Monday, September 24, 2018

Manafort Plea Documents and Comments (9/24/18)

I have just returned from a foreign trip and have had the opportunity to review the Manafort plea documents.  Those documents are:  (i) the plea agreement, here; (ii) the Statement of Offenses and Other Acts, here; and (iii) the Superseding Criminal Information, here.

Some comments:

1.  The plea agreement (par. 1) requires that Manafort plead to two conspiracy offenses. The first conspiracy offense (Count One) is the type commonly required in major tax crimes conspiracy cases.  Readers will recall that the conspiracy statute describes two types of conspiracy -- an offense conspiracy and a defraud conspiracy (commonly called in tax cases a Klein conspiracy).  See 18 USC 371, here ("either to commit any offense against the United States, or to defraud the United States, or any agency thereof").  The Superseding Criminal Information to which Manafort pled as required by the plea agreement is for both the offense conspiracy (naming the offenses) and a defraud conspiracy, stating the defraud conspiracy first (see Count One, par. 61, "knowingly and intentionally conspired to defraud the United States by impeding, impairing, obstructing, and defeating the lawful governmental functions of a government agency, namely the Department of Justice and the Department of the Treasury.")  Technically, I think (but have not updated my thoughts on this), the Government might have charged the offense and defraud conspiracies separately, but I have not seen that in tax cases where both were pled, particularly where both offenses are within the same range of conduct.  In many tax cases, only one of the two types of conspiracies is charged even where the indictment could have included both types.  For further nuance, given the Sentencing Guidelines keying the recommended sentence to tax loss and including relevant conduct tax loss, not charging any crime within the scope off the defendant's conduct may not affect the actual calculations.

2.  Manafort agrees not to appeal the conviction verdicts in the ED VA case (plea agreement par. 1), and the Government agrees not to retry to counts on which the jury hung in the ED VA case.

3.  The convictions in the ED VA case will be sentenced separately.  I have written on sentencing issues in the ED VA case:  See Paul Manafort Verdict - On Relevant Conduct (Federal Tax Crimes Blog 8/21/18), here.  I suspect that, at some level, the sentences will be coordinated so that, between them, they reach an appropriate sentence based on Manafort's overall conduct.  I note in this regard that all of the counts would have been charged in the DC case except that some crimes required venue in ED VA rather that DC and Manafort refused to waive venue so that all could proceed in a single indictment.  If there had been a single case, the sentencing judge in that case would have been able to insure a sentence based on the overall conduct without any potential differences that might be introduced by having two judges sentencing for various pieces of the conduct.  Importantly, in respect to venue, the Government can pursue the ED VA counts on which the jury hung in DC because, in paragraph 3 of the plea agreement, Manafort agrees to waive venue as to those charges in ED VA should he violate the agreement.  (I suppose that is to permit the Government to have only one more trial rather than two if he violates the plea agreement, but I also wonder whether the Government just did not want to re-try the hung counts before Judge Ellis (see The Manafort Trial - Judging the Judge's Conduct (Federal Tax Crimes Blog 8/17/18), here).)

4.  Because nontax crimes are the gravamen of the case, the plea agreement (par. 4(a)) makes the sentencing Guidelines Base Offense Level calculations under 2S1.1(a). I have noted before that Base Offense Level calculations under 2S1.1(a) are likely much higher than under the tax Guidelines in SG 2T1.1.  See Sentencing Guidelines Analysis for FBAR Convictions (Federal Tax Crimes Blog 10/31/17), here; and and Another FBAR Plea And Notice of Government Change of Position on Applicable Guidelines (Federal Tax Crimes Blog 10/27/17), here.

5.  The Government agrees (par. 4(b)) to an acceptance of responsibility downward adjustment.

6.  The Criminal History calculation (not usually an issue in most tax crimes cases) must take account of the convictions in ED VA.  (Plea agreement par. 4.C.)  I just quote that in full:
Based upon the information now available to this Office, your client has no criminal convictions, other than in the Eastern District of Virginia. Your client acknowledges that depending on when he is sentenced here and how the Guidelines are interpreted, he may have a criminal history. If additional convictions are discovered during the pre-sentence investigation by the United States Probation Office, your client's criminal history points may increase.
7.  The estimated applicable guidelines sentencing range is 210 months to 262 months.  (See par. 4.D.)  However, with only two counts of conviction, the maximum sentence is 10 years.  Even as capped, presumably, the sentencing judge might further reduce the sentence for (i) Manafort's cooperation under SG 5.K.1 or (ii) the Court's Booker discretion.  The plea agreement says -- perhaps without meaningful effect -- that "any downward departure or adjustment" from the Guidelines calculations "is not warranted" and Manafort will not seek such except for cooperation  (Par. 4.D.)

8. Manafort must "cooperate fully, truthfully, completely, and forthrightly with the Government and other law enforcement authorities identified by the Government in any and all matters as to which the Government deems the cooperation relevant."  (Plea agreement par. 8.)  I found this stipulation in this obligation interesting:
Your client acknowledges and understands that, during the course of the cooperation outlined in this Agreement, your client will be interviewed by law enforcement agents and/or Government attorneys. Your client waives any right to have counsel present during these interviews and agrees to meet with law enforcement agents and Government attorneys outside of the presence of counsel. If, at some future point, you or your client desire  to have counsel present during interviews by law enforcement agents and/or Government attorneys, and you communicate this decision in writing to this Office, this Office will honor this request, and this change will have no effect on any other terms and conditions of this Agreement. 
I suppose that Manafort is trying to avoid having to pay expensive counsel to prepare and attend such interview.

9.  Manafort waives rights to seek Government information and documents under FOIA and the Privacy Act "for the duration of the Special Counsel's investigation."  (Plea agreement par. 10.F.)

10.  The Superseding Criminal Information contains broad allegations.  The following are the ones I found interesting because they relate to the tax violations (but readers should keep in mind that nontax crimes are the gravamen of the indictment):
2.  * * * MANAFORT hid the existence of the foreign companies and bank accounts, falsely and repeatedly reporting to his tax preparers and to the United States that he had no foreign bank accounts. 
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. * * * * 
5.  * * * MANAFORT cheated the United States out of over $15 million in taxes. 
26. * * * In or about 2012 through 2014, MANAFORT directed more than 2 million euros to be wired from at least four of his offshore accounts to pay secretly the Hapsburg Group. To avoid European taxation, the contract with the Hapsburg Group falsely stated that none of its work would take place in Europe.  
55. * * * 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. 
57. Furthermore, in each of MANAFORT’s tax filings for 2007 through 2014, Manafort represented falsely that he did not have authority over any foreign bank accounts. MANAFORT 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. 
11. The tax and FBAR crimes are discussed in paragraphs 38-42 of the Statement of the Offenses and Other Acts.

12. Consistent with this plea agreement, Manafort filed a Notice that he would not file post-trial relief motions in the ED VA case.  (See Notice here.)

13.  The plea agreement does not mention the potential FBAR penalties which, of course, will be great (presumably the single 50% high amount guideline amount for willful penalty, but that guideline does allow for exceptions (in this case presumably higher amount(s)) in egregious cases.

14. For a good discussion, see Ellen Podgor, Manafort: The Fall of a Domino Can Trigger Others to Fall (White Collar Crime Prof Blog 9/15/18), here.

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