At first, I was surprised when I heard that Donald Trump had hired Paul Manafort to be one of his chief advisors. I had known Manafort from years before, when he was the chief advisor to Victor Yanukovich, the former President of Ukraine. At the time, I was representing Yulia Tymoshenko, the former Prime Minister of Ukraine, who was one of the leaders of the political opposition to Yanukovich and his pro-Russian Party of Regions, which had steered Ukraine back into the Russian orbit. Yanukovich and his cronies, including his appointees in the Ukraine Chief Prosecutor’s Office, had embarked on a campaign to harass and silence Tymoshenko and other opposition leaders through a series of baseless and politically-motivated investigations and prosecutions on a variety of trumped-up charges.
When there was a near-universal outcry of opposition to Yanukovich’s strong-arm tactics and the suppression of political and human rights from European leaders, the U.S. and others, Yanukovich hired Manafort to refurbish his political image, which had never been very good. Rumors that Yanukivich had been a low-level member of a criminal organization in his home town of Donetsk had persisted since the time he had been sentenced in 1967 to a three-year prison term for participating in a robbery and assault. In June 1970, he was convicted for a second time on charges of assault, and sentenced to two years of imprisonment. Yanukovich was also accused of having participated in the assault and rape of a young woman, but he avoided being charged with this offense by protesting that he had intervened on behalf of the woman to try and stop the assault.
While in prison, Yanukovich solidified his credentials with the prevailing Russian-based organized crime group operating in Eastern Ukraine, and after his release, this same group provided much of the financing and muscle needed to propel young Yanukovich’s administrative and political career.
At first blush, it would seem odd for Yanukovich to choose a political adviser such as Paul Manafort, who was based almost half way around the world in the Washington, D.C. area and didn’t speak a word of Ukrainian or Russian (Yanukovich’s native tongue from Eastern Ukraine). Moreover, Manafort was primarily known – at least in the U.S. — for his rather specialized talent for managing the delegate count and floor operations at Republican Presidential conventions, starting with Gerald Ford’s success in turning back the insurgent campaign of Governor Ronald Reagan in 1984.
However, what was less widely known about Manafort (but was known to Yanukovich and his associates) was that he had successfully pursued a parallel career outside the U.S. representing some of the most oppressive and autocratic leaders that other U.S. consultants wouldn’t touch with a ten-foot pole. Manafort’s dubious client list included President Marcos, who was eventually forced to flee the Philippines, and the despotic leaders of the Dominican Republic, Nigeria, Kenya, Equatorial Guinea, and Somalia. Where other less-talented or tenacious consultants had given up in frustration trying to “re-make” the public image of these strongmen, who almost uniformly had built up well-deserved reputations as sadistic torturers and human rights violators, Manafort – for a handsome price – worked hard at coaching his clients and smoothing out some of the rougher edges until they had a softer and gentler image. No detail was too unimportant. He coached them on how to hold their hands in public, how to wave to a crowd, what kind of haircut they should have, and – as more recently in the case of Donald Trump – how to use a teleprompter.
Manafort used all of his considerable skills in his make-over of Yanukovich. Where other consultants had failed and then justified their failure as a hopeless attempt to put “lipstick on a pig,” Manafort molded this rough-hewn apparatchik — who could easily have been mistaken as having all the charm as a hitman for the Russian mob — into a cosmopolitan contemporary-looking statesman. Yanukovich started sporting a more European-looking hair style (rather than the 1950’s Politburo Stalinist look he had favored), waved for the cameras with a Western-style ease, and even started responding to the long-suffering Ukrainian crowds by saying, “I can feel your pain” (a Manafort-favorite saying).
Meanwhile, under Manafort’s tutelage, the Yanukovich regime ratcheted up its anti-Western European rhetoric as part of a campaign to prevent Ukraine from pursuing membership in the European Union. As part of the age-old effective strategy of “divide and conquer,” Yanukovich started pandering to the worst fears of the Russian-speaking minority in the industrialized Eastern Ukraine, spreading totally fabricated rumors that any alliance with the EU would lead to the persecution of the Russian speaking minorities. Also, when NATO held some naval exercises in the Mediterranean near Crimea, Yanukovich followed Manafort’s advice to denounce these exercises as an infringement on Ukrainian sovereignty and as part of a European plot to force Ukraine to join the EU.
