Kiev is buzzing about the Manafort indictment

Politico reports: Last week, as the news of Paul Manafort’s indictment on 12 counts of money laundering, tax evasion and lobbying violations rocketed through Washington D.C., a small group quietly celebrated in a nondescript Soviet-era building near the Dnieper River in the Ukrainian capital.

“It showed we’re on the right track,” Serhiy Gorbatyuk, head of a special investigations unit in the Ukrainian general prosecutor’s office, told POLITICO. Gorbatyuk and his team are tasked with digging into alleged illegal, under-the-table payments by Ukraine’s pro-Russian former president, Viktor Yanukovych, who was deposed in a pro-Western revolution three years ago. Manafort, whose work as political advisor to Yanukovych for nearly a decade provided the bulk of material for the U.S. indictment, figures in two of their Ukrainian investigations.

The first, referred to locally as the “black ledgers” case, concerns some $2 billion of allegedly off-the-books disbursements by Yanukovych’s Party of Regions. Last year the New York Times revealed that Manafort’s name appeared 22 times among the hundreds of pages of handwritten entries, for alleged payments totaling $12.7 million. (Though Manafort denied receiving the money, the revelations contributed to his resignation as Trump’s campaign manager in August 2016.) [Continue reading…]

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Podesta Group, Mercury said to be companies ‘A’ and ‘B’ in indictment

NBC News reports: The lobbying firms the Podesta Group and Mercury Public Affairs are the unnamed companies in the grand jury indictment of former Trump campaign chairman Paul Manafort and his deputy, Rick Gates, according to three sources with knowledge of the investigation.

The indictment, unsealed Monday, refers to “Company A” and “Company B” as the firms Manafort and Gates solicited in 2012 to lobby on behalf of the Ukranian government. Company A is Mercury Public Affairs and Company B is the Podesta Group, the sources said.

The revelation of the companies’ identities points to more details about the players involved in the high-stakes venture run by Manafort and Gates to push the interest of a pro-Russia Ukranian political party inside the United States. It also provides a glimpse into the material special counsel Robert Mueller has corroborated on both companies and the potential legal repercussions both groups could face. [Continue reading…]

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Mueller likely to apply pressure on Manafort and Gates to reveal information on Trump’s inner circle

CNN reports: Former Trump campaign chairman Paul Manafort and former Trump campaign official Rick Gates surrendered Monday to Justice Department special counsel Robert Mueller.

Gates, 45, is a longtime business associate of Manafort, 68, having worked together since the mid-2000s, and served as his deputy on the campaign. The two were indicted under seal on Friday, a source with direct knowledge of the matter said.

The indictment against the two men contains 12 counts: conspiracy against the United States, conspiracy to launder money, unregistered agent of a foreign principal, false and misleading US Foreign Agents Registration Act (FARA) statements, false statements, and seven counts of failure to file reports of foreign bank and financial accounts.

The charges do not cover any activities related to the campaign, though it’s possible Mueller could add additional charges.

Manafort arrived at the FBI’s Washington field office Monday morning. The two are being processed separately, according to a law enforcement official. They will later be transported to federal district court in Washington later Monday morning. [Continue reading…]

The Washington Post reports: The special counsel alleged that for nearly a decade, the two men laundered money through scores of U.S. and foreign corporations, partnerships and bank accounts, and gave false statements to the Justice Department and others when asked about their work on behalf of a foreign entity.

All told, more than $75 million flowed through offshore accounts, the special counsel alleged. Manafort, the special counsel said, laundered more than $18 million, using his wealth acquired overseas to “enjoy a lavish lifestyle” in the United States, purchasing multi-million dollar properties and paying for home renovation. [Continue reading…]

Amber Phillips writes: Manafort and Gates are charged with something that does not seem directly related to Russia collusion. And so Trump and his allies could argue that this has nothing to do with them.

Except, this is likely the beginning of Mueller’s investigation, not the end, said Jeffrey Jacobovitz, a white collar lawyer who has represented Clinton administration officials.

