know what his lawyers Rudy 9/11 and Michael Mukasey had claimed about such deals.

Of course, it’s also possible he was flipped on someone else, like other officials in the Turkish government, or that something else explains the move.

That said, the prosecutors from SDNY would surely be quite interested in exacting some kind of price for Preet’s abrupt removal, and Zarrab might provide the way to do that.

Update: There has always been confusion about whether Michael (the former AG) or Marc (his son) was the lawyer who weighed in for Zarrab, which continues (as Jim notes). It was Michael, not Marc. I’ve corrected this post accordingly.

Paul Manafort Indicted for Laundering 50 Times as Much Through Rugs as Through Household Labor

In response to yesterday’s server hiccups and in anticipation that Mueller is nowhere near done, we expanded our server capacity overnight. If you think you’ll rely on emptywheel reporting on the Mueller probe, please consider a donation to support the site

One of the nifty things Robert Mueller did with his indictment of Paul Manafort was to lay out all the extravagances he used to launder his money into the US. The most amazing was his $1M antique rug bill.

Mueller also listed $1.4 million laundered through two different clothing stores.

Compare that with the mere $20,000 Manafort spent on the people who clear his NY property.

Admittedly, Manafort appears to have redone his Hamptons and FL properties routinely to launder more money. But it basically means he shorted his staff while spending big on magic carpets.

Which will make Trump’s efforts to give rich shits like Manafort more tax benefits this week even more difficult.

The money laundering through luxury goods isn’t the key crime in Manafort’s indictment. That has to do with serving as an unregistered foreign agent with regards to work from 2012. Importantly, that means Mueller got to point to Tony Podesta’s corruption prominently as one of these two unnamed firms.

The allegation is that by having one Republican and one Democratic lobbyist firm to do the work of pro-Russian Ukrainians, Manafort hid what was really going on.

Just as interesting, Mueller slapped a false statements charge onto the failure to report being a foreign agent, tied to these claims (they carry onto a second page).

That way, if the idea of actually enforcing foreign registry laws doesn’t fly (which is admittedly a novel idea in DC), they still have some crimes to charge Manafort with.

Hopefully, that false statements charge and the idea of charging for failure to register will send a chill through all of DC’s other corrupt influence peddlers.

Importantly, Mueller called for all these toys and much (but not all) of Manafort’s real estate to be forfeited. Which will make it harder for him to pay his lawyers and harder for him to look like a million dollars as he turns himself in.

The money laundering charges here (though not necessarily the foreign registry ones) can be punted down to NY State if Trump pardons Manafort.

Here’s what this does: it applies some pressure to Manafort (and serves as an object lesson to Mike Flynn, who can be charged tomorrow with the same registry related crimes). But it doesn’t yet get into the heart of the Russian influence crimes, which preserves Manafort’s ability to testify about them (that is, to flip).

It’s unclear whether it will work. My biggest question of the day is who is paying for Manafort’s legal bills and how long they’ll be willing to continue doing so.

The Reason Treasury Has Never Complied with Reagan’s EO: Rampant Privacy Violations

For years, I’ve been noting that the Treasury Department, virtually alone among intelligence agencies, does not have procedures to comply with EO 12333’s restrictions on spying on American citizens. Today, BuzzFeed explains why: Treasury’s foreign intelligence wing, OIA, has been engaging in domestic spying. Effectively, they’ve been piggy-backing on FinCen’s access through the Bank Secrecy Act to get information on Americans.

The story describes two big violations. First, when OIA gets masked reports, they call banks to learn the identities of the Americans masked in the reports.

Some sources have also charged that OIA analysts have, in a further legal breach, been calling up financial institutions to make inquiries about individual bank accounts and transactions involving US citizens. Sources said the banks have complied with the requests because they are under the impression they are giving the information to FinCEN, which they are required to do.

One source recalled an instance from 2016 in which OIA personnel, inserting themselves into a domestic money-laundering case, sought information from a Delaware financial institution. In other cases, according to a second source, FinCEN gave OIA reports with the names of US citizens and companies blacked out. OIA obtained those names by calling the banks, then used those names to search the banking database for more information on those American citizens and firms

OIA has also been permitting other agencies — it names CIA and DIA — to put temporary duty officers to access classified banking networks.

Sources also claimed that OIA has opened a back door to officers from other intelligence agencies throughout the government, including the the CIA and the Defense Intelligence Agency. Officials from those agencies have been coming to work at OIA for short periods of time, sometimes for as little as a week, and thereby getting unrestricted access to information on US citizens that they otherwise could not collect without strict oversight.

