Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 1 of 99 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA UNITED STATES OF AMERICA v. PAUL J. MANAFORT, JR., Crim. No. 17-201-1 (ABJ) Defendant. STATUS REPORT The United States of America, by and through Special Counsel Robert S. Mueller, III, files this status report to apprise the Court of a recent development in United States v. Paul J. Manafort, Jr., No. 1:18-cr-83 (E.D. Va.) that is pertinent to this Court’s upcoming sentencing decision. Attached to this status report as Exhibit A is the transcript from the sentencing hearing on March 7, 2019. Respectfully submitted, ROBERT S. MUELLER III Special Counsel Dated: March 11, 2019 By:__/s/_ ______________________ Andrew Weissmann Jeannie S. Rhee (D.D.C. Bar No. 464127) Greg D. Andres (D.D.C. Bar No. 459221) U.S. Department of Justice Special Counsel’s Office 950 Pennsylvania Avenue NW Washington, D.C. 20530 Telephone: (202) 616-0800 Attorneys for the United States of America Case Document 544 Filed 03/11/19 Page 2 of 99 EXHIBIT A Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 3 of 99 1 1 UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA ALEXANDRIA DIVISION 2 3 4 5 6 7 ------------------------------x : UNITED STATES OF AMERICA, : Criminal Action No. : 1:18-CR-83 versus : : PAUL J. MANAFORT, JR., : : March 7, 2019 Defendant. : ------------------------------x 8 TRANSCRIPT OF SENTENCING BEFORE THE HONORABLE T.S. ELLIS, III UNITED STATES DISTRICT JUDGE 9 10 APPEARANCES: 11 FOR THE GOVERNMENT: UZO ASONYE, AUSA United States Attorney's Office 2100 Jamieson Avenue Alexandria, VA 22314 and ANDREW WEISMANN, SAUSA GREG D. ANDRES, SAUSA BRANDON L. VAN GRACK, SAUSA Special Counsel's Office U.S. Department of Justice 950 Pennsylvania Avenue NW Washington, D.C. 20530 FOR THE DEFENDANT: BRIAN KETCHAM, ESQ. Kostelanetz & Fink LLP 601 New Jersey Avenue NW Suite 620 Washington, DC 20001 and THOMAS E. ZEHNLE, ESQ. Law Office of Thomas E. Zehnle 601 New Jersey Avenue NW Suite 620 Washington, DC 20001 and 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 4 of 99 2 1 Appearances continued: KEVIN DOWNING, ESQ. Law Office of Kevin Downing 601 New Jersey Avenue NW Suite 620 Washington, DC 20001 and RICHARD WILLIAM WESTLING, ESQ. Epstein, Becker, & Green, PC 1227 25th Street NW Washington, DC 20037 2 3 4 5 6 7 8 OFFICIAL COURT REPORTER: TONIA M. HARRIS, RPR U.S. District Court, Ninth Floor 401 Courthouse Square Alexandria, VA 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 5 of 99 U.S. v. Manafort 3 1 P R O C E E D I N G S 2 (Court proceedings commenced at 4:00 p.m.) 3 THE COURT: All right. Good afternoon. I apologize 4 to some of you as we're a little late starting. 5 naturalization ceremony from 2:00 to 3:30 that took a little 6 longer than I expected. 7 All right. 8 THE DEPUTY CLERK: 9 10 11 12 13 I had a You may call this next matter, please. Court calls Criminal Case, United States of America versus Paul J. Manafort, Jr. Case No. 2018-CR-83. May I have appearances, please. First for the Government. MR. ANDRES: Good afternoon, Your Honor. Greg 14 Andres, Uzo Asonye, Brandon Van Grack, Andrew Weissmann and 15 Special Agent Sherine Ebadi for the Government. 16 THE COURT: All right. 17 MR. DOWNING: Good afternoon to you. Good afternoon, Your Honor. For 18 Mr. Manafort, Kevin Downing, Thomas Zehnle, Rich Westling and 19 Brian Ketcham. 20 21 Good afternoon. THE COURT: Good afternoon to all of you, and good afternoon, Mr. Manafort. 22 (Defendant nods.) 23 Typically, I will begin with asking counsel whether 24 they had an adequate opportunity to review the presentence 25 investigation report and to review it with their client, in Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 6 of 99 U.S. v. Manafort 4 1 this case, Mr. Manafort, but it's apparent to me that from the 2 mountain of briefs that have been filed, that you've had an 3 adequate opportunity and that you have expressed fully the 4 views of each side on this. 5 But I will confirm, Mr. Manafort, have you had an 6 adequate opportunity to review the presentence report and to 7 review it with your counsel? 8 THE DEFENDANT: 9 THE COURT: 10 don't have to get up. 11 that. 12 13 I have, Your Honor. And are you fully satisfied with -- you I understand there's discomfort in You don't have to get up. Are you fully satisfied with the advice and counsel that has been provided to you by your counsel in this case? 14 THE DEFENDANT: 15 THE COURT: I am, Your Honor. All right. And as I said, it's apparent 16 to me that, Mr. Downing, you and your colleagues have had an 17 adequate opportunity to review it. 18 MR. DOWNING: 19 THE COURT: 20 We have, Your Honor. And, Mr. Andres, you and your colleagues have had an adequate opportunity to review it? 21 MR. ANDRES: 22 THE COURT: Yes, Your Honor. All right. So the way in which we will 23 proceed now, which is typical, is that we will take up first 24 the various objections that have been asserted to the facts, 25 conclusions and calculations contained in the presentence Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 7 of 99 U.S. v. Manafort 5 1 report, so that I can fulfill the first duty, which is to 2 ensure that the sentencing guidelines are accurately and 3 appropriately calculated. 4 As I'm sure most of you, if not every one of you, 5 knows, the sentencing guidelines are advisory. 6 mandatory as they once were. 7 to take into account in imposing an appropriate sentence. 8 there is a statute that itemizes the factors the Court is 9 required to consider in imposing an appropriate sentence, and 10 11 They are not They're one factor for the Court And the guidelines is merely one of those factors. Now, let me begin by being clear that what 12 Mr. Manafort is before the Court for sentencing on today. 13 Mr. Manafort is before the Court for sentencing, having been 14 found guilty by a jury of eight counts: 15 failure to file tax returns, accurate tax returns; one count 16 of failure to file report of a foreign bank account; and two 17 counts of bank fraud. 18 five counts of So he was found guilty of eight counts. The jury 19 could not reach a unanimous decision as to ten counts. I 20 dismissed those without prejudice. 21 the end, Mr. Manafort has admitted to the conduct constituting 22 those other counts. 23 that is considered by the Court in sentencing in this case. 24 He admitted to those facts in the District of Columbia's 25 Statement of Facts. They were hung counts. In So they are part of the related conduct I think I have that right, do I not? Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 8 of 99 U.S. v. Manafort 6 1 MR. ANDRES: 2 THE COURT: 3 Yes, Your Honor. All right. Do I have it right, Mr. Downing? 4 MR. DOWNING: 5 THE COURT: Yes, Your Honor. All right. Now, so the next -- he is 6 not before the Court -- let me underscore, he's before the 7 Court for those counts on which he's been found guilty and the 8 related conduct. 9 those are also to be part of the sentencing consideration. And the counts that were hung, the facts of He 10 is not before the Court for any allegation that he or anybody 11 at his direction colluded with the Russian government to 12 influence the 2016 presidential election. 13 And there is much discussion about why the special 14 prosecutor has it. 15 that issue at the beginning of this case. 16 brought by the defendant, arguing that the indictment being 17 pursued by the special prosecutor was illegitimate. 18 that case, and I issued an opinion, and I concluded that it 19 was legitimate. 20 was broad enough to cover this. 21 I would remind those of you that I faced There was a motion I heard The grant of power to the special prosecutor That's in the record of this case for those who are 22 interested. That doesn't mean that I decided the wisdom or 23 appropriateness of delegating to special prosecutors broad 24 powers that are not at times -- or a subject matter. 25 didn't have to decide that. It's not before me. But I What was Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 9 of 99 U.S. v. Manafort 7 1 before me is was this prosecution authorized from -- or 2 legitimately, and I concluded that it was, and so we went 3 ahead and had the trial. 4 for anything having to do with colluding with the Russian 5 government to influence this election. 6 Now -- so he's not before the Court Now, the first issue, the first objection, it seems 7 to me, to take up is the defendant's objection to the 8 presentence investigation report on the ground that the 9 presentence report proceeded on the basis of Section 2S1.3 10 rather than 2T1.3. In other words, the defendant argues that 11 the tax guidelines, not the FBAR, or failure to report a 12 foreign bank account guideline, applies in this case. 13 That's still a disagreement, Mr. Downing? 14 MR. DOWNING: 15 THE COURT: It is, Your Honor. And as a concession to this -- to the 16 shortness of life, would I be fair in concluding that you've 17 said everything you need to say in your briefs? 18 MR. DOWNING: 19 THE COURT: We have, Your Honor. Mr. -- all right. Mr. Andres, have 20 you-all said everything you have to say on that issue in your 21 briefs? 22 MR. ANDRES: 23 THE COURT: Yes, Your Honor. All right. The objection is overruled. 24 However, having said it's overruled, let me explain what 25 happened because history is important. What has happened in Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 10 of 99 U.S. v. Manafort 8 1 this country on this is important. 2 But at the bottom line, it is my conclusion that the 3 sentencing guideline of 2S1.3 was appropriately applied by the 4 probation officer, and the reason for that is quite clear in 5 the language of the guidelines. 6 conclusion. 7 pointed out in their brief thoroughly, for years the 8 Department of Justice didn't do that. 9 Department of Justice calculated the guidelines and went 10 It really emits of no other The problem arises, as the defense counsel had For years, the forward. 11 They did it, I think -- I don't know this, I'm 12 speculating here, but I think it was done because it led to 13 pleas using lower guidelines under 2T rather than 2S, because 14 the conduct of failing to report a foreign bank account and 15 failing to file a tax return that reflected the income that 16 you earned in a foreign bank really was the same conduct 17 essentially. 18 It hid income earned or placed overseas. So in December of 2017, the Justice Department did 19 a -- not an about-face, but it changed from imposing or 20 insisting on the use of Section 2S1.3 rather than the 2T, and 21 that resulted in guidelines that were higher rather than 22 lower. 23 And the defendant argues that the government 24 should -- that should be what the government continues to do. 25 What, in fact, must be done is that the guidelines must be -Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 11 of 99 U.S. v. Manafort 9 1 the offenses must be grouped, and I find that the probation 2 officer -- the probation officer correctly grouped the 3 guidelines. 4 The first five counts, failure to report tax, is 5 grouped with the FBAR account, the failure to report the 6 foreign bank account. 7 together and treated as a group for the guideline purposes. 8 And even though five of those, if they were alone, would be 9 treated under 2T, when they are grouped with the FBAR -- or So those six counts are grouped 10 the foreign bank account report -- count, that leads to a 11 higher guideline. 12 Court must go to the higher guideline, which is what was done 13 here, and I am in agreement with that. 14 overruled. 15 The guideline manual makes clear that the So that objection is Now, the next objection that was asserted -- if I 16 miss one, Mr. Downing, you correct me -- but I think the 17 second one is the organizer or leader under 3B1.1(a); is that 18 correct? 19 MR. DOWNING: A moment, Your Honor. 20 THE COURT: 21 (A pause in the proceedings.) 22 MR. DOWNING: Yes. Your Honor, the order may not be 23 important, but I think the intended loss, the specific intent 24 loss. 25 THE COURT: All right. Under what provision? Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 12 of 99 U.S. v. Manafort 10 1 MR. DOWNING: 2 THE COURT: 3 Are you talking about the -- this is the -- under the bank accounts, the bank fraud? 4 MR. DOWNING: 5 THE COURT: 6 Correct. No, let's deal with the -- any objections to the failure to report and FBAR counts. 7 MR. DOWNING: 8 THE COURT: 9 It would be 1.1 -- Okay. Those are grouped together. And as to those, I think the next one is the organizer or leader. The 10 probation officer imposed a four-level enhancement on the 11 ground that Mr. Manafort directed Gates and others to do 12 various things which were illegal, and that that warrants the 13 four-level enhancement. 14 otherwise extensive. 15 She also concluded that it was Now, Mr. Downing, I've read your brief on that, but 16 you may want to emphasize what you think merits or warrants 17 emphasis in that regard. 18 MR. DOWNING: 19 THE COURT: 20 MR. DOWNING: 21 Your Honor, Mr. -- Paragraph 32 of the PSR. Yes, Mr. Westling is going to handle this if it pleases the Court. 22 THE COURT: All right. 23 MR. WESTLING: Mr. Westling. Thank you, Your Honor. Yeah, very 24 briefly, we did, I think, fully brief this, but I think we 25 feel strongly that there wasn't a showing here of leadership Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 13 of 99 U.S. v. Manafort 11 1 in the classic sense under that enhancement. 2 Obviously, Mr. Gates testified they were doing this 3 together, but it didn't seem like it was either the 4 appropriate degree of leadership or that it was sufficiently 5 extensive to warrant that four-level enhancement, and that's 6 the reason for the objection. 7 THE COURT: Well, you're right that it's been fully 8 briefed, and let me say for both sides that your briefs were 9 quite thorough and clear and appreciated. 10 The commentary to 3B1.1 includes people like 11 bookkeepers, tax preparers, people in Cyprus, all the people 12 involved. 13 can be unknowing service providers. 14 the direction and they were under the direction of Manafort 15 and Gates, and I find that 3B1.1(a) applies and that the 16 four-level enhancement is appropriate. 17 That objection is overruled. 18 They don't have to be violators themselves. But they have to be under So that is overruled. Next, we go to the next objection, which is the loss 19 attributed to the bank fraud charges. 20 I might need a little more argument, Mr. Downing or 21 Mr. Westling. 22 about the same thing. 23 They Now, here, we might -- Let me go down this list so that we're talking I think it's useful in this regard to look at the 24 chart in the presentence report that appears in -- the chart 25 that appears at paragraph 64. Who will argue this, Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 14 of 99 U.S. v. Manafort 12 1 Mr. Downing? 2 MR. DOWNING: 3 MR. WESTLING: 4 THE COURT: 5 Mr. Westling. I will, Your Honor. All right. Mr. Westling, do you have that chart in front of you? 6 MR. WESTLING: 7 THE COURT: I do, Your Honor. Thank you. Now, the first one, the victim of 8 Citizens Bank loan, and that was a loan for $2.7-plus million 9 and a $682,000 line of credit. And I think the probation 10 officer concluded that there was no loss from that one. 11 you agree with that? 12 MR. WESTLING: 13 THE COURT: 14 15 16 Do That's correct, Your Honor. All right. Now, we come to the next one. And you don't disagree with that either, do you, Mr. Andres? 17 MR. ANDRES: 18 THE COURT: No, Your Honor. All right. But the next one, I think, 19 does have a disagreement. That's the Banc of California loan 20 for a million dollars, and I think the original presentence 21 report transposed some figures, which we found out. 22 in that was 684,448 is the loss that the probation officer 23 ultimately found. The loss 24 Now, Mr. Westling, do you dispute that loss? 25 MR. WESTLING: Your Honor, we don't. Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 15 of 99 U.S. v. Manafort 13 1 THE COURT: All right. So then we come to the 2 Citizens Bank loan, which is the loan for 377 Union Street. 3 Now, this is sort of an interesting one. 4 one because this was a million-dollar loan -- I'm sorry, a 5 $5.5 million loan that never closed; is that right? 6 MR. WESTLING: 7 THE COURT: It's an interesting That's correct, Your Honor. And so it never closed. Nonetheless, 8 there is convicted conduct or maybe it's admitted conduct, I 9 don't remember which, but it's conduct where there is fraud 10 against -- or the Citizens Bank in New York because a 3 -- or 11 a $5.3 million loan that was already encumbering the property 12 was not disclosed in the loan application. 13 right? 14 15 MR. WESTLING: Do I have that That's the allegation, Your Honor, yes. 16 THE COURT: All right. Now, as I understand, your 17 argument is, distilled to its essence, no harm, no foul. 18 loan was never made, and therefore, there was no loss to which 19 the Government answers that you still must take advantage -- 20 or take advantage -- take account of the intended loss. 21 there the intended loss is the full amount of the loan, 5.5 22 million. 23 24 25 The And I think I know your argument there, but let's state it so Mr. Andres can have a target to shoot at. MR. WESTLING: Well, Your Honor, I think we were Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 16 of 99 U.S. v. Manafort 14 1 looking at the provision of the guidelines that deals with the 2 specific intent of the defendant at the time of the loan. 3 this was, you may recall from the testimony at trial, a 4 situation where Mr. Manafort had actually disclosed this loan, 5 that the collateral's encumbrance, by the time this later loan 6 occurred. There were two loans at Citizens -- 7 THE COURT: 8 MR. WESTLING: 9 time. And Yes, but this loan never closed. That's correct, and it was second in So by the time the bank did the application in July, 10 they had an e-mail from Mr. Manafort back in April saying 11 there was a new mortgage on the property. 12 position that contrary to what the Government has argued, 13 which is that they had -- the bank discovered it on its own, 14 and that was true for the first loan. 15 And so we take the When it came to the second loan, Mr. Manafort had 16 given them that information and, therefore, was trying to be 17 clear. 18 deal with that encumbrance, and it eventually didn't get made. 19 But this isn't -- I think the argument was that because he 20 didn't disclose that, it somehow meant he was trying to get 21 one over on the bank. 22 In fact, the bank restructured the loan in order to There was admittedly false statements submitted in 23 connection with the loan, so we're not bickering with that 24 issue. 25 the intent to pay the loan and prevent there from being a It's simply a matter of when he submitted those with Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 17 of 99 U.S. v. Manafort 15 1 loss. And in our view the facts developed at trial suggest 2 that's exactly what happened. 3 THE COURT: 4 MR. ANDRES: All right. Mr. Andres? Your Honor, we have a dispute about the 5 facts and the trial evidence. Mr. Manafort specifically did 6 not disclose the Genesis Capital loan as part of that loan 7 application to Citizens Bank, nor did he ever disclose it 8 before the bank found out about it. 9 that he ever -- when you review both the loan application and So there's no evidence 10 the testimony of Taryn Rodriguez, which was on pages 1911 to 11 1917, he specifically did not disclose it. 12 Now, there's history to the reason why he did not 13 disclose it. 14 for Howard Street, the first loan that you went over in that 15 chart. 16 specifically failed to disclose that, and he sought to secure 17 false documents to submit to the bank to show there wasn't a 18 loan on that property. 19 Mr. Manafort had a prior loan from Citizens Bank In that loan -- in that application, he also So you may remember the testimony of Rick Gates, who 20 testified that at Mr. Manafort's direction, he contacted the 21 insurance broker and the insurance broker provided a 22 fraudulent document that didn't include that loan so it could 23 be submitted to the bank. 24 25 So in the first instance, he didn't disclose it in the first application, and then obviously making a loan to the Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 18 of 99 U.S. v. Manafort 16 1 same bank, he could not have disclosed it a second time 2 because they would have found out about the first loan. 3 he specifically intended to not disclose that. 4 But So at the time, he intended the bank to lose 5 $5.5 million because he hid what, in effect, was the 6 collateral or the collateral had a lien consistent with the 7 case law that we cited. 8 THE COURT: 9 MR. ANDRES: 10 11 Was the 5.3 loan docketed or recorded? At the -- yes, it was recorded, Your Honor, and the bank -THE COURT: So how in the world could anybody who's 12 a lawyer think that anybody is going to be fooled about 13 whether there was a loan on there before closing, because 14 clearly that would have been discovered. 15 be reasonable to conclude that the failure to disclose the 5.3 16 loan was a -- an error, a mistake, they would argue, by a busy 17 man rather than fraud, a deliberate intent to deceive? 18 MR. ANDRES: And why wouldn't it For two reasons, Judge. First, he got 19 away with it once before. 20 prior application to the same bank. 21 and secured the loan, not having disclosed it, although as you 22 say, the bank found out about it. 23 THE COURT: 24 MR. ANDRES: 25 That is in the prior loan -- in the He failed to disclose it Secondly -- And it never closed. No, the first loan did close. The first Citizens -- this is the second loan to the same bank. Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 19 of 99 U.S. v. Manafort 17 1 THE COURT: 2 MR. ANDRES: Oh, yes, go ahead. And the second reason is that 3 Mr. Manafort has agreed in his D.C. plea that he hid a loan on 4 the Union Street property. 5 in the Statement of Offense in the Washington, D.C. plea, 6 where as Your Honor noted, Mr. Manafort admitted to the 7 equated conduct here in the Eastern District of Virginia. 8 9 10 So I'm reading from Paragraph 51 So there's really no dispute about the fact that Mr. Manafort has admitted to hiding the loan in question. THE COURT: What's the standard of Scienter that's 11 required for this? 12 fails to disclose a loan carelessly, inadvertently. 13 sufficient? 14 In other words, suppose someone does it, MR. ANDRES: Is that So let me just -- for the purposes of 15 the conviction at trial, obviously we had to prove that beyond 16 a reasonable doubt that it was intentional, right? 17 Government proved and Mr. Manafort has acknowledged his guilt 18 that he intentionally hid these loans as part of his 19 admissions -- 20 THE COURT: 21 MR. ANDRES: Correct. 22 THE COURT: All right. 23 MR. ANDRES: So the Because that was Count 28, right? Go on. I -- if we're talking about it as a 24 matter of sentencing, generally, as Your Honor knows, there's 25 a different standard of proof, but -Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 20 of 99 U.S. v. Manafort 18 1 2 THE COURT: already foreclosed that. 3 4 MR. ANDRES: Well, the jury didn't -- the jury didn't convict Mr. Manafort on this count. 5 6 But as you point out, the jury has THE COURT: On 20 -- that's right, 26 and -- just a moment. 7 (A pause in the proceedings.) 8 THE COURT: 9 MR. ANDRES: 11 THE COURT: 12 MR. ANDRES: 13 THE COURT: 15 25 and 27 is what he was convicted of, correct? 10 14 All right. Correct. And -This is loan -- this is Count 28. 28. So the jury made no determination on this count. MR. ANDRES: Correct. And as part of his plea in 16 Washington, D.C., in the district court, Mr. Manafort admitted 17 the conduct that was acquitted here and in -- specifically in 18 paragraph 51 -- 19 THE COURT: I don't have any doubt that he admitted 20 that conduct. The thing that I'm having difficulty with, and 21 I think you may explain it in the same way, which might repeat 22 it, I should find that he intended Citizens Bank to lose 23 $5.5 million, right? 24 MR. ANDRES: 25 THE COURT: Correct. Now -- and that loan never closed, but Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 21 of 99 U.S. v. Manafort 19 1 nonetheless, if he intended a loss of 5.5 million, then under 2 the sentencing guidelines, he should be charged with that. 3 I'm still quizzical about why anybody who's a lawyer would 4 think that a recorded loan could be kept secret from a bank. 5 MR. ANDRES: Your Honor, putting aside whether or 6 not it was wise or whether or not it would succeed. 7 Manafort has said that he specifically sought to hide that 8 loan. 9 THE COURT: 10 MR. ANDRES: Yes. Mr. All right. So that's what the evidence is. And, 11 again, putting aside that it didn't succeed because the bank 12 found it out -- 13 THE COURT: It couldn't succeed. I don't know of 14 any bank that doesn't do a record search on a title. 15 point is he admitted it. But your 16 MR. ANDRES: And in the first loan, it did succeed. 17 THE COURT: The first loan, which one is that on our MR. ANDRES: So that would be the first loan in the 18 19 20 chart? chart, the Citizens Howard. 21 THE COURT: 22 MR. ANDRES: As to which there was no loss. As which -- as to which there was no 23 loss, but there was a -- it was a loan application, and on 24 that loan application, Mr. Manafort was required to disclose 25 the prior liabilities, including this loan that we're Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 22 of 99 U.S. v. Manafort 20 1 discussing. 2 THE COURT: Right. And it succeeded there because 3 the loan issued, but we now know that the bank suffered no 4 loss as a result of that. 5 MR. ANDRES: Correct. And when I say "succeed," 6 what I mean, obviously, is that the loan was approved by the 7 bank. 8 9 THE COURT: MR. ANDRES: 11 THE COURT: 12 MR. ANDRES: 13 THE COURT: 15 Stunning, isn't it, that a bank would miss a recorded loan on a piece of property? 10 14 Interesting. No comment. All right. Thank you, Your Honor. Is there anything you want to add, Mr. Westling? MR. WESTLING: Just briefly, Your Honor. We 16 understand there are admissions in the D.C. case, and I think 17 what we focused here is on the requirement that obviously he 18 purposely sought to inflict harm on the bank, and we simply 19 don't believe that standard is met by what's before the Court. 20 21 22 THE COURT: And that, you say, as well is in the admissions; is that right, Mr. Andres? MR. ANDRES: Well, Mr. Manafort pled guilty to bank 23 fraud, and so he was intentionally trying to defraud the bank, 24 which would necessarily -- 25 THE COURT: Yes, but what in D.C. did he say in -Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 23 of 99 U.S. v. Manafort 21 1 with respect to intending this loss? 2 Let's come back to this, Mr. Andres. I'll give you 3 an opportunity to look at it, but you see the point I'm 4 curious about. 5 The point I'm curious about is what precise standard 6 must I apply, under the guidelines, to finding that there was 7 this intended loss? 8 the standard is. 9 10 Mr. Westling has told me what he thinks Tell me again, Mr. Westling. MR. WESTLING: That he purposely sought to inflict harm on the bank, Your Honor. 11 THE COURT: Well, that doesn't tell me a lot. 12 Purposely sought to inflict harm on the bank, that's what he 13 says. 14 through this whole thing without one recess. 15 But, you think about it. MR. ANDRES: This isn't -- I'm not going Yeah, just -- Judge, just so I don't 16 lose the thread. The standard is that the Government has to 17 prove by a preponderance, for the guidelines purposes, that he 18 intended -- 19 THE COURT: 20 MR. ANDRES: 21 THE COURT: Intended the loss. Intended the loss to be five point -And you see, that's where I stumble. 22 That's where I stumble because I find it hard to find by a 23 preponderance of the evidence. 24 at what you cited me to -- I don't want to do it here -- at 25 the D.C. stuff. But, I'm going to look again But it seems to me that it's hard to believe Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 24 of 99 U.S. v. Manafort 22 1 that a lawyer would believe that he could get -- he could fool 2 a bank into not finding a $5.3 million loan that's recorded. 3 It seems to me that that might have been inadvertence or 4 something else; I don't know. 5 -- But let's pass it for a while 6 MR. ANDRES: Okay. 7 THE COURT: 8 I think I understand your position, but I want to -- and come back to it. 9 give you one more opportunity, and you as well, Mr. Westling, 10 to address the $5.5 million intended loss with respect to the 11 377 Union Street loan by Citizens Bank. 12 Now, let's turn to the next one, which is a loss of 13 207,000 on the Federal Savings Bank. 14 about that, Mr. Westling? 15 MR. WESTLING: 16 THE COURT: 17 Is there any dispute No, Your Honor. All right. And you don't have a dispute? 18 MR. ANDRES: 19 THE COURT: No, Your Honor. All right. So then we go to the Federal 20 Savings Bank loan for the 377 Union Street. 21 second one, a $6.5 million loan, and that, the probation 22 officer concluded no loss. 23 that, Mr. Westling? 24 MR. WESTLING: 25 THE COURT: This is the You don't have a problem with No, Your Honor. And Mr. Andres? Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 25 of 99 U.S. v. Manafort 23 1 MR. ANDRES: 2 THE COURT: No, Your Honor. So really the only dispute -- guidelines 3 dispute we have is whether or not there should be a 4 $5.5 million intended loss with respect to 377 Union Street, 5 and I'll come back to that. 6 MR. ANDRES: 7 THE COURT: Thank you. And in that regard, Mr. Andres, I 8 will -- I'm going to take what you say and look at the D.C. 9 material. You're telling me that, first of all, they pled 10 guilty to bank fraud. 11 end the matter. So this -- that should, in you view, But I will look at that once more carefully. 12 MR. WESTLING: 13 MR. ANDRES: Your Honor -- Thank you, Judge. It's specifically 14 paragraph 51 on page 22, and I'm happy to hand up a copy. 15 We've submitted it separately, but I'm happy to hand it up if 16 that's easier. 17 THE COURT: No, I don't need it. 18 MR. ANDRES: 19 MR. WESTLING: Okay. Just a fine point, Your Honor. 20 apologize for interrupting. 21 bank fraud in D.C., he admitted the conduct. 22 THE COURT: 23 MR. WESTLING: 24 THE COURT: 25 I But he didn't plead guilty to That's right. He didn't -- I just want to make sure we're clear. You're exactly right. He didn't plead guilty to bank fraud there, but he -- in the course of that Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 26 of 99 U.S. v. Manafort 24 1 plea in D.C., he admitted the conduct. 2 MR. WESTLING: 3 THE COURT: 4 That's correct, Your Honor. Now, why don't you tell me very succinctly why you don't think that ends the matter? 5 MR. WESTLING: Because I think admitting the 6 elements of bank fraud does not cover the issue of whether one 7 intended a loss. 8 bank that don't necessarily mean you don't plan to pay the 9 loan, and I think the guideline's key to that issue. 10 11 There's all kinds of methods of defrauding a THE COURT: And, Mr. Andres, I'll give you the last opportunity. 12 MR. ANDRES: Yeah. Again, I would just refer to the 13 Statement of Facts in D.C., where he specifically says that he 14 didn't -- that he basically conspired to defraud the bank of 15 $5.5 million. 16 defraud a bank and not intend it to lose the money that you're 17 securing from the loan. 18 I don't know that there's any other way to THE COURT: Yes. It's not a momentous issue in the 19 overall sentencing calculus. 