Many legal experts think Mueller is putting pressure on these outside figures to get them to cooperate by sharing what they know about Trump’s inner circle. If true, that would explain the FBI knocking on Manafort’s door in an aggressive pre-dawn raid, or the special counsel looking into Flynn’s son.

“Mueller wouldn’t have hired 16, 17 people to investigate these events just to indict some tangential person unrelated to the campaign,” Jacobovitz said. “I think one of the things he’s trying to do is trying to get Manafort to flip and cooperate” on the broader investigation. [Continue reading…]

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Former Trump campaign chairman Paul Manafort faces another money-laundering probe

The Wall Street Journal reports: The Manhattan U.S. attorney’s office is pursuing an investigation into possible money laundering by Paul Manafort, said three people familiar with the matter, adding to the federal and state probes concerning the former Trump campaign chairman.

The investigation by the U.S. attorney for the Southern District of New York is being conducted in collaboration with a probe by special counsel Robert Mueller into Mr. Manafort and possible money laundering, according to two of these people.

A spokesman for Mr. Manafort declined to comment. Mr. Manafort has previously said he did nothing wrong.

The continuing Manhattan U.S. attorney’s probe, which hasn’t been previously reported, is unfolding at the same time the Brooklyn U.S. attorney’s office pursues an inquiry involving Kushner Cos., owned by the family of President Donald Trump’s son-in-law, Jared Kushner.

Mr. Trump has interviewed and is poised to nominate candidates to lead the prosecutorial offices in both Manhattan and Brooklyn. The probes could complicate the confirmation process, especially because Mr. Trump is considering individuals with ties to his personal lawyer and to a political ally.

The inquiry in the Manhattan U.S. attorney’s office is being conducted at least in part by Assistant U.S. Attorney Paul Monteleoni, previously a member of the money-laundering and asset-forfeiture unit, who joined the public-corruption team in recent months, according to people familiar with the matter. [Continue reading…]

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Mueller now investigating Democratic lobbyist Tony Podesta

NBC News reports: Tony Podesta and the Podesta Group are now the subjects of a federal investigation being led by Special Counsel Robert Mueller, three sources with knowledge of the matter told NBC News.

The probe of Podesta and his Democratic-leaning lobbying firm grew out of Mueller’s inquiry into the finances of former Trump campaign chairman Paul Manafort, according to the sources. As special counsel, Mueller has been tasked with investigating possible collusion between the Trump campaign and Russia.

Manafort had organized a public relations campaign for a non-profit called the European Centre for a Modern Ukraine (ECMU). Podesta’s company was one of many firms that worked on the campaign, which promoted Ukraine’s image in the West.

The sources said the investigation into Podesta and his company began as more of a fact-finding mission about the ECMU and Manafort’s role in the campaign, but has now morphed into a criminal inquiry into whether the firm violated the Foreign Agents Registration Act, known as FARA. [Continue reading…]

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How Stalin — and the foreign press corps — hid Ukraine’s famine from the world

Anne Applebaum writes: In the years 1932 and 1933, a catastrophic famine swept across the Soviet Union. It began in the chaos of collectivization, when millions of peasants were forced off their land and made to join state farms. It was then exacerbated, in the autumn of 1932, when the Soviet Politburo, the elite leadership of the Soviet Communist Party, took a series of decisions that deepened the famine in the Ukrainian countryside. Despite the shortages, the state demanded not just grain, but all available food. At the height of the crisis, organized teams of policemen and local Party activists, motivated by hunger, fear, and a decade of hateful propaganda, entered peasant households and took everything edible: potatoes, beets, squash, beans, peas, and farm animals. At the same time, a cordon was drawn around the Ukrainian republic to prevent escape. The result was a catastrophe: At least 5 million people perished of hunger all across the Soviet Union. Among them were nearly 4 million Ukrainians who died not because of neglect or crop failure, but because they had been deliberately deprived of food.

Neither the Ukrainian famine nor the broader Soviet famine were ever officially recognized by the USSR. Inside the country the famine was never mentioned. All discussion was actively repressed; statistics were altered to hide it. The terror was so overwhelming that the silence was complete. Outside the country, however, the cover-up required different, subtler tactics. These are beautifully illustrated by the parallel stories of Walter Duranty and Gareth Jones.

