Posts

Is Manafort Getting Close to Crying “Uncle”?

/97 Comments/in , /by

Even before this hilarious Zoe Tillman report on a hearing in Paul Manafort’s civil suit against Robert Mueller, I was going to point to the things Manafort has learned that we haven’t. But the report that Manafort’s lawyers are trying to “Stop Bobby Three Sticks, before he indicts again!!!” makes the details all the more interesting.

In the hearing, Manafort’s lawyers tried to rescue their desperate lawsuit arguing Mueller’s appointment is improper by arguing they’re only trying to prevent prospective actions with this lawsuit — that is, they’re trying to prevent Mueller from larding on more charges.

During arguments Wednesday about whether Manafort’s lawsuit challenging special counsel Robert Mueller’s appointment could go forward, Manafort’s lawyer said the case wasn’t about getting the existing indictments tossed out — it was about stopping future prosecutions against Manafort by the special counsel’s office.

Pressed by the judge about how Manafort could sue now if he was trying to stop activity by the special counsel’s office that hadn’t happened yet, Manafort’s lead attorney Kevin Downing argued that the harm to Manafort was ongoing because the special counsel’s investigation and the grand jury were still active.

Without an order from the court stopping Mueller’s office from pursuing other charges in the future — based on an appointment order that Downing contends was unlawful — Manafort would have to “sit and wait” and keep chasing the special counsel’s office wherever they decided to prosecute him next in order to challenge Mueller’s appointment, Downing said. He didn’t specify what other types of charges he thought the special counsel might be investigating against Manafort.

Manafort’s civil lawsuit against the Justice Department and the special counsel’s office, filed in January in the US District Court for the District of Columbia, asked the court to not only declare Mueller’s original appointment in May invalid, but also to set “aside all actions taken against Mr. Manafort pursuant to the Appointment Order.”

But Downing has since walked that back, saying that they’re only asking for a forward-looking order that blocks future action.

As I noted, there are several apparently unrelated things that Mueller’s team may have shown Manafort that they haven’t shown us.

First, back on March 1, Mueller’s team moved to unseal transcripts of some sidebar conferences from the status conferences on January 16 and February 14, as well as an ex parte discussion they had with the judge on February 14 (as well as discussions about why Manafort couldn’t yet, and still can’t, make bail from February 14).

The United States of America, by and through Special Counsel Robert S. Mueller, III, respectfully moves to unseal the sealed portion of the transcripts of sidebar/bench conferences that occurred during the status conferences held in this matter on January 16, 2018, and February 14, 2018. The transcripts of these bench conferences were sealed at the government’s request. At the time, the government indicated that the cause for sealing was likely to be mooted in the near future and that the government had no objection to making the transcript available to the public once that happened. The government respectfully submits that unsealing is now appropriate. The government also submits that the transcript of an ex parte sidebar discussion between the government and the Court, conducted at the February 14, 2018, status conference should also be unsealed and made available to the public, the cause for sealing having been mooted. [my emphasis]

The cause for sealing that would soon be mooted might either be the larding on of new charges against Manafort related to his more recent money laundering between 2015 and 2017 (which took place on February 22), or Rick Gates’ anticipated plea (which took place on February 23).

On March 7, Gates’ team asked for more time to object to the unsealing, until five days after they got the transcripts, based on the fact that Tom Green had just joined the case and wasn’t present at those hearings. On March 9, Manafort’s team asked for the same five days after they got the transcripts. Judge Amy Berman Jackson granted both those requests. Since then, there’s been no further developments on this unsealing reflected in the unsealed docket, though there are skips in the numbering (230 and 231, and 238). While it’s possible those transcripts aren’t ready yet, the original version of the January 16 transcript was ready in 7 days (there’s no notice for the February 14 transcripts, though two hearings since that one have been docketed).

So it’s quite possible Manafort now has the transcript of that ex parte sidebar from February 14, but has decided he doesn’t want us to see it.

Then there’s the minute notice from yesterday granting the government’s request to seal an exhibit from its Monday filing.

Berman Jackson’s approval notes that the government has already released a redacted version of the exhibit, meaning the exhibit in question must be the Rod Rosenstein memo. I suggested yesterday that the government was effectively providing Manafort a less redacted copy showing what else it was investigating Manafort for, which might well pertain to Oleg Deripaska, given that Mueller dropped an otherwise superfluous reference to Deripaska in Monday’s motion.

But who knows? There are definitely possible investigative prongs that might be even more damaging for Manafort than just his well-known relationship with Deripaska.

Whatever it is, Manafort’s team went from reading that memo to making a desperate bid to prevent Mueller from bringing any more indictments against Manafort.

That bid — as well as the bid to throw out the indictments — appears to be doomed. Based on Tillman’s report, Berman Jackson seems to have already read Monday’s filing, given that the doubts she raised in today’s hearing all were all laid out in that.

US District Judge Amy Berman Jackson — who is also handling Manafort’s criminal case in DC — expressed significant doubts on Wednesday about whether Manafort could pursue a civil lawsuit. She questioned whether there was a clear limit on how broad a special counsel’s authority could be from the get-go; how Manafort had standing to sue over a possible future prosecution that hadn’t yet happened; and why he should be able to bring a civil lawsuit when he could make the same arguments in the criminal cases, where he clearly had the right to challenge the indictments.

The judge noted that the Justice Department regulations Manafort cited explicitly said that they did not create rights that could be enforced in a civil lawsuit.

That she’s raising objections from that motion suggests she finds them (unsurprisingly) persuasive.

Which means, absent some action from Trump or Rosenstein, Manafort will have to just sit there trying to negotiate bail and waiting for new charges until such time as he screams “uncle.”

Share this entry

There Are Almost Certainly Other DAG Rosenstein Memos

/15 Comments/in , , , /by

As I noted in this post, Robert Mueller’s team of “Attorneys for the United States of America” responded to Paul Manafort’s claim that Rod Rosenstein’s grant of authority to the Special Counsel did not extend to the money laundering he is currently being prosecuted for by revealing an August 2, 2017 memo from Rosenstein authorizing Mueller to investigate, along with a bunch of redacted stuff,

Allegations that Paul Manafort:

  • Committed a crime or crimes by colluding with Russian government officials with respect to the Russian government’s efforts to interfere with the 2016 election for President of the United States, in violation of United States law;
  • Committed a crime or crimes arising out of payments he received from the Ukrainian government before and during the tenure of President Viktor Yanukovych.

As the filing notes, this memo has not been revealed before, neither to us nor to Manafort.

That’s all very interesting (and has the DC press corps running around claiming this is a big scoop, when it is instead predictable). More interesting, however, is the date, which strongly suggests that there are more of these memos out there.

Mueller is unlikely to have waited two and a half months to memorialize his scope

I say that, first of all, because Rosenstein wrote the August 2 memo two and a half months after he appointed Mueller. Given Trump’s raging attacks on the investigation, it’d be imprudent not to get memorialization of the scope of the investigation at each step. Indeed, as I’ve noted, in the filing Mueller points to the Libby precedent, arguing that this memo “has the same legal significance” as the two memos Jim Comey used to (publicly) memorialize the scope of Patrick Fitzgerald’s investigation.

The August 2 Scope Memorandum is precisely the type of material that has previously been considered in evaluating a Special Counsel’s jurisdiction. United States v. Libby, 429 F. Supp. 2d 27 (D.D.C. 2006), involved a statutory and constitutional challenge to the authority of a Special Counsel who was appointed outside the framework of 28 C.F.R. Part 600. In rejecting that challenge, Judge Walton considered similar materials that defined the scope of the Special Counsel’s authority. See id. at 28-29, 31-32, 39 (considering the Acting Attorney General’s letter of appointment and clarification of jurisdiction as “concrete evidence * * * that delineates the Special Counsel’s authority,” and “conclud[ing] that the Special Counsel’s delegated authority is described within the four corners of the December 30, 2003 and February 6, 2004 letters”). The August 2 Scope Memorandum has the same legal significance as the original Appointment Order on the question of scope.

The first of those Comey letters, dated December 30, 2003, authorized Fitz to investigate the leak of Valerie Plame’s identity. The second of those, dated February 6, 2004, memorialized that Fitz could also investigate,

federal crimes committed in the course of, and with intent to interfere with, your investigation, such as perjury, obstruction of justice, destruction of evidence, and intimidation of witnesses; to conduct appeals arising out of the matter being investigated and/or prosecuted; and to pursue administrative remedies and civil sanctions (such as civil contempt) that are within the Attorney General’s authority to impose or pursue.

It’s the second memo that memorialized Fitz’ authority to prosecute Scooter Libby for protecting Dick Cheney’s role in outing Valerie Plame.

Mueller, then the acting FBI Director, would presumably have been in the loop of the Fitz investigation (as Christopher Wray is in Mueller’s) and would have known how these two letters proceeded. So it would stand to reason he’d ask for a memo from the start, particularly given that the investigation already included multiple known targets and that Trump is even more hostile to this investigation than George Bush and Dick Cheney were to Fitz’s.

Admittedly, unlike the Comey memo, which was designed for public release, there’s no obvious, unredacted reference to a prior memo. Though something that might imply a prior memo is redacted at the top of the released memo (though this is probably a classification marking).

And, given that this memo was designed to be secret, Rosenstein may have written the memo to obscure whether there are prior ones and if so how many.

The memo closely follows two key dates

That said, the date of the memo, August 2, is mighty curious. It is six days after the July 27 Papadopoulos arrest at Dulles airport. And seven days after the July 26 no knock search of Paul Manafort’s Alexandria home.

That timing might suggest any of several things. It’s certainly possible (though unlikely) the timing is unrelated.

It’s possible that Rosenstein wrote the memo to ensure those two recent steps were covered by his grant. That wouldn’t mean that the search and arrest wouldn’t have been authorized. The memo itself notes that Mueller would be obliged to inform Rosenstein before each major investigative step.

The Special Counsel has an explicit notification obligation to the Attorney General: he “shall notify the Attorney General of events in the course of his or her investigation in conformity with the Departmental guidelines with respect to Urgent Reports.” 28 C.F.R. § 600.8(b). Those reports cover “[m]ajor developments in significant investigations and litigation,” which may include commencing an investigation; filing criminal charges; executing a search warrant; interviewing an important witness; and arresting a defendant.

Both Papadopoulos’ arrest and that dramatic search would fit this criteria. So it’s virtually certain Rosenstein reviewed Urgent Memos on both these events before they happened. Plus, his memo makes it clear that the allegations included in his memo “were within the scope of the Investigation at the time of your appointment and are within the scope of the Order,” meaning that the inclusion of them in the memo would retroactively authorize any activities that had already taken place, such as the collection of evidence at Manafort’s home outside the scope of the election inquiry.

As I noted, the memo also asserts that Special Counsels’ investigative authority, generally, extends to investigating obstruction and crimes the prosecutor might use to flip witnesses.

