Crime in Progress

by Glenn Simpson;Peter Fritsch;

  Further clues to the depths of Manafort’s ties to Russia’s oligarchs continued to accrue. In London, Simpson met with a Republican power broker at the Dorchester Hotel on Park Lane. Over martinis, the talk turned to Trump’s recent promotion of Manafort to chairman of his campaign. Simpson mentioned that Manafort might have received upwards of $20 million from Deripaska. “I think it’s more like $100 million,” the Republican shot back. Court records later showed that Manafort’s firm had “vanished more than $18.9 million” of Deripaska’s investments—an odd phrase that would later become clear.

  Simpson wasn’t guessing about Manafort’s financial entanglements with Deripaska. Weeks before Trump tapped Manafort to run his campaign, Christopher Steele had hired Fusion for help investigating Manafort. The matter had nothing to do with politics and was a typical commercial assignment. Orbis had recently been queried by an American law firm about finding Manafort’s assets. The firm’s unidentified client claimed that Manafort owed him millions of dollars and was seeking to collect by locating Manafort’s property. Orbis wanted to procure a copy of Fusion’s Manafort archive and have Fusion check for any new information about Manafort in public records in the United States—just the kind of routine American public records task that Orbis farmed out to Fusion from time to time rather than attempt to do the work itself from across the Atlantic.

  Steele didn’t have much to offer in terms of leads, but he did say that Manafort appeared to have spent huge amounts at a Manhattan tailor known in the corporate records as Fortunato & Venanzi. Owing to a clerical mistake, F&V was classified in business records as an ice cream shop, prompting Steele to theorize that Manafort must be using it to launder money. (The truth ultimately turned out to be more prosaic, but also more telling: This was one of the places where Manafort squandered his Russian oligarch money, eventually dropping $1.3 million on fancy clothes, including a $15,000 ostrich jacket.)

  Orbis did not disclose the ultimate client for the job, and Fusion didn’t press the issue. Most assignments of this nature, known as “asset recovery” in the legal field, are quite routine, and the identity of the client is not particularly relevant or important, since the work is straightforward, if not easy.

  At the time Manafort first surfaced in the Trump campaign, Fusion and Orbis had inked that small deal to research Manafort’s finances for Steele’s client. (Steele did not know at the time that Fusion’s Republican clients for the Trump work were also becoming interested in Manafort.) Manafort’s reappearance in American politics seemed like an odd, but happy, gift for Fusion and the Never Trump operation. In the research business, it is not unusual for cases to intersect or for investigative subjects to resurface. So there was nothing suspicious to Fritsch and Simpson about the interest in Manafort from two different quarters. They did debate whether the situation presented a possible conflict but ultimately decided there wasn’t one, since the parties were not adverse to each other.

  Not everyone would see it that way. Farther down the road, Trump supporters in Congress and the media would seek to portray the convergence of these two projects as a Kremlin conspiracy.

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  In early April 2016, Fusion’s Manafort investigation, which was still being paid for by The Washington Free Beacon, was going full speed when Michael Isikoff of Yahoo News, a friend of Simpson’s from the days of the Clinton scandals, called with a question. What did Simpson make of a 2014 court case in the Cayman Islands that suggested that Manafort and his partner Rick Gates were on the run from a huge bankruptcy case and some unidentified creditor? One Cayman Island filing stated that “Paul Manafort and Rick Gates have simply disappeared.”

  The financial machinations in the case were “pretty wild,” Isikoff said. “Deripaska invests $18.9 million in some cable-telecommunications deal and then, I gather, the money disappears and they can’t get in touch with Manafort.”

  Indeed, Manafort’s whereabouts had been something of a mystery for the two years before he resurfaced at the Trump campaign. In May 2014, Politico ran a long piece under the headline “Mystery Man: Ukraine’s U.S. Fixer,” in which it described the once omnipresent D.C. operative as the Invisible Man.