In the 1930s, all of the members of the Moscow press corps led a precarious existence. At the time, they needed the state’s permission to live in the USSR, and even to work. Without a signature and the official stamp of the press department, the central telegraph office would not send their dispatches abroad. To win that permission, journalists regularly bargained with foreign ministry censors over which words they could use, and they kept on good terms with Konstantin Umansky, the Soviet official responsible for the foreign press corps. William Henry Chamberlin, then the Moscow correspondent for the Christian Science Monitor, wrote that the foreign reporter “works under a Sword of Damocles—the threat of expulsion from the country or of the refusal of permission to re-enter it, which of course amounts to the same thing.”

Extra rewards were available to those, like Walter Duranty, who played the game particularly well. Duranty was The New York Times correspondent in Moscow from 1922 until 1936, a role that, for a time, made him relatively rich and famous. British by birth, Duranty had no ties to the ideological left, adopting rather the position of a hard-headed and skeptical “realist,” trying to listen to both sides of the story. “It may be objected that the vivisection of living animals is a sad and dreadful thing, and it is true that the lot of kulaks and others who have opposed the Soviet experiment is not a happy one,” he wrote in 1935—the kulaks being the so-called wealthy peasants whom Stalin accused of causing the famine. But “in both cases, the suffering inflicted is done with a noble purpose.”

This position made Duranty enormously useful to the regime, which went out of its way to ensure that Duranty lived well in Moscow. He had a large flat, kept a car and a mistress, had the best access of any correspondent, and twice received coveted interviews with Stalin. But the attention he won from his reporting back in the U.S. seems to have been his primary motivation. His missives from Moscow made him one of the most influential journalists of his time. In 1932, his series of articles on the successes of collectivization and the Five Year Plan won him the Pulitzer Prize. Soon afterward, Franklin Roosevelt, then the governor of New York, invited Duranty to the governor’s mansion in Albany, where the Democratic presidential candidate peppered him with queries. “I asked all the questions this time. It was fascinating,” Roosevelt told another reporter.

As the famine worsened, Duranty, like his colleagues, would have been in no doubt about the regime’s desire to repress it. In 1933, the Foreign Ministry began requiring correspondents to submit a proposed itinerary before any journey into the provinces; all requests to visit Ukraine were refused. The censors also began to monitor dispatches. Some phrases were allowed: “acute food shortage,” “food stringency,” “food deficit,” “diseases due to malnutrition,” but nothing else. In late 1932, Soviet officials even visited Duranty at home, making him nervous.

In that atmosphere, few of them were inclined to write about the famine, although all of them knew about it. “Officially, there was no famine,” wrote Chamberlin. But “to anyone who lived in Russia in 1933 and who kept his eyes and ears open, the historicity of the famine is simply not in question.” Duranty himself discussed the famine with William Strang, a diplomat at the British embassy, in late 1932. Strang reported back drily that the New York Times correspondent had been “waking to the truth for some time,” although he had not “let the great American public into the secret.” Duranty also told Strang that he reckoned “it quite possible that as many as 10 million people may have died directly or indirectly from lack of food,” though that number never appeared in any of his reporting. Duranty’s reluctance to write about famine may have been particularly acute: The story cast doubt on his previous, positive (and prize-winning) reporting. [Continue reading…]

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Schooled in scandal: What makes Ukraine a hotbed of intrigue

The New York Times reports: After four years of investigation by the German police, the F.B.I. and other crime-fighting agencies around the world, heavily armed security officers stormed an apartment in the central Ukrainian town of Poltava. After a brief exchange of gunfire, they captured their prey: the man suspected of leading a cybercrime gang accused of stealing more than $100 million.

The arrest of Gennadi Kapkanov, 33, a Russian-born Ukrainian hacker, and the takedown of Avalanche, a vast network of computers he and his confederates were accused of hijacking through malware and turning into a global criminal enterprise, won a rare round of applause for Ukraine from its frequently dispirited Western backers.

By the following day, however, Mr. Kapkanov had disappeared.