20 there is an interplay here of plea negotiations in another 21 jurisdiction affecting this case, and that's unusual. 22 All right. It's sort of interesting because I think we have dealt with all of the 23 loan . Now, let me deal with one other subject with respect 24 to the bank loan. 25 the parties on restitution. I think there is a current dispute between I think the defendant says wait Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 27 of 99 U.S. v. Manafort 25 1 on restitution until these properties are resolved, sold or 2 something else; is that right, Mr. Westling? 3 Either one of you. 4 MR. WESTLING: Mr. Downing? Your Honor, I think to be clear, 5 we're -- we were just wanting to ensure that there would be an 6 appropriate offset for anything that came from that process so 7 that -- 8 9 THE COURT: Yes. I think Mr. Andres would be willing to agree with that or Mr. Asonye. 10 MR. ASONYE: A cameo or more? We'll see, Your Honor. We do agree, 11 and it is in paragraph 3 of the restitution order, the offset 12 language. 13 THE COURT: 14 now been handed to me. 15 right? 16 MR. ASONYE: 17 THE COURT: 18 All right. The restitution order has It was given to the clerk today, Yes, Your Honor. I'm not an instant reader, so that'll be something I will do at the first recess. 19 All right. So I have that one issue that I'm going 20 to consider. 21 believe -- to the presentence report that I should consider at 22 this time? 23 Are there any other objections -- there are, I For those of you in the courtroom, once I resolve 24 all of the objections to the presentence report, then I will 25 have a final offense level and criminal history. He's a Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 28 of 99 U.S. v. Manafort 26 1 Criminal History Category I; that is, he has no criminal 2 history. 3 will be one factor for the Court to take into account, and we 4 will then go to argument and allocution, which is where the 5 government and the defendant get to tell me what they think 6 should be the disposition of this sentencing. 7 That will have the guideline calculation and that And Mr. Manafort will have the opportunity, if he 8 wishes, to address the Court and to say anything at all he 9 wishes to this Court by way of extenuation or mitigation or 10 not at all if he wishes. 11 what we have left. 12 It's entirely up to him. Now, just a minute. Let me see if I see -- we 13 haven't done the role in the offense yet, have we, 14 Mr. Westling? 15 MR. WESTLING: 16 THE COURT: So that's We have, Your Honor. We have. That's right; I did conclude 17 that. 18 adjustment for obstruction of justice, and there is no 19 adjustment for -- oh, acceptance of responsibility. 20 21 I don't think there is anything left. All right. this. There is no I do want to hear from you a bit on The guidelines -- 22 (A pause in the proceedings.) 23 THE COURT: The guidelines provide for a credit, 24 under the guidelines calculation, for a defendant's acceptance 25 of responsibility. And the probation officer did not give Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 29 of 99 U.S. v. Manafort 27 1 Mr. Manafort a credit for acceptance of responsibility, and 2 the reason for which is that he exercised his constitutional 3 right to go to trial. 4 counts and went ahead with trial. 5 He denied the -- his guilt under those Now, that doesn't foreclose acceptance of 6 responsibility. 7 responsibility even if you go to trial, and the guidelines 8 make that clear, but they do so in a provision that states 9 that -- well, let's get it in argument. 10 You can still get acceptance of But I think it's very clear under the law that a 11 defendant who exercises his right to go to trial can 12 nonetheless receive credit for acceptance of responsibility, 13 but it's fairly limited, the circumstances under which a 14 defendant can receive that. 15 ahead in the District of Columbia and his cooperation 16 agreement had not been terminated, was it, Mr. Andres or 17 Mr. -- 18 MR. ANDRES: 19 THE COURT: 20 MR. ANDRES: I think if defendant had gone Breached, Your Honor. Yes, but what -- was it terminated? The -- what happens with the breach is, 21 effectively, the defendant loses his rights under the 22 contract, but the government doesn't. 23 contract doesn't get ripped up. 24 THE COURT: 25 So it's not that -- the So from his point of view, it was terminated. Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 30 of 99 U.S. v. Manafort 28 1 2 MR. ANDRES: Yes, breached. But yes, that's the effect. 3 THE COURT: All right. And so in that circumstance, 4 you get to use his Statement of Facts, but he does not get 5 acceptance of responsibility. 6 MR. ANDRES: He doesn't allow -- he's not allowed to 7 withdraw his plea, which is the same thing that the Statement 8 of Facts stands, his plea stands. 9 THE COURT: Now, the argument I'm going to hear -- 10 and I want you to put some flesh on it, Mr. Downing -- he 11 spent 50 hours with the special prosecutor. 12 your words, not mine, spilling his guts, and I gave you those 13 words. 14 arguing. 15 They weren't yours. You would say, But it would be what I'd be In any event, he didn't get it because they didn't 16 believe he was truthful. 17 the circumstances? 18 obstruction, because the obstruction is not an impediment to 19 acceptance of responsibility in this case. 20 But why do you think he gets under And you don't need to argue about MR. DOWNING: Sure. 21 couple of things. 22 this is a very unusual case. 23 24 25 Thank you, Your Honor. Just a One, to start out with the fairly obvious, THE COURT: So we're -- I think it's worth -- nobody here denies that. MR. DOWNING: Right. And I think because of the Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 31 of 99 U.S. v. Manafort 29 1 process that was -- surrounds this case, the Office of Special 2 Counsel, the way in which the case was handled, I think we 3 ended up at trial for that very reason. 4 have been faced with this same case by the local U.S. 5 Attorney's Office, we may never have had a trial. I think if we would 6 So I'd like the Court to consider the fact that when 7 we went into this case, the Court even observed that this case 8 was overcharged, and at the end of the day, 10 of the 18 did 9 hang. 10 11 But there was not a process in place from our standpoint to avoid having gone to trial. Now, at trial, I think, we did not step into any of 12 the areas where the sentencing guidelines say if you do the 13 following at trial, you cannot get acceptance. 14 trial was over, and I know this Court doesn't get into pleas 15 and plea negotiations, we were able to have much more 16 productive discussions and reach a plea agreement shortly 17 after the end of this trial. 18 THE COURT: 19 MR. DOWNING: After the In D.C. In D.C., correct. Again, Your Honor, 20 a bifurcated trial I don't think would have existed if the 21 U.S. Attorney's Office had brought the case. 22 So I think these are a lot of extenuating 23 circumstances around the consideration that after this trial, 24 shortly thereafter, once we were able to get into productive 25 discussions with the Office of Special Counsel, there was a Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 32 of 99 U.S. v. Manafort 30 1 resolution and there was immediate acceptance of 2 responsibility for Mr. Manafort's conduct with respect to the 3 hung counts. 4 the Court, the unusual circumstances and what followed. 5 And we think all of that should be considered by THE COURT: Well, yes, I don't question that, and I 6 don't think Mr. Andres does, that I can take that into account 7 under 3553. 8 reduction; am I right, Mr. Andres? 9 10 But his argument is you don't get the three-level MR. ANDRES: THE COURT: 12 MR. ANDRES: I beg your pardon? It would really just be a two-level reduction. 14 THE COURT: 15 MR. ANDRES: 16 Two-level reduction. 11 13 Correct, Your Honor. It would be. You're correct. I don't think the third point is really an issue because the Government hasn't made a motion. 17 THE COURT: You're quite right. 18 MR. DOWNING: Go on. Well, again, I think all these 19 attenuating circumstances around this particular trial, it's 20 very odd because ordinarily all of the counts would be in one 21 case and you wouldn't have a conviction and a plea. 22 because of the odd nature of what happened here -- and 23 obviously we exercised Mr. Manafort's constitutional rights to 24 be tried in the appropriate venue. 25 But Certainly, the outcome of him getting acceptance Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 33 of 99 U.S. v. Manafort 31 1 shouldn't change because he exercised his constitutional 2 rights, and that's really what we would like the Court to 3 consider. 4 THE COURT: 5 MR. ANDRES: All right. Mr. Andres. Your Honor, it certainly is true that 6 all these -- the Government offered to indict Mr. Manafort in 7 Washington, D.C., as to all the counts that he wanted to be 8 tried in the appropriate venue, and there's certainly nothing 9 wrong with that. 10 I would say the following: There's nothing unusual 11 about the fact that evidence is submitted to a grand jury, 12 that that grand jury returns an indictment, that before this 13 Court, Your Honor heard argument on all of the relevant 14 motions, including the motion to dismiss. 15 jury was picked by both sides under Your Honor's supervision, 16 and that jury convicted Mr. Manafort. 17 is not entitled to acceptance of responsibility. The case -- the And for that case, he 18 What the guidelines says is if you go to trial to 19 preserve a legal issue, if there's a novel legal issue that 20 you want to appeal or something along those lines, then you 21 could get -- still get acceptance of responsibility because 22 you've accepted your guilt as to those facts or to those 23 crimes, but you want to preserve your legal appeal. 24 That's not what happened here. 25 What happened here is Mr. Manafort vigorously defended himself on the facts and Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 34 of 99 U.S. v. Manafort 32 1 his guilt, and he did not accept responsibility in this 2 courthouse with respect to those crimes, notwithstanding what 3 happened in D.C., and I -- 4 THE COURT: But let me ask you this: Suppose that 5 the facts that arose that caused the Government to seek 6 Mr. Manafort's ending of his bond and his failure to be 7 truthful, suppose none of that had occurred. 8 here today saying he does get acceptance of responsibility. 9 MR. ANDRES: I don't want to hypothesize about what 10 happened, Your Honor, but I will say this: 11 he -- 12 13 14 THE COURT: You would be The fact that I'm asking you to hypothesize. If that had happened, wouldn't he get acceptance? MR. ANDRES: Well, there's nothing in the plea 15 agreement, and remember that the plea agreement is supposed to 16 contain all of the agreements between the parties, that there 17 are no agreements beyond that. 18 It certainly doesn't say in the plea agreement that 19 the Government would be asking for a reduction or not to be 20 imposing an acceptance of responsibility addition to the 21 guidelines here. 22 It's certainly possible that the Government would 23 have brought Mr. Manafort's cooperation, had he cooperated, to 24 the Court's attention. 25 indicate that we would have -- that we would have accepted a But there's certainly nothing to Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 35 of 99 U.S. v. Manafort 33 1 reduction for acceptance of responsibility. 2 Moreover, what I would say to Your Honor, and again, 3 I don't want to mix the D.C. and Eastern District of Virginia 4 cases, but there's a pertinent fact, which is the Fourth 5 Circuit has said that post-plea -- post-arrest and post-plea 6 conduct is relevant to acceptance of responsibility. 7 judge -- the judge in Washington, D.C., Judge Jackson, has 8 found that Mr. Manafort has both lied to the Government and 9 lied to the grand jury. 10 And a And so that's also relevant to Your Honor's 11 determination about whether or not he's accepted 12 responsibility. 13 THE COURT: All right. 14 Mr. Downing. 15 MR. DOWNING: Thank you. Your Honor, one of the difficulties 16 here is -- and we pointed this out in our briefing. 17 Office of Special Counsel is presenting this Court with fact 18 finding by another court that is still open to reconsideration 19 because of subsequent evidence that was presented by the 20 Office of Special Counsel. 21 The So I have not been -- I've been doing this for a 22 long time. 23 finding in another case is affecting the Court's decision on 24 sentencing in this case. 25 I've never been in the situation where open fact THE COURT: Yes, I take your point, and I'm also Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 36 of 99 U.S. v. Manafort 34 1 sensitive to the fact that this isn't your first rodeo nor is 2 it anybody's here first rodeo, except Mr. Manafort's. 3 I just had occasion to recognize that I've been here 4 32 years and I have seen a great deal. 5 think everyone here would have to agree with is this is 6 unusual. 7 gets. It's unusual because of the attention this case Look at the courtroom. 8 9 And the one thing I It's filled. I sentence people -- and there's an overflow courtroom. I sentence people every week. I have sentenced 10 large numbers of people in the past 32 years for a lot of 11 conduct, some of it far more egregious than this and some of 12 it less, rarely have a courtroom even close to this filled, 13 which is unfortunate. 14 sentences I impose need to have publicity so that they have 15 general deterrent effect. 16 It's unfortunate because a lot of the I don't know, as an empirical matter, whether there 17 is any deterrent effect to sentences. 18 think, remains to be empirically tested. 19 had to sentence young people who were mules, drug mules from 20 Colombia, the country of my birth. 21 drugs and I sentenced them to a mandatory minimum of ten years 22 in prison. 23 I hope so. But that, I I know years ago I They came up here with And, of course, these were young kids essentially, 24 teenagers and 20's, who were told, here, take these drugs. 25 They'll -- if they find them, they'll just deport you. Well, Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 37 of 99 U.S. v. Manafort 35 1 that's true, but only after ten years in Uncle Sam's custody. 2 And I thought that failing to give people notice of that in 3 Colombia, Madine, and other places, was wrong, immoral. 4 So I ordered the government to put signs up in these 5 airports and I smugly told myself that that would make some 6 difference. 7 general deterrence, but it is still a congressionally mandated 8 consideration under 3553, and I hope it has some effect. 9 Not in the slightest. So I don't know about And, of course, I also am fully aware of the fact 10 that they hung pickpockets in 18th and 17th Century England. 11 But every time they had a hanging, pickpockets showed up. 12 that gives you a sense of the deterrent effect. 13 that later. 14 15 16 So We'll come to But let's get back to this now. Did you finish what you wanted to say, Mr. Downing, about -MR. DOWNING: The only other issue that I wanted to 17 bring up is that even in the D.C. case, that the Office of 18 Special Counsel has conceded that the issue of the breach in 19 the agreement might only go to one of the pled counts. 20 So I feel like we are a lot further away from one of 21 the two counts in D.C. and in a position where I think that 22 issue should be of -- 23 THE COURT: Well -- 24 MR. DOWNING: 25 THE COURT: -- little relevance to this Court. All right. But I take it you would urge Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 38 of 99 U.S. v. Manafort 36 1 me -- you would agree that if I agree with Mr. Andres that he 2 should not receive acceptance of responsibility, you would 3 still urge me to take into account and to consider the fact 4 that he spent 50 hours with the special prosecutor and 5 cooperated there, and that isn't where he lied apparently -- 6 or is it, Mr. Andres? 