The filing is perhaps most interesting for the other authorities casually asserted, which are not necessarily directly relevant in this prosecution, but are for others. First, Mueller includes this footnote, making it clear his authority includes obstruction, including witness tampering.

The Special Counsel also has “the authority to investigate and prosecute federal crimes committed in the course of, and with intent to interfere with, the Special Counsel’s investigation, such as perjury, obstruction of justice, destruction of evidence, and intimidation of witnesses” and has the authority “to conduct appeals arising out of the matter being investigated and/or prosecuted.” 28 C.F.R. § 600.4(a). Those authorities are not at issue here.

Those authorities are not at issue here, but they are for the Flynn, Papadopoulos, Gates, and Van der Zwaan prosecutions, and for any obstruction the White House has been engaging in. But because it is relevant for the Gates and Van der Zwaan prosecutions, that mention should preempt any Manafort attempt to discredit their pleas for the way they expose him.

The filing includes a quotation from DOJ’s discussion of special counsels making it clear that it’s normal to investigate crimes that might lead someone to flip.

[I]n deciding when additional jurisdiction is needed, the Special Counsel can draw guidance from the Department’s discussion accompanying the issuance of the Special Counsel regulations. That discussion illustrated the type of “adjustments to jurisdiction” that fall within Section 600.4(b). “For example,” the discussion stated, “a Special Counsel assigned responsibility for an alleged false statement about a government program may request additional jurisdiction to investigate allegations of misconduct with respect to the administration of that program; [or] a Special Counsel may conclude that investigating otherwise unrelated allegations against a central witness in the matter is necessary to obtain cooperation.”

That one is technically relevant here — one thing Mueller is doing with the Manafort prosecution (and successfully did with the Gates one) is to flip witnesses against Trump. But it also makes it clear that Mueller could do so more generally.

Mueller used the false statements charges against Papadopoulos to flip him. He surely hopes to use the money laundering charges against Manafort to flip him, too. Both issues may have been at issue in any memo written to newly cover the events of late July.

Mueller may not have revealed the scope of the Manafort investigation at that time

Now consider this detail: the second bullet describing the extent of the investigation into Manafort has a semi-colon, not a period.

It’s possible Mueller used semi-colons after all these bullets (of which Manafort’s is the second or third entry). But that, plus the resumption of the redaction without a double space suggests there may be another bulleted allegation in the Manafort allegation.

There are two other (known) things that might merit a special bullet. First, while it would seem to fall under the general election collusion bullet, Rosenstein may have included a bullet describing collusion with Aras Agalarov and friends in the wake of learning about the June 9 Trump Tower meeting with his employees. More likely, Rosenstein may have included a bullet specifically authorizing an investigation of Manafort’s ties with Oleg Deripaska and Konstantin Kilimnik.

The Mueller memo actually includes a specific reference to that, which as I’ve noted I will return to.

Open-source reporting also has described business arrangements between Manafort and “a Russian oligarch, Oleg Deripaska, a close ally of President Vladimir V. Putin.”

The latter might be of particular import, given that we know a bunch of fall 2017 interviews focused on Manafort’s ties to Deripaska and the ongoing cover-up with Kilimnik regarding the Skadden Arps report on the Yulia Tymoshenko prosecution.

All of which is to say that this memo may reflect a new expansion of the Manafort investigation, perhaps pursuant to whatever the FBI discovered in that raid on Manafort’s home. If so, that should be apparent to him, as he and his lawyers know what was seized.

Still, I wouldn’t be surprised if he inquired about what authorized that July 26 raid, if for no other reason than to sustain his effort to make more information on Mueller’s investigation public.

The redactions almost certainly hide two expansions to the investigation as it existed in October 2016

Now let’s turn to what else (besides another possible Manafort bullet) the redactions might show, and what may have been added since.

The unredacted description of the Manafort investigation takes up very roughly about one fifth of the section describing allegations Mueller was pursuing.

The Schiff Memo revealed that DOJ had sub-investigations into four individuals in October 2016.

Endnote 7 made it clear that, in addition to Page, this included Flynn and Papadopoulos, probably not Rick Gates, and one other person, possibly Roger Stone.

In August 2017, all four of those would have been included in a Rosenstein memo, possibly with a bullet dedicated to Gates alone added. That said, not all of these would require two or more bullets (and therefore as much space as the Manafort description). Papadopoulos’ description might include two, one dedicated to the collusion and one to the lying about collusion, or just one encompassing both the collusion and the lying. Flynn’s might include three, one dedicated to the collusion, one to the lying about it, and one to the unregistered foreign agent work, including with Turkey, that we know Mueller to have been investigating; or, as with Papadopoulos, the lying about the collusion might be incorporated into that bullet. Stone’s bullet would likely have only reflected the collusion, an investigation that is currently very active. Carter Page’s suspected role as a foreign agent might be one bullet or two.

That suggests, though doesn’t confirm, that there are a few other things included in those redacted bullets, things not included in the investigation in October 2016 as reflected in the Schiff memo.

Indeed, we should expect two more things to be included in the bullet points: First, the name of any suspect, including the President, associated with the obstruction of justice. Rosenstein himself had already been interviewed with respect to that aspect of the investigation by August 2, so surely Rosenstein had already authorized that aspect of the investigation.

The redactions most likely also include the names of Don Jr and Jared Kushner (and Paul Manafort), for their suspected collusion with Russia as reflected in the June 9 meeting. At least according to public reporting, Mueller may have first learned of this in June when Manafort and Kushner confirmed it in turning over evidence to Congress and Mueller. The first revelations that Mueller was obtaining subpoenas from a dedicated grand jury were on August 3, just one day after this memo. That same day, reports described Mueller issuing subpoenas related to the June 9 meeting.

Indeed, it’s quite possible Rosenstein issued this memo to memorialize the inclusion of the President’s spawn among the suspects of the investigation.

Rosenstein has almost certainly updated this memo since August 2

All that said, there’s not enough redacted space to include the known expanded current scope of the investigation, and given that the newly expanded scope gets closer to the President, Rosenstein has surely issued an update to this memo since then. These things are all definitively included in the current scope of the investigation and might warrant special mention in any update to Rosenstein’s authorizing memo:

Many of these — particularly the ones that affect only Russians — might be included under a generic “collusion with Russia” bullet. The closer scrutiny on Jared, however, surely would get an update, as would any special focus on the Attorney General.

More importantly, to the extent Mueller really is investigating Trump’s business interests (whether that investigation is limited just to Russian business, or more broadly) — the red line the NYT helpfully set for the President — that would necessarily be included in the most up-to-date memo authorizing Mueller’s activities. There is no way Mueller would take actions involving the President personally without having the authorization to do so in writing.

Which is why we can be virtually certain the August 2 memo is not the last memo Rosenstein has written to authorize Mueller’s actions.

Mind you, Mueller probably wouldn’t want to release a memo with several pages of redacted allegations. Which may be why we’re looking at the redacted version of an almost certainly superseded memo.

Updated: Later today Mueller’s team asked to file a copy of an exhibit–which given Judge Berman Jackson’s description of it as released in redacted form, has to be the Rosenstein memo–under seal. Which suggests they’re going to show Manafort what else they’re investigating (which I bet is the Deripaska stuff).

Share this entry

The Mueller Filing

/24 Comments/in , /by

Robert Mueller’s team has submitted its response to Paul Manafort’s motion to dismiss his indictment based on a claim Mueller isn’t authorized to prosecute crimes like the money laundering he is accused of. As I predicted, this filing lays out some theory of his case — but much of it is redacted, in the form of a memo Rod Rosenstein wrote last August laying out the parameters of the investigation at that time. As the filing makes clear, that memo (and any unmentioned predecessors or successors) form the same function as the public memos Jim Comey gave Patrick Fitzgerald to memorialize any seeming expansions of his authority in the CIA leak case, which the DC Circuit relied on to determine that the Libby prosecution was clearly authorized by Fitzgerald’s mandate.

Nevertheless, midway through the legal description, the filing lays out what I have — Manafort’s Ukrainian entanglements are part of this investigation because 1) he was a key player in the campaign and 2) had long ties to Russian backed politicians and (this is a bit trickier) Russians like Oleg Deripaska.

The Appointment Order itself readily encompasses Manafort’s charged conduct. First, his conduct falls within the scope of paragraph (b)(i) of the Appointment Order, which authorizes investigation of “any links and/or coordination between the Russian government and individuals associated with the campaign of President Donald Trump.” The basis for coverage of Manafort’s crimes under that authority is readily apparent. Manafort joined the Trump campaign as convention manager in March 2016 and served as campaign chairman from May 2016 until his resignation in August 2016, after reports surfaced of his financial activities in Ukraine. He thus constituted an “individual associated with the campaign of President Donald Trump.” Appointment Order ¶ (b) and (b)(i). He was, in addition, an individual with long ties to a Russia-backed Ukrainian politician. See Indictment, Doc. 202, ¶¶ 1-6, 9 (noting that between 2006 and 2015, Manafort acted as an unregistered agent of Ukraine, its former President, Victor Yanukovych—who fled to Russia after popular protests—and Yanukovych’s political party). Open-source reporting also has described business arrangements between Manafort and “a Russian oligarch, Oleg Deripaska, a close ally of President Vladimir V. Putin.”

[snip]

The Appointment Order is not a statute, but an instrument for providing public notice of the general nature of a Special Counsel’s investigation and a framework for consultation between the Acting Attorney General and the Special Counsel. Given that Manafort’s receipt of payments from the Ukrainian government has factual links to Russian persons and Russian-associated political actors, and that exploration of those activities furthers a complete and thorough investigation of the Russian government’s efforts to interfere in the 2016 election and any links and/or coordination with the President’s campaign, the conduct charged in the Indictment comes within the Special Counsel’s authority to investigate “any matter that arose or may arise directly from the investigation.”

I’ll do a follow-up on why the Deripaska reference is a bit tricky. It’s tricky in execution, not in fact.

The “Attorneys for the United States of America”

I’ll refer to the author of this memo as Mueller for convenience sake, but because I obsess about how Mueller’s team deploys, it’s worth noting how the memo is signed.

The memo is signed by Andrew Weissman, the lead in the Manafort prosecution and (as the memo notes) a career AUSA in his own right. Greg Andres, who has also been on all the Manafort filings, includes his DC district license, making any continuity there clear. Adam Jed, an appellate specialist who has been deployed to this team in the past, is included. But before all them is Michael Dreeben, the Solicitor General’s killer attorney on appeals.

Aside from Mueller himself, Andres is the only lawyer listed who was not a DOJ employee when Jim Comey got fired, which is relevant given the memo’s argument that these attorneys could have prosecuted this with or without Mueller present.

Notably, Kyle Freeny, who has been on all the other Manafort filings, is not listed.

