Last week, President Trump’s campaign manager, Paul Manafort, was indicted on charges of money laundering and making false statements to officials mainly about his time working as a lobbyist in Ukraine. The indictment is lengthy and complex. It has left many wondering what money laundering entails and how exactly it works.
Money laundering usually occurs when someone engages in a financial transaction with money derived from illegal activity for the purpose of making it look like the funds were obtained through a legitimate source. Money laundering can also occur when an individual conducts a financial transaction with the purpose of committing tax fraud or to avoid “transaction reporting requirements” under federal law.
You might ask why criminals need to launder their money, and your question is a good one. However, the answer becomes obvious after considering the following example: Fred is your typical marijuana dealer, and as such, he has a number of problems. Besides the fear of going to prison or being robbed by his clients, Fred has large amounts of cash at his disposal. However, because this cash has been obtained by his illegal activities, i.e. selling marijuana, he has difficulty buying big ticket items like a home or a car. Why? Because if Fred – a man with seemingly no assets and no job – walked into a car dealership and plopped down $60,000.00 in cash to buy an Escalade, he knows that law enforcement officials will start investigating. Fred also knows something worse could happen. The I.R.S. might begin an investigation. By examining his tax returns, the I.R.S. might ask how a person can afford an expensive new car, a boat and multiple trips to Vegas while reportedly making $25,000 a year. Fred doesn’t want that kind of attention. So, how can Fred use that “dirty money” to buy a new car?
He can launder it. Or, more specifically, clean his dirty money by integrating it into a legitimate business like a bar, restaurant, construction company, or grocery store. This is exactly what Manafort is alleged to have done, only on a much larger scale. Manafort purportedly set up several offshore bank accounts in which he deposited money from his time working as a lobbyist in Ukraine. He then used money from the accounts to purchase expensive real estate, clothing, cars, and landscaping. Authorities believe he spent over $18.5 million on goods or services in the United States using funds from offshore accounts. Manafort never reported the accounts, and therefore, never paid taxes on any of the monies deposited in them. By using the offshore accounts to commit tax fraud, federal prosecutors believe Manafort violated 18 U.S.C.§ 1956, the federal money laundering statute.
How the Feds discovered Manafort’s scheme is unknown. However, two facts are clear. First, Manafort’s luxurious lifestyle and spending habits were sure to be noticed by legal investigators. During a 5 year period, he purchased $3 million homes, 4 luxury cars and spent over $1.3 million on clothes at two stores. Second, once Manafort accepted the position as campaign manager for then candidate Donald Trump, he should have realized the media scrutiny and investigations would expose the money trail from foreign accounts to his U.S. spending habits. The real issue is whether Manafort will “flip,” i.e. will he cooperate with the Feds and provide information regarding Trump’s Russian entanglements, if any exist, to avoid a lengthy sentence?
If you need a lawyer for a criminal or Federal case, call Attorney W. Joseph Edwards (614-309-0243) who has over 25 years experience representing clients in these legal matters.