When American Ambassador William Taylor told Manafort at a meeting in the U.S. Embassy in Kiev in 2006 that it was against U.S. interests for Manafort and Yanukovich to be steering Ukraine towards Russia and away from Europe and the West, Manafort just ignored him and continued to advise the Ukrainian pro-Russian political forces to do everything in their power to keep Ukraine out of the EU and NATO. All other appeals to Manafort’s patriotism by U.S. officials were equally rebuffed, and Manafort continued to be the primary Western spokesperson and apologist for Yanukovich and his pro-Russian allies in Ukraine.
While advising Yanukovich, Manafort spent an increasing amount of time in Kiev, where he met and befriended Dymitri Firtash, one of Ukraine’s wealthiest and most powerful oligarchs who was one of Yanukovich’s primary financial backers and a close associate of Putin. Firtash had literally made billions of dollars through a very simple yet effective scheme engineered with Putin and his associates who managed Gazprom, the Russian-owned natural gas company. Gazprom sold huge amounts of natural gas to Firtash’s company, RUE, who then marked up the price and resold the gas to Ukraine and Western Europe. RUE served no legitimate service to justify this mark up in price, and never actually took possession of the natural gas. In other words, this was a pure “skimming” operation, the sole purpose of which was to divert billions of dollars to Firtash and RUE, who then doled out generous kick-backs and pay-offs to Putin and his cronies in Russia, and Yanukovich and his pro-Russian allies in Ukraine. This was the grease that kept the corrupt regimes of Yanukovich and Putin chugging along year after year.
The most difficult part of the scheme was not where the money would be coming from. The source of the funds was from RUE’s mark-up of the billions of dollars in natural gas sales from Russia (actually mostly from Turkmanistan) to Ukraine and the West. The only difficult part of the equation was to disguise the distribution of those ill-gotten gains back to Putin in Russia and Yanukovich in Ukraine. The trick was to make the distribution route for the money to be so complicated and circuitous that it would be impossibly difficult to trace. This is called money laundering: the dirty money goes in and the “clean” untraceable money comes out.
Putin and Yanukovich, and their cronies, were always looking for new ways to launder the tidal wave of cash being generated by Firtash’s gas-trading activities. Manafort opened up an entirely new world of opportunities for Firtash by inviting him to “invest” in real estate deals in New York and elsewhere in North America and the Caribbean. Firtash was very interested.
Manafort saw this as a tremendous opportunity to truly hit the big time. Until he met Firtash, Manafort had made a very comfortable living as a Republican political consultant and lobbyist in the U.S., as well as a consultant and “image manager” for despots around the globe who held their grip on power not through the vagaries of the democratic process but, rather, through violence, terror, the conscription of child soldiers, the sale of blood diamonds and recreational torture and murder of political opponents and virtually anyone else who got in their way. His consulting firm’s contracts pulled in $900,000 here (Marcos) or $700,000 there, which was a lot of money for often only a few weeks’ work. But this was mere pocket change to the boatloads of money that he saw passing hands literally before his eyes.
For example, shortly after Manafort’s firm was retained to represent President Fernando Marcos, he was forced to flee the country. Under a deal negotiated by Senator Paul Laxalt of Nevada and Manafort, Marcos was granted asylum in the U.S. When Marcos’ plane landed in Honolulu, a customs inspection revealed a huge cache of gold bars that Marcos had withdrawn from the Philippines federal reserve bank as a going away present to himself. The gold was confiscated by U.S. authorities, but in return, Marcos and his family were issued bearer bond certificates by the U.S. Treasury, with each bearer bond representing $50 million. Thereafter, whenever Marcos or his family needed some walking around money, they would cash in one of the certificates in order to finance their extravagant life style.