I’m unsure whether the filing uses the title, “Attorneys for the United States of America” because it underscores the argument of the memo — all their authority derives directly from Rosenstein — or if it signifies someone (probably Dreeben, who maintains his day job at the Solicitor General’s office) isn’t actually a formal member of Mueller’s team. But it is a departure from the norm, which since at least the roll-out of Brian Richardson as a “Assistant Special Counsel” with the Van der Zwaan plea, has used the titles “Senior” and “Assistant Special Counsel” to sign their filings.

Update: Christian Farias notes that this Attorneys for the US is not unique to this filing.

Manafort is especially screwed because Rosenstein is so closely involved

The memo starts by laying out what its presents as the history of the investigation. It includes the following events:

  • Jeff Sessions March 2, 2017 recusal
  • Jim Comey’s March 20, 2017 public confirmation of an investigation into “the Russian government’s efforts to interfere in the 2016 presidential election, and that includes investigating the nature of any links between individuals associated with the Trump campaign and the Russian government and whether there was an coordination between the campaign and Russia’s efforts.”
  • Rod Rosenstein’s May 17, 2017 order appointing Mueller Special Counsel “to investigate Russian interference with the 2016 presidential election and related matters”

It then lays out the regulatory framework governing Mueller’s appointment. While this generally maps what Rosenstein included in his appointment order — which cites 28 USC §§ 509, 510, 515, and 600.4 through 600.10 — Mueller also cites to the basis of the Attorney General’s authority, including 28 USC §§ 503, 516, and all of 600. The latter citation is of particular interest, as it notes that the AG (Rosenstein, in this case) ” is not required to invoke the Special Counsel regulations” (which the filing backs by citing some historical examples). The filing then asserts that the Special Counsel regulations serve as ” a helpful framework for the Attorney General to use in establishing the Special Counsel’s role.”

Mueller then describes what the filing implies has been the process by which Mueller has informed Rosenstein of major actions he’s about to take. This consists of “‘providing Urgent Reports’ to Department leadership on ‘major developments.'” By doing it this way, Mueller implies a process without providing a basis to FOIA these Urgent Reports.

Then, the filing lays out how the scope of his authority has evolved. Initially, he notes, that was based on his appointing order. On August 2 — two and a half months after his appointment, almost a week after George Papadopoulos’ arrest, and the day after Andres joined Mueller’s team — Rosenstein wrote a memo describing the scope of Mueller’s investigation and authority.  That memo (which is included in heavily redacted form) authorizes Mueller to investigate,

Allegations that Paul Manafort:

  • Committed a crime or crimes by colluding with Russian government officials with respect to the Russian government’s efforts to interfere with the 2016 election for President of the United States, in violation of United States law;
  • Committed a crime or crimes arising out of payments he received from the Ukrainian government before and during the tenure of President Viktor Yanukovych.

In other words, by August 2 (if not before) Rosenstein had authorized Mueller to prosecute Manafort for the money laundering of his payments from Yanukovych.

Significantly, the filing notes that the August 2 memo told Mueller to come back if anything else arises.

For additional matters that otherwise may have arisen or may arise directly from the Investigation, you should consult my office for a determination of whether such matters should be within the scope of your authority. If you determine that additional jurisdiction is necessary in order to fully investigate and resolve the matters assigned, or to investigate new matters that come to light in the course of your investigation, you should follow the procedures set forth in 28 C.F.R. § 600.4(b).

The filing then lays out Manafort’s DC indictments and his challenge to Mueller’s authority. The summary of that argument looks like this:

Manafort’s motion to dismiss the Indictment should be rejected for four reasons. First, the Acting Attorney General and the Special Counsel have acted fully in accordance with the relevant statutes and regulations. The Acting Attorney General properly established the Special Counsel’s jurisdiction at the outset and clarified its scope as the investigation proceeded. The Acting Attorney General and Special Counsel have engaged in the consultation envisioned by the regulations, and the Special Counsel has ensured that the Acting Attorney General was aware of and approved the Special Counsel’s investigatory and prosecutorial steps. Second, Manafort’s contrary reading of the regulations—implying rigid limits and artificial boundaries on the Acting Attorney General’s actions—misunderstands the purpose, framework, and operation of the regulations. Properly understood, the regulations provide guidance for an intra-Executive Branch determination, within the Department of Justice, of how to allocate investigatory and prosecutorial authority. They provide the foundation for an effective and independent Special Counsel investigation, while ensuring that major actions and jurisdictional issues come to the Acting Attorney General’s attention, thus permitting him to fulfill his supervisory role. Accountability exists for all phases of the Special Counsel’s actions. Third, that understanding of the regulatory scheme demonstrates why the Special Counsel regulations create no judicially enforceable rights. Unlike the former statutory scheme that authorized court-appointed independent counsels, the definition of the Special Counsel’s authority remains within the Executive Branch and is subject to ongoing dialogue based on sensitive prosecutorial considerations. A defendant cannot challenge the internal allocation of prosecutorial authority under Department of Justice regulations. Finally, Manafort’s remedial claims fail for many of the same reasons: the Special Counsel has a valid statutory appointment; this Court’s jurisdiction is secure; no violation of the Federal Rules of Criminal Procedure occurred; and any rule-based violation was harmless. [my emphasis]

The bolded bit is the key part: Mueller is treating Manafort’s challenge as a challenge to Article II authority, making the appointment even more sound than previous Ken Starr-type Independent Counsel appointments were, because they don’t present a constitutional appointments clause problem. Mueller returns to that argument several times later in the filing.

Under the Independent Counsel Act, constitutional concerns mandated limitations on the judiciary’s ability to assign prosecutorial jurisdiction. In the wholly Executive-Branch regime created by the Special Counsel regulations, those constitutional concerns do not exist.

[snip]

[T]he court contrasted [limitations on Independent Counsels] with the Attorney General’s “broader” authority to make referrals to the independent counsel: the Attorney General “is not similarly subject to the ‘demonstrably related’ limitation” because the Attorney General’s power “is not constrained by separation of powers concerns.” Id.; see also United States v. Tucker, 78 F.3d 1313, 1321 (8th Cir.), cert. denied, 519 U.S. 820 (1996). That is because the Attorney General’s referral decision exercises solely executive power and does not threaten to impair Executive Branch functions or impose improper duties on another branch.

[snip]

It is especially notable that Manafort, while relying on principles of political accountability, does not invoke the Appointments Clause as a basis for his challenge, despite the Clause’s “design[] to preserve political accountability relative to important Government assignments.” E

From there, the memo goes into the legal analysis which is unsurprising. The courts, including the DC Circuit in the Libby case, have approved this authority. That’s a point the filing makes explicit by comparing the August 2 memo with the two memos Jim Comey wrote to document the scope of Patrick Fitzgerald’s authority in the CIA leak investigation.

The August 2 Scope Memorandum is precisely the type of material that has previously been considered in evaluating a Special Counsel’s jurisdiction. United States v. Libby, 429 F. Supp. 2d 27 (D.D.C. 2006), involved a statutory and constitutional challenge to the authority of a Special Counsel who was appointed outside the framework of 28 C.F.R. Part 600. In rejecting that challenge, Judge Walton considered similar materials that defined the scope of the Special Counsel’s authority. See id. at 28-29, 31-32, 39 (considering the Acting Attorney General’s letter of appointment and clarification of jurisdiction as “concrete evidence * * * that delineates the Special Counsel’s authority,” and “conclud[ing] that the Special Counsel’s delegated authority is described within the four corners of the December 30, 2003 and February 6, 2004 letters”). The August 2 Scope Memorandum has the same legal significance as the original Appointment Order on the question of scope. Both documents record the Acting Attorney General’s determination on the scope of the Special Counsel’s jurisdiction. Nothing in the regulations restricts the Acting Attorney General’s authority to issue such clarifications.

Having laid out (with the Rosenstein memo) that this investigation operates in equivalent fashion to the Libby prosecution, the case is fairly well made. Effectively Manafort is all the more screwed because the Acting AG has been personally involved and approved each step.

The other authorities cover other prosecutions Mueller has laid out

The filing is perhaps most interesting for the other authorities casually asserted, which are not necessarily directly relevant in this prosecution, but are for others. First, Mueller includes this footnote, making it clear his authority includes obstruction, including witness tampering.

The Special Counsel also has “the authority to investigate and prosecute federal crimes committed in the course of, and with intent to interfere with, the Special Counsel’s investigation, such as perjury, obstruction of justice, destruction of evidence, and intimidation of witnesses” and has the authority “to conduct appeals arising out of the matter being investigated and/or prosecuted.” 28 C.F.R. § 600.4(a). Those authorities are not at issue here.

Those authorities are not at issue here, but they are for the Flynn, Papadopoulos, Gates, and Van der Zwaan prosecutions, and for any obstruction the White House has been engaging in. But because it is relevant for the Gates and Van der Zwaan prosecutions, that mention should preempt any Manafort attempt to discredit their pleas for the way they expose him.

The filing includes a quotation from DOJ’s discussion of special counsels making it clear that it’s normal to investigate crimes that might lead someone to flip.

[I]n deciding when additional jurisdiction is needed, the Special Counsel can draw guidance from the Department’s discussion accompanying the issuance of the Special Counsel regulations. That discussion illustrated the type of “adjustments to jurisdiction” that fall within Section 600.4(b). “For example,” the discussion stated, “a Special Counsel assigned responsibility for an alleged false statement about a government program may request additional jurisdiction to investigate allegations of misconduct with respect to the administration of that program; [or] a Special Counsel may conclude that investigating otherwise unrelated allegations against a central witness in the matter is necessary to obtain cooperation.”

That one is technically relevant here — one thing Mueller is doing with the Manafort prosecution (and successfully did with the Gates one) is to flip witnesses against Trump. But it also makes it clear that Mueller could do so more generally.

I’ll comment more on the memo tomorrow. But for now, understand this is a solid memo that puts the Manafort prosecution squarely on the same footing that the Libby one was.

 

Share this entry

Alex Van Der Zwaan: “Gone Native”

/68 Comments/in , /by

Tomorrow, Alex Van der Zwaan, the former Skadden associate who unsuccessfully attempted to hide ongoing conversations between him, Rick Gates, Konstantin Kilimnik, and (presumably) Greg Craig that took place in September and October 2016 will be sentenced. The government is seeking prison time, his lawyers are seeking probation (in part to keep him out of our nightmarish deportation process).

In advance of the sentencing (and today’s filing explaining how all this is authorized under the Special Counsel mandate Rod Rosenstein gave to Mueller), I wanted to lay out a few more details revealed by the public documents in this case, including the prosecution and defense arguments on sentencing.

Taken together, the documents reveal a few interesting wrinkles.

First, the defense argues that Van der Zwaan didn’t hide the communications he had with Rick Gates and Konstantin Kilimnik in fall 2016 to hide the ongoing relationship Trump’s onetime campaign manager had with someone the FBI still believed had ties to GRU, the Russian intelligence agency behind the hack-and-leak of the DNC emails. Rather, his defense lawyers claim Van der Zwaan hid those things (or rather, attempted to hide them, using means it’s shocking a lawyer would believe might work) because he didn’t want to reveal to the Skadden lawyers who represented him in his first interview with Mueller’s team that he had recorded his conversations in that time period with Greg Craig.

