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Offbeat Manafort, Cohen cases reveal weaknesses in enforcement of tax and election laws

02:10  26 august  2018
02:10  26 august  2018 Source:   msn.com

The Questions the Jurors in the Manafort Trial Will Be Asking

  The Questions the Jurors in the Manafort Trial Will Be Asking In weighing whether to find Paul Manafort guilty or not of financial fraud charges, jurors will have to take into account evidence, witness credibility and other factors.Many factors could affect how the jury weighs the evidence. Here are some.

Paul Manafort ’s multiyear tax fraud and Michael Cohen ’s ability to easily arrange campaign contributions as hush money could have been intercepted The IRS, for instance, conducted audits on just 0.6 percent of tax returns last year, the lowest level in 15 years. For incomes above million, a

Manafort was found guilty on eight charges of tax and bank fraud and failing to disclose foreign bank accounts; the judge declared a Jail time for Manafort and Cohen now seems all but inevitable unless the president can find a way to pardon them, and that seems unlikely without considerable political risk.

Paul Manafort, left, and Michael Cohen.© AP/ Paul Manafort, left, and Michael Cohen.

Paul Manafort’s multiyear tax fraud and Michael Cohen’s ability to easily distribute campaign contributions as hush money could have been intercepted sooner based on existing rules.

But several decisions by policymakers and lawmakers to defang regulation and defund investigations, particularly through political pressure aimed at the Internal Revenue Service, helped the behavior to go unnoticed.

On Tuesday, Manafort, President Trump’s former campaign chairman, was convicted of eight tax- and bank-fraud charges — the same day Cohen, Trump’s former attorney, pleaded guilty to tax fraud and campaign finance violations. The felonies slipped past multiple agencies and were unearthed by prosecutors and journalists only after they began digging into Trump’s inner circle. White-collar crime experts believe similar behavior is flourishing throughout the political system, exploiting the yawning gaps in government scrutiny.

The Latest: Dem: White House looks like criminal enterprise

  The Latest: Dem: White House looks like criminal enterprise The Latest on the Paul Manafort trial (all times local):5:35 p.m.Democratic Sen. Richard Blumenthal of Connecticut says the White House "looks increasingly like a criminal enterprise" after the convictions of President Donald Trump's former campaign chairman Paul Manafort and personal lawyer Michael Cohen.Blumenthal said Tuesday that the verdicts show the probe led by special counsel Robert Mueller is "not a witch hunt or hoax" as Trump has claimed. He says Mueller's team will continue following the facts as the investigation "circles ever closer to the Oval Office.

Paul Manafort , left, and Michael D. Cohen .Credit Al Drago for The New York Times Mr. Manafort ’s trial in Virginia was the first of two criminal cases against him. On Tuesday, a jury On Tuesday, Mr. Cohen pleaded guilty to breaking campaign finance laws , as well as multiple counts of tax evasion

Manafort 's case marked the first indictment in Mueller's investigation. The allegations revealed last October reiterated a year of news reports that Then in February, prosecutors filed new mortgage and tax fraud charges against him weeks after they discovered he was offering to secure his bail with

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“Had it not been for their relationship with President Trump, these crimes would have ultimately gone unprosecuted,” said Eugene Soltes, an associate professor at Harvard Business School and expert on white-collar crime.

Such worries come amid a steady, multiyear decline in the number of financial fraud cases the government has pursued, erosions that began during the Obama administration after Republicans took control of Congress.

The IRS, for instance, conducted audits on just 0.6 percent of tax returns last year, the lowest level in 15 years. For incomes above $1 million, a category that likely would have included Manafort, the IRS audited just 4.4 percent of returns, down from 12.5 percent in 2011.

Cohen, Manafort, Hunter, oh my: Donald Trump’s nightmare news day, explained

  Cohen, Manafort, Hunter, oh my: Donald Trump’s nightmare news day, explained Tuesday was a ridiculous news day. Here’s everything that happened.In very rapid succession, the day saw two major associates of President Donald Trump — Paul Manafort and Michael Cohen — found guilty of serious crimes carrying years-long prison sentences in federal court. It saw another Trump aide — Larry Kudlow — facing accusations that he palled around with a prominent white nationalist. It saw a major Trump ally in Congress indicted for spending hundreds of thousands of dollars in campaign money on personal expenses.