But as Manafort learned, the gold that Marcos spirited out of the Philippines was only the tip of the iceberg. What Manafort also learned was that Marcos knew the location in the Philippines where the Yamamoto gold cache had been hidden. During the height of Japan’s domination of the Far East and the Pacific during World War II, and after the fall of the Philippines and withdrawal of U.S. forces, Japanese General Yamamoto had most of the gold bullion that had been seized from the British colonies that had fallen transferred to the Philippines. After the end of the war and the rise of Marcos’ political fortunes, Marcos invited the surviving Japanese officers who had supervised the burying of the gold back to the Philippines as his personal guest. After they were appropriately entertained for a few weeks in Manila, they revealed the location of the gold to Marcos, who confirmed this information by having the retired officers bring him to the location of the gold itself. Marcos then had one of his closest and trusted associates execute the officers on the spot, and disposed of the bodies. Marcos did not reveal the location of the gold to Manafort or anyone else, but he bragged that it was worth at least $50 billion.
Yanukovich and his closest oligarchs also opened up a whole new world of opulence to Manafort, complete with palaces, solid gold golf clubs, a private lake with a replica of a Spanish galleon for entertainment, and pet ostriches wandering around the Versailles-style gardens surrounding the Presidential palace just outside Kiev. Yanukovich had a customized private helicopter built that was bigger and much more expensive than any used by a U.S. President, which Yanukovich never tired of reminding Manafort and others in his inner circle. But I digress.
With a commitment of an initial $25 million from Firtash, Manafort formed CMZ Ventures in New York with office located on the 20th floor of 1501 Broadway in Manhattan. In addition to Manafort (the “M” in CMZ), the two other name partners in the Company were Brad Zackson, a real estate broker with the Donald Trump organization, and Arthur Cohen, a longstanding real estate developer in the New York area. Firtash was the “silent partner” in the Company, and the source of the funding. Manafort also knew (or should have known) that by teaming up with Firtash, he was also doing business with Firtash’s primary backer, Seymeon Mogalevich, the godfather of Russian organized crime. But Manafort had made a successful career of dealing with shady characters, so he teamed up with Firtash and Mogalevich with nary a qualm. Manafort made it clear to his other U.S. partners and to Company employees that he was to be the only contact person for Firtash, and he flew off to Monaco and other European locations to meet with Firtash.
In addition to wiring $25 million to New York in 2008, Manafort also secured a commitment from Firtash to provide the financing for a $100 million investment fund, with Manafort and his U.S. partners receiving a $1.5 million fee for supposedly managing the money.
In order to successfully disguise CMZ Ventures as a legitimate real estate company, the Company entered into an options contract to purchase the Drake Hotel site in midtown Manhattan, and drew up plans to build a new luxury commercial and residential tower to be called “Bulgari Towers.”
During 2008, CMZ also hired a number of young, bright employees who were looking to gain some experience in the real estate development field. Among those they hired were Scott Snizek and Christy Rullis, both of whom I later represented after CMZ failed to pay them any salary and even denied that they were employees when they filed for unemployment benefits.
In fact, Scott, Christy and the rest of the employees were never actually paid any salary at all. Instead, they were periodically given “expense” checks as reimbursement for fictitious expenses that they had incurred. The apparent reason for this was that the Company did not want to go through the trouble of establishing a legitimate payroll system, with tax withholding and other bothersome requirements, because it never intended to stay in business for very long. The primary purpose was to launder sufficient funds for Firtash though a labyrinth of bank accounts and an alphabet soup of sub-companies, with Manafort, Zackson and Cohen receiving sizable cuts along the way for their money-laundering purposes.
Christy Rullis recalled being extremely puzzled as to why she was being asked to open bank accounts in Panama and other Caribbean locations when the projects that they were supposedly financing, such as the Drake Hotel project, were located in New York. It wasn’t until much later, after the Company abruptly closed its doors in January 2009 without actually ever closing on any project, that it had never been the partners’ intention to operate a legitimate real estate company.
Scott, Christy and some of the other employees applied for unemployment insurance payments, but could not produce any pay stubs or other evidence that they had actually been employees at the Company. This was particularly hard on Christy Rullis, since she had just renewed her apartment lease in Manhattan, thinking that she would have a steady income over the next year or so, only to have the rug abruptly pulled out from under her.
It was only after several weeks of investigation by the New York State Labor Department and various unemployment insurance hearings that Scott, Christy and some of the other employees in the Company were able to establish that they had in fact been actual employees of the Company, such that they were able to start receiving some unemployment insurance benefits.