He knew it was improper to have recorded his conversation with the Skadden senior partner; indeed, he understood that he could be fired for having done so. He also knew that a truthful disclosure about his September 2016 calls with Gates and Person A would almost inevitably lead to questioning that could quickly get to the existence of the recordings. During the interview, Alex was keenly aware that he was not speaking only to OSC. Alex was represented by Skadden lawyers, and anything he shared with the OSC would simultaneously be heard by Skadden. In his mind, his boss was listening to every word.

The explanation is unconvincing (so is his lawyers’ claim that Van der Zwaan couldn’t read the Ukrainian document he received). After all, Craig knew (and presumably has also told Mueller’s team unless he’s at legal jeopardy himself) of some of those emails. So Van der Zwaan was bound to be asked the same kinds of questions in any case. Which he was. Which is how he came to confess to making the recordings (and keeping his own notes) in the first place.

It’s not entirely clear why he made that recording. The defense filing claims he didn’t tell anyone about them. But given another detail laid out by all this paperwork, I at least wonder whether he intended to share it with Gates or Kilimnik.

Consider the “going native” claim made about Van der Zwaan by an unnamed witness (who might be Greg Craig).

Yet, although he had been instructed not to share advance copies of the report with the public relations firm retained by the Government of Ukraine, van der Zwaan had, in the words of one witness, “gone native”—that is, he had grown too close to Manafort, Gates, and Person A.

While we knew that Van der Zwaan had shared the Skadden report with Gates and Kilimnik back in 2012, in direct violation of Skadden’s wishes, the defense filing reveals another key detail. In 2012, either while he was moonlighting while being paid by Skadden to help Manafort, Gates, and Kilimnik spin the Skadden report to make the prosecution of Tymoshenko look kosher or just after, Van der Zwaan was talking about working for Manafort and Gates.

That’s another good reason to hide all this: Van der Zwaan was ignoring Skadden Arps instructions at a time when he was considering a job with Gates and Manafort, who weren’t technically the client, but who were laundering the money to pay Skadden with.

Finally, while I don’t make as much of the tie between Van der Zwaan and his father-in-law, Alfa Bank founder German Khan, as others do, the defense filing provides more details on when Van der Zwaan joined the family. He and Eva Khan first met in “spring” 2016; elsewhere that gets described as a year before their marriage, which took place in June 2017.

Which is to say, the entirety of Van der Zwaan’s relationship with the Khan family has taken place during the Russian operation and attempt to cover up the tampering in the US election.

Just for fun: Back in 2008, American diplomats passed on complaints about Khan’s heavy-handedness in the operations of BP Russia, including the anecdote that Khan said he considers The Godfather to be his “manual for life.”

At dinner that evening, Khan had told a stunned Summers that The Godfather was his favorite movie, that he watched it every few months, and that he considered it a “manual for life.”

There’s actually no reason to believe that Van der Zwaan would have become a valuable enough resource that Khan would marry off his daughter to him, Godfather like.

But Van der Zwaan’s behavior in 2016 may make better sense considering the full context of that “going native” comment.

Update: I see from Zoe Tillman’s coverage of Van der Zwaan’s sentencing (where he was given a month in jail) that his lawyers fibbed a bit when they said his second grand jury appearance was entirely voluntary.

[Andrew] Weissmann refuted the idea that van der Zwaan voluntarily came back to tell the truth, saying he had been served with a grand jury subpoena after his first meeting in November 2017 and would have been required to return to the United States anyway.

2012: Van der Zwaan working on Tymoshenko report in facilitating role

July to early August 2012: Van der Zwaan provides unauthorized copy of Skadden report on Yulia Tymoshenko to PR firm engaged by Ukraine’s Ministry of Justice

September 2012: Van der Zwaan provides Rick Gates talking points to spin Skadden report

2012-2013: Van der Zwaan conducts discussions over Gmail about working directly for Gates and Manafort; these were among the other materials Van der Zwaan attempted to destroy in advance of his Mueller interview

2014: Eva Khan moves to London to study art (she is 11 years younger than Van der Zwaan)

Spring 2016: Van der Zwaan and Eva Khan meet

September 2016: First public allegations of spam traffic between Trump marketing account and Alfa bank

September and October 2016:

Rick Gates contacts Van der Zwaan, urges him to contact Kliminik and sends him a document in Ukrainian

September 12, 2016: Van der Zwaan emails Konstantin Kilimnik, who asks him to contact him on Telegraph or WhatsApp

Van der Zwaan reports this to (presumably) Greg Craig

Van der Zwaan reports back to Gates

[These communications continue as a series]

January 2017: Paul Manafort provides Trump a strategy to rebut the Russian investigation by discrediting the Steele dossier

January 2017: Brian Benczkowski leaves transition team and returns to Kirkland & Ellis

March to May 2017: Pending Assistant Attorney General nominee Brian Benczkowski advises Alfa Bank on lawsuit against Buzzfeed

April 2017: Jeff Sessions asks Benczkowski if he wants to be AAG for Criminal Division

May 26, 2017: After months of consultation with Alfa Bank (and German Khan by name) sue Buzzfeed over the Steele dossier

June 2017: Van der Zwaan and Khan married; she applies for permanent residency as his spouse

Prior to November 3, 2017: Van der Zwaan gives Skadden his laptop from the 2012 time frame

October 3, 2017: Alfa Bank lawsuit is moved to federal jurisdiction

November 3, 2017: Van der Zwaan participates in eight hour voluntary interview, represented by Skadden Arps lawyers; during that interview, FBI confronts him with an email he withheld from Skadden’s discovery

November 16, 2017: Van der Zwaan returns to the US

November 17, 2017: Van der Zwaan surrenders his passport to the FBI and retains new counsel (this is probably when Skadden fired him)

November 29, 2017: Kilimnik emails Manafort for review of purportedly exonerating op-ed

December 1, 2017: Van der Zwaan’s second interview with FBI

February 14, 2018: Van der Zwaan agrees to plea deal

February 20, 2018: Van der Zwaan pleads guilty

February 23, 2018: Gates pleads guilty

May 2018: Date Van der Zwaan would have made partner

August 2018: Due date of Van der Zwaan son

Share this entry

Buried Amid the John Dowd News, Mueller’s Team Seems to Think Trump Knows about the June 9 Meeting

/75 Comments/in , /by

I didn’t get a chance to unpack this story before John Dowd up and resigned. It lays out the four areas that Dowd was, until yesterday, negotiating with Mueller’s office regarding Trump’s testimony. It actually provides less detail than the WaPo and CNN stories I covered here. Those stories laid out that Mueller’s team was asking specific questions about:

Flynn’s Firing

  • Whether Trump knew about Flynn’s communications with Russian Ambassador Sergey Kislyak during the presidential transition?
  • What instructions, if any, the president gave Flynn about the contact?Whether he fired Flynn because he had misled Vice President Pence about his contact with Kislyak?

Comey’s Firing

  • Whether he fired Comey because he had mishandled an investigation of Democratic presidential candidate Hillary Clinton?
  • What was Attorney General Jeff Sessions’ involvement in the Comey dismissal?

While far less detailed than those earlier articles, however, yesterday’s pre-Dowd departure story describes Mueller’s team asking questions about four areas (I’ve reordered these to make them chronological):

  1. The circumstances surrounding [the June 9, 2016] Trump Tower meeting
  2. The President’s role in crafting a statement aboard Air Force One that miscast Donald Trump Jr.’s campaign June 2016 meeting with Russians in Trump Tower
  3. The firing of national security adviser Michael Flynn
  4. The firing of FBI Director James Comey

It was this focus, according to CNN, that pissed Trump off because,

The focus on Trump himself in Mueller’s pursuits has alarmed and angered the President, who adhered to a legal strategy of holding back set by his attorney John Dowd and White House special counsel Ty Cobb, who have said for months the investigation was likely to conclude soon.

And now Dowd is gone and Ty Cobb is reportedly likely to follow him, to be replaced by table-pounders who will make noise rather than argue the facts.

Bullet 1 — seven words slipped into the CNN story between stuff we’ve long talked about Trump’s involvement in — ought to be blaring headlines.

BREAKING: “Robert Mueller’s prosecutors are going to ask the President about the circumstances surrounding the meeting at which some Russians, including representatives from Trump’s old business associate Aras Agalarov, pitched Junior, Jared, and Trump’s corrupt campaign manager, on dirt about Hillary in the context of relaxing sanctions,” the headline should have read.

Call me crazy. But I doubt Mueller’s team would ask the President about this unless they had reason to believe Trump knew something about it.

And that changes the import of the three other bullets dramatically.

For example, most people have assumed Bullet 2, Trump’s claim this meeting pertained to adoptions and not dirt-for-sactions, is about obstruction charges (Elizabeth de la Vega lays out how that might serve as the basis for one or another conspiracy charge here). But that ignores that Trump spent the weekend leading up to that statement meeting, twice, with Vladimir Putin, including that bizarre meeting over dinner with no babysitter right before the White House released the statement.

BREAKING: The President met twice with Vladimir Putin while he was taking the lead on responding to questions about a meeting we’re all pretending Trump knew nothing about, and then came out with the spin that Vladimir Putin would most likely give it, the designated Russian propaganda line to cover up its campaign against Magnitsky sanctions.

Which brings us to Bullet 3: Whether Trump (via KT McFarland serving as a go-between from Mar a Lago) ordered Flynn to ask Sergey Kislyak to hold off on responding to sanctions, and if so, why he fired Flynn for doing what he told him to do.

Trump surely didn’t fire Flynn because he lied to Mike Pence (if indeed he did lie). Did he fire Flynn because he didn’t lie about it, making an otherwise marginally legally problematic discussion a legally problematic issue? Or did he fire Flynn because he believed it was the most efficacious way to make the focus on his efforts to roll back sanctions on Russia go away?

Bullet 4. Mueller’s prosecutors want to know why, a day before the Russians showed up for a meeting at which Trump refused to have US press, Trump fired Comey, and then told the Russians,

“I just fired the head of the F.B.I. He was crazy, a real nut job,” Mr. Trump said, according to the document, which was read to The New York Times by an American official. “I faced great pressure because of Russia. That’s taken off.”

Mr. Trump added, “I’m not under investigation.”

Laid out like this, this is what Mueller’s four bullets might look like:

  1. What Trump knew about the dirt-for-sanctions relief deal his one-time business partner Aras Agalarov pitched
  2. Whether Trump gave his National Security Adviser orders to deliver that dirt-for-sanctions deal even before being inaugurated
  3. Why Trump fired Flynn if he was following his orders delivering on that dirt-for-sanctions deal
  4. What Trump meant when he said he fired Comey because firing him took care of the great pressure he had because of Russia

Even as Mueller was negotiating these four questions, Trump called up Putin, at which, according to the Kremlin, “It was agreed to develop further bilateral contacts in light of [the fact that Trump had just fired Rex Tillerson, the next guy standing in the way of fulfilling the dirt-for-sanctions relief deal]. The possibility of organizing a top-level meeting received special attention.” “We will probably get together in the not-too-distant future,” Trump said of the call on Tuesday. “I suspect that we’ll probably be meeting in the not-too-distant future,” he said a second time, a line that reportedly surprised his aides, another piece of news lost in the legal team shake-up. “I think, probably, we’ll be seeing President Putin in the not-too-distant future,” Trump said a third time in his public comments.