  The story quoted an email sent by Manafort’s former business partner and longtime Trump ally Roger Stone. “Where is Paul Manafort?” Stone asked a group of mutual friends. It then offered a jokey multiple choice that included “chauffeuring Yanukovych around Moscow” and “loading gold bullion on an Army Transport plane from a remote airstrip outside Kiev and taking off seconds before a mob arrived.”

  Intrigued by the Isikoff query, Simpson went hunting for more information to help solve the mystery of what Manafort had been doing in recent years and why he had become a ghost. On April 19, 2016, Simpson began rummaging through the PACER court records database looking for litigation in Northern Virginia—Manafort’s home—that might shed new light on Manafort’s financial problems. The logic was basic, if not obvious: People who don’t or can’t pay their bills tend to get sued.

  There was nothing fresh on the docket under Manafort’s name. Knowing that foreign courts sometimes file cases in the United States under obscure titles, he decided to try a favorite trick and tapped in a special PACER code for a search of the Virginia docket for all evidence requests emanating from foreign courts. Maybe lawyers in the Cayman bankruptcy had made such a filing in their pursuit of Manafort.

  It wasn’t long before he came across a blandly captioned filing from the previous year on behalf of the Grand Court of the Cayman Islands: “In re: Application of Kris Beighton and Alex Lawson, in their capacities as Joint Official Liquidators of Pericles Emerging Market Partners LP, for assistance pursuant to 28 USC 1782.” The mention of Pericles caught Simpson’s attention. That was the name of the fund mentioned in the Cayman Islands bankruptcy case involving Manafort.

  The text of the document was astonishing. Over nineteen pages, it alleged in scorching detail how Manafort and Gates had apparently made off with tens of millions of dollars that they had promised to invest in Ukraine on behalf of a mysterious company in Cyprus called Surf Horizon Limited. The filing described an elaborate series of transactions involving some $37 million and a long chain of offshore shell companies. The whole thing reeked of fraud and possible money laundering.

  While a private investigator had eventually tracked down and subpoenaed Gates, it appeared from the court record that the PI had a great deal of trouble finding Manafort. That almost certainly meant that Manafort, the big-shot political consultant, had spent much of his time in 2015 hiding from process servers.

  Simpson and Fritsch were both incredulous. The Republican front-runner for president of the United States had recruited to help run his campaign an alleged international fraudster who appeared to be on the run from one very wealthy, very angry, and almost certainly foreign fraud victim. It was as if Manafort had boarded the Trump campaign plane with baggage stuffed with explosives. Within Fusion, researcher Jacob Berkowitz initiated a $5-per-entry When Is Manafort Gone? office pool. Most people gave the new hire a month or two at best. Simpson was the least sanguine. Trump would fire him by May 1, he predicted. Fritsch took the opposite view: “Never—Trump don’t capitulate to no one!”

  The Virginia filings and other documents on the Surf Horizon affair soon surfaced in various articles about Manafort in the national media, but they had no discernible impact, either on the race or on Manafort’s job security. Manafort and the Trump campaign simply shrugged them off, and the press moved on.

  Fusion did not. The re-emergence of Manafort was simply too weird and disturbing. Why would he take such a high-profile job without pay if he was in hock and on the run? And who owned the bizarrely named Surf Horizon? Trump’s campaign manager owed someone a great deal of money, that was clear. What if it really was a foreign oligarch? Wouldn’t that mean the person managing a major presidential campaign was dangerously com
promised by someone—whoever that someone might be?

  Fusion decided to try to unravel Surf Horizon’s ownership mystery on its own, ordering the corporate records from Cyprus. While many of the documents were in Greek, a few contained some company names in the Latin alphabet. One document seemed to show that in 2013, one of the directors of Surf Horizon was actually not a person but rather another offshore company, this one based in Panama, called Sarvangasana Holdings Limited.

  A records search turned up some securities filings in Hong Kong, where the owner of Sarvangasana had been required by law to identify himself. It was none other than…Oleg Deripaska. The very same Putin-allied Russian oligarch whom Simpson and Fritsch had published stories about nearly a decade earlier.