Dean Boyd has a pretty funny non-denial denial of this charge in the article.

The Defense Intelligence Agency did not respond to a request for comment. CIA spokesman Dean Boyd said, “Suggestions that the Agency may be improperly collecting and retaining US persons data through the mechanisms you described are completely inaccurate.”

I suspect the source of this problem is that Treasury is split into two, with one group doing foreign intelligence and another doing domestic intelligence.

Under a seminal Reagan-era executive order, a line runs through the Treasury Department and all other federal agencies separating law enforcement, which targets domestic crimes, from intelligence agencies, which focus on foreign threats and can surveil US citizens only in limited ways and by following stringent guidelines.

Compare that with FBI, which hasn’t been split in two since the PATRIOT Act, and so can access vast swaths of intelligence on Americans by pretending to be looking at foreigners.  I also suspect the reason this hasn’t been changed at Treasury is because it would piss off the banks, making it clear that the mandated spying assistance under the Bank Secrecy Act implicates their customers too.

Michael Cohen Starts Not Recalling His Negotiations with Dmitry Peskov, “Main Protagonist” of Campaign Versus Hillary

In this post, I suggested the WaPo scoop about Felix Sater discussing a Trump Tower deal was Michael Cohen’s attempt to pre-empt the real story, which would begin to come out after those particular emails got delivered to HPSCI.

Once they got delivered, we learned that Sater connected the Trump Tower plan (if there ever was one) with getting Trump elected.

Michael I arranged for Ivanka to sit in Putins [sic] private chair at his desk and office in the Kremlin. I will get Putin on this program and we will get Donald elected. We both know no one else knows how to pull this off without stupidity or greed getting in the way. I know how to play it and we will get this done. Buddy our boy can become President of the USA and we can engineer it. I will get Putins [sic] team to buy in on this, I will manage this process.

The immediate question at that point should have been why Sater would tie this alleged real estate deal to getting Trump elected, but instead the follow-up reporting has been about the alleged deal.

In response to the first release of that language, Cohen “rebutted” that focus on Sater by denying two things that don’t address what the main focus should be.

Mr. Cohen suggested that Mr. Sater’s comments were puffery. “He has sometimes used colorful language and has been prone to “salesmanship,” Mr. Cohen said in a statement. “I ultimately determined that the proposal was not feasible and never agreed to make a trip to Russia.”

Sater was just engaged in salesmanship. But for what? A tower or a presidency?

Cohen never went to Russia. But did he make the deal without leaving NYC?

Now, a second story based on the emails actually turned over reveals a far more interesting detail: Cohen may not have gone to Russia, but he did reach out to Dmitry Peskov.

Peskov, you may recall, was (per the Steele dossier) the “main protagonist” of the kompromat campaign against Hillary, which initially reportedly — but perhaps not credibly — started as sharing old dirt on Hillary with Trump’s campaign, but by the end, consisted of deciding to leak the second batch of emails.

Russians do have further ‘kompromat’ on CLINTON (e-mails) and considering disseminating it after Duma (legislative elections) in late September. Presidential spokesman PESKOV continues to lead on this.

For his part, Cohen played the key role in brokering relations between Russia and the Trump team after Paul Manafort stepped down during the summer.

Speaking separately to the same compatriot in mid-October 2016, a Kremlin insider with direct access to the leadership confirmed that a key role in the secret TRUMP campaign/Kremlin was being played by the Republican candidates personal lawyer Michael COHEN

So any ongoing discussions between Cohen and Peskov would go to the heart of any coordination between Trump and Russia.

Which is why it is so interesting that Cohen has started to not recall whether there were ongoing conversations after that January email (note, NYT’s Haberman says Cohen sent this to the mail press email for Peskov, not a private one).

“Over the past few months I have been working with a company based in Russia regarding the development of a Trump Tower – Moscow project in Moscow City,” Cohen wrote Peskov, according to a person familiar with the email. “Without getting into lengthy specifics. the communication between our two sides has stalled.”

“As this project is too important, I am hereby requesting your assistance. I respectfully request someone, preferably you, contact me so that I might discuss the specifics as well as arranging meetings with the appropriate individuals. I thank you in advance for your assistance and look forward to hearing from you soon,” Cohen wrote.


In the statement, obtained by the Washington Post, Cohen said Sater suggested the outreach because a massive Trump development in Moscow would require Russian government approval. He said he did not recall receiving a response from Peskov and the project was abandoned two weeks later. [my emphasis]

I wonder if Cohen can recall any more recent conversations with Peskov, such as in advance of the time, in February of this year, when he and Sater delivered a Ukrainian peace plan to Mike Flynn in the days before Trump’s National Security Advisor was forced to quit?