So now Dowd is gone, which is probably lucky for him because otherwise he’d be business negotiating over Bullet 5.

5. Why did Trump fire Rex Tillerson and how does that relate to this big new push to meet with Putin again?

Share this entry

Trump’s Legal Team: “If the Law and the Facts Are Against You, Pound the Table and Yell Like Hell”

/42 Comments/in , /by

Folks in the White House keep telling Maggie Haberman and Mike Schmidt about imminent changes to his legal team.

March 10: Emmet Flood

On March 10, it was that the superb Emmet Flood — who among other things, kept Dick Cheney out of the pokey — would join his team. The possibility was based on a meeting (now over 10 days ago) described as “an overture.”

The lawyer, Emmet T. Flood, met with Mr. Trump in the Oval Office this past week to discuss the possibility, according to the people. No final decision has been made, according to two of the people.

Should Mr. Flood come on board, the two people said, his main duties would be a day-to-day role helping the president navigate his dealings with the Justice Department.

Two people close to the president said that the overture to Mr. Flood did not indicate any new concerns about the inquiry. Still, it appears, at the least, to be an acknowledgment that the investigation is unlikely to end anytime soon.

The story admitted that Flood had said no to a similar offer last summer, at such time when Flood might have set the legal strategy and established ground rules for his client.

As recently as the summer, Mr. Flood, who currently works at the law firm Williams & Connolly, turned down an opportunity to represent Mr. Trump. It is not clear what has changed since then.

It also claimed that Flood was the only lawyer the White House had approached.

Mr. Flood had been on the wish list of some of the president’s advisers to join his legal team last year, and he is the only person the White House has been in contact with about such a leading role.

It also included the bizarre notion that Ty Cobb’s job was meant to end as soon as the White House had turned over all the documents Robert Mueller wanted.

Mr. Cobb has told friends for weeks that he views his position as temporary and does not expect to remain in the job for much longer.

Mr. Cobb’s primary task — producing documents for Mr. Mueller and arranging for White House aides to meet with prosecutors — is largely complete.

March 19: Joseph Di Genova

Then, on Monday, Maggie and Mike reported that Joseph Di Genova would join the team. The former US Attorney wouldn’t actually be lawyering so much as pounding the table and inventing conspiracy theories (best as I can tell, pounding tables is supposed to be Trump’s current lawyer, Jay Sekulow’s job, but he seems to have taken to hiding under the bed of late).

Mr. diGenova, a former United States attorney, is not expected to take a lead role. But he will serve as an outspoken player for the president as Mr. Trump has increased his attacks on the special counsel, Robert S. Mueller III. Mr. Trump broke over the weekend from the longstanding advice of some of his lawyers that he refrain from directly criticizing Mr. Mueller, a sign of his growing unease with the investigation.

It’s just as well that Di Genova wouldn’t be doing any lawyering given that in 1997, he argued that sitting presidents could be indicted, a view that would make it easier for Mueller to charge his supposed client.

Somehow, this story didn’t explain a big puzzle about the hiring: how Di Genova could represent the president when his wife, Victoria Toensing, has represented three other people in the investigation, at least one of whom gave apparently damning testimony to Mueller’s investigators.

Mr. diGenova is law partners with his wife, Victoria Toensing. Ms. Toensing has also represented Sam Clovis, the former Trump campaign co-chairman, and Erik Prince, the founder of the security contractor Blackwater and an informal adviser to Mr. Trump. Mr. Prince attended a meeting in January 2017 with a Russian investor in the Seychelles that the special counsel is investigating.

Ms. Toensing also represents Mark Corallo, the former spokesman for the Trump legal team who has accused one of the president’s advisers of potentially planning to obstruct justice with a statement related to a 2016 meeting between Donald Trump Jr. and a Russian lawyer who supposedly had damaging information on Hillary Clinton.

While it’s certainly possible Di Genova could clear up the conflict with Clovis and Prince, Corallo reportedly testified that Hope Hicks, having met one-on-one with Trump, suggested that emails regarding the June 9, 2016 meeting could be buried.

March 20: Ted Olson

Then, today, multiple outlets claimed that Ted Olson was under consideration. That’d be weird, given that Trump wants to claim that Robert Mueller has conflicts on account of his association with Jim Comey, yet Olson was as integrally involved in the most famous Comey-Mueller event — the hospital hero challenge to Stellar Wind in 2004 — as Mueller was. Plus, Olson’s name is on the Supreme Court precedent that deemed even the more expansive special prosecutor statute constitutional.

Which is to say that Olson may be the best active Republican lawyer with the possible exception of his former deputy, Paul Clement (hey, why isn’t Clement being floated?), but it’s not clear he would help Trump much, even if he could get Trump to follow instructions.

Yet the pushback from Olson’s firm suggests he was never really considering this offer (which raises questions about whether Flood, who like Olson also considered and rejected the position last year, is taking this offer any more seriously). It seems Trump wants to create the appearance, at least, that serious lawyers will still consider representing him.

Trump’s existing lawyers prepare to bolt

As it turns out, Trump didn’t tell his existing lawyers about a number of these conversations. And even aside from the shit shingle they’re facing, particularly as it becomes clear to Trump they were lying to him all last year about how long this inquiry would be and how serious Trump’s jeopardy is, they’re all getting tired babysitting the president.

The hiring of diGenova on Monday, first reported by the New York Times, infuriated Dowd, who responded angrily to the development, according to people familiar with his reaction, who spoke on the condition of anonymity to share internal details. Dowd views diGenova as pushing him to be the second chair rather than top dog on Trump’s legal team, these people said. But Dowd said in an email to a Post reporter that he’s perfectly happy with the new addition: “Love Joe.”

Dowd, however, has lost the confidence of many in the president’s orbit, both inside and outside the White House. In December, after Trump tweeted that he had fired his former national security adviser Michael Flynn because Flynn had lied to both the vice president and the FBI, Dowd later claimed that he was the one who had drafted the missive.

One outside adviser described Dowd as “the weakest link” in the team.

McGahn and Cobb have also had their share of tension. While Cobb has urged the president to cooperate with Mueller and hand over documents to his investigators, McGahn has pushed a more aggressive approach, according to people familiar with his work.

McGahn has said the legal team should make the special counsel subpoena every document, explain every interview and fight for every piece of information, one person said. A second White House aide said McGahn has questioned the constitutional status of the special counsel position.

But McGahn and Trump have also clashed repeatedly since entering the White House, and one former administration official said the president mused at least three times that perhaps he should hire a new counsel.

McGahn has told associates that he is exhausted and frustrated at times in the job, but that he has been able to make a historic impact on appointing judges and reducing regulations and that he would like to be around for a second Supreme Court opening, one friend said. McGahn also has a strong relationship with Kelly.

So Trump’s lawyers (with the possible exception of Don McGahn, who’ll stay so long as he can pack the courts with unqualified ideologues) want out, and none of the real lawyers he’s approaching want to have anything to do with him.

When Rick Gates ran his defense team like this, he had a way out: to flip on Paul Manafort and Trump himself.

But who will Trump flip on? Vladimir Putin?

This is the most remarkable thing to behold. The most powerful man in the world is having difficulties getting anyone but a washed out table-pounder to represent him in the most high profile investigation in recent years.

Share this entry

Facebook Cuts Off Cambridge Analytica, Promises Further Investigation

/120 Comments/in , , /by

As I noted in my post on Andrew McCabe’s firing, the far more important news of the weekend is that Facebook has suspended Cambridge Analytica’s access to its data.

As Facebook explained, back in 2015, Cambridge researcher Aleksandr Kogan harvested data on millions of Americans by getting them to willingly use his research app. When Facebook found out that he had handed the data off to two downstream companies (this detail is important), it made them delete the data based on developer user agreements.

In 2015, we learned that a psychology professor at the University of Cambridge named Dr. Aleksandr Kogan lied to us and violated our Platform Policies by passing data from an app that was using Facebook Login to SCL/Cambridge Analytica, a firm that does political, government and military work around the globe. He also passed that data to Christopher Wylie of Eunoia Technologies, Inc.

Like all app developers, Kogan requested and gained access to information from people after they chose to download his app. His app, “thisisyourdigitallife,” offered a personality prediction, and billed itself on Facebook as “a research app used by psychologists.” Approximately 270,000 people downloaded the app. In so doing, they gave their consent for Kogan to access information such as the city they set on their profile, or content they had liked, as well as more limited information about friends who had their privacy settings set to allow it.

Although Kogan gained access to this information in a legitimate way and through the proper channels that governed all developers on Facebook at that time, he did not subsequently abide by our rules. By passing information on to a third party, including SCL/Cambridge Analytica and Christopher Wylie of Eunoia Technologies, he violated our platform policies. When we learned of this violation in 2015, we removed his app from Facebook and demanded certifications from Kogan and all parties he had given data to that the information had been destroyed. Cambridge Analytica, Kogan and Wylie all certified to us that they destroyed the data.

They now claim to have new information that CA didn’t delete the data (I have firsthand knowledge that Facebook knew of this at least a year ago, and these pieces argue Facebook knew even earlier).

Several days ago, we received reports that, contrary to the certifications we were given, not all data was deleted. We are moving aggressively to determine the accuracy of these claims. If true, this is another unacceptable violation of trust and the commitments they made. We are suspending SCL/Cambridge Analytica, Wylie and Kogan from Facebook, pending further information.

We are committed to vigorously enforcing our policies to protect people’s information. We will take whatever steps are required to see that this happens. We will take legal action if necessary to hold them responsible and accountable for any unlawful behavior.

What changed is that the guy who operationalized all this data, Christopher Wylie, just came forward publicly. Here’s how Carole Cadwalladr, the Guardian reporter who has owned this story, describes Wylie.

Or, as Wylie describes it, he was the gay Canadian vegan who somehow ended up creating “Steve Bannon’s psychological warfare mindfuck tool”.

In 2014, Steve Bannon – then executive chairman of the “alt-right” news network Breitbart – was Wylie’s boss. And Robert Mercer, the secretive US hedge-fund billionaire and Republican donor, was Cambridge Analytica’s investor. And the idea they bought into was to bring big data and social media to an established military methodology – “information operations” – then turn it on the US electorate.

Wylie describes how he profiled Americans so they could tailor political ads.

[W]hile studying for a PhD in fashion trend forecasting, he came up with a plan to harvest the Facebook profiles of millions of people in the US, and to use their private and personal information to create sophisticated psychological and political profiles. And then target them with political ads designed to work on their particular psychological makeup.

