Superseding criminal information in the case against Richard Gates

The Special Counsel informs the Court:

1. RICHARD W. GATES III (GATES) served for years as a political consultant and lobbyist. Between at least 2006 and 2015, GATES and Paul J. Manafort, Jr. (Manafort) acted as unregistered agents of the Government of Ukraine, the Party of Regions (a Ukrainian political party whose leader Victor Yanukovych was President from 2010 to 2014), Yanukovych, and the Opposition Bloc (a successor to the Party of Regions that formed in 2014 when Yanukovych fled to Russia). Manafort and GATES generated tens ofmillions ofdollars in income as a result 0ftheir Ukraine work In order to hide Ukraine payments from United States authorities, from approximately 2006 through at least 2016, Manafort and GATES laundered the money through scores ofUnited States and foreign corporations, partnerships, and bank accounts.

2. In furtherance of the scheme. Manafort and GATES funneled mi11ions 0f do1lars in payments into foreign nominee companies and bank accounts, opened by them and their accomplices in nominee names and in various foreign countries, including Cyprus, Saint Vincent & the Grenadines (Grenadines), and the Seychelles Manafort and GATES hid the existence of the foreign companies and bank accounts, falsely and repeatedly reporting to their tax preparers and to the United States that they had no foreign bank accounts.

3. In furtherance ofthe scheme, Manafort and GATES concealed from the United States their work as agents 01‘, and millions ofdollars in payments from, Ukraine and its political parties and leaders. Because Manafort and GATES, among other things, directed a campaign to lobby United States officials on behalfofthe Government okaraine, the President of Ukraine, and Ukrainian political parties, they were required by law to report to the United States their work and fees. Manafort and GATES did not do so. Instead, when the Department of Justice sent inquiries to Manafort and GATES in 2016 about their activities, Manafon and GATES responded with a series of false and misleading statements.

4. In furtherance of the scheme, Manafort used his hidden overseas wealth to enjoy a lavish lifestyle in the United States, without paying taxes on that income. Manafort, without reporting the income to his tax preparer or the United States, spent millions ofdollars on luxury goods and services for himself and his extended family through payments wired from offshore nominee accounts to United States vendors. Manafort also used these offshore accounts to purchase multi- million dollar properties in the United States. Manafort then borrowed millions ofdollars in loans using these properties as collateral, thereby obtaining cash in the United States without reporting and paying taxes on the income. In order to increase the amount ofmoney he could access in the United States, Manafort defrauded the institutions that loaned money on these properties so that they would lend him more money at more favorable rates than he would otherwise be able to obtain.

5. GATES aided Manafort in obtaining money from these offshore accounts, which he was instrumental in opening. Like Manafort, GATES used money from these offshore accounts to pay for his personal expenses, including his mortgage, children’s tuition, and interior decorating ofhis Virginia residence.

6. In total, more than $75,000,000 flowed through the offshore accounts. Manafort laundered more than $18,000,000, which was used by him to buy property, goods, and services in the United States, income that he concealed from the United States Treasury, the Department of J ustice, and others. GATES transferred more than $3,000,000 from the offshore accounts to other accounts that he controlled.

Relevant Individuals And Entities

7. Manafort was a United States citizen. He resided in homes in Virginia, Florida, and Long Island, New York.

8. GATES was a United States citizen. He resided in Virginia.

9. In 2005, Manafort and another partner created Davis Manafort Partners, Inc. (DMP) to engage principally in political consulting. DMP had staff in the United States, Ukraine, and Russia. In 201 l, Manafort created DMP International, LLC (DMI) to engage in work for foreign clients, in patticular political consulting, lobbying, and public relations for the Govemment of Ukraine, the Party ofRegions, and members ofthe Party ofRegions. DMl was a partnership solely owned by Manafort and his spouse. GATES worked for both DMP and DM1 and served as Manafort‘s right—hand man.