However, perhaps most damaging to Scott and Christy was the damage to their careers. The Company had been “sold” to them by Manafort and Zackson as a good opportunity for them to get valuable experience in the real estate development field, and it appeared – at least on the surface – that the Company was working on legitimate real estate projects. In addition to the Drake Hotel project, the Company was developing plans to build a major resort on a small deserted island in the Bahamas, and Scott actually spent some of his own money travelling down to the potential site to do some preliminary investigation. However, this real estate project also evaporated into thin air once Manafort, Firtash and Zackson had accomplished their primary role, which was to launder millions of dollars of Firtash’s money through seemingly legitimate business enterprises, and then abruptly closing down the “front” business (CMZ) without having actually “closed” on any of the real estate deals. Along the way, Manafort and Zackson were well compensated for their troubles.
At first blush, it is puzzling that Donald Trump would choose Paul Manafort to lead his “America First” campaign for President of the United States, knowing that Manafort had a long history of making a small fortune advising foreign despots such as Yankovich who pursued blatantly anti-American policies and were squarely in the pro-Russian camp. Over a period of years, Manafort used all of his considerable talents to help the Yanukovich Regime to steer Ukraine clear of close ties with the EU, NATO and the U.S., ensuring that it would remain squarely in the Russian orbit.
On closer examination, however, both Manafort and Trump shared an admiration for Vladimir Putin, who assumed the traditional role as the Russian strongman, tamping down on any real moves towards democracy, free speech, and respect for fundamental human rights in Russia.
Manafort and Trump also share the entrepreneur’s instinct for wanting to gain access to Russian capital, which had largely stagnated due to the EU and U.S. sanctions against Russian for its repeated violations of human rights and aggression towards neighboring countries, including Ukraine. Trump got a taste of “From Russian With Love” at the Miss. Universe pageant held in Russian, where he was suitable impressed when Putin decided to stop by to say “hello.” So much for Trumps foreign policy credentials. No doubt he looked Putin in the eye and saw a kindred spirit. Both the KGB and the New York real estate market are similar in that brute force is often required to achieve one’s objectives.
It reminds me of Sarah Palin saying that she “knows” Russian because she can see it from her window in Alaska on a clear day. Another Republican candidate clueless about foreign policy issues, but at least if elected, she would not have had her finger on the nuclear trigger (unless John McCain became incapacitated).
Manafort’s relationship with Putin and Russia run much deeper than Trump’s. When Manafort was masterminding Yanukovich’s anti-U.S. policy in Ukraine, he established a relationship with Oleg Deripaska –a Russian oligarch with close ties to Putin. I happened to learn of Manafort’s business relationship with Deripaska after the Ukrainian people decided that they had had enough of Yanukovich’s corruption and excesses, and his unabashed intention to turn Ukraine back into a Russian vassal state. Peaceful student demonstrations at Independence Square (EuroMaidan) in downtown Kiev were met with violent suppression by Yanukovich, who ordered military sharpshooters to pick off leaders from the surrounding buildings. Finally, Yanukovich and his cronies were forced to flee Kiev, leaving behind thousands of incriminating documents that they did not have time enough to dispose of. The sauna of the General Prosecutor’s mansion was filled with documents, one of which was a memo sent by Rick Gates, Manafort’s right hand man, to two of Deripaska’s associates, discussing a possible business investment by Deripaska. We eventually learned that Deripaska did, in fact, invest millions of dollars in a Manafort-controlled company, Pericles LLC, that was supposed to invest in various real estate projects in the U.S. and the Caribbean but never did so. The money just “disappeared” according to court papers later filed by Deripaska’s lawyers, and for a period of time, Manafort also went “missing.” Strange happenings for an “America First” Presidential campaign manager, who willingly climbed into bed with both the autocratic leaders of Russia and Ukraine, as well as their oligarchs, knowing full well that the political and economic leaders of both countries, at least under the Yanukovich and Putin regimes, were little more than criminal organizations holding tenaciously onto their power through systematic terror, intimidation, extortion and endemic corruption.
Truly, Trump and Manafort were made for each other. God help America.