“We ‘broke’ Facebook,” he says.

And he did it on behalf of his new boss, Steve Bannon.

Wylie is going on the record (and providing the records) to back this description of how, contrary to repeated claims made in parliamentary testimony, Alexsandr Kogan harvested data in the guise of doing research.

Kogan then set up GSR to do the work, and proposed to Wylie they use the data to set up an interdisciplinary institute working across the social sciences. “What happened to that idea,” I ask Wylie. “It never happened. I don’t know why. That’s one of the things that upsets me the most.”

It was Bannon’s interest in culture as war that ignited Wylie’s intellectual concept. But it was Robert Mercer’s millions that created a firestorm. Kogan was able to throw money at the hard problem of acquiring personal data: he advertised for people who were willing to be paid to take a personality quiz on Amazon’s Mechanical Turk and Qualtrics. At the end of which Kogan’s app, called thisismydigitallife, gave him permission to access their Facebook profiles. And not just theirs, but their friends’ too. On average, each “seeder” – the people who had taken the personality test, around 320,000 in total – unwittingly gave access to at least 160 other people’s profiles, none of whom would have known or had reason to suspect.

What the email correspondence between Cambridge Analytica employees and Kogan shows is that Kogan had collected millions of profiles in a matter of weeks. But neither Wylie nor anyone else at Cambridge Analytica had checked that it was legal. It certainly wasn’t authorised. Kogan did have permission to pull Facebook data, but for academic purposes only. What’s more, under British data protection laws, it’s illegal for personal data to be sold to a third party without consent.

“Facebook could see it was happening,” says Wylie. “Their security protocols were triggered because Kogan’s apps were pulling this enormous amount of data, but apparently Kogan told them it was for academic use. So they were like, ‘Fine’.” [my emphasis]

Here’s where the violation(s) come in. While participants in Kogan’s harvesting project willingly participated in the project (and in the process made their friends’ Facebook data accessible to Kogan as well), he told Facebook it was for research, and in spite of the fact that the harvesting was done in the UK, he didn’t get consent before he sold the data to CA.

Both Cadwalladr and NYT’s story are calling this a “breach” which in my opinion is counterproductive for a lot of reasons, not least that consumer recourse for “breaches” in the US is virtually nothing — as the recent experience of those exposed in Equifax’ breach has made clear.

Whereas the kinds of TOS violations that Kogan committed in the UK do provide consumers recourse, not just to demand transparency about what happened, but also financial fines. Facebook, in the EU, is similarly exposed (full disclosure: I believe I have a still running challenge in Ireland for my CA-related FB data).

Just as this story was breaking, David Carroll, who has been a key activist on this issue, filed a claim against CA in the UK.

In other words, with Wylie’s testimony, there are sticks to use in Europe to first gain transparency about what happened, and possibly fine the parties. Which is probably why Facebook finally suspended CA’s access to Facebook, without which it is far less dangerous.

There are other aspects of this story: shell companies, a pitch to Lukoil, and questions about the citizenship of those who worked for CA in the 2014 and 2016 elections, potentially raising questions about the involvement of foreign (British) actors in our elections. But here’s the detail in the NYT story I’m most interested in.

While the substance of Mr. Mueller’s interest is a closely guarded secret, documents viewed by The Times indicate that the firm’s British affiliate claims to have worked in Russia and Ukraine.

The Ukrainian side of Paul Manafort’s involvement in the Party of Regions — the American lobbying side of which is what got him charged with conspiracy to defraud the US — pertains to bringing American style politics to Ukraine.

He also directed Yanukovych’s party to harp on a single theme each week—say, the sorry condition of pensioners. These were not the most-sophisticated techniques, but they had never been deployed in Ukraine. Yanukovych was proud of his American turn. After he hired Manafort, he invited U.S. Ambassador John Herbst to his office, placed a binder containing Manafort’s strategy in front of him, and announced, “I’m going with Washington.”

Manafort often justified his work in Ukraine by arguing that he hoped to guide the country toward Europe and the West. But his polling data suggested that Yanukovych should accentuate cultural divisions in the country, playing to the sense of victimization felt by Russian speakers in eastern Ukraine. And sure enough, his clients railed against nato expansion. When a U.S. diplomat discovered a rabidly anti-American speech on the Party of Regions’ website, Manafort told him, “But it isn’t on the English version.”

Yanukovych’s party succeeded in the parliamentary elections beyond all expectations, and the oligarchs who’d funded it came to regard Manafort with immense respect.

There are Americans doing this overseas more and more of late, and Manafort’s efforts for Yanukovych precede the foundation of CA (and Manafort’s involvement in the Trump campaign largely precedes Bannon and Cambridge Analytica’s). But that’s the basis for his relationships in the region.

There’s a lot of implications of the Wylie testimony, assuming law enforcement, parliament, and Congress find his underlying documents as compelling as the journalists have. For starters, this significantly limits what CA (and its intelligence contractor SCL) will be able to do, which neutralizes a powerful tool Bannon and the Mercers have been holding. I believe that both CA and FB are both already at significant legal exposure. I suspect this will finally force FB to get a lot more attentive to what app developers do with FB user data. I’ve been saying for a while that at some point US tech companies may want to harmonize with Europe’s General Data Protection Regulation (GDPR), which starts being enforced in May. Certainly, it would provide a solution to some of the political problems they’re already facing and harmonization would make compliance easier. That would provide even more teeth to prevent this illicit kind of downstream data usage.

But there also may be aspects of this story that expose CA and their clients, including the Trump campaign, to legal concerns that piggy back on any conspiracy with Russia.

Share this entry

10 Years Out: What’s with the Bear in the Middle?

/22 Comments/in , , /by

[NB: Check the byline — it’s me, Rayne. I am not a registered financial representative or a lawyer; this post is based on my own observations and opinions. As always, your mileage may vary.]

On a chilly March evening ten years ago tonight, I was yelling at loved ones: Sell. For gods’ sake, SELL.

My own household had moved its investments from a number of mutual funds to guaranteed income. Every fund in the portfolio to that point contained a chunk of an investment bank and was therefore exposed to what I felt was sure to come.

It was obvious to anyone who was really paying attention that something was really off. Trying to buy a house in 2004 was almost impossible where I live, in spite of the ongoing migration of manufacturing jobs offshore. In the target price range for a 2000-square foot house, there were only a handful of homes listed and they all needed more than $50K in improvements. The nearby farmers’ fields were full of a new crop: single-family homes, mostly 3-bedroom and up, had eaten acres and acres in less than a year. It was insanity — there was no way this pace could be maintained, not with my state’s problematic over-reliance on the automobile industry.

Instead of buying an existing home, I built a new one. It didn’t make sense to spend $50K on improvements requiring a lot of construction if I couldn’t guarantee I could hire a contractor when new construction was so hot. I didn’t build in the top end neighborhood, either. I left myself some room in case I had to leave the area quickly for a new job; I also left room for the market to improve.

Except it didn’t. The last landscaping contractor must have pulled away from my new home in 2005 just as the bubble began to deflate. There were signs it was going to get worse, too, what with fuel prices skyrocketing. Banks increasingly offered crazy terms on mortgages just so they could something, anything, not taking the hint the market was saturated. Given the number of people relying too heavily on adjustable rate mortgages with ridiculously low entry rates, the increased gasoline price costing the average family more than $1000 a year was certain to cause credit card defaults and foreclosures.

Something ugly was coming.

~ ~ ~

In March 2008 — almost exactly a month after the Washington Post published an op-ed by New York’s then-Governor Eliot Spitzer exhorting action on subprime mortgages — 85-year-old  American investment bank Bear Stearns crashed and burned.

After urgent, fancy foot work by the Federal Reserve Bank, J.P. Morgan and other key investors, settlements were made with bail out money and remnants of the firm were ultimately snapped up by J.P. Morgan for what amounted to the cost of Bear Stearn’s headquarters building, about $2 per share. By St. Patrick’s Day, Bear Stearns was no more, completely subsumed.

It would be another six months before the next large investment bank crashed — Lehman Brothers — taking the global economy with it.

~ ~ ~

At the time the crash was blamed on lax controls on lending to home buyers, encouraging an excess of subprime mortgages, combined with investment banks’ more recent taste for collateralized debt obligations bundling mortgages into tranches for slicing up and trading.

But not all of the trash loans were residential mortgages stuffed into tranches. Some of the loans were to developers and contractors who were building commercial facilities and multi-family buildings. Some of these loans were packaged into funds which were more like offshore corporations.

The two funds triggering Bear Stearns’ meltdown were just that: offshore funds incorporated in the Cayman Islands in 2003, holding various assets including tranches of poorly-collateralized mortgages, managed by Bear Stearns Asset Management (BSAM). What mortgages were in these two funds the public doesn’t really know; were they single-family residential mortgages or commercial facilities mortgages, or some combination? The information is out there somewhere but it’s not at the public’s fingertips.

The financial media still paints a messy picture even a decade later, blaming Bear Stearns management but not its own persistent failure to provide a more comprehensive and accessible picture of the financial industry’s health.

These two funds collapsed because too many mortgages within their CDOs failed; the effect on the bank was like pulling out two critical load-bearing pieces in a game of Jenga. The cascading demand for cash to resolve the failures may have pushed other investment banks’ equally sketchy funds to fail as well, crashing the entire heap nearly a decade ago.

~ ~ ~

It was a surprise blast from the unpleasant past to see Bear Stearns’ name pop up in the middle of recent testimony before the House Permanent Subcommittee on Intelligence. Fusion GPS’ Glenn Simpson cited the investment bank as a source of financing for Donald Trump and some sketchy condominium development.

[SIMPSON]… There’s the Trump vodka business that was earlier. And then ultimately, you know, what we came to realize was that the money was actually coming out of Russia and going into his properties in Florida and New York and Panama and Toronto and these other places.

And what we, you know, gradually begun to understand, which, you know, I suppose I should kick myself for not figuring out earlier, but I don’t know that much about the real estate business, which is I alluded to this earlier, so, you know, by 2003, 2004, Donald Trump was not able to get bank credit for — and if you’re a real estate developer and you can’t get bank loans, you know, you’ve got a problem.

And all these guys, they used leverage like, you know, — so there’s alternative systems of financing, and sometimes it’s — well, there’s a variety of alternative systems of financing. But in any case, you need alternative financing.

One of the things that we now know about how the condo projects were financed is that you have to — you can get credit if you can show that you’ve sold a certain number of units.

So it turns out that, you know, one of the most important things to look at is — this is especially true of the early overseas developments, like Toronto and Panama — you can get credit if you can show that you sold a certain percentage of your units.

And so the real trick is to get people who say they’ve bought those units, and that’s where the Russians are to be found, is in some of those pre-sales, is what they’re called. And that’s how, for instance, in Panama they got the credit of — they got a — Bear Stearns to issue a bond by telling Bear Stearns that they’d sold a bunch of units to a bunch of Russian gangsters.