10. The Party of Regions was a pro-Russia political party in Ukraine. Beginning in approximately 2006, it retained Manafort, through DMP and then DMI, to advance its interests in Ukraine, including the election of its slate of candidates. In 2010, its candidate for President, Yanukovych, was elected President of Ukraine. In 2014, Yanukovyeh fled Ukraine for Russia in the wake of popular protests of widespread governmental corruption. Yanukovych, the Party of Regions, and the Government of Ukraine were Manafort, DMP, and DM1 clients.

11. The European Centre for a Modern Ukraine (the Centre) was created in or about 2012 in Belgium as a mouthpiece for Yanukovych and the Party of Regions. The Centre was used by Manafort, GATES, and others in order to lobby and conduct a public relations campaign in the United States and Europe on behalt‘ofthe existing Ukraine regime. The Centre effectively ceased to operate upon the downfall of Yanukovych in 2014.

12. Manafort and GATES owned or controlled the following entities, which were used in the scheme (the Manafort-GATES entities):

Domestic Entities

Cypriot Entities

Other Foreign Entities

13. The Internal Revenue Service (IRS) was a bureau in the United States Department ofthe Treasury responsible for administering the tax laws ofthe United States and collecting taxes owed to the Treasury.

The Scheme

14. Between in or around 2008 and 2017, both dates being approximate and inclusive, in the District of Columbia and elsewhere, Manafort and GATES devised and intended to devise, and executed and attempted to execute, a scheme and artifice to defraud, and to obtain money and property by means oft‘alse and fraudulent pretenses, representations, and promises from the United States, banks, and other financial institutions. As part of the scheme, Manafort and GATES repeatedly provided false information to financial bookkeepers, tax accountants, and legal counsel, among others.

Manafort And GATES’ Wiring OfMoney From Offshore Accounts Into The United States

15. In order to use the money in the offshore nominee accounts of the Manafort-GATES entities without paying taxes on it, Manafort and GATES caused millions ofdollars in wire transfers from these accounts to be made for goods, services, and real estate. They did not report these transfers as income to DMP, DMI, or Manafort.

16. From 2008 to 2014, Manafort caused the following wires, totaling over $12,000,000, to be sent to the vendors listed below for personal items. Manafort did not pay taxes on this income, which was used to make the purchases.

17. In 2012, Manafort caused the following wires to be sent to the entities listed below to purchase the real estate also listed below. Manafort did not report the money used to make these purchases on his 2012 tax return.

Manafort And GATES’ Hiding Okaraine Lobbying And Public Relations Work

18. It is illegal to act as an agent ofa foreign principal engaged in certain United States influence activities without registering the affiliation. Specifically, a person who engages in lobbying or public relations work in the United States (hereafter collectively referred to as lobbying) for a foreign principal such as the Government okaraine or the Party ofRegions is required to provide a detailed written registration statement to the United States Department ofJustice. The filing, made under oath, must disclose the name ofthe foreign principal, the financial payments to the lobbyist, and the measures undertaken for the foreign principal, among other information. A person required to make such a filing must further make in all lobbying material a “conspicuous statement” that the materials are distributed on behalt'ofthe foreign principal, among other things. The filing thus permits public awareness and evaluation ofthe activities ofa lobbyist who acts as an agent ofa foreign power or foreign political party in the United States.

19. In furtherance of the scheme, From 2006 until 2014, both dates being approximate and inclusive, Manafort and GATES engaged in a multi-million dollar lobbying campaign in the United States at the direction of Yanukovych, the Party of Regions, and the Government of Ukraine. Manafort and GATES did so without registering and providing the disclosures required by law.

20. As part ofthe scheme, in February 2012, Manafort and GATES solicited two Washington. D.C., firms (Company A and Company B) to lobby in the United States on behalfonanukovych, the Party OIchions, and the Government of Ukraine. For instance, GATES wrote to Company A that it would be “representing the Government okaraine in [Washington,] DC.”

21. Manafort repeatedly communicated in person and in writing with Yanukovych, and GATES passed on directions to Company A and Company B. For instance, Manafort wrote Yanukovyeh a memorandum dated April 8, 2012, in which he provided Yanukovych an update on the lobbying firms’ activities “since the inception ofthe project a few weeks ago. It is my intention to provide you with a weekly update moving forward.” Toward the end ofthat first year, in November 2012, GATES wrote to Company A and Company B that the firms needed to prepare an assessment of their past and prospective lobbying efforts so the “President” could be briefed by “Paul” “on what Ukraine has done well and what it can do better as we move into 2013.”