Ah well. I’m sure a good lawyer like Cohen simply forgot these details, rather than giving the classic DC not recall answer that will provide him with another opportunity to tell a cover story the next time inconvenient emails get found.

Update: The WSJ gets into the act, with this report on how Cohen, when asked why he didn’t tell Trump he was going to call Putin’s top advisor for favors while Trump was running for President, did not respond.

In 2015, Mr. Cohen said, he informed the then-candidate that he was working on a licensing deal for a Trump Tower in Moscow. He subsequently asked for and received Mr. Trump’s signature on a nonbinding letter of intent for the project in October 2015. And in January 2016, he said, he informed the then-candidate that he had killed the proposal. Mr. Cohen said each conversation was brief.

Mr. Cohen’s communication with the president about the Moscow project may come under scrutiny because of a January 2016 email Mr. Cohen sent to Russian President Vladimir Putin’s top press official to ask for “assistance” in arranging the deal. Mr. Cohen said he didn’t inform Mr. Trump that he had sent the email to the press official, Dmitry Peskov. He didn’t respond when asked why he hadn’t done so.

So Cohen would have you believe he informed Trump at each stage of this process — except the one where he solicited help from a top official from a hostile nation-state.

On the Manafort Raid

This morning, the WaPo reported that Paul Manafort’s Alexandria home was searched in a pre-dawn raid on July 26.

There are several notable details about WaPo’s report.

First, as Julian Sanchez notes, it makes no mention of the fact that to get a search warrant, you have to convince a judge you’ll find evidence of a crime.

Note, too, that WaPo talked to someone who has seen the warrant, which is almost certainly otherwise still sealed.

The search warrant was wide-ranging and FBI agents working with special counsel Robert S. Mueller III departed the home with various records.


The search warrant indicates investigators may have argued to a federal judge they had reason to believe Manafort could not be trusted to turn over all records in response to a grand jury subpoena.

Having neglected to mention the probable cause bit and reviewed the warrant, WaPo goes to some lengths to suggest the seized documents are ones Manafort would have gladly given over had Robert Mueller’s inquiry just asked nicely.

The raid came as Manafort has been voluntarily producing documents to congressional committees investigating Russia’s interference in the 2016 presidential election.


The documents included materials Manafort had already provided to Congress, said people familiar with the search.

“If the FBI wanted the documents, they could just ask [Manafort] and he would have turned them over,” said one adviser close to the White House.

And it specifically points to documents pertaining to the June 9, 2016 meeting that Manafort and everyone else failed to disclose in timely fashion.

Manafort has provided documents to both the Senate Judiciary Committee and the Senate and House intelligence committees. The documents are said to include notes Manafort took while attending a meeting with Donald Trump Jr. and a Russian lawyer at Trump Tower in June 2016.

So the seized documents include documents Manafort turned over willingly, which in turn includes details on that June 9 meeting. But that doesn’t mean (contrary to some shitty derivative reporting on this) that the set of documents seized matches the set of documents provided to Congress. It may also include other things.

Manafort’s attorney is not the source for the story, but Manafort’s allies may be.

Josh Stueve, spokesman for Mueller, declined to comment, as did Reginald Brown, an attorney for Manafort.


Manafort’s allies fear that Mueller hopes to build a case against Manafort unrelated to the 2016 campaign, in hopes that the former campaign operative would provide information against others in Trump’s inner circle in exchange for lessening his own legal exposure.

Now consider a detail included in the NYT version of this story but not (as far as I’ve seen) in any of the other coverage: the documents seized include tax documents and foreign banking records.

Investigators for the special counsel, Robert S. Mueller III, recently searched a home of President Trump’s former campaign manager, Paul Manafort, for tax documents and foreign banking records, according to a person briefed on the matter.

These are money laundering documents, not campaign documents.

The NYT, curiously, doesn’t report where the raid was, which suggests it was not just a response to WaPo’s reporting, which clearly identified the raid as taking place in Alexandria.

Remember: when high powered people are being investigated, the safest way they can communicate to each other is via leaks to the press. Moreover, such leaks can help spin the story away from one area (perhaps, here, away from the financial documents) and towards another (that June 9 meeting about which Manafort spoke with Congress). Given the Manafort allies’ spin that Mueller may be investigating stuff unrelated to the election campaign, it suggests this may be as much about money laundering (which FBI has been investigating for over a year) that all involved worry will be used to flip Manafort to testify about Trump.

Update: One other interesting question about this story is why it is coming out now. Why did it take two weeks for this story to come out?