7 MR. ANDRES: 8 THE COURT: 9 MR. ANDRES: 10 It's one of the places where he lied. All right. He lied both in the proffers and before the grand jury. 11 THE COURT: All right. 12 MR. DOWNING: So he lied in other places. However, I do think it stands to be 13 emphasized that there were two limited issues for which at the 14 end of the day, the judge found that Mr. Manafort lied. 15 There's one issue that's open to a motion to reconsider now. 16 THE COURT: 17 MR. DOWNING: 18 19 20 21 22 23 Is that -- and this is under seal? Yes. It seems like everything is under seal. THE COURT: Why is it under seal? The public ought to know about these things. MR. ANDRES: Your Honor, it's not all under seal. There is a public order which Judge Jackson issued and -THE COURT: Well, that's her decision. 24 second-guessing that. 25 right, and I'm sure she will. I'm not She should do whatever she thinks is But I hope, at the end of the Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 39 of 99 U.S. v. Manafort 37 1 day, all this will be unsealed. 2 MR. ANDRES: 3 Understood, Judge. It's part under seal because there's a continuing investigation. 4 If I could just briefly address several points? 5 One, even if Your Honor put aside the fact that a 6 federal judge in Washington has found that Mr. Manafort lied 7 to the government and the grand jury for the purposes of 8 acceptance of responsibility, there's no Fourth Circuit law, 9 at least none that the defense has cited and none that we've 10 found, where defendant vigorously contests his guilt and the 11 facts at trial and gets acceptance. 12 Second of all, the government is not -- is opposing 13 the imposition of acceptance of responsibility in Washington, 14 D.C., as well. 15 I accepted responsibility and I should be getting acceptance 16 of responsibility for my plea, it's not going to happen with 17 respect to his plea in Washington, D.C. -- or I shouldn't 18 predict what the judge is going to do; I'm not suggesting 19 that. 20 the acceptance here. 21 THE COURT: So the notion that Mr. Manafort's argument is: But the government opposes acceptance there as well as All right. Your arguments, as usual, 22 have been helpful, and it illuminates a number of facts. 23 it's the guidelines terms that govern this decision. 24 25 But As I said and as the guidelines reflect, conviction by trial does not automatically preclude a defendant from Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 40 of 99 U.S. v. Manafort 38 1 consideration for such a reduction. 2 according to the guidelines, a defendant may clearly 3 demonstrate an acceptance of responsibility for criminal 4 conduct even though he exercises his constitutional right to 5 trial. 6 trial to assert and preserve issues that do not relate to 7 factual guilt, for example, making a constitutional challenge 8 to the applicability of a statute to his conduct. 9 In rare situations, This may occur, for example, where a defendant goes to But in each such instance, the guidelines note that 10 a determination that the defendant has accepted responsibility 11 would be based primarily upon pretrial statements and conduct. 12 In the end, I think that it is important for me to 13 recognize what he has done, the 50 hours of cooperation. 14 in the end, he doesn't get acceptance under the strict terms 15 of the guidelines. 16 But So the objection is overruled, but it doesn't mean 17 that I don't take into account under 3553, and in the overall 18 consideration of an appropriate sentence, those facts. 19 don't know all of the facts relating to his -- the allegations 20 that he lied on two issues in the District of Columbia. 21 And I I think , Mr. Downing, you invited the Court to go 22 look at that. I declined that invitation. I am not -- I do 23 not sit to second-guess Judge Jackson, and I'm not going to. 24 She will do whatever she thinks is right, and I will accept 25 that. I don't go behind it, and I don't need to know all of Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 41 of 99 U.S. v. Manafort 39 1 that. 2 3 Now, I think I now have dealt with all of the objections, Mr. Andres, Mr. Downing, Mr. Westling. 4 5 MR. WESTLING: objection, Your Honor. 6 THE COURT: 7 MR. WESTLING: 8 What's the additional one? Which related to the sophisticated means enhancement for the bank fraud. 9 THE COURT: 10 11 I think there is one additional Yes, yes. MR. WESTLING: We're happy to stand on our briefs, but I just wanted to make -- 12 THE COURT: All right. Well, I'm happy to rule on 13 the basis of the briefs that have been filed. 14 any doubt that this involves sophisticated means under the 15 guidelines, and so that enhancement is appropriate. 16 I don't have Now, I'm going to take a brief recess, and at the 17 end of that recess, I will either rule on this intended loss 18 issue or ask for more information, and then I will expect the 19 parties to be prepared to go on and make their arguments under 20 the sentencing arguments, with, Mr. Andres, you going first, 21 unless you're going to give Mr. Asonye an opportunity to 22 dazzle us with his verbal atomic footwork, and then you, Mr. 23 Westling. 24 25 That's not meaningful to other people. Mr. Asonye is an assistant U.S. attorney in the Eastern District, not a member of the Special Prosecutor's Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 42 of 99 U.S. v. Manafort 40 1 office, and I see Mr. Asonye on a routine basis here on 2 Fridays and for trials. 3 verbal atomic footwork. 4 All right. So I have some knowledge of his We'll take a 15-minute recess and also 5 take a -- we will then hear at -- once I hear argument from 6 Mr. Manafort. I have the restitution order up here now? 7 All right. 8 (Recess.) 9 (Court proceedings resumed at 5:15 p.m.) Court stands in recess. 10 (Defendant present.) 11 THE COURT: 12 job. Yes. You-all can see why Mr. Flood got his He can get your attention. 13 All right. I -- two things before we get to 14 argument. 15 loss on the Union Street property. 16 loan didn't -- the first loan did not go through, but there's 17 still a $5.5 million loss on that one and that's what's at 18 issue, right? 19 First of all, there is this issue of the intended MR. ANDRES: The second -- or the first His second loan. So the first loan 20 went through, in which Mr. Manafort hid the loan, the Genesis 21 Capital loan. 22 about the Count 24 and 25. The -- when I say the first loan, I'm talking 23 THE COURT: Just a moment. 24 (A pause in the proceedings.) 25 THE COURT: I'm sorry, Mr. Andres. Would you repeat Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 43 of 99 U.S. v. Manafort 41 1 that, please? 2 MR. ANDRES: Yes. There were two loans with 3 Citizens Bank. 4 and 25, was a loan for the Howard Street property, and on that 5 property, Mr. Manafort hid his loan on the Union Street 6 property. 7 The first loan, which was charged in Count 24 The second loan was a loan that's charged in 8 Count 28, is a loan for the Union Street property itself, and 9 again, in that loan, Mr. Manafort hid the prior lien on that 10 loan as well. 11 THE COURT: All right. And the issue that I raised 12 was in the Union Street bank loan for 5.5 million, which never 13 closed. 14 it's difficult to understand that he intended a $5.5 million 15 loss? 16 that didn't close is -- well, no loss, but what he intended. Why should he be charged with $5.5 million loss when Now, usually the only loss that would occur on a loan 17 And I went and read, as you invited me to do, Mr. 18 Andres, paragraph 51 of the Statement of Offenses and other 19 acts in the District of Columbia, and it says that he made or 20 caused to be made a series of false and fraudulent material 21 representations to the bank in order to secure the loan, 22 including the submission of false statement of assets that hid 23 a prior loan on the Union Street property, that's the Genesis 24 loan, among other liabilities and the submission of falsified 25 2016 DMI, P&L that overstated DMI's income. Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 44 of 99 U.S. v. Manafort 42 1 2 Do you have anything further you want to say on this, Mr. Westling? I think I understand it. 3 MR. WESTLING: 4 THE COURT: 5 No, Your Honor. I'm going to overrule the objection, but I'm going to state what I think is a real problem with it. 6 I find it difficult to see that as an intended loss 7 in that one. Sometimes there -- you could argue an 8 intended -- what they really wanted to do was get the interest 9 rate down. That's why they left that -- whoever submitted it 10 left that loan out. 11 is very material at all to my sentencing decision. 12 But in any event, it isn't something that But I'm going to overrule the objection and I do 13 rely to some extent in that regard, Mr. Andres, on the 14 paragraph that you cited to me, paragraph 51 from the D.C. 15 submission. 16 I wanted to mention. 17 So now -- one other thing I wanted -- two things First of all is the restitution order. Mr. Asonye, 18 I don't think I agree with your construction of paragraph 3. 19 Paragraph 3 reads -- well, let me set the stage for people. 20 This is a restitution order, and the basic objection to the 21 restitution order is, to distill it to its essence, is the 22 defendant says, look, wait until these properties are all sold 23 and everything is all resolved, and then I'll know exactly 24 what I have to do in restitution. 25 That's a fairly appealing position to take. Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 45 of 99 U.S. v. Manafort 43 1 Mr. Asonye says, well, we've taken care of that in paragraph 3 2 of the restitution order, and I don't think so, Mr. Asonye. 3 Let me tell you why. The amount of restitution paid 4 to any entity, I'm reading now from the restitution order, 5 shall not exceed the entities in total loss from the offenses 6 of conviction pursuant to such-and-such statute. 7 paid to an entity under an order of restitution shall be 8 reduced by an amount later recovered as compensatory damages 9 for the same loss by the victim in any federal or state civil 10 11 Any amount proceeding. Well, that's what you were referring to by saying 12 that it's -- that the order accommodates the defense's 13 argument that he shouldn't have to pay any more than an actual 14 loss, right? 15 16 MR. ASONYE: Both provisions, Your Honor. Both the first sentence, which permits that no -- 17 THE COURT: 18 MR. ASONYE: 19 THE COURT: First sentence of paragraph 3. Correct, which -Look, just change -- why didn't you 20 change the language to say by an amount later recovered in any 21 way in the disposition of the property? 22 compensatory damages for the same loss by the victim, but -- 23 24 25 MR. ASONYE: Your Honor. Don't limit it to We have no objection to doing that, That language comes straight from the statute. THE COURT: I wouldn't think that -- well, just Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 46 of 99 U.S. v. Manafort 44 1 because it comes straight from the statute doesn't mean it's 2 appropriate to accommodate the parties' intention on this -- 3 or the Court's intention on the restitution order. 4 I don't want to order restitution in any amount 5 greater than what the disposition of this property gives to 6 these banks or other victims. 7 MR. ASONYE: 8 THE COURT: 9 So -Now, does that -- why don't you huddle there with Mr. Westling and Mr. Downing, and let's see if we 10 can get language, because right now, I don't have a 11 restitution order signed by all parties, and that is something 12 I'd like to have before I proceed. 13 Now, while they're doing that, let me say this to 14 the others. 15 so don't worry about it. 16 And, counsel, you don't need to listen to this, In a few minutes, I will be pronouncing sentence. 17 And although 99 percent of the cases I have in which I 18 announce sentences don't involve this kind of interest and 19 notoriety, the very few that I have had, minuscule number, as 20 soon as I say something, reporters run out. 21 disruptive and not appropriate. 22 sentencing. 23 we don't want that to happen. 24 ask that you retire to -- 25 That's very I've never had it in a I've had it with jury verdicts and so forth, and If you want to do that, I would Mr. Flood, seven. Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 47 of 99 U.S. v. Manafort 45 1 THE CSO: Seven. 2 THE COURT: The seventh floor courtroom. Everything 3 is piped into there, and if you want to make immediate contact 4 with your publication, whatever it may be, when you hear 5 something, please use that. 6 the beginning of a marathon or something because it's 7 disruptive and inappropriate. 8 All right. 9 MR. WESTLING: 10 Let's not run out of here like Thank you. Is that agreeable to you, Mr. Westling? Yes, Your Honor, that language in that provision is agreeable. 11 THE COURT: All right. 12 MR. WESTLING: Well -- Let me just make a point on what 13 you're going to ask me next, Judge, is why haven't we signed 14 it. 15 appellate right, I would prefer not to have the defendant sign 16 it but have the Court impose the order, because I don't want 17 to have been viewed as waiving any issue that I can't see down 18 the road. 19 practice, so I'll defer to the judge. 20 make -- 21 And I think just in terms of not waiving any possible And so I recognize that may not be the local THE COURT: All right. But I just wanted to I don't know what you mean 22 by local practice. It's not what I typically do, but I will 23 do this because I think it's a fair restitution order and I 24 didn't like paragraph 3 the way it was. 25 fine, Mr. Asonye. This one, I think, is Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 48 of 99 U.S. v. Manafort 46 1 2 All right. Government to begin with? 3 4 Now, Mr. -- well, who will argue for the MR. ANDRES: Your Honor, I'm just going to cover the 3553 factors. 5 THE COURT: 6 MR. ANDRES: Yes. And Mr. Asonye has an outstanding issue 7 with respect to the forfeiture and with respect to fines. 8 we'll split the argument up that way, and we're not going to 9 be long. 10 11 THE COURT: from him first though. All right. So Well, maybe I should hear What is it, forfeiture and what? 12 MR. ANDRES: And the fine. 13 MR. ASONYE: I think we'll start where we have the 14 most agreement, Your Honor, and on forfeiture. 15 In light of the forfeiture proceedings that are 16 taking place in the District of Columbia, and for ease of 17 administration and clarity, the parties have agreed that -- to 18 attempt to resolve the forfeiture issues pertaining to 19 Mr. Manafort in the District of Columbia; therefore, the 20 Government will not seek a forfeiture order in this district. 21 22 THE COURT: All right. Judge Jackson deal with it. Well, that's fine. Let Next. 23 MR. ASONYE: 24 Now, the guidelines state that the Court shall 25 The fine, Your Honor. impose a fine in all cases except where the defendant Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 49 of 99 U.S. v. Manafort 47 1 establishes he's unable to pay. 2 defendant has not met his burden that he's unable to pay a 3 substantial fine in this case, particularly since he has not 4 submitted the financial information requested by the probation 5 officer. 6 And, Your Honor, the We will note, however, that in paragraph 135 of the 7 PSR, it notes that based on the available financial 8 information to the probation officer, it appears he does have 9 significant assets and that he does have the means to pay a 10 fine. 11 aware that Mr. Manafort owns two homes that are not included 12 in any forfeiture proceedings in D.C. 13 Alexandria, Virginia, and he also has a home in Palm Beach 14 Gardens, Florida. 