22. At the direction of Manafort and GATES, Com pany A and Company B engaged in extensive lobbying. Among other things, they lobbied multiple Members ofCongress and their staffs about Ukraine sanctions, the validity of Ukraine elections, and the propriety of Yanukovych’s imprisoning his presidential rival, Yulia Tymoshenko (who had served as Ukraine President prior to Yanukovych). Manafort and GATES also lobbied in connection with the roll out ofa report concerning the Tymoshenko trial commissioned by the Government 01" Ukraine. Manafort and GATES used one oftheir offshore accounts to funnel $4 million to pay secretly for the report.

23. To minimize public disclosure oftheir lobbying campaign, Manafort and GATES arranged for the Centre to be the nominal client ofCompany A and Company B, even though in fact the Centre was under the ultimate direction ofthe Govemment okaraine, Yanukovych, and the Patty of Regions. For instance, Manafort and GATES selected Company A and Company B, and only thereafier did the Centre sign contracts with the lobbying firms without ever meeting either company. Company A and Company B were paid for their services not by their nominal client, the Centre, but solely through off—shore accounts associated with the Manafort—GATES entities, namely Bletilla Ventures Limited (in Cyprus) and Jeunet Ltd. and Global Endeavour 1nc. (in Grenadines). In total, Company A and Company B were paid more than $2 million from these accounts between 2012 and 2014.

Company B through a principal replied to GATES the same day that “there’s a lot ofemail traffic that has you much more involved than this suggests[.] We will not disclose that but heaven knows what former employees of [Company B] or [Company A] might say.”

25. In September 2016, after numerous recent press reports concerning Manafort, the Department ofJustiee informed Manafon, GATES, and DM1 that it sought to determine whether they had acted as agents ofa foreign principal under the Foreign Agents Registration Act (PARA), without registering. In November 2016 and February 2017, Manafort, GATES, and DM1 caused false and misleading> letters to be submitted to the Department ofJustiee, which mirrored the false cover story set out above. The letters, both of which were approved by Manafort and GATES before they were submitted, represented, among other things, that:

• DMI‘s “efforts on behalfofthe Party of Regions” “did not include meetings or outreach within the 11.8.”;
• Manafort and GATES did not “recall meeting with or conducting outreach to US. government officials or US. media outlets on behalfofthe [Centre]. nor do they recall being party to, arranging, or facilitating any such communications. Rather, it is the recollection and understanding ot‘Messrs. Gates and Manafort that such communications would have been facilitated and conducted by the [Centre’s] U.S. consultants, as directed by the [Centre]. . . .”;
• Manafort and GATES had merely served as a means of introduction of Company A and Company B to the Centre and provided the Centre with a list of“potential U.S.-based consultants—including [Company A] and [Company B]——for the [Centre’s] reference and further consideration."
• DMI “does not retain communications beyond thirty days” and as a result of this policy, a “search has returned no responsive documents.” The November 2016 letter attached a one-page, undated document that purported to be a DMI “Email Retention Policy.”

26. In fact, Manafort and GATES had: selected Company A and Company B; engaged in weekly scheduled calls and frequent emails with Company A and Company B to provide them directions as to specific lobbying steps that should be taken; sought and received detailed oral and written reports from these firms on the lobbying work they had perfomted; communicated with Yanukovych to briefhim on their lobbying efforts; both congratulated and reprimanded Company A and Company B on their lobbying work; communicated directly with United States officials in connection with this work; and paid the lobbying firms over $2 million from offshore accounts they controlled. among other things. In addition, court-authorized searches of Manafort and GATES‘ DMI email accounts and Manafort‘s Virginia residence in July 2017 revealed numerous documents, including documents related to lobbying, which were more than thirty—days old at the time ofthe November 2016 letter to the Department of Justice.

Manafort And GATES‘ Hiding ()fForeign Bank Accounts And False Filings

27. United States citizens who have authority over certain foreign bank accounts -- whether or not the accounts are set up in the names ofnominees who act for their principals -- have reporting obligations to the United States.

