Paul Manafort thought he was in the clear in the summer of 2014 after meeting with federal prosecutors and FBI agents about his Ukrainian income, bank records and income tax returns.
Michael Cohen was charged so quickly he never got a chance to meet with the Justice Department’s Tax Division to negotiate a non-criminal solution to his tax evasion, a court filing says.
Today, both men stand convicted of tax cheating in indictments brought by special counsel Robert Mueller and the U.S. attorney’s office in Manhattan in 2017-2018.
The two have other similarities.
Manafort and Cohen worked closely with President Trump, as campaign manager and personal attorney, respectively. Both men didn’t come under investigation until the FBI opened its Russia probe in July 2016. A Manafort friend said that if the political consultant hadn’t gone to work for Mr. Trump, he never would have faced charges in a 2014 probe that had gone dormant.
Conservatives see decisions to prosecute them — on tax charges not remotely connected to Russian collusion — as the Justice Department’s and Mr. Mueller’s strong-arm tactics. They wanted to force guilty pleas and then gain cooperation, with a goal of getting evidence against Mr. Trump.
In Manafort’s case, his presiding trial judge in Alexandria, Virginia, agreed.
“Given the investigation’s focus on President Trump’s campaign, even a blind person can see that the true target of the Special Counsel’s investigation is President Trump, not defendant, and that defendant’s prosecution is part of that larger plan,” said U.S. District Judge T.S. Ellis III. “Specifically, the charges against defendant are intended to induce defendant to cooperate with the Special Counsel by providing evidence against the President or other members of the campaign. Although these kinds of high-pressure prosecutorial tactics are neither uncommon nor illegal, they are distasteful.”
In the case of Cohen, Tom Fitton, who runs the conservative watchdog group Judicial Watch, said: “The ‘usual practice’ has been cast aside for the Trump investigations.”
He cited the raid on Cohen’s office, the wiretap warrants on a Trump volunteer based on Hillary Clinton opposition research and Justice officials in regular contact with Fusion GPS, the investigative firm that facilitated the unverified anti-Trump dossier financed by Democrats.
Kevin Downing, Manafort’s defense counsel, spelled out the timeline in a January 2018 court filing.
Now a convicted felon and jailed, Manafort had been an international political consultant and property investor with a taste for fine dining and well-tailored suits. He earned huge sums for his work for the Party of Regions, a pro-Russia group in Ukraine.
Based on suspicious bank transfers, Manafort was summoned July 30, 2014, to the Justice Department, where he met with lawyers and FBI agents. He presented financial documents and identified his overseas banks accounts.
“During the interview, Mr. Manafort provided a detailed explanation of his activities in Ukraine, including his frequent contact with a number of previous U.S. Ambassadors in Kiev and his efforts to further U.S. objectives in Ukraine on their behalf. He further discussed his offshore banking activity in Cyprus,” Mr. Downing said in his court filing.
Manafort associates say he never heard from the agents again — that is, not until Mr. Mueller was appointed special counsel and recruited Andrew Weissmann from Justice’s fraud division.
Next, Manafort was under criminal investigation, with Mr. Weissmann leading the prosecution.
“The Office of the Special Counsel charged Mr. Manafort with the very conduct he voluntarily disclosed to DOJ almost three years prior to the appointment of Mr. Mueller as Special Counsel,” Mr. Downing said in his motion to disqualify Mr. Mueller’s office.
A judged denied his motion.
“Prosecutors in Mr. Mueller’s office have admitted that the Special Counsel’s investigation of Mr. Manafort concerns conduct that has nothing to do with the charges in the Appointment Order’s original jurisdiction clause,” Mr. Downing said.
Mr. Downing asked Deputy Attorney General Rod Rosenstein if he authorized Mr. Mueller to investigate tax returns submitted years before Manafort became campaign chairman and that couldn’t possibly be linked to the Trump-Russia probe. He received no reply.
“Waste of time and resources”
Six months after Manafort met with the FBI in 2014, the Obama administration named Mr. Weissmann as chief of Justice’s fraud division in January 2015.
In the summer-fall of 2016, the FBI opened an investigation into whether the Trump campaign conspired with Moscow on election interference. One of four Trump associates targeted was Manafort, who had served for two months as campaign chairman.
In April 2017, Mr. Weissmann met with Associated Press reporters who briefed him on their Manafort investigation, according to documents obtained by Mr. Downing, who accused Mr. Mueller’s team of leaking grand jury testimony.
In October, Mr. Weissmann brought the first of several indictments against Manafort.
Today, 28 months after the FBI opened the Russia probe, Manafort has not been accused by prosecutors of the reason for their appointment —Trump election collusion.
Manafort never was offered a chance to settle his tax delinquencies with the Justice Tax Division.
Mr. Downing said in court papers that Justice has no records of Manafort contacts with Russian officials. He said the press repeatedly reported inaccurately that there were such records.
In the Cohen case, his attorney, former federal prosecutor Guy Petrillo, filed a brief asking the judge for leniency. Cohen was sentenced Wednesday to 36 months in prison.
Mr. Petrillo said Cohen’s tax crimes — not reporting $4 million in income over five years to avoid $1.4 million in taxes — were not elaborate schemes with offshore accounts and bogus deductions. He said his client simply underreported his income to an accountant for his taxicab business. As such, he should have been given the opportunity to negotiate a civil settlement.
“The usual practice of review with counsel and an opportunity to be heard by the Tax Division within DOJ as to the filing of criminal charges was omitted by decision of the government,” Mr. Petrillo said. “In comparison, numerous allegations of unpaid tax are routinely asserted by the IRS outside of the criminal context and addressed through assessments, liens and penalties. On the merits, such an approach could readily have been taken here, because other than the unreported income itself, no aggravating … factors are present.”
He cited a Justice Department manual that says “if time and circumstance permit, the Tax Division generally grants a taxpayer’s written request for a conference with the division.”
Mr. Petrillo said he received quick notification of charges. Three days later, Cohen was indicted.
Though all cases have differences, delinquent taxpayers do often settle with the IRS, avoiding criminal charges. An example is the Rev. Al Sharpton, a Democratic activist, MSNBC host and Trump basher.
The New York Post reported Dec. 1 that Mr. Sharpton is paying millions in back taxes to the IRS in installments. He has paid off $1.3 million and still owes $2.5 million, the Post said, quoting court records. He owes New York $736,375 in back taxes.
Cohen’s unpaid federal tax totaled $1.4 million.
In the end, prosecutors got what they wanted. Cohen has emerged as perhaps the prosecution’s best witness against Mr. Trump — but not on Russia.
The New York U.S. attorney’s office has decided that Mr. Trump’s payments to two alleged lovers were campaign expenditures and thus illegal because they exceeded individual limits and were not reported to the Federal Election Commission. Cohen pleaded guilty, saying he did the “fixer” chore at Mr. Trump’s direction.
Mr. Trump depicts the payments as part of a private non-disclosure agreement. His associates have said that federal law permits candidates to give unlimited amounts to their campaigns.
Cohen hasn’t faced Russia collusion charges. Prosecutor court filings don’t suggest he has any knowledge. He has publicly denied witnessing Russia conspiracies by anyone in the campaign.
Judge Ellis said in a pre-trial ruling that the Mueller team is under pressure to gain Russia convictions.
“If a Special Counsel discovers no criminal activity then the investigation is likely to be perceived as a waste of time and resources, and thus a Special Counsel has a strong incentive to find criminality and to prosecute criminal conduct by the people he has been charged with investigating — here persons connected with the Trump campaign,” Judge Ellis said.