Manafort under FBI investigation for alleged Ponzi scheme

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President Trump’s former campaign chairman Paul Manafort and his former son-in-law, Jeffrey Yohai, are currently under scrutiny by federal investigators for allegedly defrauding investors in a series of million-dollar real estate deals, according to a report in the New York Times on Friday which relies on unnamed sources.

The two reportedly financed millions of dollars worth of apartments and luxury homes in New York and California with money from Manafort and other investors solicited by Yohai, including actor Dustin Hoffman and his son. F.B.I. agents have so far reviewed financial records related to Yohai.

Manafort resigned from Trump’s campaign last August amid reports that he had received millions of dollars  from the Ukraine in under-the-table payments for his consulting work there, but it’s not clear if this current investigation has anything to do with those allegations and the ongoing probe into possible collusion between Trump campaign associates and Russia.

A key figure in the FBI’s Russia investigation because of his dealings with Ukraine’s former president (an ally of Russian president Vladimir Putin), Manafort’s longtime lobbying and consulting career has included numerous financial dealings with Russian officials, and one of his former employees has reportedly been investigated in Ukraine on suspicion of having ties to Russian intelligence, according to the Times report.

In addition to FBI and congressional inquiries, the New York State attorney general’s office has opened a preliminary inquiry “focused on certain real estate dealings” involving Manafort, according to yet another unnamed source.

The Times and other mainstream media sources including The Wall Street Journal and NBC News reported last month that federal officials had requested Manafort’s bank records from Citizens Financial Group, and a subpoena had been issued for records related to a $3.5 million loan obtained last August by a shell company, Summerbreeze L.L.C., which is linked to Manafort. The Times first began writing about the loan in April.

“The Summerbreeze loan was part of a series of mortgages over the past year, totaling $20 million, secured by properties belonging to Mr. Manafort or his wife. Some of that money appears to have been used by Mr. Manafort to try to salvage his investments with Mr. Yohai. Court records show that Mr. Manafort and his wife invested at least $4 million in several California properties, part of a real estate business that one of Mr. Manafort’s daughters described as a joint venture between her father and Mr. Yohai,” according to the report, which claimed that the partnership “was unexpected given Mr. Manafort’s early opinion of his son-in-law, as described in text messages belonging to Andrea Manafort, one of Mr. Manafort’s two daughters, which were hacked last year and posted on a website used by Ukrainian hackers.

In the messages, Manafort said in 2013 that her father ‘wholeheartedly opposes’ her sister Jessica’s marriage to Yohai, whose financial problems had deeply concerned Manafort.”

Two years into his marriage, Yohai was reportedly “forming shell companies to purchase luxury properties in the Hollywood Hills, worth tens of millions of dollars, which Manafort would put money into. Manafort was more than a passive investor; Jessica Manafort told her sister last year that Mr. Yohai had ‘a contract that says dad and him are 50/50 business partners.'” In March, she filed for divorce.

The Times report went on to describe how Yohai “borrowed millions from banks and obtained money from investors, he also intimated he had access to large amounts of cash” before appearing on a reality television show called “Million Dollar Listing,’’ in which the real estate agent said on the show that he had “seen proof of funds.”

However, Andrea Manafort claimed in one of the leaked texts that Yohai was “running a Ponzi scheme”.

A lawsuit filed in November by fashion photographer Guy Aroch, who invested with Yohai, claimed that Yohai employed a “web of dozens of limited liability companies” to repay early investors with money from new investors to create the illusion of a “quick and large return on their investments,” according to the Times.

Yohai denied Aroch’s accusations in a court filing, stating that the lawsuit invoked Manafort’s name “in an improper effort to attract publicity.”

“This allegation that I participated in fraud and criminal activity is obviously an extremely derogatory accusation that will harm my reputation,” he said in the filing.

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