28. First, the Bank Secrecy Act and its implementing regulations require United States Citizens to report to the United States Treasury any financial interest in, or signatory authority over, any bank account or other financial account held in foreign countries, for every calendar year in which the aggregate balance of all such foreign accounts exceeds $10,000 at any point during the year. This is commonly known as a foreign bank account report or “FBAR.” The Bank Secrecy Act requires these reports because they have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings. The United States Treasury’s Financial Crimes Enforcement Network (FinCEN) is the custodian for FBAR filings, and FinCEN provides access to its FBAR database to law enforcement entities, including the Federal Bureau of Investigation. The reports filed by individuals and businesses are used by law enforcement to identify, detect, and deter money laundering that furthers criminal enterprise activity, tax evasion, and other unlawful activities.

29. Second, United States citizens also are obligated to report information to the IRS regarding foreign bank accounts. For instance, in 2010 Form 1040, Schedule 13 had a “Yes” or “No” box to record an answer to the question: “At any time during> [the calendar year], did you have an interest in or a signature or other authority over a financial account in a foreign country, such as a bank account, securities account, or other financial account?" If the answer was “Yes," then the form required the taxpayer to enter the name 01‘ the Foreign country in which the financial account was located.

30. For each year in or about and between 2008 through at least 2014, Manafott had authority over foreign accounts that required an FBAR report. Specifically, Manafort was required to report to the United States Treasury each foreign bank account held by the foreign Manafort-GATES entities noted above in paragraph 12 that bear the initials PM. No FBAR reports were made by Manafort for these accounts.

31. For each year in or about and between 2008 through at least 2013, GATES had authority over foreign accounts that required an FBAR report. Specifically, GATES was required to repoll to the United States Treasury each foreign bank account held by the foreign Manafott-GATES entities noted above in paragraph 12 that bear the initials RG, as well as three other accounts in the United Kingdom. No FEAR reports were made by GATES for these accounts.

32. Funhermore, in each ofManafort’s tax filings for 2008 through 2014, Manafort represented falsely that he did not have authority over any foreign bank accounts. Manafort and GATES had repeatedly and falsely represented in writing to Manafort’s tax preparer that Manafort had no authority over foreign bank accounts, knowing that such false representations would result in false Manafort tax filings. For instance, on October 4, 2011, Manafort’s tax preparer asked Manafort in writing: “At any time during 2010, did you [or your wife or children] have an interest in or a signature or other authority over a financial account in a foreign country, such as a bank account, securities account or other financial account?” On the same day, Manafort falsely responded "NO.” Manafort responded the same way as recently as October 3, 2016, when Manafort‘s tax preparer again emailed the question in connection with the preparation ol'Manal‘orts tax rctums: "Foreign bank accounts etc?" Manafort responded on or about the same day: “NONE." Manafort And GATES’ Fraud To Increase Access To Offshore Money

33. After Manafort used his offshore accounts to purchase real estate in the United States. he took out mortgages on the properties thereby allowing Manafort to have the benefits of liquid income without paying taxes on it. Further, Manafort defrauded the banks that loaned him the money so that he could withdraw more money at a cheaper rate than he otherwise would have been permitted.

34. In 2012, Manafort, through a corporate vehicle called “MC Soho Holdings, LLC” owned by him and his family, bought a condominium on Howard Street in the Soho neighborhood in Manhattan, New York. He paid approximately $2,850,000. All the money used to purchase the condominium came from Manafort entities in Cyprus. Manafort used the property from at least January 2015 through 2016 as an income-generating rental property, charging thousands of dollars a week on Airbnb, among other places. In his tax returns, Manafort took advantage of the beneficial tax consequences ofowning this rental property.

