Manafort's Pricey Brooklyn Brownstone May Not Be His Much Longer
Manafort Cash Flowed to Pricey Brooklyn, Soho Homes, U.S. Says
(Bloomberg) -- Paul Manafort made his name as a political adviser, helping GOP politicians and foreign leaders recast their images and win elections.
But for the past five years, Manafort has been active in real estate, investing in properties in Brooklyn, Manhattan, Virginia and California, and then borrowing heavily against some of those properties and others that he owns.
Manafort, 68, an ex-campaign chairman for Donald Trump, was indicted Monday on tax, money laundering and conspiracy charges. Among the allegations is that Manafort laundered money through properties in Brooklyn and SoHo.
As part of the case, the government is seeking forfeiture of the Brooklyn brownstone and the SoHo condominium, as well as Manafort’s house in the Hamptons and a house in Arlington, Virginia, purchased in 2012 by one of Manafort’s daughters.
Special Counsel Robert Mueller accused Manafort of using cash from secret offshore accounts that he failed to disclose to pay for U.S. real estate and other items. He used some of the money for luxury goods and services, including $5.4 million that went to a home improvement company in the Hamptons, where he and his wife own a house, $934,350 to an antique rug store in Virginia, and $849,215 to a men’s clothing store in New York. None of the businesses were named.
By buying properties with undeclared money from overseas and borrowing against them, Manafort was able “to have the benefits of liquid income without paying taxes on it,” according to the indictment.
Cheaper Rate
Mueller also accused Manafort of defrauding banks that provided him with loans so he would withdraw more money at a cheaper rate.
Manafort and his wife, Kathleen, have owned homes in New York, Virginia and Florida for more than a decade. But in the past five years, their real estate activity has increased significantly.
In 2012, the Manaforts or companies owned by the family purchased a $3 million Brooklyn townhouse and a $2.85 million SoHo condominium, according to property records. Since 2014, the Manaforts and another daughter invested more than $4 million in California real estate being developed by his son-in-law, and the couple purchased a $2.7 million condominium in Virginia in 2015.
In the past two years alone, the Manaforts or companies controlled by them have borrowed more than $20 million against their properties, according to property records.
According to Mueller’s indictment, Manafort paid for the SoHo condominium with money from accounts based in Cyprus, and he used Airbnb and other venues to rent it out in 2015 and 2016. When he applied for loan on the property, Manafort stated falsely that the daughter and her husband used it as a second home, because the bank would permit a larger loan if the property were owner-occupied, the indictment says.
‘Living There’
On Jan. 26, 2016, Manafort told his son-in-law that when the bank assessor came to assess the property, “remember, he believes that you and (Manafort’s daughter) are living there.”
Manafort’s co-defendant, Rick Gates, who was also indicted Monday, created a document that falsely listed the SoHo condominium as the second home of the daughter and son-in-law, the indictment says.
“As a result of his false representations, in March 2016, the bank provided Manafort a loan for approximately $3.185 million,” the indictment said. Publicly available mortgage documents show the lender to be Citizens Financial Group Inc. of Providence, Rhode Island. Peter Lucht, a spokesman, said the bank had no comment.
Manafort borrowed money against the Brooklyn brownstone, too. He obtained a loan for about $5 million in early 2016, promising to use $1.4 million of that on construction, the indictment says. Instead, he used the money to pay off another mortgage and to make a down payment on a property in California, according to the indictment.
Public records list Genesis Capital Master Fund II LLC as providing more than $5 million in loans on the property in early 2016. A spokesman, Brian Schaffer, declined to comment.
To contact the reporters on this story: Andrew Martin in New York at amartin146@bloomberg.net, Paul Cox in New York at pcox16@bloomberg.net.
To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Heather Smith at hsmith26@bloomberg.net.
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