15 And we'll note that Mr. Manafort -- the Government is He has a home in And the PSR notes that the equity in those homes is 16 approximately $4 million. 17 believes that he has at least $4 million to pay towards a fine 18 in this case, potentially more since he has not even submitted 19 a financial information form, which is particularly troubling 20 in light of the fact that this prosecution is based on 21 Mr. Manafort hiding income and providing false statements to 22 financial institutions. 23 THE COURT: 24 MR. ASONYE: 25 THE COURT: So the Government certainly The restitution order says $24 million. Yes, Your Honor. That includes the 6 million in unpaid Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 50 of 99 U.S. v. Manafort 48 1 taxes? 2 MR. ASONYE: It does, Your Honor. 3 THE COURT: 4 MR. ASONYE: 5 THE COURT: 6 MR. WESTLING: All right. Go on. That's it, Your Honor. All right. Mr. Westling or Mr. Downing. Your Honor, I think that from our 7 perspective, obviously it's in the Court's discretion to order 8 a fine. 9 one. 10 One of the factors you consider is whether he can pay Clearly, even if you take the information from present -- 11 THE COURT: Why don't we have financial information? 12 MR. WESTLING: I can only say, Your Honor, that it 13 was a very difficult process given his incarceration. 14 a lot of complexity to it, and we just had difficulty getting 15 it together, and I apologize to the Court for that. 16 makes the job more difficult. 17 There's I know it But I will note that even based on this information, 18 which we know includes the assets that are being forfeited in 19 D.C., he has a net worth of 13 million. 20 going to enter an order of 24 million of restitution, and it 21 seems to me it's clearly a situation where he's illiquid, and 22 again, that includes assets that we know are being forfeited. 23 24 25 THE COURT: Tell me this. And the Court is This really should be directed to Mr. Asonye. Tell me this, Mr. Asonye: Will Judge Jackson also Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 51 of 99 U.S. v. Manafort 49 1 have the opportunity to impose a fine on the basis of 2 convictions or admitted conduct there? 3 4 MR. ASONYE: admitted conduct here. 5 6 She would, Your Honor, but not on the THE COURT: Why? He's admitted all the conduct over there. 7 MR. ASONYE: Yeah, but it's not relevant conduct for 8 purposes of calculating the guidelines in the District of 9 Columbia. 10 11 It's just essentially relevant conduct for purposes of considering the 3553 -THE COURT: Can you tell me what defined guidelines 12 are in the District of Columbia? 13 MR. ASONYE: 14 THE COURT: 15 (A pause in the proceedings.) 16 MR. ASONYE: 17 PSR in the District of Columbia. 18 but the Government will object because we don't believe it was 19 calculated correctly. 20 know an accurate fine range for the District of Columbia. 21 I will note it does not include -- 22 THE COURT: One -- Court's indulgence? Yes, of course. Your Honor, there is a -- there is a It does note a fine range, So in our view, we do not currently What's your view of the correct fine 23 guideline range in the District of Columbia? 24 the Government's view? 25 But That is, what's You may confer with your co-counsel. (A pause in the proceedings.) Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 52 of 99 U.S. v. Manafort 50 1 MR. ASONYE: Your Honor, the PSR in the District of 2 Columbia says that the maximum fine range is $250,000 times 3 two for the two counts, so -- 4 THE COURT: 5 MR. ASONYE: 6 THE COURT: 7 MR. ASONYE: 8 THE COURT: 9 MR. ASONYE: 10 Yes, but I -- that's the PSR. Right. You said you differ. Correct. I want to know what you think. And our view is that the maximum fine range in D.C. should be approximately $12 million. 11 THE COURT: Well, tell me again, Mr. Asonye, what we 12 know or what the Government knows right now of his financial 13 situation. 14 MR. ASONYE: We know that he owns two homes with net 15 equity of approximately $4 million. 16 believe, 135 of the PSR. 17 That's in paragraph, I 132, Your Honor. The Palm Beach, Florida, home has an equity, 18 according to the PSR, of $1.25 million, and the Alexandria 19 home has equity of approximately $3 million. 20 THE COURT: 21 MR. ASONYE: 22 23 The reason -And, Your Honor, if -- I will also add -THE COURT: Just a moment. The reason that I want 24 to know that is the primary financial burden on the defendant 25 should be restitution, not a fine. And it makes no sense to Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 53 of 99 U.S. v. Manafort 51 1 impose an onerous fine when restitution is already 2 significant. 3 don't know that we need that if we're going to have a 4 restitution of $24 million. The purpose of a fine is chiefly punitive and I 5 MR. ASONYE: 6 THE COURT: And, Your Honor, to that point -Because I think the Government would 7 agree that victims should be paid before the Government gets 8 its fine money, right? 9 MR. ASONYE: We do agree with that, Your Honor. I 10 would note that although the forfeiture proceedings are 11 ongoing in the District of Columbia, and I hesitate to say how 12 things will turn out, because we still are negotiating with 13 Mr. Manafort and the various banks. 14 If things go according to plan, we have some sense, 15 if you look at paragraph 64 of the PSR, of where -- how much 16 the banks will receive based on estimates of the value. 17 so if you look at the Citizens Bank loan, the $3.2 million, 18 the estimate fair market value of that property, as estimated 19 in the PSR, is $3.8 million. 20 plan, Citizens Bank may be made whole. 21 And So if things go according to Banc of California, there was no collateral, so we 22 are looking at a $685,000 loss at least there. And then with 23 respect to the Federal Savings Bank, again, the PSR has 24 calculated at approximately, after the collateral, if it's 25 disposed appropriately in the District of Columbia, Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 54 of 99 U.S. v. Manafort 52 1 approximately $200,000 loss. 2 So in truth, if the -- if things go as we project, 3 then actually the banks will be out -- Mr. Manafort will still 4 owe $1 million on a restitution order after the properties are 5 forfeited and paid. 6 a restitution amount that he should be able to pay, 7 particularly in light of the fact that he has $4 million in 8 equity in his homes. 9 securities that are listed in the PSR of approximately 10 That doesn't include the additional $5.6 million, which is listed in paragraph 131. 11 12 So he still would have -- that's actually THE COURT: But he also has a $6 million bill to pay to the IRS. 13 MR. ASONYE: That's true. The fine, though -- and, 14 Your Honor, the fine and the tax obligation as such, they're 15 all to Uncle Sam. 16 THE COURT: Oh, no. The fine is. The tax is paying 17 back you, me, and the rest of the folks here who paid their 18 taxes. 19 MR. ASONYE: 20 THE COURT: That's true, Your Honor. As I will tell Mr. Manafort, the real 21 essence of his violation is he stole from us, from people who 22 paid their taxes, not the fine. 23 and simple. 24 25 MR. ASONYE: The fine is punitive, pure Your Honor, I agree. And at bottom, the guidelines instruct that if Mr. Manafort has an ability to Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 55 of 99 U.S. v. Manafort 53 1 2 3 4 5 6 pay a fine, the Court shall impose one. THE COURT: And clearly if -- Well, that's -- is that the guideline or the statute? MR. ASONYE: guidelines. Well, that's -- I'm reading from the But the statute -- THE COURT: All right. It's what it says, "shall." 7 It's not a command that I have to follow. 8 not mandatory. 9 10 11 12 MR. ASONYE: THE COURT: The guidelines are It's 3572, Your Honor, 18 U.S.C. 3572. All right. It's a statute, not the guidelines. MR. ASONYE: Correct. And the Court should impose a 13 fine if Mr. Manafort has ability to pay one. 14 argument is that he certainly has multiple millions of dollars 15 after the restitution order to pay a fine. 16 THE COURT: 17 MR. WESTLING: 18 All right. THE COURT: 20 MR. WESTLING: 21 THE COURT: 22 MR. WESTLING: 24 25 Mr. Westling. Well, I think, Your Honor, that we would contend that even with Mr. -- 19 23 The Government's A little louder, please, sir. I'm sorry? A little louder. I've actually been reminded by Ms. Harris a couple of times, Judge. THE COURT: Well, I know, but I -- we always require lawyers to come to the podium, but it's a big -- it's a lot of Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 56 of 99 U.S. v. Manafort 54 1 2 lawyers today, and I want to get things done. MR. WESTLING: Understood, Your Honor. What we 3 would simply note, Your Honor, is that even assuming that 4 Mr. Asonye's math about the repayment to the various lenders 5 is correct, which we would probably bicker with, you still 6 have a $7 million restitution order against assets, which the 7 Government says amount to two homes worth about $4 million. 8 9 So I recognize that, you know, we're dealing with a lot of issues here, but I think there's still a big "if" about 10 what will be collected from the sale of those properties. 11 it -- in any case, he faces a restitution order of $20 12 million -- $24 million on its face. 13 whether that is what he'll have to pay or not until the sales 14 take place. 15 there's not evidence he has the ability to pay. 16 And So we can't really know I think based on all of that, we would simply say THE COURT: I wonder if the restitution order 17 shouldn't say that the defendant is ordered to pay restitution 18 in an amount of at least -- no, not at least -- in an amount 19 of up to $24 million. 20 MR. ASONYE: 21 22 objection to that. It may be less; am I right? That's -- the Government has no You are correct, Your Honor. THE COURT: Well, let's change the language there. 23 I'm still -- Mr. Asonye, I'm still puzzled a bit by imposing a 24 fine when I don't know what the total amount of restitution is 25 going to be in the end and how that will affect his ability to Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 57 of 99 U.S. v. Manafort 55 1 pay. 2 predictions on the dispositions of the property and the 3 restitution to the other victims is such that even after all 4 that's paid, plus the $6 million in tax liability, would leave 5 him with two homes. 6 7 I think your -- the argument you've made is that the Is that your view? MR. ASONYE: Two homes and millions of dollars in securities, Your Honor. 8 THE COURT: And they're in what paragraph? 9 MR. ASONYE: 131 of the PSR. And again, Your Honor, 10 that's based on information that the probation officer was 11 able to locate. 12 page 44 of the PSR: 13 insurance policy of $1.496 million and another $2.5 million in 14 investments in a -- The securities are listed at the bottom of a $4.2 million in securities, a life 15 THE COURT: 16 MR. ASONYE: 17 18 19 He has to die to get that 1.496. Your Honor, I believe there are ways to cash out and to sell your life insurance policies. THE COURT: There are, indeed, but -- there are, indeed, but certainly not for $1.496 million. 20 MR. ASONYE: 21 THE COURT: But, Your Honor -Have you ever tried to sell an insurance 22 policy that you have? 23 MR. ASONYE: I have not. 24 THE COURT: Don't do it. 25 MR. ASONYE: You will be dismayed. The point is, Your Honor, it's the Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 58 of 99 U.S. v. Manafort 56 1 defendant's burden to prove he doesn't have the ability to pay 2 a fine, and he hasn't -- 3 4 THE COURT: Right. I understand that. But I am not going to impose a fine that is unfair. 5 MR. ASONYE: 6 THE COURT: And -If I don't -- let me ask you this: If I 7 don't have enough information, can I -- I know I can delay 8 restitution, but I don't need to because of some changes have 9 been made. 10 11 But can I also delay the imposition of fine? I don't think the law permits that. MR. ASONYE: And we don't believe it does, 12 Your Honor. And what we would submit is, you do have -- you 13 do have before you in the PSR information of -- about the 14 equity and properties that he owns and securities of at least 15 $4 million. 16 THE COURT: 17 MR. ASONYE: 18 19 20 21 What do you think a fine should be? Well, Your Honor, what we've -- the position of the Special Counsel is that we do not make -THE COURT: That's the Government's position. don't want to hear Special Counsel, the Government. MR. ASONYE: The Government's position is that we 22 out -- lay out the fine range, which is laid here. 23 not taking a specific position on the exact fine that the 24 Court should. 25 I THE COURT: But we're So what's the fine range again? Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 59 of 99 U.S. v. Manafort 57 1 MR. ASONYE: Your Honor, the fine range in this case 2 is on page 49 of the PSR, $50,000 to 25 -- essentially just 3 over $25 million, Your Honor. 4 5 THE COURT: So that's a pretty good range and you don't take a position. Stand by. 6 All right. 7 Do you have anything else, Mr. Westling? 8 MR. WESTLING: 9 THE COURT: 10 Thank you. No, Your Honor. All right. Now, we've come to the sentence, itself. 11 Mr. Andres. 12 MR. ANDRES: 13 Your Honor, I'm going to focus my comments obviously Thank you, Your Honor. I'll be brief. 14 on the 3553 factors. 15 cooperation. 16 that Mr. Manafort did not provide sufficient cooperation to 17 allow for any mitigation by this Court. 18 counsel has noted that there were 50 hours of cooperation, but 19 the -- The Special Counsel's office takes the position 20 THE COURT: 21 MR. ANDRES: 22 I wanted to start, though, with the Is that inaccurate? It was long. I would say -- I don't know. 23 MR. DOWNING: 24 MR. ANDRES: 25 I know that the It was. If it was 50 hours, but we met on multiple occasions, I think on at least ten occasions. So the Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 60 of 99 U.S. v. Manafort 58 1 number of hours is probably in the ballpark, but it's not 2 reflective, Your Honor, of the value of the information that 3 Mr. -- 4 THE COURT: Well, of course not. You haven't filed 5 a 5K1.1. 6 consider his cooperation to be substantial, but that doesn't 7 mean that he didn't cooperate. 8 didn't give you a lot of information. 9 give you information you thought was particularly valuable. 10 So in your view, I knew that the Government didn't MR. ANDRES: That doesn't mean that he It just means he didn't I disagree, Your Honor. Defense 11 counsel who bears the burden here hasn't provided, Your Honor, 12 with a single -- 13 THE COURT: 14 MR. ANDRES: 15 16 Bears the burden of what? To establish what the cooperation was, and they haven't provided -THE COURT: I haven't given them a 5K1.1. They 17 aren't going to get one and they aren't going to get 18 acceptance of responsibility. 19 about 50 hours. 20 that into account in imposing a sentence because you don't 21 think -- well, two things. 22 the information he provided, you didn't like it. 23 substantial assistance. 24 25 And you've admitted he spent Now, you say under 3553, I shouldn't take MR. ANDRES: You say, one, he lied, and two, It wasn't of I understand that. And three -- and three or four, even Mr. Manafort hasn't provided the Court with any information Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 61 of 99 U.S. v. Manafort 59 1 that he provided to the Special Counsel that was of any value. 2 So what Your Honor is evaluating is simply the fact 3 that he met for 50 hours. 4 50 hours was because he lied. 5 to try to show Mr. Manafort what the evidence was to allow him 6 to provide truthful proffers. 