A company set up by a senior Donald Trump aide to funnel a Ukrainian oligarch’s fortune into U.S. real estate withheld payroll checks in violation of labor law, a former employee alleged in a 2009 complaint.
Trump strategist and veteran GOP consultant Paul Manafort set up the company, CMZ Ventures, LLC, in 2008. The company was eventually used to park hundreds of millions of dollars from Ukrainian gas tycoon Dmirty Firtash in offshore investment vehicles.
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In a whistleblower complaint filed with the New York State Department of Labor in 2009, former CMZ employee Scott Snizek accused the company of "blatant violations of employment law."
According to Snizek, the company failed to withhold taxes from employees’ paychecks, withheld those paychecks for months at a time, and ridiculed those who brought concerns to their supervisors’ attention.
Snizek’s allegations shed light on the inner workings of a company run by a consultant who is now leading Trump’s efforts to secure delegates at the Republican National Convention in July.
The complaint and accompanying documentation also provide additional details on how CMZ and a handful of related companies structured deals that Firtash’s critics say allowed him to shield his immense wealth from authorities in Ukraine.
Snizek called CMZ "an elaborate smoke-and-mirrors act played by well-known individuals, who used their experience, high level relationships and influence to avoid suspicion as to their pattern of behavior while they go after the biggest deals in real estate without remorse for the damage they cause to those who they get involved" in a letter to Sens. Charles Schumer (D., N.Y.) and Kirsten Gillibrand (D., N.Y.) alerting them to the complaint.
Snizek listed 23 other companies that he identified as either closely related to, different iterations of, or parties to CMZ’s real estate investment activities.
"With no defining reference points to distinguish new corporations, it appears that the corporations were formed by the members, for the sole purpose of serving as pass thru conduit or as shell corporations to avoid responsibilities encountered through conducting business," he wrote.
Snizek identified one of those "shell corporations" as ZMC Partners LP, which, like CMZ, took its name from the initials of its three principals: Manafort, former Trump Organization employee Brad Zackson, and New York real estate investor Arthur Cohen.
According to a partnership agreement referenced in Snizek’s complaint, ZMC Partners was a joint venture between Manafort’s ZMC Investors LP and Group DF, Firtash’s holding company.
The initial terms of the agreement said Group DF would invest $200 million in the partnership. Its total value would be about $1 billion.
Snizek’s complaint and the ZMC partnership agreement came to light during a lawsuit filed by former Ukrainian prime minister Yulia Tymoshenko against Firtash, Manafort, and other individuals and entities involved in their transactions.
At the time, Manafort was serving as a senior adviser to recently-ousted Ukrainian president Viktor Yanukovych, a political ally of Russian president Vladimir Putin.
Other documents released during Tymoshenko’s lawsuit reveal additional companies and business ventures affiliated with or run by Manafort as a means of investing Firtash’s fortune in real estate ventures in the United States and elsewhere.
A federal judge eventually dismissed allegations that Manafort, Firtash, and others had violated federal racketeering laws. However, the documents released during the suit shed new light on their financial arrangements.
The ZMC partnership agreement, one of those documents, hints at the use of a web of companies to enable those activities.
"In order to facilitate investment by certain investors, [ZMC Investors] or an Affiliate thereof may establish one or more additional collective investment vehicles or other arrangements," the agreement noted.
The amorphous structure of CMZ and its affiliated entities likely resulted in violations of labor and tax law, Snizek said in his complaint.
"Tax violations and related employment violations of New York City, State, and Federal laws, will likely found in regard to the business practices of the partners," he wrote.
"Due to the players involved, a potential cascade of additional violations will likely be uncovered as well involving interstate and international employment law, foreign representation registration, money laundering, wiring crime, Securities and Exchange Commission violations, and violations of interstate and international limited liability laws" Snizek added.
The New York Department of Labor said it could not comment on or confirm the existence of specific complaints lodged with the department.
In addition to Snizek’s complaint, documents released during Tymoshenko’s lawsuit show that the department was investigating the possibility that CMZ had failed to report wages to state authorities.
Efforts to reach Manafort for comment were not successful.