  Once again, Deripaska appeared to have found a way to exert leverage over a presidential campaign via Manafort and his partner Gates. Months before anyone learned of Russia’s hacking of Democrats, it seemed to be a sign that the Russians were seeking ways to influence Trump.

  *  Especially troublesome was a 2001 court battle in the United States over an alleged “massive racketeering scheme” involving “an international Russian-American organized crime group” fighting over a huge aluminum factory in southwest Siberia. The case alleged that Deripaska and his rivals and associates “committed numerous criminal acts, including, but not limited to, murder, bribery, extortion, mail and wire fraud, and money laundering.” Antony Barnett and Nick Kochan, “Chelsea Boss Faces £2bn Court Battle,” Guardian, October 25, 2003.

  Fritsch woke up on the morning of March 1, Super Tuesday, knowing a Trump nomination was now all but inevitable, even if a Trump presidency still seemed far-fetched. He figured the funders of the Free Beacon would soon resign themselves to a Trump candidacy and pull the plug on their opposition research efforts. Even the most fervent of Never Trump billionaires would be reluctant to turn their opposition to him into support for Hillary Clinton. It seemed obvious that demand for information on Trump would soon shift to the Democrats.

  At 7:44 that morning, he fired off an email to a senior figure in the Democratic Party establishment. The subject line was simple: “Trump.” So was the message: “Ok he has to be stopped,” Fritsch wrote. “We have done the most on him.”

  Nine minutes later, Fritsch received a reply: “Yes. Let’s talk.”

  Inside Fusion, Fritsch was out on a limb. Simpson wasn’t a big fan of the Clintons, having covered them as a journalist: the Whitewater mess, the Monica Lewinsky scandal, and, most important, Bill Clinton’s courtship of Chinese campaign contributions during the 1996 race for president—a race that posed some parallels to what would play out through the rest of 2016. The river of foreign money that later coursed through the Clinton Global Initiative suggested to Simpson that the Clintons presided over a twenty-first-century political machine built on peddling influence to foreign oligarchs and other foreign interests, many of whom benefited in one way or another from Secretary of State Hillary Clinton’s actions in office.

  Fritsch and Fusion partner Tom Catan sympathized with Simpson’s wariness of the Clintons, but they ultimately took a different view as Trump ascended. Fritsch made a lesser-of-two-evils argument in support of approaching the Hillary camp. In a head-to-head with Trump, there was only one evil, he’d argue. Catan would remind Simpson that continuing the Trump research was also a business decision: They’d be stupid not to capitalize on all the work they’d done.

  By March 1, Simpson had begun to reconsider. At 10:25 that morning, he emailed Catan and Fritsch. “The only way I could see working for HRC is if it is against Trump,” he wrote. “We should make sure [the Democrats] know we have a big book on Trump. Lest they try to buy it someplace else.”

  As expected, Trump romped on Super Tuesday, winning seven of the eleven states. The next day, March 2, Fritsch had a preliminary chat with Fusion’s Democratic contact, who promised to make some inquiries inside the Hillary campaign and get back ASAP.

  The partners’ growing knowledge of Trump’s troubling Russia ties and his questionable business practices had fed a collective sense of concern as Trump racked up primary wins. When Fritsch finally told Simpson about his side conversations about working for the Clinton campaign, Simpson barely looked up from his computer. “Guess we have no choice,” he muttered.

  * * *

  —

  There was now unanimity inside Fusion on the need to do what they could to keep Trump out of the White House, and also unanimity as to why. Many of his traits disqualified him for the job, and his political rhetoric was loathsome, but his ties to the criminal underworld, his reliance on hidden flows of Russia money, and his record of chicanery in business topped the list.

  On March 15, Trump all but put the nomination away, driving Senator Marco Rubio from the race by drubbing him in his home state of Florida. The state’s governor, Rick Scott, endorsed Trump the next day and said it “is now time for Republicans to accept and respect the will of the voters.” The candidate himself said that if the party somehow conspired to deny him the nomination, “I think you’d have riots.”