A judge in a district court in Poltava turned down a prosecution request that he be held in preventive custody for 40 days, and ordered him set free. Mr. Kapkanov has not been seen since.

Whether Mr. Kapkanov’s flight was the result of corruption, incompetence or a mix of the two has not been clearly established. The prosecutor general in Kiev, Ukraine’s capital, threatened to fire the local prosecutor but backed off when it became clear that the case had been handled by one of his own deputies.

The Poltava debacle helps explain why Ukraine, a land of so much promise thanks to its educated population, fertile farmland and vibrant civil society, has a tendency instead to generate so many headline-grabbing scandals. [Continue reading…]

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Inside a Putin-linked biker club — and its combat school

 

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Pressure on Manafort grows as feds track more income, possible money laundering

McClatchy reports: Paul Manafort’s place in the crosshairs of Special Counsel Robert Mueller’s probe into the Kremlin’s attempts to sway the 2016 presidential election seems to be growing more uncomfortable.

Two sources familiar with the inquiry tell McClatchy that investigators are working to confirm information indicating that Manafort and the consulting firms he led earned between $80 million and $100 million over a decade from pro-Moscow Ukrainian and Russian clients.

Mueller’s expanded focus on Manafort’s complicated financial picture is zeroing in on whether he may have evaded taxes or engaged in any money laundering schemes, the sources say, and the hunt for his financial records through a labyrinth of offshore bank and business accounts has become an important prong of the investigation. [Continue reading…]

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How Russia treats its Ukraine veterans

Christopher Miller writes: Russian volunteer Andrei Kamayev arrived in war-torn eastern Ukraine in late September 2014, bursting with patriotic bravado and convinced that he was following in the footsteps of his grandfather—a Soviet intelligence officer in World War II—by fighting against “fascists and Nazis.”

Using terms propagated by the Kremlin to describe Ukrainian government forces fighting Russia-backed separatists, the 49-year-old Kamayev admits to other motives for joining up: He also wanted to help restore the Russky Mir, or “Russian World,” and stave off the perceived encroachment of NATO.

But his dream of military glory came to a quick and devastating end on February 1, 2015. As Kamayev followed a convoy of tanks during an assault near the strategic town of Debaltseve—then Ukrainian-controlled—a mortar shell exploded beside him, shredding part of his left leg. He was evacuated to a nearby hospital, but without the proper medicine to treat him, gangrene set in and doctors were forced to amputate the rest of his leg up to his hip.

He was lucky to survive, unlike many fellow Russians who volunteered to fight in Ukraine. But back in his new home, St. Petersburg, Kamayev hobbled around the former imperial capital on crutches, struggling to get by.

For him and thousands of other unrecognized, so-called veterans of the Kremlin-fomented conflict in eastern Ukraine, there is little, if any, glory beyond the battlefields of a war that grinds into a fourth year, with no end in sight. [Continue reading…]

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In Ukraine, a malware expert who could blow the whistle on Russian hacking

The New York Times reports: The hacker, known only by his online alias “Profexer,” kept a low profile. He wrote computer code alone in an apartment and quietly sold his handiwork on the anonymous portion of the internet known as the Dark Web. Last winter, he suddenly went dark entirely.

Profexer’s posts, already accessible only to a small band of fellow hackers and cybercriminals looking for software tips, blinked out in January — just days after American intelligence agencies publicly identified a program he had written as one tool used in the hacking of the Democratic National Committee.

But while Profexer’s online persona vanished, a flesh-and-blood person has emerged: a fearful man who the Ukrainian police said turned himself in early this year, and has now become a witness for the F.B.I.

“I don’t know what will happen,” he wrote in one of his last messages posted on a restricted-access website before going to the police. “It won’t be pleasant. But I’m still alive.”

It is the first known instance of a living witness emerging from the arid mass of technical detail that has so far shaped the investigation into the D.N.C. hack and the heated debate it has stirred. The Ukrainian police declined to divulge the man’s name or other details, other than that he is living in Ukraine and has not been arrested. [Continue reading…]

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North Korea’s missile success is linked to Ukrainian plant, investigators say

The New York Times reports: North Korea’s success in testing an intercontinental ballistic missile that appears able to reach the United States was made possible by black-market purchases of powerful rocket engines probably from a Ukrainian factory with historical ties to Russia’s missile program, according to an expert analysis being published Monday and classified assessments by American intelligence agencies.