And, of course, they didn’t put that in the underwriting information, they just said, we’ve sold a bunch of units and here’s who bought them, and that’s how they got the credit. So that’s sort of an example of the alternative financing. … [bold mine, excerpt pages 95-96]

The timing mentioned, 2003-2004, is very close to the time that Bear Stearns launched the two Cayman-based funds which failed first. Is it possible Trump’s financing provided by Bear Stearns ended up in the funds’ CDOs? Probably not — Simpson refers to bonds. But let’s look at a financial statement from one of the subject funds:

It’s difficult to tell what’s in any of the CDOs listed in this summary. Who knows what mortgages are in them or from where they originated without access to more details?

Note the bonds at the bottom — again, what’s in them? What percentage of these bonds consisted of dicey or outright fraudulent financing for construction related to money laundering? Again, we can’t tell without access to more granular details. We don’t know whether bond(s) offered to Trump developments were in Bear Stearns’ first two failed funds or if they helped cause the eventual financial pyroclastic flow toward Bear Stearns’ end.

~ ~ ~

Another thing sticks in my craw — a bit from Michael Lewis’ The Big Short:

The bond market, because it consisted mainly of big institutional investors, experienced no similarly populist political pressure. Even as it came to dwarf the stock market, the bond market eluded serious regulation. Bond salesmen could say and do anything without fear that they’d be reported to some authority. Bond traders could explore inside information without worrying that they would be caught. Bond technicians could dream up ever more complicated securities without worrying too much about government regulation — one reason why so many derivatives had been derived, one way or another, from bonds. … [bold mine]

In other words, nobody would look askance at all at bonds sold to finance a condominium development with rather thin commitment to payment. Nobody looked askance at the ratio of CDOs to bonds, either, though Bear Stearns would try to offset the CDOs’ losses by liquidating bonds. This fund as an example couldn’t manage this offset based on the ratio alone; it would have been catastrophically worse if the collateral beneath the bonds was as fraudulent as many subprime adjustable rate mortgages in CDOs were at the time.

The root cause of the 2008 crash remains the collapse of poorly collateralized as well as fraudulent mortgages. But I have to wonder:

— With so much attention on CDOs and mortgage defaults combined with a lack of bond market adequate monitoring, how much did crappy bonds, based on fraudulent representations of collateral, contribute to the crash?

— If there was so little regulation and oversight of the bond market, how much sketchy or fraudulent project financing was in bonds on the banks’ books — including projects like Trump’s, based on promises to pay made by offshore vehicles or non-U.S. citizens?

— With so little regulation and oversight, would it have been possible for one or more nation-states using offshore finance vehicles to “weaponize” banks’ books? How many of the crappy bonds contributing to the 2008 crash were based on poorly collateralized pre-sales to Russian oligarchs and gangsters?

— What assurances do we have today — especially with Mick Mulvaney defunding the Consumer Finance Protection Bureau and knocking off an opportunity to look more deeply into credit reporting by killing off the Equifax investigation — that investment banks have changed their practices and ensured legitimate projects are financed?

—What assurances do we have that our legislators see the slippery slip when they approve legislation like S. 2155 just this week, weakening Dodd-Frank reforms?

~ ~ ~

Recall the state of the economy between Bear Stearns’ and Lehman Brothers’ crashes. Oil prices rose to over $150/barrel, resulting in $4/gallon gasoline. Other commodity prices rose in tandem with fuel prices. The home buyers who could least afford any change in their household expenses were the same ones targeted for subprime mortgages with shady terms; it came down to paying for gas to get to work and feeding the family, or making the mortgage payment.

The price of oil at the time had been driven up by excess speculation. Legislation passed in June 2008 requiring all commodity futures trading to require a minimum of 30% margin upfront rather than 10%. Oil prices dropped drastically and reduced in volatility almost overnight, but it was already too late. Too many home buyers could no longer afford their payments and mortgage defaults began to snowball.

Which brings me to yet another question: if the bond market could have been “weaponized” at that time, could a volatile commodities market likewise have been used as a trigger?

Are there any other weak points in our market which could be “weaponized,” for that matter?

~ ~ ~

On this tenth anniversary after the crash began with Bear Stearns’ collapse, I feel more secure about my retirement portfolio. There were no frantic phone calls to family members exhorting moves to safety this evening. My exposure to the remaining weaknesses of investment banking have been minimized as much as possible, though I remain vulnerable because I have a mortgage. Real estate isn’t the sure return it once was. Only uber-wealthy investors buying into certain urban markets come out on top. But wealthy real estate investors can still cause self-inflicted damage.

Atlanta, Georgia’s market has turned around since the crash — but it was home to another failed Trump real estate project, a 363-unit Trump Tower which went into foreclosure with pre-sales of only 100 units. (In January 2017, Trump ranted about Atlanta as Rep. John Lewis’ district, calling it “falling apart” and “crime infested.” One wonders what crime he meant…)

Hollywood, Florida had a brush with a failed Trump project:

In 2006, he and billionaire condo king Jorge Perez began selling a 23-story apartment building near Mar-a-Lago, but the project was abandoned a year later because of slow sales. Another Perez-Trump deal, the 200-unit Hollywood oceanfront tower, was foreclosed in 2010 after selling less than 15% of its units. (The building eventually opened, still Trump-branded, but without Perez.)

So did the Miami, Florida area:

Trump Sunny Isles, a three-tower residential complex outside Miami, has also struggled. Trump partnered with Perez again and another developer named Gil Dezer to build the project, which targeted wealthy Latin Americans. . . .

Unfortunately, the last two towers of the development opened in the middle of the financial crisis, and Perez bailed on them. . . .

And Puerto Rico, too, was home to a Trump-branded golf course which failed in 2015.

Though with so many failures followed by continued attempts, it’s worth asking if this is a business model. How does Trump continue to benefit from so much failure? How do the backers he has benefit from staking Trump money or title?

Trump’s business alone wasn’t the cause of the 2008 crash. There were far more players involved — millions, if we want to blame residential homeowners who were misled by banks to believe they could safely contract a mortgage in spite of either inadequate collateral or income and ultimately forced into foreclosure. But at least one of Trump’s business projects was in the mix if Fusion’s Simpson’s testimony is truthful; what would keep Trump or real estate investors like Trump from contributing to (if not causing) another crash today?

We must ask when we see that Trump’s former campaign manager Paul Manafort and his former son-in-law Jeffrey Yohai were engaged in sketchy real estate development projects the community/regional Banc of California may have deterred by forcibly shutting their accounts.

And ask again when we see a community bank like The Federal Savings Bank of Chicago involved in another of Manafort’s bank frauds.

The damage could be even worse, in the case of Trump’s son-in-law Jared Kushner, who is over his head in debt on 666 Fifth Avenue and whose family business is distressed, possibly causing geopolitical turmoil to shakedown new financing.

How many of these flimsy real estate deals and junky mortgages, loans, and bonds are there in the system when we can now see these affiliated with the president and his campaign advisers? How many of them will it take to cause another crash if legislators continue to pick away at safeguards?

Let’s hope I’m not writing another financial postmortem like this one in March 2028.

Share this entry

Oleg Deripaska Gets Ahead of His Own Fusion Dossier (and Manafort Prosecution?) Disclosures

/26 Comments/in , /by

Sometime Paul Manafort client and owner Oleg Deripaska just did a column in the Daily Caller insinuating the Mueller investigation is a Deep State attack on good aluminum smelters like him — though the column seems as much an effort to get ahead of disclosures about his own tie to the Steele dossier or Manafort trial as anything else. 

Chuck Grassley throws breadcrumbs about others tied to the Steele dossier, including Oleg Deripaska

For weeks, I’ve been waiting to learn why Chuck Grassley asked Democrats about the role of a number of people in the Fusion dossier, including Victoria Nuland, former SSCI staffer Dan Jones, and Oleg Deripaska.

Look, now, at this detail from the letters Chuck Grassley sent out to the DNC, its top officials, and the Hillary campaign, and its top officials, trying to find out how much they knew about and used the dossier. Grassley also asks for any communications to, from, or relating to the following (I’ve rearranged and classified them).

Fusion and its formal employees: Fusion GPS; Bean LLC; Glenn Simpson; Mary Jacoby; Peter Fritsch; Tom Catan; Jason Felch; Neil King; David Michaels; Taylor Sears; Patrick Corcoran; Laura Sego; Jay Bagwell; Erica Castro; Nellie Ohr;

Fusion researcher who worked on both the Prevezon and Democratic projects:Edward Baumgartner;

Anti-Magnitsky lobbyists: Rinat Akhmetshin; Ed Lieberman;

Christopher Steele’s business and colleagues: Orbis Business Intelligence Limited; Orbis Business International Limited.; Walsingham Training Limited; Walsingham Partners Limited; Christopher Steele; Christopher Burrows; Sir Andrew Wood,

Hillary-related intelligence and policy types: Cody Shearer; Sidney Blumenthal; Jon Winer; Kathleen Kavalec; Victoria Nuland; Daniel Jones;

DOJ and FBI: Bruce Ohr; Peter Strzok; Andrew McCabe; James Baker; Sally Yates; Loretta Lynch;

Grassley, like me, doesn’t believe Brennan was out of the loop either: John Brennan

Oleg Deripaska and his lawyer: Oleg Deripaska; Paul Hauser;

It’s the last reference I’m particularly interested in.

When Simpson talked about how the dossier got leaked to BuzzFeed, he complains that, “I was very upset. I thought it was a very dangerous thing and that someone had violated my confidences, in any event.” The presumed story is that John McCain and his aide David Kramer were briefed by Andrew Wood at an event that Rinat Akhmetshin also attended, later obtained the memo (I’m still not convinced this was the full memo yet), McCain shared it, again, with the FBI, and Kramer leaked it to Buzzfeed.

But Grassley seems to think Russian oligarch Oleg Deripaska was in on the loop of this. Deripaska is important to this story not just for because he owns Paul Manafort (he figures heavily in this worthwhile profile of Manafort). But also because he’s got ties, through Rick Davis, to John McCain. This was just rehashed last year by Circa, which has been running interference on this story.

There is a report that Manafort laid out precisely the strategy focusing on the dossier that is still the main focus of GOP pushback on the charges against Trump and his campaign (and Manafort).

It was about a week before Trump’s inauguration, and Manafort wanted to brief Trump’s team on alleged inaccuracies in a recently released dossier of memos written by a former British spy for Trump’s opponents that alleged compromising ties among Russia, Trump and Trump’s associates, including Manafort.

“On the day that the dossier came out in the press, Paul called Reince, as a responsible ally of the president would do, and said this story about me is garbage, and a bunch of the other stuff in there seems implausible,” said a personclose to Manafort.

[snip]

According to a GOP operative familiar with Manafort’s conversation with Priebus, Manafort suggested the errors in the dossier discredited it, as well as the FBI investigation, since the bureau had reached a tentative (but later aborted) agreement to pay the former British spy to continue his research and had briefed both Trump and then-President Barack Obama on the dossier.