35. In late 2015 through early 2016, Manafort applied for a mortgage on the condominium. Because the bank would permit a greater loan amount if the property were owner-occupied, Manafort falsely represented to the bank and its agents that it was a secondary home used as such by his daughter and son—in-law and was not a property held as a rental property. For instance, on January 26, 2016, Manafort wrote to his son-in-law to advise him that when the bank appraiser came to assess the condominium his son-in—law should "[rlcmember, he believes that you and [Manal‘ort's daughter] are living there.” Based on a request from Manafort, GATES caused a document to be created which listed the Howard Street property as the second home of Manafort’s daughter and son—in-law, when GATES knew this fact to be false. As a result of‘ his false representations, in March 2016 the bank provided Manafort a loan for approximately $3.185.000.

36. Also in 2012, Manafort —- through acorporate vehicle called “MC Brooklyn Holdings,1.I.C” similarly owned by him and his family -- bought a brownstone on Union Street in the Carroll Gardens section of Brooklyn, New York. He paid approximately $3,000,000 in cash for the property. All of that money came from a Manafort entity in Cyprus. After purchase of the property, Manafort began renovations to transform it from a multi-family dwelling into a single family home. In late 2015 through early 2016, Manafort sought to borrow cash against the property. The institution Manafort went to for the loan provided greater loan amounts for “construction loans” -- that is, loans that required the loan amounts to be used to pay solely for construction of the property and thus increase the value of the property serving as the loan‘s collateral. The institution would thus loan money against the expected completed value ofthe property, which in the case ofthe Union Street property was estimated to be $8,000,000. In early 2016, Manafort was able to obtain a loan of approximately $5,000,000, after promising the bank that approximately $1,400,000 of the loan would be used solely for construction of the Union Street property. However, Manafort never intended to limit use ofthe proceeds to construction as required by the loan contracts. In December 2015, before the loan was made, Manafort wrote his tax preparer, among others, that the construction loan “will allow me to pay back the [another Manafort apartment] mortgage in full. . . .” Further, when the construction loan closed, Manafort used hundreds of thousands of dollars from the construction loan to make a down payment on another property in California.

COUNT ONE

Conspiracy Against The United States

37. From in or about and between 2006 and 2017, both dates being approximate and inclusive, in the District ofColumbia and elsewhere, the defendant RICHARD W. GATES 111, together with others, knowingly and intentionally conspired to defraud the United States by impeding, impairing, obstructing, and defeating the lawful governmental functions ofa government agency, namely the Department ofJustice and the Department of the Treasury, and to commit offenses against the United States, to wit, the violations of law charged in Counts Three through Six and Ten through Twelve ofthe Indictment returned in this matter on October 27, 2017 (Indictment). 38. In furtherance ofthe conspiracy and to effect its illegal object, GATES, together with others, committed the overt acts noted in Count Eleven ofthe Indictment and the overt acts, among others, in the District ofColumbia and elsewhere as set forth in paragraphs 9, 16, 17, 20-25, 32, and 34—36, which are incorporated herein.

COUNT TWO

False Statement

39. On or about February 1, 2018, in the District of Columbia, the defendant RICHARD W. GATES 111 did willfully and knowingly make a materially false, fictitious, and fraudulent statement and representation in a matter within the jurisdiction of the executive branch of the Government of the United States, to wit, the defendant falsely stated and represented to the Special Counsel‘s Office, including Special Agents ofthe Federal Bureau oflnvestigation:

(i) that after a March 19, 2013 meeting in Washington, DC. attended by Manafort, a senior Company A lobbyist, and a Member of Congress (the Meeting), he was told by Manafort and a senior Company A lobbyist that there were no discussions okaraine at the Meeting;

when, in fact, as he then and there well knew:

(ii) (a) Manafort and the senior Company A lobbyist had not made the above statements to him; (b) Manafort and the senior Company A lobbyists had told him that the meeting went well; (0) GATES had participated with Manafort in preparing a report that memorialized for Ukraine leadership the pertinent Ukraine discussions that Manafort represented had taken place at the meeting; and (d) Manafort told GATES in 2016 that Manafort told his FARA lawyer that there had been no discussion of Ukraine at the Meeting.

(18 U.S.C. §1001(a))

ROBERT S. MUELLER, III
Special Counsel

By:
Andrew Weissmann
Greg D. Andres
Kyle R. Freeny
Brian M. Richardson
Senior/Assistant Special Counsel