The studies may solve the mystery of how North Korea began succeeding so suddenly after a string of fiery missile failures, some of which may have been caused by American sabotage of its supply chains and cyberattacks on its launches. After those failures, the North changed designs and suppliers in the past two years, according to a new study by Michael Elleman, a missile expert at the International Institute for Strategic Studies.

Such a degree of aid to North Korea from afar would be notable because President Trump has singled out only China as the North’s main source of economic and technological support. He has never blamed Ukraine or Russia, though his secretary of state, Rex W. Tillerson, made an oblique reference to both China and Russia as the nation’s “principal economic enablers” after the North’s most recent ICBM launch last month.

Analysts who studied photographs of the North’s leader, Kim Jong-un, inspecting the new rocket motors concluded that they derive from designs that once powered the Soviet Union’s missile fleet. The engines were so powerful that a single missile could hurl 10 thermonuclear warheads between continents.

Those engines were linked to only a few former Soviet sites. Government investigators and experts have focused their inquiries on a missile factory in Dnipro, Ukraine, on the edge of the territory where Russia is fighting a low-level war to break off part of Ukraine. During the Cold War, the factory made the deadliest missiles in the Soviet arsenal, including the giant SS-18. It remained one of Russia’s primary producers of missiles even after Ukraine gained independence.

But since Ukraine’s pro-Russian president, Viktor Yanukovych, was removed from power in 2014, the state-owned factory, known as Yuzhmash, has fallen on hard times. The Russians canceled upgrades of their nuclear fleet. The factory is underused, awash in unpaid bills and low morale. Experts believe it is the most likely source of the engines that in July powered the two ICBM tests, which were the first to suggest that North Korea has the range, if not necessarily the accuracy or warhead technology, to threaten American cities. [Continue reading…]

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U.S. investigators seek to turn Manafort in Russia probe

Reuters reports: U.S. investigators examining money laundering accusations against President Donald Trump’s former campaign manager Paul Manafort hope to push him to cooperate with their probe into possible collusion between Trump’s campaign and Russia, two sources with direct knowledge of the investigation said.

Special Counsel Robert Mueller’s team is examining Manafort’s financial and real estate records in New York as well as his involvement in Ukrainian politics, the officials said.

Between 2006 and 2013, Manafort bought three New York properties, including one in Trump Tower in Manhattan. He paid for them in full and later took out mortgages against them. A former senior U.S. law enforcement official said that tactic is often used as a means to hide the origin of funds gained illegally. Reuters has no independent evidence that Manafort did this.

The sources also did not say whether Mueller has uncovered any evidence to charge Manafort with money laundering, but they said doing so is seen by investigators as critical in getting his full cooperation in their investigation. [Continue reading…]

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Manafort was in debt to pro-Russia interests, Cyprus records show

The New York Times reports: Financial records filed last year in the secretive tax haven of Cyprus, where Paul J. Manafort kept bank accounts during his years working in Ukraine and investing with a Russian oligarch, indicate that he had been in debt to pro-Russia interests by as much as $17 million before he joined Donald J. Trump’s presidential campaign in March 2016.

The money appears to have been owed by shell companies connected to Mr. Manafort’s business activities in Ukraine when he worked as a consultant to the pro-Russia Party of Regions. The Cyprus documents obtained by The New York Times include audited financial statements for the companies, which were part of a complex web of more than a dozen entities that transferred millions of dollars among them in the form of loans, payments and fees.

The records, which include details for numerous loans, were certified as accurate by an accounting firm as of December 2015, several months before Mr. Manafort joined the Trump campaign, and were filed with Cyprus government authorities in 2016. The notion of indebtedness on the part of Mr. Manafort also aligns with assertions made in a court complaint filed in Virginia in 2015 by the Russian oligarch, Oleg V. Deripaska, who claimed Mr. Manafort and his partners owed him $19 million related to a failed investment in a Ukrainian cable television business.