The judge in the Cohen case reveals that the former Trump lawyer is to plead guilty to at least five counts of tax fraud and one count of making false Reporters shout, asking whether he has any reaction to the Manafort and Cohen cases as he walks down the steps. He doesn't immediately reply

“ Manafort , Cohen cases reveal weaknesses in enforcement of tax and election laws ,” Washington Post, Aug. 26, 2018, p. A1; “Martin Lobel, The IRS is in Crisis and the Tax Community Needs to Help,” Tax Notes, Dec. 14, 2015, p. 1407; reprinted in Huffington Post, Dec.

Overall, the number of new white-collar crime prosecutions brought by federal investigators has fallen to its lowest level in more than 20 years, according to data from Syracuse University’s Transactional Records Access Clearinghouse. There are projected to be fewer than 6,000 of these prosecutions in 2018, down from more than 10,000, when the number peaked in 2011.

Meanwhile, penalties against corporations and their executives imposed by the Justice Department sank from $51.5 billion in 2016 to $4.9 billion during Trump’s first year in office, according to consumer advocate Public Citizen.

Manafort’s lawyers said the IRS never audited his taxes, despite his complex financial relationships with Ukranian officials and wire transfers to Cyprus bank accounts — actions that can be red flags for investigators. Despite never being audited, prosecutors proved he had avoided paying his full tax obligations for years.

Timeline: How Cohen turned on Trump

  Timeline: How Cohen turned on Trump Michael Cohen's guilty plea on Tuesday to eight counts of fraud and campaign finance violations marks a stunning reversal of fortune for a man who was once President Trump's personal lawyer and fixer.Load Error

Mr. Cohen made the admission as he pleaded guilty to tax evasion, bank fraud and campaign finance violations in federal court in Manhattan. President Trump’s former lawyer Michael Cohen has been sentenced to prison for offenses, including paying women for their silence during the 2016 election .

Paul Manafort was using fraudulently obtained loans and tax -cheating tricks to prop up his personal finances as he became chairman of the Trump campaign in 2016, according The additional charges had been expected in special counsel Robert S. Mueller III’s prosecution of Manafort and Gates.

IRS spokesman Matthew Leas declined to comment on whether the agency audited Manafort, saying the agency was prohibited from discussing specific taxpayers.

Manafort is also accused of failing to notify the Justice Department about his lobbying work for the Ukraine government, which is required by the Foreign Agents Registration Act.

Manafort faces trial next month on violating FARA law, but a prior inspector general review concluded the FARA enforcement system had been frequently ignored by lobbyists in years past, partly because officials at the FBI and Justice Department had different notions of how such cases should be pursued.

Marc Raimondi, a Justice Department spokesman, said the agency has “spent significant effort” in the past year reaching out to entities that they believe should register under FARA, “and we have made our determination findings more fulsome.” This has led to a large increase in FARA registrations, he said, with the number jumping by more than 50 percent from 2016 to 2017.

Cohen pleaded guilty to eight crimes, including two acts of arranging illegal campaign contributions to pay hush money to two women who claimed they had had an affair with Trump.

8 experts on why the Paul Manafort jury doesn’t have a verdict yet — and what it might mean

  8 experts on why the Paul Manafort jury doesn’t have a verdict yet — and what it might mean “You could speculate that there’s some dynamic involving a holdout, but the better fit with the facts is that they’re just moving through methodically.”Jurors headed home on Friday (they weren’t sequestered) without reaching a verdict after two days of deliberations, frustrating onlookers eager for answers in the highest-profile development yet in special counsel Robert Mueller’s Russia investigation. Manafort, the former campaign chairman for President Donald Trump, has been charged on 18 total counts. They include bank fraud, bank fraud conspiracy, false income tax returns, and failure to report foreign bank or financial assets, and has pleaded not guilty to all of them.