7 the interest of the Special Counsel's office to have 8 Mr. Manafort provide helpful and meaningful cooperation and he 9 didn't. 10 And the reason that he met for Because he lied, it took longer It certainly was the -- was in There were a wide range of issues that he was asked 11 about and he did not provide valuable cooperation. 12 there's nothing in the record, Your Honor, to suggest that he 13 did. 14 not anything specific about any individual, about any area of 15 cooperation or anything that merits Your Honor -- Mr. Downing has simply cited the number of hours, but 16 17 THE COURT: So I'm to assume that he spent 50 hours telling you things you didn't want to hear. 18 19 And MR. ANDRES: He told us 50 hours, a large part of things we already knew or was included in documents. 20 THE COURT: 21 MR. ANDRES: All right. So he didn't provide additional 22 information. 23 know and it certainly wasn't 50 hours of information that was 24 useful. 25 It wasn't 50 hours of information that we didn't THE COURT: All right. Go on. Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 62 of 99 U.S. v. Manafort 60 1 MR. ANDRES: Your Honor, the 3553 factors obviously 2 first begin with the nature and circumstances of the offenses. 3 The jury in this courtroom convicted Mr. Manafort of serious 4 crimes, crimes that were serious because of their frequency, 5 crimes that were serious because of the amount of money 6 involved. 7 dollars secured by fraud from financial institutions. 8 were serious crimes because they were sophisticated schemes, 9 because they involved a number of individuals. Millions of dollars in unpaid taxes and millions of 10 They Mr. Manafort's crimes did not occur decades ago, not 11 even a decade ago. 12 2016 and 2017. 13 them up. 14 those choices have consequences. 15 the dozens and hundreds of documents admitted as evidence in 16 this trial -- at the trial, in bank account records, corporate 17 documents, loan files, tax returns and the more than dozen 18 witnesses. 19 He made criminal choices as recently as No one made up those crimes. Nobody conjured Mr. Manafort, himself, made criminal choices and The crimes were borne out in Mr. Manafort made criminal choices and the jury of 20 his peers found him guilty. Bank records established that 21 Mr. Manafort had more than 30 foreign overseas bank accounts 22 in three different countries. 23 shelf companies, which existed only to receive and hide those 24 funds. 25 Mr. Manafort failed to pay more than $6 million in taxes and They involved a dozen different Those accounts held more than $55 million. Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 63 of 99 U.S. v. Manafort 61 1 he broke the basic civil covenant of citizens in this 2 democracy, the agreement to pay taxes. 3 his choice and those choices have consequences. 4 And again, that was And today, we know that Mr. Manafort remains -- 5 fails to accept responsibility and is not remorseful. We hear 6 that he's failed to file a financial statement. 7 we really have no idea of what his financials are, financial 8 assets are, particularly in a case where he was convicted of 9 hiding his assets and in a case where he's doctored financial As of today, 10 statements and submitted them to the bank. 11 submits that that suggests a lack of remorse for his crimes. 12 The Government As I mentioned, he secured more than $25 million in 13 bank loans. 14 offshore tax cases and those cases are nothing like the case 15 before Your Honor. 16 and bank fraud cases. 17 Mr. Manafort has cited to a series of different This is a case about tax fraud, FBAR fraud THE COURT: Mr. Manafort didn't simply -Actually I resided over some of those 18 and they are like this. 19 hide money and usually the government gets a plea and they 20 don't go through all the tax returns and everything else. 21 I don't think it's accurate to say that those cases are 22 nothing like this case. 23 case. 24 and this. 25 Every FBAR case involves trying to So There are always differences, case to But there is a lot of similarity between those cases MR. ANDRES: Your Honor, if I may, the Horsky case, Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 64 of 99 U.S. v. Manafort 62 1 which Your Honor presided over -- 2 THE COURT: Yes. 3 MR. ANDRES: -- was significantly different. In 4 that case, the defendant had an investment scheme and he hid 5 the money from that investment. 6 THE COURT: 7 He didn't use the account -- Now, how many -- how much taxes did he avoid paying? 8 MR. ANDRES: 9 THE COURT: 10 paying, three times. I believe that his -It was three times what he avoided 11 MR. ANDRES: 12 THE COURT: Right. And how -- And -- but a big difference that you 13 ought to point out Mr. Horsky -- refresh my recollection here, 14 those who might have been here -- he showed up at sentencing 15 with a check. He paid everything. 16 MR. ANDRES: 17 THE COURT: 18 MR. ANDRES: 19 $100 million, Your Honor. Well, he owed a lot. He did, he did. But before his sentencing, Your -- 20 THE COURT: But he was able to pay everything. 21 MR. ANDRES: 22 THE COURT: I understand. So that is a difference between that 23 case and this case. But basically any FBAR case is a case of 24 stealing money from the U.S. 25 case. It's the same as any tax fraud That's why people don't report foreign bank accounts. Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 65 of 99 U.S. v. Manafort 63 1 They want to hide income. So they are similar cases. 2 take your point and it's a valid point that there are 3 differences between Horsky and Manafort. 4 large as you think they are, is a matter I have to consider. Understood. But I Whether they're as 5 MR. ANDRES: And I haven't said exactly 6 how large those differences are. 7 Your Honor. 8 other defendants where the cases that are cited by 9 Mr. Manafort, defendants self disclosed their activity. But consider this, There are other cases where the -- there are 10 People got downward departures for cooperation. 11 reductions for acceptance of responsibility. 12 was an 80-year-old woman in Florida who inherited money when 13 her husband died who he -- and he, himself, had inherited that 14 money in an overseas foreign account. 15 accounts in the way that Mr. Manafort did and they didn't have 16 the knowledge Mr. Manafort did. 17 People got One defendant They didn't use the One other important distinction, Your Honor. 18 Mr. Manafort didn't only use his overseas accounts for the 19 purposes of hiding taxes. 20 of his FERA violation and his FERA crimes in the District of 21 Columbia, and that was part of his plea in the District of 22 Columbia that the -- some of the -- 23 THE COURT: 24 MR. ANDRES: 25 He also used it for the promotion For which he will be punished there. Understood. But it's also a point of distinction with respect to the FERA crimes -- the FBAR crimes Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 66 of 99 U.S. v. Manafort 64 1 here. I'm not suggesting -- I'm just suggesting that not all 2 FBAR cases are the same. 3 THE COURT: 4 MR. ANDRES: 5 Certainly the list -- Most of them are pretty close. Well, again, I would disagree, Your Honor, but -- 6 THE COURT: Well, let me put it to you this way. 7 Most of the ones I've presided over and studied are pretty 8 much the same. 9 so they don't have to pay taxes on it. 10 They're hiding money from the U.S. government MR. ANDRES: Understood. And obviously there are 11 disparities with all of them as to the amount, as to whether 12 they got downward departures, as to whether -- 13 THE COURT: Some made contributions to charitable 14 institutions, some did all kinds of good things. 15 Mr. Manafort has done some, as the defense has pointed out in 16 their brief. 17 Others did lots of redemptive things that redeemed them. 18 Some people were just, otherwise, pretty bad. All -- every case is different, every defendant is 19 different. 20 tax evasion is all the same. 21 so you don't have to pay taxes on it. 22 Well, But the fundamental conduct of FBAR violations and MR. ANDRES: Hide money from the government Your Honor, I'd also like to address 23 the issue of deterrence here as required by 3553, both general 24 deterrence and specific deterrence are important. 25 requires the Court to impose a sentence that shows others that The law Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 67 of 99 U.S. v. Manafort 65 1 this conduct has consequences, that Mr. Manafort's criminal 2 choices have consequences. 3 stand as a beacon to others that this conduct can't be 4 accepted. And obviously the sentence must In this case, there's -- 5 THE COURT: I think you've heard me before. 6 MR. ANDRES: 7 The -- there's also a need for specific deterrence I've read you, Judge. 8 with respect to Mr. Manafort. 9 extended period of time. In the Government's view, he has not 10 accepted responsibility. His sentencing submissions are 11 replete with blaming others for his consequences and not 12 taking responsibility, and Mr. Manafort is here today because 13 of the criminal decisions he made himself. 14 He committed crimes over an With that, Your Honor, the Government asks that the 15 Court impose a substantial sentence consistent with those 3553 16 factors and those we've discussed in our submission. 17 you. 18 THE COURT: 19 MR. DOWNING: 20 THE COURT: 21 MR. DOWNING: 22 MR. ZEHNLE: 23 THE COURT: 24 MR. ZEHNLE: 25 All right. Thank Mr. Downing or Mr. Westling. We're going to have Mr. Zehnle now. All right. Thank you, Your Honor. Good afternoon, Your Honor. Good afternoon, Mr. Zehnle. Your Honor, in terms of the focus of the 3553 factors, I want to devote primarily the time to the Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 68 of 99 U.S. v. Manafort 66 1 sentencing disparity issue that Mr. Andres was just hitting on 2 last. 3 its filings versus what the Government has done with respect 4 to that, I think it's telling because if you look at the 5 numerous cases, not only with Your Honor, not only with other 6 judges in this district court, but judges across the country, 7 we've cited more than 20 different cases. Essentially, the cases that the defense has cited in 8 THE COURT: 9 (A pause in the proceedings.) 10 THE COURT: 11 MR. ZEHNLE: Excuse me a minute. Go ahead, Mr. Zehnle. Yes, Your Honor. What I was saying was 12 that we have cited more than 20 different cases in our 13 pleadings as the Court is aware. 14 recognized, these are cases that involve both tax and FBAR 15 charges. 16 And as the Court just Now, the Government seeks to distinguish this 17 particular case from all those other cases involving tax 18 charges and FBAR charges when this Court sat and heard the 19 same evidence that everyone else did, that the FBAR charge, 20 the one that he was convicted on in this court, was covered by 21 the tax charge in Count 3. 22 The false tax return was not only unreported income, 23 but also the failure to report the tax -- the foreign bank 24 accounts. 25 are relevant, Your Honor. All that evidence, all that -- all those charges They're all tax and tax related. Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 69 of 99 U.S. v. Manafort 67 1 And the Government seeks to then say, well, there's also this 2 bank fraud stuff out there, and that's what makes this 3 different. 4 But I would point the Court to something that the 5 Government said in its opening statement in this case that 6 ties this entire matter together as a tax and tax related 7 case. 8 of the transcript, "In 2015, the defendant's work in Ukraine 9 had dried up. Mr. Asonye was stating, and I quote, this is on page 24 He was no longer making millions and couldn't 10 support his lifestyle. Mr. Manafort was running out of cash 11 and to maintain that life he had become accustomed to, he 12 needed more of it. 13 loans on homes that he purchased and improved with the untaxed 14 income from his foreign banks." So he approached multiple banks for loans, 15 Your Honor, that's their words, not mine. They're 16 the ones who have tied this all into one theme of Mr. Manafort 17 has made a lot of money being an advisor overseas. 18 report that money. 19 accounts and that is the crux of this case. 20 just pointed out, the -- all of those cases that we cited in 21 this district, California, Illinois, Wisconsin, New York, New 22 Jersey, all those cases all involve similar circumstances of 23 tax avoidance, tax evasion, failing to file tax returns and 24 FBARs. 25 specifically tie into that because, in closing, the Government He did not That money was kept in foreign bank And as this Court And the two charges related to the bank fraud Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 70 of 99 U.S. v. Manafort 68 1 also refers back to, well, gee, when things got tight, he 2 basically tapped into money by getting mortgages on assets 3 that he had used untaxed proceeds to purchase. 4 together, Your Honor. 5 And it wasn't a smattering. So it all ties I mean, if you look at 6 the Government's filing, they basically put one paragraph on 7 it, which is telling in and of itself on that particular 8 sentencing factor. 9 reply and they still didn't really deal with it. 10 And then, you know, they actually filed a So I also wanted to make note of one other point 11 just with respect to the sentencing disparity issues. I think 12 Mr. Andres was talking about, well, some of these dealt with 13 pleas. Well, yes, Your Honor, some of them did deal with 14 pleas. The majority deal with pleas. 15 that most cases plead. 16 anymore. 17 where the defendant had actually gone to trial, and that 18 person, for example, in one of the cases we cite, Ashvin Desai 19 was convicted of hiding over 8 million. 20 range for him was 78 to 96 months and he was sentenced to 21 six months in prison and six months of home detention. 22 There's another one, Arvind Ahuja. This Court's well aware It's rare that cases go to trial But we did find and present to this Court cases And the guidelines That was more 23 than 8.5 million, Your Honor. The sentencing guidelines in 24 that case were 41 to 51. 25 probation and three months in home confinement. He was sentenced to three years of For the ones Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 71 of 99 U.S. v. Manafort 69 1 for which there were pleas or there were pleas and 2 cooperation, the majority of them are probation. 3 So I don't think it's fair for the Government to sit 4 there and try to distinguish away cases that involve taxes and 5 FBAR combined by saying, oh, gee, this is so different from 6 those. 7 It's not, Your Honor, as the Court correctly noted. Now, turning briefly to some of the other points 8 that Mr. Andres made, serious crimes. 9 you're -- you know, Mr. Manafort is going to speak to you in a 10 moment. 11 one is disputing that. 12 sitting at that table as a federal prosecutor and as a chief 13 of one of the criminal sections. 14 15 16 These are serious crimes. Of course, this -- THE COURT: We understand that. No Your Honor, for 14 years, I was And you're trying to redeem yourself now. MR. ZEHNLE: But I do -- Your Honor, I do have, I 17 think, a good deal of familiarity with tax cases and FBAR 18 cases and those kinds of things. 19 brought in this case that were tried before Your Honor are 20 quite similar, and they're serious, but they're very similar 21 to these other cases that we've actually directed you to. And these charges that were 22 In terms of -- it was interesting that the 23 Government did point out the Professor Horsky case that I know 24 this Court handled. 25 did -- it was $100 million, Your Honor. Yes, he did show up with a check and he Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 72 of 99 U.S. v. Manafort 70 1 One point I would like to make for the Court's 2 consideration, though, is Mr. Manafort and his team have been 3 working through forfeiture issues for many months now as part 4 of our negotiated plea with them. 5 there and say, well, gee, you haven't paid back the IRS yet 6 when you're still trying to sit there and give the Government, 7 you know, the property that you've agreed to forfeit. 