After The Times shared some of the documents with representatives of Mr. Manafort, a spokesman, Jason Maloni, did not address whether the debts might have existed at one time. But he maintained that the Cyprus records were “stale and do not purport to reflect any current financial arrangements.”

“Manafort is not indebted to Mr. Deripaska or the Party of Regions, nor was he at the time he began working for the Trump campaign,” Mr. Maloni said. “The broader point, which Mr. Manafort has maintained from the beginning, is that he did not collude with the Russian government to influence the 2016 election.” (Mr. Manafort resigned as campaign manager last August amid questions about his past work in Ukraine.)

Still, the Cyprus documents offer the most detailed view yet into the murky financial world inhabited by Mr. Manafort in the years before he joined the Trump campaign. [Continue reading…]

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Huge Manafort payment reflects murky Ukraine politics

The New York Times reports: Paul J. Manafort, President Trump’s former campaign chairman, recently filed financial reports with the Justice Department showing that he earned nearly $17 million for two years of work for a Ukrainian political party with links to the Kremlin.

Curiously, that was more than the party itself reported spending in the same period for its entire operation — the national political organization’s expenses, salaries, printing outlays and other incidentals.

The discrepancies show a lot about how Mr. Manafort’s clients — former President Viktor F. Yanukovych of Ukraine and his Party of Regions — operated.

And in a broader sense, they underscore the dangers that lurk for foreigners who, tempted by potentially rich payoffs, cast their lot with politicians in countries that at best have different laws about money in politics, and at worst are, like Ukraine in those years, irredeemably corrupt.

Mr. Yanukovych was driven from office in the Maidan Revolution of 2014, after having stolen, according to the current Ukrainian government, at least $1 billion. In the years before his fall, Mr. Manafort took lavish payments to burnish the image of Mr. Yanukovych and the Party of Regions in Washington, even as the party acknowledged only very modest spending.

In 2012, for example, the party reported annual expenses of about $11.1 million, based on the exchange rate at the time, excluding overhead. For the same year, Mr. Manafort reported income of $12.1 million from the party, the Justice Department filing shows. [Continue reading…]

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Ukraine cyberattack was meant to paralyze, not profit, evidence shows

The New York Times reports: The day started like most for Roman N. Klimenko, an accountant in Kiev who had just settled in at his desk, typing at a computer keyboard and drinking coffee. He was unaware that concealed within his tax preparation software lurked a ticking bomb.

That bomb soon exploded, destroying his financial data and quickly spreading through computer systems vital to Ukraine’s government — and beyond. The cyberattack, on Tuesday, was caused by a virus similar to one that wreaked global havoc less than two months ago.

Both had the appearance of hacker blackmail assaults known as ransomware attacks: screens of infected computers warn users their data will be destroyed unless ransoms are paid.

But in Ukraine’s case, a more sinister motive — paralysis of the country’s vital computer systems — may have been at work, cybersecurity experts said on Wednesday. And many Ukrainians cast their suspicions on Russia.

Cybersecurity experts based their reasoning partly on having identified the group of Ukrainian users who were initially and improbably targeted: tax accountants. [Continue reading…]

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Trump campaign chief’s firm got $17 million from pro-Russia party

The New York Times reports: Paul Manafort, who was forced out as President Trump’s campaign chairman last summer after five months of infighting and criticism about his business dealings with pro-Russian interests, disclosed Tuesday that his consulting firm had received more than $17 million over two years from a Ukrainian political party with links to the Kremlin.

The filing serves as a retroactive admission that Mr. Manafort performed work in the United States on behalf of a foreign power — Ukraine’s Party of Regions — without disclosing it at the time, as required by law. The Party of Regions is the political base of former President Viktor F. Yanukovych, who fled to Russia during a popular uprising in 2014.

The disclosure hints at the vast fortunes available to top American political consultants plying their trade in other countries.

It was not immediately clear if Mr. Manafort would be required to pay any fines for the late filing. He has maintained that a majority of his work for Mr. Yanukovych was political consulting in Ukraine, where his firm, Davis Manafort International, operated an office at the time. [Continue reading…]

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