Double Blow for Trump as Former Allies Are Guilty of Financial Crimes
ALEXANDRIA, VA — August 22, 2018
Donald Trump suffered one of the worst days of his presidency, with his former campaign chief found guilty of fraud and his ex lawyer pleading guilty to financial crimes.
Paul Manafort, the longtime political operative who for months led Donald Trump’s winning presidential campaign, was found guilty of eight financial crimes Tuesday in the first trial victory of the special counsel investigation into the president’s associates. A judge declared a mistrial on 10 other counts the jury could not agree on. Mr. Manafort is the most senior figure in the Trump administration to be charged with a crime and now faces years in prison, potentially life.
The charges are the result of evidence discovered during Robert Mueller’s investigation into Russian interference in the 2016 presidential election, however they do not relate to Mr. Manafort’s time as campaign chair.
Some of the charges relate to Mr. Manafort’s time working alongside pro-Russian operatives in Ukraine.
The jury found Manafort guilty of five counts of filing false tax returns on tens of millions of dollars in Ukrainian political consulting income. He was also convicted of failing to report foreign bank accounts in 2012 and of two bank fraud charges that accused him of lying to obtain millions of dollars in loans after his consulting income dried up.
The jury couldn’t reach a verdict on three other foreign bank account charges, and the remaining bank fraud and conspiracy counts.
The former campaign chair has been behind bars for weeks, following allegations of witness tampering.
The president has not revealed his thinking but spoke sympathetically throughout the trial of his onetime aide, at one point suggesting he had been treated worse than gangster Al Capone.
“Looking back on history, who was treated worse, Alfonse Capone, legendary mob boss, killer and “Public Enemy Number One” or Paul Manafort…” the President tweeted earlier this month.
The president Tuesday called the outcome a “disgrace” and said the case “has nothing to do with Russia collusion.”
Manafort decided not to put on any witnesses or testify himself in the trial. His attorneys said he made the decision because he didn’t believe the government had met its burden of proof.
Manafort’s defense team has attempted to make the case about the credibility of longtime Manafort protege, Rick Gates, who served as the government’s star witness. They have attacked him as a liar, embezzler and instigator of many crimes as they tried to persuade jurors that Manafort didn’t willfully violate the law.
For the prosecution, Gates was the star witness, spending three days before the jury, telling them how he committed crimes alongside Manafort for years. Gates admitted to doctoring documents, falsifying information and creating fake loans to lower his former boss’s tax bill. He also admitted to stealing hundreds of thousands of dollars without Manafort’s knowledge by filing fake expense reports.
But the government’s case wasn’t all about Gates. Prosecutors spent two weeks presenting a meticulous, document-based case before the jury as they sought to prove Manafort used offshore bank accounts to conceal millions of dollars in proceeds from his Ukrainian political consulting from the IRS and later turned to defrauding banks.
Overall, prosecutors say Manafort avoided paying more than $16 million in taxes over several years.
The trial in Alexandria, Virginia, is the first of two for Manafort. He faces a trial later this year in Washington DC on charges of conspiracy against the United States, conspiracy to launder money, making false statements and acting as an unregistered foreign agent for Ukrainian interests. He is also accused of witness tampering in that case.
The verdict was part of a stunning one-two punch of bad news for the White House, coming as the president’s former lawyer, Michael Cohen, was pleading guilty in New York as part of a separate deal with prosecutors.
Cohen pleaded guilty to five counts of tax fraud, one count of making false statements to a financial institution, one count of willfully causing an unlawful corporate campaign contribution and one count of making an excessive campaign contribution.
As we have wrote before, the only choice remaining today is whether to save the world financial system at the expense of the US or save the US at the expense of the global financial system. There is no third way. In any case, this contradiction will be resolved through a severe crisis. Trump and groups behind him opt for the second choice. The Federal Reserve System opts for the first. They want to save the world dollar system and its single most important client – large banks at the expense of US industry and the real economy.
The Federal Reserve had to reduce its interest rates down to zero to hit the target, and official low inflation turned them even lower to negative positions. Trump wants to raise the interest rates to return production to the United States and use the domestic market as a base and maximize exports (including using political tools, what the hell!) to save the US economic sector.
These two powerful groups have tried to reach an agreement, but, as we have said, consensus is not possible. One of the sides must disappear. In July this year, “the bulldog scramble under the carpet” came to an end. The direct war began, the first goal of which is control of the fed's policy. Specifically, whether to raise or lower interest rates.
The attack on Trump's closest associates, even former ones, should be considered in the context of a mutual exchange of blows. Let’s wait for the retaliation from Trump. I think we'll see it soon.