8 9 And it's difficult to sit It's not like the IRS is going to go away. I mean, a lot of people would probably like that to happen, but it's 10 not going to happen. And so I just wanted to make that point, 11 that that's a little unfair to basically say, well, gee, you 12 know, you didn't show up, you know, you haven't made any 13 payments, et cetera, because he is working through his 14 agreement despite the Government's breach determination that 15 they've made based -- unilaterally on their good faith, 16 they've made that determination, we still continue to do that. 17 (A pause in the proceedings.) 18 MR. ZEHNLE: Oh, yeah. Your Honor, yeah, and as I 19 was talking to Mr. Downing, in terms of the deterrence issue, 20 this case, as you've pointed out, has probably gotten more 21 scrutiny than any other tax FBAR violation case I've ever 22 seen. 23 charges were -- 24 25 And whether it's because of the nature of how the THE COURT: Well, we know why. Come on. It's not relevant to my determination of an appropriate sentence. But Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 73 of 99 U.S. v. Manafort 71 1 we all know why there's this much interest. 2 MR. ZEHNLE: So let -- so if I may be just a little 3 more clear. I understand, Your Honor. 4 in terms of general deterrence, one of the things you always 5 focus on, if you're the Government or prosecutor, is getting 6 the word out and letting people know, look, this is a serious 7 crime. 8 THE COURT: 9 worry about that in this case. I'm just saying that You're quite right. We don't have to That's why I told that story 10 about -- even then, though, this -- it's not clear because 11 when I put -- had them -- the Government put up all those 12 signs, it didn't make any difference. 13 come. 14 Mules continued to Maybe they didn't read the signs. Deterrence is endlessly to debated by academics 15 based on empirical studies. It's a hard, hard issue. But 16 Congress has decided that I have to take it into account and I 17 do. 18 specific deterrence and general deterrence. 19 important factors for the Court to consider. 20 pointing out that there will be general deterrence here 21 because of the notoriety provided to this case. Mr. Andres has appropriately argued about special or 22 MR. ZEHNLE: 23 THE COURT: 24 that counts for you. 25 same thing. Both are And you're Correct, Your Honor. All right. Go on. I don't know how Mr. Evans, I think, would point out the He would say, you know, give him a life sentence Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 74 of 99 U.S. v. Manafort 72 1 so -- and we'll publish that. 2 pretty high. 3 MR. ZEHNLE: 4 extraordinarily high. 5 6 THE COURT: 19 to 24. 7 8 Actually the guidelines are Yes, Your Honor. 19 to 24 years. The guidelines are I believe that's right, It's about right, isn't it? MR. ZEHNLE: It was 19 and a half to 24 years, Your Honor. 9 THE COURT: 10 MR. ZEHNLE: Yes, go on. Okay. If -- and since I did reference 11 it a moment ago, Your Honor, as I did sit at that table for 12 many years, I can tell you because -- I don't want to repeat 13 myself from what we've put in the papers, but I can tell you 14 that when I was a chief, I would tell my younger prosecutors 15 in tax cases in particular, you know, if you received a 16 sentence of 18 months to 24 months of imprisonment in a tax 17 case, that's pretty good, because in terms of the gradation of 18 all the federal offenses, you know, under Title 26, under 19 Title 18, it's just an understanding that courts every day -- 20 you know, tax evasion is by no means jaywalking. 21 also not, you know, narcotics trafficking where people, you 22 know, have their lives ruined and people get killed in the 23 trade. 24 25 But it is And so you have to understand the courts are taking all these things into account, and that's why I make that Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 75 of 99 U.S. v. Manafort 73 1 statement when I was a chief of those sections. 2 of 18 to 24 months, the guidelines are showing 18 to 24 years. 3 It's just so disproportionate. 4 THE COURT: 5 MR. ZEHNLE: 6 Here, instead 19 to 24. 19.5 to be actual -- to be correct, 19.5 to 24 years, Your Honor. 7 And so the only other two things I want to make a 8 point of, because I do think the Court should be aware of it, 9 the 50 hours plus that my client spent with the Government, we 10 would have no problem -- and the Government, you know, if they 11 want to provide you all the 302's to see the cooperation that 12 he provided, we don't have the 302's -- 13 THE COURT: 14 MR. ZEHNLE: 15 I understand, Your Honor. But I'm just saying it's like, oh, well, they haven't proven it -- 16 17 I'm not interested in reading that. THE COURT: interested. 18 Now, there are people here who would be But I'm not one of them. MR. ZEHNLE: And the last thing I do want to point 19 out, Your Honor, because it did come out at trial and it came 20 up through their main cooperating witness, is that back in 21 2014, and the Court may recall that there was a meeting 22 between FBI agents and Mr. Manafort and Mr. Gates, and a 23 number of these entities and accounts were disclosed at that 24 time. 25 the Court considers, you know, all the 3553 factors, that it And so I just think that these are important facts as Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 76 of 99 U.S. v. Manafort 74 1 also pay specific attention to those. 2 THE COURT: All right. Mr. Manafort, this is now 3 your opportunity to address the Court and to say anything -- 4 and you may remain seated. 5 MR. MANAFORT: 6 THE COURT: Thank you, Your Honor. But speak up, please. And the reason 7 you may remain seated is because I understand that you have a 8 physical impairment at the moment that makes that very 9 painful. This is your opportunity to address the Court and to 10 say anything at all you wish to the Court by way of 11 extenuation, mitigation or, indeed, anything you think I 12 should know before sentence is imposed. 13 to say anything, but you have the opportunity to do so if you 14 wish to. 15 16 Do you wish to say anything? THE DEFENDANT: Thank you, Your Honor. Yes, I would. 17 18 You're not required THE COURT: All right. Please keep your voice up, sir. 19 THE DEFENDANT: The last two years, Your Honor, have 20 been the most difficult years for my family and I that we've 21 ever experienced. 22 THE COURT: I'm sorry. I'm an old man with bad 23 ears, so you're going to have to speak up a little louder than 24 that. 25 Do you have a microphone there for Mr. Manafort? Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 77 of 99 U.S. v. Manafort 75 1 THE DEFENDANT: 2 THE COURT: 3 THE DEFENDANT: I'll speak more loudly. All right. Go ahead, sir. The last two years have been the 4 most difficult that my family and I have ever experienced. 5 The person that I am or that I have been described as in 6 public is not someone I recognize. 7 humiliated and ashamed would be a gross understatement of this 8 characterization. 9 To say that I feel But the worse pain that I feel is the pain that I 10 know my family is feeling. 11 I've been most proud of being the protector and their role 12 model, and it pains me deeply that I have caused them this 13 suffering by the actions that have happened confront me here 14 today. 15 My whole life I have been proud -- What has been uplifting to me, I should say, 16 however, is the outpouring of support and affection that I 17 have received not just from my family and friends but from 18 total strangers. 19 their prayers is what has sustained me through these terrible 20 times. 21 The support and the incredible power of Having been separated from my family over the last 22 nine years -- nine months has been very hard. At a time when 23 I planned to be spending quality time giving back to my 24 family, I've had to rely upon them as my -- for support to get 25 me through this situation. I truly feel the bonds of their Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 78 of 99 U.S. v. Manafort 76 1 love and have been strengthened by it. 2 In the midst of this pain, I must tell you, Your 3 Honor, that I appreciate the fairness of the trial that you 4 have conducted. 5 frenzy atmosphere surrounding the trial. 6 affects me, and I know the kind of pressures it put on the 7 Court, and I truly do appreciate the fact that at least from 8 my perspective, I feel that you've bent over backwards to make 9 this to be a fair proceeding. 10 I know this has not been easy given the media I know how it I could tell you that I feel the punishment from 11 these proceedings already and know that it was my conduct that 12 brought me here. 13 seven months of home arrest have given me -- has affected my 14 physical and mental health. 15 financially is in shambles, and I feel the pain and shame of 16 these factors. Nine months of solitary confinement after My life professionally and 17 I say all of this to let the Court know that I will 18 never put myself in questionable circumstances in the future. 19 Sitting in solitary confinement, I've had much time to reflect 20 upon my life and my choices and the importance of family and 21 friends. 22 notoriety into a positive and show the world who I know I 23 really am and who is not who I've been depicted to be. 24 25 This reflection has created my intent to turn my With the power of prayer and God's guiding hand, I know that my family and I will grow stronger from this ordeal, Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 79 of 99 U.S. v. Manafort 77 1 and I recognize and acknowledge that it is an ordeal that I am 2 responsible for. 3 Again, I want to thank you for the fair trial. Your 4 wisdom and management of this courtroom has given me hope for 5 the judicial system, and I am ready for your decision, and I 6 ask your compassion. 7 THE COURT: 8 (No response.) 9 THE COURT: All right. All right. 10 then pronounce sentence. 11 ten minutes. Anything further? I'll take a brief recess and Court stands in recess. 12 (Recess.) 13 (Court proceedings resumed at 6:32 p.m.) 14 THE COURT: 15 All right. It will be Any reason why the Court should not now pronounce sentence, Mr. Andres? 16 MR. ANDRES: No, Your Honor. 17 THE COURT: 18 MR. DOWNING: 19 THE COURT: 20 Mr. Manafort, you stand convicted of the serious Mr. Downing? No, Your Honor. Mr. Manafort, you may remain seated. 21 crimes -- very serious crimes by a jury. 22 of five counts of failing to report. 23 carries a maximum term of imprisonment of three years. 24 25 You stand convicted Each of those counts You stand convicted of one count of failing to file a report of a foreign bank account that has a ten-year Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 80 of 99 U.S. v. Manafort 78 1 maximum, I believe -- five-year maximum, and then you stand 2 convicted of two bank fraud -- excuse me -- two bank fraud 3 counts, and each of those carries a maximum term of 4 imprisonment of 30 years. 5 The law requires that I consider a variety of 6 factors in imposing an appropriate sentence. 7 nature and circumstances of the offense. 8 government has argued and, I think, the defendant accepts or 9 concedes, they are serious crimes. 10 First, the And as the They are very serious crimes. 11 The essence of the tax fraud or failure to report 12 counts and FBAR counts is hiding money from the government so 13 that you don't have to pay taxes on it. 14 amount of money hidden resulted in a tax loss to the 15 government of 6 plus -- 6 and -- I've forgotten what the exact 16 figure was, 6.3 -- or something of that sort -- million 17 dollars. 18 money, a theft of money from everyone who pays their taxes. 19 If you don't pay your fair share, you're taking away from the 20 common pool of money that the government uses. 21 counts were appropriately grouped for tax -- or for guidelines 22 calculations. 23 And in this case, the And as I said earlier, in essence, that's a theft of So those So the nature and circumstances of the offense, I 24 think, are clear, and they're undeniably serious, as 25 Mr. Andres argued. They are serious offenses, and I don't Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 81 of 99 U.S. v. Manafort 79 1 think that the defense argues otherwise. 2 Next, the Court must take into account the history 3 and characteristics of the defendant. 4 Category I in criminal history; that is, he has no criminal 5 history. 6 here, Georgetown for both, and he's lived an otherwise 7 blameless life. 8 number of people, all of whom have written the Court about 9 him. 10 The defendant is a He is a graduate of a university and law school And he's also earned the admiration of a And you've received those letters as well, 11 Mr. Andres, I'm sure. 12 MR. ANDRES: 13 THE COURT: Yes, Your Honor. And I have reviewed those, and I have 14 taken those into account. 15 sentencing, a court must consider the entire individual, not 16 just the individual and his crime-committing activities. 17 And the law is very clear that in Mr. Manafort has engaged in lots of good things. 18 He's been a good father and husband, and he has been a good 19 friend to others and a generous person. 20 erase his criminal activity, but it is -- they are factors 21 that the Court must take into account. 22 Of course, that can't Next, the Court has to impose a sentence that 23 reflects the seriousness of these offenses and a sentence that 24 promotes respect for the law and that provides just punishment 25 for the offenses. Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 82 of 99 U.S. v. Manafort 80 1 And the Court must impose a sentence that 2 promotes -- or that provides adequate deterrence for the 3 defendant specifically and general deterrence as well. 4 I'll discuss that in a little greater detail. 5 The Court also has to take account of the 6 guidelines. 7 These guidelines are quite high. 8 that is from 19 to 24 years, roughly. 9 10 And They're not mandatory, but they're advisory. They provide for a sentence I think that sentencing range is excessive. think that's warranted in this case. 11 I don't It raises questions. The guidelines are important because they -- I began 12 sentencing people before there were guidelines, and the 13 variety of sentences that could be imposed was staggering. 14 mattered a lot whether you got Judge A or Judge B. 15 go home to probation or to jail for ten years depending on 16 whether it was Judge A or Judge B, and that was really not 17 right, and I think we all knew it wasn't right, and I 18 personally was glad when the guidelines came into effect. 19 It You could But as I lived under the guidelines initially and 20 they were mandatory, I came to conclude that they were not a 21 good idea as they stood, and ultimately, that changed. 22 And we should all remember who brought that about. 23 It was Justice Scalia in his opinions, which was a surprise to 24 some, I suppose. 25 advisory. Anyway, they're now not mandatory; they're Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 83 of 99 U.S. v. Manafort 81 1 The next factor is related to the guidelines. It's 2 a factor that says that the Court should impose a sentence 3 that does not involve an unwarranted disparity between the 4 sentence imposed on Mr. Manafort and the sentence imposed on 5 others convicted of essentially similar conduct. 6 help to avoid that. 7 Guidelines Well, here we have a very curious situation. We 8 have a violation that for years the Department of Justice, I 9 think for sensible reasons, argued that the guidelines should 10 be 2T rather than 2S, which was a higher guideline for FBAR 11 and tax violations. 