Law enforcement is any system by which some members of government act in an organized manner to enforce the law by discovering, deterring, rehabilitating

Cohen was sentenced to three years in prison after pleading guilty to charges of tax evasion Cohen pleaded guilty to violating campaign finance law as well as tax evasion and making false statements Paul manafort trial tested mueller, trump: what to know about the case . On the recording, which was made prior to the 2016 presidential election , Cohen tells Trump: “I need to

The Federal Election Commission has civil jurisdiction over violations of campaign finance law. But it largely relies on campaigns to self-report their activity as well as whistleblowers to uncover illicit activity.

What’s more, Cohen directed the payments through two business entities outside of the scope of the FEC, making it even harder for agency officials to know what he was doing. Cohen was later reimbursed through “sham” invoices billed to the Trump Organization, prosecutors said.

Christian J. Hilland, an FEC spokesman, declined to comment on the Cohen case.

The use of obscure limited liability companies, which enables white-collar criminals to mask how they move money, presents particular challenges for federal investigators, former federal officials said.

“Right now in the United States, there is a massive problem of anonymous companies,” said Elizabeth Rosenberg, who served in the Treasury Department during the Obama administration, combating terror financing and financial crimes.

The Obama administration tried to bring more transparency to such entities, proposing in 2016 changes to federal law that would require people to disclose the “beneficial ownership” for limited liability companies. But Congress did not pass the bill.

Jury set to begin deliberations in Paul Manafort trial

  Jury set to begin deliberations in Paul Manafort trial Jurors are set to begin deliberating Thursday morning whether to convict President Donald Trump's former campaign manager Paul Manafort of bank fraud and tax evasion. The high-stakes prosecution of Manafort by special counsel Robert Mueller's team reached its conclusion with Wednesday's closing arguments -- with prosecutors accusing Mueller of "lies" and defense lawyers questioning the credibility of key witnesses."Mr. Manafort lied to keep more money when he had it, and he lied to get more money when he didn't," said prosecutor Greg Andres. "This is a case about lies.

“I think that everything is now being set up so that it is possible to hide money, whether it is foreign money or money like [the Cohen case], and it’s almost impossible to detect it,” said Ann Ravel, a Democrat and former FEC chairman.

Trump last week did not dispel the idea that the acts committed by Manafort and Cohen are common. The president told Fox News, regarding Manafort, that “some of the charges they threw against him, every consultant, every lobbyist in Washington probably does.” And Trump said Cohen’s “campaign violations are considered not a big deal, frankly.”

IRS spokesman Leas, while not addressing the Manafort and Cohen cases, said the agency’s criminal investigation unit “uses sophisticated data analytics tools to detect fraud and identify criminal activity. But it’s important to note that these analytics alone frequently do not indicate tax fraud on the surface since many situations are outside the scope of our normal processes,” such as foreign financial activity, he said.

The IRS’s ability to expose fraud cases on its own has diminished, particularly related to political figures. The IRS has faced a torrent of pressure from Republicans in Congress to stay out of politically charged cases while dealing with budget cuts in recent years.

Its budget fell from $13.1 billion in 2008 to $11.5 billion last year, and the White House has proposed more cuts. The number of IRS special agents who can pursue tax-related crimes fell from 2,683 in 2007 to 2,157 in 2017, about the level the agency had 50 years ago.

Another trial looms for ex-Trump campaign chairman Manafort

  Another trial looms for ex-Trump campaign chairman Manafort As jurors weigh Paul Manafort's fate in a sprawling financial fraud case, the former Trump campaign chairman still has another trial looming in the nation's capital — and prosecutors there have a whole new set of charges and a huge volume of evidence. The trial now underway in Alexandria, Virginia, is the first case brought by special counsel Robert Mueller to go to trial. The jury will return Monday to begin a third day of deliberations on 18 counts, including tax and bank fraud and failure to disclose foreign bank accounts.

“Their systems have gotten so weak,” said Paul Streckfus, a former tax lawyer at the IRS and editor of the EO Tax Journal, a newsletter that tracks the agency’s activity. “The IRS isn’t doing much. Criminal enforcement is way down.”

