Let’s Get Criminal

Trump and Comey in January, 2017

Deputy Attorney General Rod Rosenstein informed the Senate that the characterization of the investigation into Russia’s meddling in the elections has shifted from one of counterintelligence to criminality, according to Senator Lindsey Graham. This would seem to reflect a pivot in the investigation toward whether anyone would be held legally culpable. Whether those potential criminal charges are related to Russia’s involvement in the 2016 presidential elections or some other matter is not clear.

NBC News reported this week that Michael Flynn and Paul Manafort are central figures in the investigation, which has issued subpoenas for as many as six months now. Evidence, according to NBC, includes contacts, business partners, and financial transactions of a number of Trump associates. Business relationships outside of the scope of the Russia investigation have also been “folded into the Russia probe,” according to NBC. These threads of the investigation reportedly include Manafort’s dealings in Ukraine, but may also include Flynn’s legal issues.

The severity of the threat Russia posed to the electoral process and even the definition of truth was emphasized last week with testimony by former Director of National Intelligence James Clapper:

I hope the American people recognize the severity of this threat and that we collectively counter it before it further erodes the fabric of our democracy.

Time Magazine has an essential read detailing the extent of the threat and how the investigation into Russia’s influence operation evolved. Beginning in May of 2016, U.S. intercepts of a Russian military intelligence officer included a claim to a colleague in the GRU that the Russians were poised to interfere in the upcoming presidential elections. The Russians, according to TIME, viewed this as payback for the pro-democracy work of then Secretary of State Hillary Clinton during the 2011 Russian elections. Putin was only given more motivation to meddle after sanctions in 2014 cut Russia off from access to U.S. technology necessary to extract trillions of dollars’ worth of oil reserves.

The TIME article recounts precise targeting of influential and susceptible reporters and staffers in Washington, D.C., in an effort to shape their opinions of Clinton. The Clinton camp contends that negative fake news was more prevalent in potential swing districts. But, the extent to which these behavioral efforts proved successful is difficult to quantify. The social media messaging operation recounted in the TIME article seems to have attracted the attention of congressional investigators.

Reuters reported recently that investigators are aware of 18 instances of communication between Trump associates and Russian officials or individuals suspected of close ties to the Kremlin. Six of these contacts were phone calls between associates and the Russian Ambassador, Sergei Kislyak. The sources cited by Reuters state that these communications contain no evidence of any wrong doing or collusion. These 18 contacts took place between April and November of 2016. According to Reuters’ sources, the discussions centered on improving relations between the U.S. and Russia, including Obama’s recently imposed sanctions, and coordinating the fight in Syria.

Trump hosted Kislyak and Lavrov at the Oval Office last week.

One other contact was Viktor Medvedchuk, a Ukrainian oligarch close to Putin. Reuters was unable to determine who was speaking with Medvedchuk. The oligarch had interjected himself into fraught negotiations concerning the Russian insurgents in Eastern Ukraine, as detailed several years ago in The New York Times. As the Financial Times noted last month, Medvedchuk is currently sanctioned by the United States. While Medvedchuk has acted on behalf of Kiev in negotiations with Moscow, Vladimir Putin is the godfather of his daughter. By all accounts, Medvedchuk is a Putin stalwart. (In February, Trump’s personal lawyer had four different accounts for why he was dealing with a peace plan for Ukraine, as Business Insider noted.)

More than any other associates of Trump, Flynn’s and Manafort’s legal troubles appear to be the most severe. The Comey Memo reportedly centers around the investigation of Michael Flynn, who was fired in February right before the meeting that Comey memorialized (New York Times). Trump’s missteps related to Flynn seem to have multiplied as well, as Yahoo reported, the president managed to send words of encouragement in late April to his former National Security Advisor. The account from Yahoo, sourced by two Flynn friends, conveys Flynn’s account of the president’s message as well as Flynn’s belief that the investigation was due to his opposition of Clinton.

How the White House vetted their first National Security Advisor may become an area of focus for the newly appointed special counsel, Robert Mueller. Elijah Cummings sent a letter in November to Vice President-Elect Mike Pence, who was heading the transition for the Trump administration, warning Pence about Flynn’s ties to Turkey and Russia (McClatchy). Barack Obama warned Trump about Flynn after the election as well.

The New York Times reported on Wednesday, which the White House has since denied, that Flynn informed the transition team in early January that he was under investigation for his lobbying work on behalf of Turkey’s interests. According to the Times account, Flynn notified Donald McGahn, the transition’s chief lawyer who would go on to be White House counsel. The Times also reported that a veteran counterintelligence prosecutor has been issuing subpoenas seeking records from Flynn Intel Group and the principle Turkish American lobbying contact, Ekim Alptekin.

