Lawsuit: Trump Aide Funneled Mob-Linked Ukrainian Oligarch’s Fortune into U.S. Real Estate

Suit dismissed in 2014 highlighted financial activities of former Yanukovych adviser Paul Manafort

Paul Manafort at the Republican National Convention in 1996. / Screenshot from CSPAN
March 31, 2016

A senior aide to Republican presidential frontrunner Donald Trump helped a scandal-plagued Ukrainian oligarch with ties to political and criminal figures in Russia park millions of dollars in offshore real estate investments, according to documents released as part of a federal racketeering suit.

The lawsuit, brought by former Ukrainian Prime Minister Yulia Tymoshenko, accused U.S. political consultant Paul Manafort of complicity in a complex scheme of retaliation against Tymoshenko and her political allies for impeding the business interests of Ukrainian gas tycoon Dmitry Firtash.

Manafort, a veteran GOP consultant and former adviser to recently-ousted Ukrainian president and Firtash ally Viktor Yanukovych, is now leading the Trump presidential campaign’s efforts to secure delegates at the Republican National Convention in July.

Trump’s praise for Russian president Vladimir Putin, who backed Yanukovych’s Kremlin-friendly government, has drawn criticism from Republican rivals and experts on U.S. policy toward Russia.

One of the GOP frontrunner’s top foreign policy advisers is also a staunch defender of Putin’s regime and highly critical of U.S. efforts to counter Russian influence in Ukraine and the rest of Europe.

Manafort’s involvement with Firtash in high-dollar business ventures could fuel criticism of Trump’s apparent affinity for Russian political interests, which U.S. military leaders say amount to the nation’s greatest strategic threat.

That involvement came to light through Tymoshenko’s lawsuit, which was filed in 2011 against Firtash and a number of his political and business associates. The suit alleged that Firtash had funneled ill-gotten gains from a Ukrainian gas monopoly through business interests that allowed him to shield income from authorities in that country.

A U.S. federal judge dismissed the suit in 2014, saying its racketeering allegations involved conduct in foreign countries that was outside the jurisdiction of U.S. courts.

The judge also ruled that Tymoshenko had failed to adequately demonstrate that Manafort’s business dealings with Firtash constituted a conscious effort to abet intimidation and harassment against his political critics in Ukraine.

However, documents revealed during court proceedings offer a glimpse of Manafort’s financial ties to Firtash, who is currently wanted by the Federal Bureau of Investigation over bribery allegations.

The documents show how Manafort set up investment vehicles at Firtash’s behest in order to funnel his considerable fortune into real estate ventures in the United States and elsewhere.

Manafort was working on the unsuccessful presidential campaign of Sen. John McCain (R., Ariz.) in late 2008. He was also on the payroll of Yanukovych’s Party of Regions. Manafort is widely credited with rehabilitating Yanukovych’s image in Ukraine and helping to engineer his victory in the country’s 2010 presidential election.

At the same time, Manafort was arranging financial ventures with Firtash’s backing, emails show. On August 25, 2008, he emailed two other individuals who would be involved in some of these ventures. One of them, Brad Zackson, was a former manager of the Trump Organization under Fred Trump, Donald’s father.

Manafort hoped to get input from Zackson on a "vision statement" for a real estate investment firm called CMZ Ventures. According to its founding documents, CMZ was jointly owned by Zackson’s Barbara Ann Holdings LLC, Manafort’s XXX LLC, and Vulcan Properties, which was controlled by real estate developer Arthur G. Cohen and owned by his wife.

Manafort made clear that Firtash was deeply involved in the process. "We should have a checklist organized for me to review this week of what would be the next steps if DF signs off on the Vision Statement," he wrote.

Manafort met with Firtash in Kiev in December 2008 to discuss the arrangement. One of his partners reported his success: Firtash’s holding company, Group DF, would invest $100 million in a global real estate fund, pay an initial fee of $1.5 million to CMZ to manage the fund, and set up offices for the firm in Kiev.

Manafort was back in Ukraine a few months later to discuss the arrangement with Firtash. "Basically, DF is still totally on board and a wire will be forthcoming … as a partial payment on the 1.5," he wrote. "Obviously, there is a lot going on over there, some with DF some on politics but affecting DF," he added. "Things are moving in a forward direction but slowly."

At the same time, Manafort was arranging another major real estate deal on Firtash’s behalf. He and Group DF discussed plans in late 2008 to buy the site of New York’s famed Drake Hotel. Zackson had already met with the company in Monte Carlo. "It could not have gone better," he reported.

David Brown, the chief executive of Group DF’s real estate division, laid out the terms of the deal in a letter dated November 8, 2008, four days after Manafort client McCain lost the U.S. presidential election.

Group DF was "prepared to provide $112 million in equity for the project" with an up-front commitment of $25 million, Brown wrote.

The $850 million Drake deal eventually fell through, despite Zackson’s last-minute attempts to get Donald Trump on board as an investor. Tymoshenko alleged that it was just part of a larger plan to funnel Firtash’s fortune into offshore real estate ventures.

"By inviting Firtash to utilize the various U.S. based companies to facilitate Firtash’s money laundering and political corruption activities, Manafort gave Firtash the opportunity to expand the scope of his money laundering activities into the United States," her lawsuit alleged in claims that the judge eventually found wanting.

While Manafort was not found to have violated either the Alien Tort Statute or the Racketeering Influenced and Corrupt Organizations Act, the two laws at issue in the suit, his involvement in Firtash’s interests could be a political liability for a Trump campaign that has already drawn fire for its closeness with Russia.

Tymoshenko claimed that CMZ and other Manafort-run firms were backed not just by Firtash but also by Semion Mogilevich, a Ukrainian national deeply involved in Russian organized crime. Tymoshenko’s lawsuit referred to Mogilevich as a "silent partner" in Group DF.

Mogilevich is "involved in weapons trafficking, contract murders, extortion, drug trafficking, and prostitution on an international scale," according to the FBI.

In a meeting with the American ambassador to Ukraine in late 2008, Firtash "acknowledged ties to Russian organized crime figure Seymon Mogilevich, stating he needed Mogilevich's approval to get into business in the first place," according to a State Department cable released by Wikileaks.

"Firtash acknowledged that he needed, and received, permission from Mogilievich when he established various businesses, but he denied any close relationship to him," according to the cable.

Firtash is currently wanted by the FBI, which has sought to extradite him to the U.S. on bribery charges since his 2014 apprehension in Austria.

The Trump campaign did not respond to questions about its knowledge of Manafort’s work for Firtash, or the latter’s alleged criminality or ties to the Russian mob. Efforts to reach Manafort were not successful.