Four things we learned from the Manafort trial

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U.S. President Donald Trump’s former campaign chair, Paul Manafort, was convicted Tuesday of financial crimes in connection with more than US$60-million he made from oligarchs and politicians connected to Russian President Vladimir Putin.

The prosecution of the 69-year-old veteran lobbyist and political operative was the greatest test yet for Robert Mueller, the Special Counsel investigating ties between Mr. Trump’s inner circle and the Kremlin’s plot to tip the 2016 presidential election in his favour.

The jury in Alexandria, Va. found Mr. Manafort guilty on eight counts – five related to tax evasion, two to bank fraud and one for hiding foreign bank accounts from U.S. authorities – and deadlocked on 10 others. The crimes carry maximum sentences of between five and 30 years each.

Meanwhile in New York, Mr. Trump’s former lawyer, Michael Cohen, pleaded guilty to illegally brokering payments to two women who said they’d had extramarital affairs with Mr. Trump to buy their silence before the 2016 election.

As part of a deal with prosecutors, Mr. Cohen admitted making the payments on the orders of a presidential candidate — unnamed at the court hearing, but matching Mr. Trump’s description.

The twin developments show just how wide-ranging the investigations into Mr. Trump’s political and personal lives are — and suggest that his business dealings may be under scrutiny too.

The proceedings also lifted the curtain on the murky world of political fixing and hidden money.

Here are five takeaways from a tumultuous day for two of the President’s former advisors.

Oligarchs, shell companies and a python skin jacket

An adviser to Republican politicians since the 1970s, Mr. Manafort ultimately set up a lucrative business consulting for overseas autocrats. By 2010, his chief clients were Viktor Yanukovych – the Putin-allied then-president of Ukraine – and a circle of oligarchs around him.

In order to dodge U.S. taxes on his hefty invoices, Mr. Manafort stashed earnings in foreign bank accounts and routed money through shell companies in Cyprus – a tax haven favoured by wealthy Russians. In some cases, Mr. Manafort disguised money coming from the shell companies as “loans” so he would not have to pay taxes on it. In others, he had the companies themselves pay his expenses directly.

Mr. Manafort used his wealth to support an opulent lifestyle for himself and his family, with houses and condos in New York, Virginia and Florida, a series of luxury cars, and a closet full of expensive clothes. In one four-year period, court heard, Mr. Manafort spent nearly U.S. $1-million at two high-end menswear stores, purchasing such items as a U.S. $18,500 jacket made from python skin.

The prosecution’s star witness, Rick Gates – Mr. Manafort’s former business associate – pleaded guilty to federal charges including conspiracy and making false statements. He agreed to detail his, and his former boss’s crimes in exchange for leniency from Mr. Mueller. Mr. Gates also admitted on the stand to stealing from Mr. Manafort by inflating expense reports.

Remarkably, Mr. Manafort was able to carry on his mass tax evasion scheme for years without the government uncovering it. It only came to light once Mr. Mueller started investigating the Trump campaign.

“We can speculate with plausibility that Mr. Manafort would never have been prosecuted and indicted had he not joined Trump or worked for Yanukovych,” said Peter Hardy, a former federal prosecutor and money-laundering expert.

Manafort was in a trough when he joined Trump

The good times came to an abrupt end for Mr. Manafort in 2014, when an uprising in Ukraine forced Mr. Yanukovych to flee to Russia. Cut off from his main source of cash, but apparently unwilling to give up the high life, he resorted to scamming banks.

In one case, Mr. Manafort claimed that a New York condo he was renting out on Airbnb was actually his daughter’s residence, so he could borrow more money against it. In other cases, he told banks his income was larger than it really was in order to qualify for multimillion-dollar loans.

This was the state of his business when he and Mr. Gates signed on to Mr. Trump’s campaign in the summer of 2016 – a job that held the potential to increase his value as a consultant by giving him inside access to a possible future presidential administration.

The job-shopping list

The CEO of Federal Savings Bank, Steve Calk, approved US$16-million worth of loans to Mr. Manafort. And Mr. Manafort tried to help him get a job in the Trump administration.

In an e-mail to Mr. Manafort, sent 11 days after the 2016 presidential election, Mr. Calk presented a list of eight different high-ranking government posts that he was interested in. At the top of the list was Secretary of the Army, with Secretary of Commerce, Secretary of Housing and Urban Development and senior positions in the Treasury and Defence departments listed further down.

Mr. Calk also gave Mr. Manafort a list of “ambassadorships I would like in rank order,” from Britain (No. 1) to Singapore (No. 18.)

Mr. Manafort apparently tried to fulfill the request, writing to Mr. Gates that “we need to discuss Steve Calk for secretary of the army.” In any event, Mr. Calk never received his coveted appointment.

The Mueller investigation is casting a wide net

The case against Mr. Manafort does not directly relate to the 2016 election – an indication that Mr. Mueller is prepared to prosecute any alleged crimes he finds.

It could have implications for Mr. Trump’s businesses, demonstrating that the Special Counsel is willing to investigate financial crimes along with Kremlin collusion.

Saikrishna Prakash, a constitutional law professor at the University of Virginia, said it’s not entirely clear whether Mr. Mueller is investigating the President’s business dealings, but that he certainly could. Kenneth Starr, the independent counsel who investigated then-president Bill Clinton, provides something of a precedent: He was initially called in to probe a failed real estate deal, but ended up looking into an extramarital affair.

“If Mueller doesn’t find any collusion, he could still find wrongdoing by Trump or Trump companies,” Mr. Prakash said. “Starr was investigating Whitewater and he found other stuff, and that became the case.”

A conviction of Mr. Manafort – besides validating Mr. Mueller’s probe in the face of Mr. Trump’s insistence that it’s a “witch hunt” – could also turn up the pressure on Mr. Manafort to co-operate with authorities and turn over any information he has, Mr. Prakash said.

Mr. Hardy, a Philadelphia-based white collar defence lawyer at Ballard Spahr, suggested a more basic purpose for Mr. Mueller’s charges against Mr. Manafort: As an agent of the government, he likely feels an obligation to prosecute any alleged wrongdoing he finds.

And it has to be done to set a high-profile example on that most basic of civic duties – paying tax: “If there’s a perception of unfairness in the tax system, people are more inclined to cheat.”

The hush money

Mr. Cohen pleaded guilty to eight charges, including arranging payments to two women in 2016 to help a presidential candidate win that year’s election. The timelines and other details match the stories of adult film actress Stormy Daniels and former Playboy model Karen McDougal, who both say they had affairs with Mr. Trump.

The payments of $130,00 and $150,000, respectively, count as campaign contributions because they were used to suppress potentially damaging stories about a candidate before the election. But they exceed limits on political donations and were not disclosed.

Mr. Cohen’s plea deal did not require him to help federal prosecutors. But he appeared to implicate Mr. Trump, saying he set up the payments at the behest of a candidate. And as the President’s lawyer for a decade, he is likely to have significant insight into his business empire.