The chief of IRS criminal enforcement acknowledged weaknesses in his most recent annual report.

“[R]esource issues make it impossible to be involved in every investigation in which we are asked to participate,” Don Fort wrote. “We have the same number of special agents — around 2,200 — as we did 50 years ago. Financial crime has not diminished during that time — in fact, it has proliferated in the age of the internet, international financial crimes and virtual currency.”

Republicans and the Trump administration have resisted calls from Democrats to make the IRS pursue more fraud cases, arguing that the agency is bloated and needs to be overhauled. House Ways and Means Committee Chairman Kevin Brady (R-Tex.) said last year he wanted a “bust up [of] the IRS as it is today.”

Sen. John Thune (R-S.D.) said Thursday that the agency has not come to Congress and sought more funding for investigations.

“If they feel they don’t have sufficient resources, they should let us know that,” Thune said. “We’ll obviously deal with it accordingly.”

He has proposed further cuts to the IRS’s already shrinking budget, and the Treasury Department recently instituted a new policy that blocked more scrutiny of donors to most nonprofit groups with political agendas. It said this would save money because it would remove reporting requirements.

The violations that Cohen pleaded guilty to relate to restrictions on who can make monetary or in-kind contributions to a federal candidate, and how much — rules that are overseen by the FEC.

But there are structural and political obstacles that cripple the FEC’s ability to take aggressive enforcement actions, and it likely wouldn’t have known about Cohen’s activities in the absence of news reports or a complaint, campaign finance experts said.

Paul Manafort’s trial in D.C. to take 3 weeks, probe Ukraine lobbying world

  Paul Manafort’s trial in D.C. to take 3 weeks, probe Ukraine lobbying world A court filing on Friday night listed 1,500 exhibits, some referring to U.S. lobbyists Tony Podesta and Vin Weber.The estimated trial timeline and exhibits were included in a joint filing Friday night in federal court in Washington by Manafort’s defense and prosecutors with special counsel Robert S. Mueller III.

For about a decade, the FEC has been divided on party lines over whether it should more aggressively pursue enforcement, and whether it should launch investigations even if they aren’t prompted by formal complaints, experts said. The FEC now typically opens investigations only if there is a complaint, and the law requires approval from four of the commission’s six members to open an investigation. Two of the FEC’s seats are vacant, making it even less likely that a case will be brought.

Hilland, the FEC spokesman, said in a statement: “In exercising its regulatory and enforcement authority, the Commission uses a variety of methods to uncover possible election law violations including reviewing campaign finance reports, conducting financial audits of political committees, and investigating complaints filed with the agency by members of the public.”

After the Wall Street Journal reported on the payments to Daniels in January, Common Cause filed a complaint later that month asking the FEC and Justice Department to investigate the payments.

“I have a hard time imagining how those violations [by Cohen] would have come to attention of the FEC absent the investigative journalism that brought these violations to the public light, that led Common Cause to file our complaints,” said Paul S. Ryan, vice president of policy and litigation at Common Cause.

Trevor Potter, a former Republican FEC commissioner and founder of the campaign-finance advocacy group Campaign Legal Center, said the FEC could be a powerful deterrent if it were aggressively pursuing enforcement action and referring more potential criminal cases to the Justice Department.

“Every few years, there’s a sort of scandal like this with criminal penalties, and people going to jail,” Potter said. “That reminds campaigns and their lawyers and accountants that these are laws that have serious teeth, and that even though the odds of a violation being discovered may be small, the effect of discovering a criminal violation is life ruining.”

damian.paletta@washpost.com

robert.oharrow@washpost.com

michelle.lee@washpost.com

Seung Min Kim and Devlin Barrett contributed to this report.

Paul Manafort’s trial in D.C. to take 3 weeks, probe Ukraine lobbying world .
A court filing on Friday night listed 1,500 exhibits, some referring to U.S. lobbyists Tony Podesta and Vin Weber.The estimated trial timeline and exhibits were included in a joint filing Friday night in federal court in Washington by Manafort’s defense and prosecutors with special counsel Robert S. Mueller III.

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