In this account, the second interaction related to the investigation was between the lawyers for the transition and Flynn’s lawyers. According to the administration, Flynn also mislead the White House about his conversations with Ambassador Kislyak in late 2016. When Acting Attorney General Sally Yates brought this to the attention of McGahn, the White House counsel requested to see the classified information on Flynn’s communications. Yates, according to her testimony, had this arranged by late January, right before she was fired, but did not know if McGahn went to review the documents. Flynn would not be fired for another two weeks, immediately following the Washington Post story that revealed he had in fact discussed sanctions with Kislyak late in 2016.

Flynn’s lobbying on behalf of a Turkish-American businessman has raised questions about his request that the Obama administration pause plans to support aKurdish offensive on Raqqa, Syria (McClatchy). Politico reported late last month that Flynn’s client, Alptekin, was active in Turkish lobbying in conjunction with Dmitri Zaikin and that both men have financial ties to the Kremlin. Flynn has claimed that he obtained assurances from Alptekin about the origins of the money that went to pay for his services. However, Flynn’s account of this contract has evolved over time — from a Dutch L.L.C. in the Fall to the retroactive filing of foreign agent status after Flynn exited the White House. Alptekin denied knowing Zaikin when asked by Politico, but both men were part of the same Turkish business association, which Zaikin, who is not from Turkey, co-founded. Politico cited several sources that claim Alptekin and Zaikin have worked together with this group to advance Turkish interests. Zaikin’s career in oil and minerals advanced alongside Putin’s consolidation of these industries in Russia. He has benefited from incredibly generous stock sales and worked with an ex-KGB oligarch, according to Politico.

As reported by The New York Times, Michael Flynn and Jared Kushner met with Ambassador Kislyak in December, 2016. Near the end of March, The Wall Street Journal reported that Kushner tasked an aide to follow-up with Kislyak. At that meeting, Kislyak and Kushner’s aide laid the groundwork for the president’s son-in-law to meet Sergei Gorkov, the former FSB officer who was now chairman of VEB, a Russian development bank widely viewed as a vehicle for advancing Russian interests. In early April, The New York Times reported that Kushner failed to include a number of recent foreign contacts on his security clearance paperwork. The meeting with Flynn and Kislyak was not recorded on these forms. This week, The Wall Street Journal reported that VEB purchased assets in Ukraine from Trump’s partner in a luxury condo/hotel development in Toronto. The partner used the funds from these sales to reinvest in the troubled Toronto development.

Paul Manafort, the former campaign manager for Trump, has apparently attracted the attention of investigators for his financial dealings, perhaps dating as far back as his time as a consultant for former Ukrainian President Viktor Yanukovych. After exiting the campaign after his name appeared on a Yanukovych register of illegal payments, Manafort tapped lines of credit from a number of financiers linked to Trump, as reported in the New York Times. According to this report, Manafort obtained $20 million in loans backed by his various properties, $13 million of which was obtained from two supporters of the Trump campaign. One loan worth $3.5 million was borrowed from Spruce Capital. Spruce is backed by Ukranian born Alexander Rovt and was founded by a developer, Joshua Crane, who has worked on a number of Trump hotel developments. Rovt made his fortune in the post-Soviet liberalization of the fertilizer industry, finally exiting the business with a sale of his assets to oligarch Dmytro Firtash (Bloomberg).

According to the same The New York Times article, Manafort also obtained a $9.5 million loan from Federal Savings Bank of Chicago, which is run by another Trump supporter, Stephen Calk. These loans amounted to more than 5% of the bank’s assets. The bank typically caters to veterans’ loans backed by the VA. The Spruce Capital loans were also unusual, as most of that firm’s business takes place in New York City while Manafort’s property was in the Hamptons. NBC News reports that federal investigators have subpoenaed records on this mortgage, which was repaid in December — four months after the loan was borrowed. Manafort’s shell company that took out the mortgage appears to have failed to pay taxes as well, according to NBC News. Moreover, no mortgage notice was filed by the lender, a departure from normal protocols. Manafort’s attorneys told NBC that documentation was filed but not processed. Manafort’s real estate attorney and Spruce Capital state that the mortgage was settled by an independent broker between the two parties.

The Wall Street Journal late last week also reported that Manafort’s bank records have drawn the interest of investigators. The Journal notes another loan, for $2.7 million, borrowed against a condo in New York City. The Attorney General of New York and the Manhattan District Attorney, according to the Journal, have also begun to look into Manafort’s many real estate deals over the past decade.

Previously, The Wall Street Journal and The Daily Beast reported that Manafort remained influential within the campaign and the Trump transition team throughout the remainder of 2016. The Wall Street Journal reported in February that Manafort was in contact with Trump almost immediately after his resignation and even discussed the Steele Dossier. After Manafort’s resignation, his former partner in Ukraine, Rick Gates, remained on the campaign as well. The Washington Post recently described Gates as “entrenched” within the administration’s agenda advocacy shop.