  Fusion’s move to the Hillary campaign would take some time; the firm was more than a month from signing on. In the meantime, the work for the Free Beacon would keep going, at least for now. Their patrons had apparently not given up hope of somehow stopping Trump before the Republican convention in July. One reason appeared to be that they had been persuaded by Fusion’s research that Trump was vulnerable on his ties to Russia.

  That view solidified with Manafort’s arrival on the scene at the end of the month. The Free Beacon team was initially eager to expose Manafort’s Russian entanglements and his adventures in Ukraine. Two days after Manafort joined the Trump campaign, the Beacon posted a story on a theme that others in the mainstream media would write about only later: “Lawsuit: Trump Aide Funneled Mob-Linked Ukrainian Oligarch’s Fortune into U.S. Real Estate.” Soon, the Free Beacon’s appetite for attacking Trump began to wane as Trump’s nominating position grew stronger, which suggested to Fusion that even Trump’s most ardent conservative critics were unlikely to abandon the Republican banner if Trump emerged as their standard-bearer. Email queries slowed to a trickle, and there was no longer the same hunger for fresh material.

  On April 19, Trump took the New York primary with 59 percent of the vote.

  * * *

  —

  The next day, Simpson and Fritsch sat down in Washington with Marc Elias, an attorney at Perkins Coie, a Seattle-based law firm with a large political practice in D.C. on the Democratic side of the aisle. Fusion’s Democratic contact had made the introduction to Elias, arguably the most powerful attorney in Democratic politics. He served as general counsel to both the Democratic National Committee and the Hillary for America campaign. He was also personal counsel to many Democratic senators. As a voting rights specialist, he had argued—and won—multiple cases before the U.S. Supreme Court.

  Despite his résumé, Elias is a supremely informal character. He is a large, balding man who looks like he could have played on the offensive line of his favorite NFL team, the New York Giants. His shoes are sensible, his sentences short. He is as happy talking about his dog, Bode, as he is discussing election law or politics. A dog bed shares space in his office with Giants swag and framed letters of appreciation from every Democratic senator you can name, and a few you can’t.

  Elias didn’t need much convincing. He had heard of the research Fusion had done on Mitt Romney and Bain Capital during the 2012 campaign and said he needed that kind of deep research on Trump. The existing in-house research at the DNC and the campaign was incomplete. The campaign wanted a belt-and-suspenders approach to its research efforts; redundancy was tolerable if that meant the campaign ended up with the very best information at its disposal.

  Money wouldn’t be a problem, Elias said. Clinton, the Democratic Party, and related PACs would go on to raise over $1.
2 billion for her campaign.

  Elias said the campaign knew what it needed to know about Trump on a lot of the issues—Trump’s cynical flip-flops to a pro-life stance on abortion rights and his latter-day opposition to a ban on assault weapons. Less understood, he said, was how Trump had managed to recover from a string of bankruptcies that should have ruined him. Where did his money come from, how much did he really have, and who helped him? “We know what he says,” Elias said. “We need you guys to figure out who he is.”

  Fritsch disclosed that Fusion was currently engaged by an unnamed Republican client to do research on Trump but expected that engagement to end soon. Simpson said the firm couldn’t share the written reports it had done for the Republicans but had a wealth of knowledge and promising leads gleaned from public records that could be drawn upon in new, general-election-focused research. Elias didn’t see a conflict or a problem.

  Elias said Fusion would be reporting only to him, which sounded great to Fritsch and Simpson. They didn’t want to have any contact with the campaign brass. Elias wanted it that way for legal reasons: If Fusion’s communications were with a lawyer, they could be considered privileged and kept confidential. Political work like this can be perilous, provoking lawsuits down the road—as this job would later prove. Elias also didn’t want Fusion drawn into the daily fire drill of a presidential campaign, forced to respond to the jack-in-the-box demands of political operatives. He wanted Fusion to focus on the big picture, and Trump himself.

  For all the conspiracy theories and accusations that came later, that rule was strictly applied. As far as Fusion knew, Clinton herself had no idea who they were. To this day, no one in the company has ever met or spoken to her.