Manafort told Priebus that the dossier was tainted by inaccuracies and by the motivations of the people who initiated it, whom he alleged were Democratic activists and donors working in cahoots with Ukrainian government officials, according to the operative.

If Deripaska learned of the dossier — and obtained a copy from McCain or someone close to him — it would make it very easy to lay out the strategy we’re currently seeing.

Victoria Nuland gets ahead of the narrative by explaining her own role in the dossier

Shortly after I asked that question, Nuland (in about the first move that Democrats made to get ahead of the dossier) explained her own role. She had received reports he had done for other people, but when she heard of the Trump dossier, she (wary of Hatch Act violations) said the FBI should take the lead.

Glasser: And so, around this period is also when the famous dossier is starting to circulate. And it’s been reported that you were familiar already—and others were—with the work of Christopher Steele, that he had been a helpful source of information, of analysis and insight over the previous few years. Did you know him personally, or just his work?

Nuland: I did not know him personally. He had—’13, ’14, ’15, he had a number of corporate clients who were interested in who was in the decision-making loop on Ukraine issues in the Kremlin, who was in the—who the back channels were between Ukraine and Russia, and he was generous enough, as many people were in that period, to share their findings and their work with us, and all of us who were trying to understand it as a policy matter were taking all kinds of information. We never—

Glasser: But you weren’t personally debriefing?

Nuland: No, we never worked with him directly. We never tasked him. We never had an official association. His information on Russia and Ukraine was one of hundreds of sources that we were using at the time.

Glasser: When did you first hear about his dossier?

Nuland: I first heard—and I didn’t know who his client was until much later, until 2017, I think, when it came out. I first heard that he had done work for a client asserting these linkages—I think it was late July, something like that.

Glasser: That’s very interesting. And you would have taken him seriously just because you knew that he knew what he was talking about on Russia.

Nuland: What I did was say that this is about U.S. politics, and not the work of—not the business of the State Department, and certainly not the business of a career employee who is subject to the Hatch Act, which requires that you stay out of politics. So, my advice to those who were interfacing with him was that he should get this information to the FBI, and that they could evaluate whether they thought it was credible.

Jones and Deripaska’s roles remain unexplained, even in spite of Jane Mayer’s reporting on the latter

We still hadn’t heard about Jones or Deripaska’s role; Jane Mayer didn’t even clarify the latter in her 15,000 word Steele profile.

Orbis promises confidentiality, and releases no information on its clientele. Some of its purported clients, such as a major Western oil company, are conventional corporations. Others are controversial, including a London law firm representing the interests of Oleg Deripaska, the billionaire victor of Russia’s aluminum wars, a notoriously violent battle. He has been described as Putin’s favorite oligarch. Steele’s possible financial ties to Deripaska recently prompted Senator Grassley to demand more information from the London law firm. If a financial trail between Deripaska and Orbis can be established, it is likely to raise even more questions about Steele, because Deripaska has already figured in the Russia investigation, in an unsavory light. Paul Manafort, Trump’s former campaign manager, has been accused of defrauding Deripaska’s company while working for it in Ukraine. (Manafort has been indicted by Special Counsel Robert Mueller on charges of money laundering and other financial crimes. He has pleaded not guilty.) Even if Steele’s rumored work for Deripaska is aboveboard, it illustrates the transition that he has made from the world of government service to the ethically gray world of commerce. Oligarchs battling other oligarchs provide some of the most lucrative work for investigators with expertise in Russia. Orbis maintains that, as long as its activities are limited to providing litigation support for Western law firms acting in Western courts, it is helping to settle disputes in a more civilized way than they would be in Russia.

Oleg Deripaska’s bid to get ahead of Deripaska disclosures

Which brings us to Deripaska’s column in the (!?!?!) Daily Caller. Deripaska describes himself — in a column released even as Trump rolls out aluminum sanctions and just weeks after he stepped down as President — as “the founder of UC Rusal, the world’s leading producer of aluminum using clean, renewable hydropower.” The column drops a load of American cultural and historical references: Wag the Dog, Teddy Roosevelt, “World War II hero and former U.S. Sen. Daniel Inouye,” and George Soros.

The most remarkable passage, seemingly an attempt to leak where Grassley and Nunes might otherwise go, is this attack on Dan Jones and Nuland.

Yet on March 16, 2017, Daniel Jones — himself a team member of Fusion GPS, self-described former FBI agent and, as we now know from the media, an ex-Feinstein staffer — met with my lawyer, Adam Waldman, and described Fusion as a “shadow media organization helping the government,” funded by a “group of Silicon Valley billionaires and George Soros.” My lawyer testified these facts to the Senate Intelligence Committee on Nov. 3. Mr. Soros is, not coincidentally, also the funder of two “ethics watchdog” NGOs (Democracy 21 and CREW) attacking Rep. Nunes’ committee memo.

A former Obama State Department official, Nuland, has been recently outed as another shadow player, reviewing and disseminating Fusion’s dossier, and reportedly, hundreds of other dossiers over a period of years. “Deep State-proud loyalists” apparently was a Freudian slip, not a joke.

Deripaska names Jones as a “self-described former FBI agent,” as if FBI agents here are as thuggish and secretive as FSB agents in Russia. He suggests “we now know from the media” that Jones is “an ex-Feinstein staffer,” as if we don’t know in large part because of the Republican fight against the Torture report in (this is important!) the Senate Intelligence Committee. Then, after explaining on what authority he is sharing all this information — “My lawyer testified these facts to the Senate Intelligence Committee on Nov. 3,” — Deripaska claims third hand that Jones told his lawyer that Fusion is a “shadow media organization helping the government,” funded by a “group of Silicon Valley billionaires and George Soros.”

Among other things then, this is a very crafty attempt to get information submitted to the close-lipped SSCI, but probably not to SJC or HPSCI where everything leaks, into the public.

So Deripaska, presumably using one hell of a ghost writer, manages to spin a Paul Singer funded effort as a Soros cabal.

As noted above, there’s good reason to believe that Deripaska is the mastermind of the entire strategy of discrediting the dossier as a way to discredit the Mueller investigation. The last time he tried to discredit the investigation directly, prosecutors dinged Paul Manafort for violating the gag rule in the DC case; any bets they have the red line of this effort? Yet the name Manafort doesn’t appear here, so perhaps (especially as Manafort is officially on the clock in EDVA after his arraignment today as well as DC) Deripaska’s just getting around the gag.

As you read this work of art (really!), keep the following in mind: for all that Deripaska puts the focus on Jones and Nuland, he never gets around to explaining why Chuck Grassley thinks he had a role in the dissemination of the dossier, too. Or why he demanded immunity to testify to SSCI. At that level this may be an attempt to get ahead of disclosures about his role in the dossier.

Then, on February 14, Alex Van der Zwaan pled guilty to lying about communications with Deripaska’s flunkie Konstantin Kilimnik, making it clear (if it wasn’t already) that Kilimnik and through him Deripaska are a key focus of Mueller’s investigation.

February 14: Alex Van der Zwaan got caught and pled guilty to lying about communications he had with Rick Gates, Konstantin Kilimnik, and Greg Craig in September 2016. On top of whatever he had to say to prosecutors between his second interview on December 1 and his plea on February 14, both Craig and Skadden Arps have surely provided a great deal of cooperation before and since September 2016.

In addition, some currently sealed transcripts will soon be unsealed in the DC case that may name Kilimnik or Deripaska in more detail.

Oleg Deripaska was the key figure behind the larger conspiracy to defraud the US that Paul Manafort currently serves as the figurehead for. That will become increasingly clear in upcoming days (even assuming jailed sex worker Nastya Rybka’s claims to have recordings on election interference and Deripaska’s role in it never get substantiated), whether through additional Mueller indictments, Steele related disclosures, or reporting that finally explains the latter.

Share this entry

The Mueller Subpoena Starts at the Moment a Real Estate Deal in Moscow Might Get Trump Elected

/36 Comments/in , /by

Axios got a copy of a subpoena someone got from Robert Mueller last month. It asks for all communications (including handwritten notes) “this witness sent and received regarding the following people.” The list of people includes a lot of people you’d expect, but it’s missing a few:

  1. Carter Page
  2. Corey Lewandowski
  3. Donald J. Trump
  4. Hope Hicks
  5. Keith Schiller
  6. Michael Cohen
  7. Paul Manafort
  8. Rick Gates
  9. Roger Stone
  10. Steve Bannon

Cooperating witnesses George Papadopoulos and Mike Flynn aren’t on this list, but cooperating witness Rick Gates is (which may date the subpoena to before Gates flipped on February 23). The order is of particular interest (or, maybe they’re just alpha order by first name): Page, the long term suspected Russian asset, followed immediately by Lewandowski, who was in the loop on the stolen email offer, followed by the President and those closest to him, followed by Manafort and his closest aide. Then Stone and then — in the same month he gave 20 hours of testimony — Bannon.

Neither Don Jr nor Kushner is on this list. Given the emphasis on communications “regarding” the listed people, and given the way that Abbe Lowell purposely avoided giving “about”communications to Congress (and possibly to Mueller), and also given that Jonathan Swan is Axios’ key White House scoopster, I actually don’t rule out the witness being Jared. Or, as I joked on Twitter, like Flynn and Papadopoulos, maybe he has already flipped and so isn’t on this list.

Whoever it is, the absences on the list are probably a function of who is legitimately in this person’s circle.

Perhaps most telling, however, is the timing: November 1, 2015, to the present. Recall that on November 3, sometime FBI informant Felix Sater sent Michael Cohen (on the list) an email promising that a real estate deal in Moscow might lead to Trump becoming President. (Here’s the original WaPo scoop on the story.)

On November 3, 2015, two months before the GOP primary started in earnest and barely over a year before the presidential election, mobbed up real estate broker and sometime FBI informant Felix Sater emailed Trump Organization Executive Vice President and Special Counsel to Trump, Michael Cohen. According to the fragment we read, Sater boasts of his access to Putin going back to 2006 (when the Ivanka incident reportedly happened), and said “we can engineer” “our boy” becoming “President of the USA.”

[snip]

Mr. Sater, a Russian immigrant, said he had lined up financing for the Trump Tower deal with VTB Bank, a Russian bank that was under American sanctions for involvement in Moscow’s efforts to undermine democracy in Ukraine. In another email, Mr. Sater envisioned a ribbon-cutting ceremony in Moscow.

“I will get Putin on this program and we will get Donald elected,” Mr. Sater wrote.

That’s the start date Mueller uses for potential communications among people including Trump’s closest aides, including Cohen (but not including Sater) in the Russian investigation.

Update: Adding, we know that on October 21, 2016, the FBI had investigations into Manafort, Page, Stone, and possibly Gates. Is it possible this list is the sum of all those against whom sub-investigations have been opened (or were at the time this subpoena was issued)?

Share this entry