12 Then in December of 2017, the government changed its 13 view, I think, again, for understandable reasons and for 14 reasons that were grounded in the language of the guidelines, 15 to say 2T -- I beg your pardon -- 2S for FBAR violations. 16 But over the years, there has been a remarkable 17 trend in sentences imposed for this kind of conduct. The 18 sentences have been remarkably light, and I need to take that 19 into account. It is important that the -- 20 (A pause in the proceedings.) 21 THE COURT: There's been a steady history of the 22 imposition of sentences under FBAR and tax violations, and I 23 want to review that because it furnished the context in which 24 I made my ultimate decision. 25 The guidelines, to most people, would suggest that a sentence And let me be clear about that. Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 84 of 99 U.S. v. Manafort 82 1 is somehow an arithmetic calculation, it is not. It is a 2 judgment, and that's an important factor to keep in mind. 3 guidelines are judgments. The 4 Now, when the guidelines were originally done, what 5 they did is collect historical evidence of sentences and take 6 two standard deviations from the mean of those sentences as 7 the guideline range. 8 information about certain kinds of offenses, so they couldn't 9 do that anymore. 10 Well, they soon ran out of historical And indeed, for many offenses today for which we 11 have guidelines, there isn't any empirical or historical data. 12 They are judgments by the Sentencing Commission. 13 end, it's a district judge who has to make a sentence -- has 14 to make a judgment about an appropriate sentence. 15 And in the But it is important to avoid unwarranted 16 disparities. 17 justice that like cases should be treated alike, and if 18 they're treated differently, there ought to be a good reason 19 for it. 20 Why? Because it's a fundamental principle of Well, there are a number of cases of offshore hiding 21 of money, and some of them are summarized by the defendant in 22 its brief. 23 them. 24 defendant who hid more than $200 million in offshore accounts, 25 and there was about an $18 million loss to the government in Some of them I remember because I presided over Horsky was the most prominent one. That was a Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 85 of 99 U.S. v. Manafort 83 1 tax revenues. 2 loss in this case. 3 Now, that's roughly three times the amount the But, Mr. Horsky received from me a sentence of seven 4 months followed by a period of supervised release. 5 that was the right sentence or not is subject to reasonable 6 people differ, as is true with any sentence that I impose. 7 don't expect the sentence I'm about to announce to meet with 8 everyone's approval. 9 impose a just sentence, and I have to satisfy myself about it. 10 Whether I don't sit to do it that way. I I sit to Now, there's another case, United States against 11 Kim. 12 sentencing because I recused myself. 13 because -- I don't know if this is in the record, and you-all 14 didn't know it -- but I recused myself because Mr. Kim made a 15 very substantial contribution to a university department in 16 which I served as the -- as a -- on the advisory committee, 17 and so I didn't think it was proper for me to sit in that 18 case, and Judge Brinkema didn't know that either. 19 20 21 That was my case, but ultimately, Judge Brinkema did the I recused myself But that was a case in which he failed to report $28 million in income hidden in a Swiss bank account. Now, Mr. Andres correctly points out that all these 22 cases have little differences to them. For example, you would 23 say, well, in the Kim case, there weren't any bank fraud. 24 That's true. 25 differences between Kim and Manafort, all of which I have to And in the Kim case, there were other Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 86 of 99 U.S. v. Manafort 84 1 take into account, but I still have to consider overall 2 whether there are disparities. 3 Now, there were others, other cases. I think Horsky 4 was Mr. -- I think it was Mr. Westling who argued. 5 the Desai case and the Ahuja case. 6 listed in his brief, and he's correct. 7 were rather strange. 8 9 He raised There are many others Some of them, I think, I think Ms. Curran (ph) was the elderly woman. She was the elderly woman, and she didn't disclose $47 million in 10 a Swiss bank account, so there was a $21 million FBAR penalty, 11 and she was sentenced to five seconds of probation, 12 astonishingly. 13 14 15 I think that may be a record. And there are many others in here, and the sentences range from a few months to probation and other things. All of these cases suggest to me that to impose a 16 sentence of 19 to 24 years on Mr. Manafort would be clearly an 17 unwarranted disparity. The conduct is slightly different, as 18 Mr. Andres points out. There are bank fraud counts here, as 19 there weren't in most of these other cases. 20 But in the end, I don't think the guidelines range 21 is at all appropriate given the provisions of 3553 and 22 especially the history. 23 time, the Department of Justice used a different guideline 24 from the one it seeks to enforce today, but I think the 25 Department of Justice, the Government is correct in its There's no doubt that for a long Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 87 of 99 U.S. v. Manafort 85 1 2 argument here that 2S not 2T applies, and I've so ruled. So, deterrence. Mr. Andres argues that he needs to 3 be deterred. 4 event, I think what I intend to do will deter him. 5 more important, in my view, that this case serve as a beacon 6 to warn others not to engage in hiding income overseas to 7 avoid paying taxes here, because there are serious 8 consequences. 9 I'm not so sure I agree with that, but in any It's far As Mr. Andres and Mr. Downing both know since 10 they've read all my sentencing proceedings, I tell all 11 defendants life is making choices, Mr. Manafort, and then 12 living with the choices you make. 13 you live or to whom you're born or anything of that sort or 14 whether you're born with handicaps or talents, but you do 15 determine how you respond to all of that, and you made choices 16 to engage in criminal conduct, and there will be consequences 17 for those decisions. 18 You don't determine where I listened carefully to your allocution, and I don't 19 have any doubt that what you said was genuine, but I was 20 surprised that I did not hear you express regret for engaging 21 in wrongful conduct. 22 really, really regret not doing what I knew the law required. 23 In other words, you didn't say, I Now, that doesn't make any difference to the 24 judgment that I'm about to make, Mr. Manafort, that you didn't 25 say that, but I hope you will reflect on that and that your Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 88 of 99 U.S. v. Manafort 86 1 regret will be that you didn't comply with the law. 2 should be your true regret, and you should have remorse for 3 that, and I certainly recommend that you do it in the District 4 of Columbia, because you'll have that opportunity. 5 That So the main factor that I think is operative here on 6 3553 is I need to impose a sentence that reflects the 7 seriousness of the offense, promotes respect for the law, 8 provides just punishment, and does not involve -- the other 9 important thing, it does not involve unwarranted disparities. 10 The government cannot sweep away the history of all 11 these previous sentences. 12 having advocated the application of 2T rather than 2S to these 13 types of offenses. 14 It cannot sweep away the history of Now, so we are now at the end where I have to 15 exercise this judgment. 16 calculation. 17 all the factors that you have raised in your counsel's briefs 18 and the government has raised in its briefs. 19 And I repeat, it's not a mathematical It is a judgment, but it is a judgment guided by Now, let me mention one other thing. I was curious 20 about the Sentencing Commission's experience or statistics on 21 2S1.3. 22 Very few cases, but of those cases, the substantial majority 23 all ended up with sentences below the guideline range. 24 exclude from that the substantial assistance ones. 25 majority of all the rest of them, which doesn't surprise me. Very, very few cases from 19- -- or from 2008 to 2017. And I Still a Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 89 of 99 U.S. v. Manafort 87 1 Now, to pronounce sentence. It is the judgment of 2 this Court, Mr. Manafort, that you be sentenced, that you be 3 committed to the custody of Bureau of Prisons for the 4 following terms: 5 With respect to Counts 1, 2, 3, 4, and 5, those 6 counts are counts of subscribing to false United States 7 individual income tax returns for -- those are counts which 8 involve a maximum term of three years. 9 impose a sentence, that is, I commit you to the custody of For those counts, I 10 Bureau of Prisons for a period of 24 months for Count 1, 24 11 months for Count 2, 24 months for Count 3, 24 months for Count 12 4, and 24 months for Count 5, all of which is to be served 13 concurrently. 14 15 Now, with respect to Count 11 or 12 -- which one is it? I've forgotten the number. 16 MR. ANDRES: 17 THE COURT: 18 19 20 12, Your Honor. 12. That's the failure to file reports of foreign income -- foreign bank and financial accounts. The maximum penalty for that is, Mr. Asonye, Mr. Andres, I think it's ten years? 21 MR. ANDRES: 22 THE COURT: Five years, Your Honor. Five years. All right. For that, it is 23 the judgment of this Court -- it's really the same offense as 24 the others, so I'm going to impose a sentence of 30 months on 25 that, to run concurrently to the 24-month sentences imposed on Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 90 of 99 U.S. v. Manafort 88 1 Counts 1 through 5. 2 Then we come to Counts 27 and 28, the bank fraud. 3 MR. ANDRES: 4 THE COURT: 5 MR. ANDRES: 6 THE COURT: 25 and 27, Your Honor. 25 and -27. And 27. Now, those counts for bank 7 fraud have a maximum of 30 years, as I recall; is that 8 correct? 9 10 MR. ANDRES: Correct. Yes, Your Honor. THE COURT: All right. And I take into account a 11 number of factors there, but it is the judgment of this Court 12 that you be committed to the custody of the Bureau of Prisons 13 for a period of 47 months. 14 concurrently with the other terms. 15 sentence of 47 months. 16 That term is to be served So you have a total I took into account, Mr. Manafort, your personal 17 history and characteristics. I think I might have been a 18 little more impressed if you'd been able to resolve your IRS 19 and other problems, but I hope you will still do that. 20 So I have imposed a sentence -- did I say 47? 21 MR. ANDRES: 22 THE COURT: 23 other words, that's concurrent. 24 25 Yes, Your Honor. Yes, 47 months, and that's total; in It's more severe than most of the cases cited by the defendant, significantly more. I've taken into account all of Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 91 of 99 U.S. v. Manafort 89 1 the criminal conduct that's been found by the jury and 2 admitted by you, Mr. Manafort, and I'm convinced that's a just 3 sentence for that conduct. 4 The government didn't argue for a guideline 5 sentence, which I thought was a good thing. 6 concluded that it was vindictive, because clearly the 7 guidelines were way out of whack on this, as the history of 8 the sentences in this area show. 9 Then I would have I'm going to require that he pay a $100 special 10 assessment for each count, and that total can easily be added 11 up. 12 I'm going to require that he serve -- I think the 13 supervised release period for the tax counts is one year; is 14 that correct? 15 THE PROBATION: 16 THE COURT: Yes, Your Honor. So he'll get one year of supervised 17 release for each of the first five counts, and that term is to 18 run concurrently. 19 to follow any period of incarceration of three years with 20 respect to the FBAR count. 21 years. 22 those terms are to run concurrently. 23 He will get a period of supervised release That provides for at least three And three years for the two bank fraud counts. All of Now, as a special condition of his supervised 24 release, he is to comply with the terms of this restitution 25 order. Now, the restitution order isn't in a final form. I'm Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 92 of 99 U.S. v. Manafort 90 1 going to waive interest, and the amount of $25,000,815 is due 2 and payable immediately. 3 4 5 The paragraph 3 that troubled me, can you read to me now how it reads? MR. ASONYE: It reads: "The amount of restitution 6 paid to any entity shall not exceed the entity's total loss 7 from the offenses of conviction. 8 under an order of restitution shall be reduced by an amount 9 later recovered for the same loss by the victim in any federal 10 11 12 Any amount paid to an entity or state civil proceeding." THE COURT: All right. You'll have to submit a new restitution order with that language in it. 13 I think that language is appropriate, Mr. Westling. 14 MR. WESTLING: 15 THE COURT: That's correct, Your Honor. Now, I take your point you don't want to 16 sign it, and that's perfectly appropriate. 17 do it, but I want you to be able to say to me why you don't 18 think that -- I thought the language I was originally 19 presented with was clearly not appropriate, but this one does 20 sound appropriate. 21 22 In other words, I don't want your client paying in restitution more than these people really lose. 23 MR. WESTLING: 24 THE COURT: 25 You don't need to Correct, Your Honor. And the restitution order also doesn't show what I want it to show, Mr. Asonye, and that is that Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 93 of 99 U.S. v. Manafort 91 1 first I want him to pay restitution to the United States, not 2 to these banks. 3 MR. ASONYE: Your Honor, I believe by law that the 4 banks are due, I think it's under 3664(i), the banks must be 5 paid first before the United States. 6 7 THE COURT: rest of us. 8 9 That's a mistake because that cheats the All right. But I wanted to -- well, I'm not going to impose interest. And I'm going to say that he's to pay it in $100 a 10 month or 25 percent of his net income 60 days after release 11 from any period of confinement. 12 Now, we come to the issue of a fine. 13 Is there a request -- first of all, Mr. Downing, is 14 there a request for a designation? 15 MR. DOWNING: 16 THE COURT: 17 18 19 20 21 22 23 Yes, Your Honor. In this area so that he may be near his family? MR. DOWNING: We would request a designation to the federal prison camp at Cumberland, Maryland. THE COURT: recommendation. All right. I will make that It's consistent with his security needs. Can you-all wait until I've recessed? In the future, please do so. 24 All right. Go on. 25 MR. DOWNING: Your Honor, one other issue we'd like Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 94 of 99 U.S. v. Manafort 92 1 to raise, and I don't know that we need to raise it right now, 2 but it has to do with whether or not you can order this 3 sentence to be concurrently served with -- 4 THE COURT: I can't, but she can. 5 MR. DOWNING: 6 THE COURT: Thank you, Your Honor. I don't believe I can. If you find in 7 the law that I'm incorrect, you can bring that to my 8 attention. 9 MR. DOWNING: 10 THE COURT: Thank you, Your Honor. But I think it is entirely up to her 11 whether any sentence she imposes is to run concurrent to this 12 sentence. 13 incorrect, that I have that discretion or that power, you 14 may -- and that will be after she completes her sentencing -- 15 then you can return. It's up to her. But if you find that I'm 16 Anything else, Mr. Downing? 17 MR. DOWNING: 18 THE COURT: 19 MR. ANDRES: 20 housekeeping issues, Your Honor. 21 MR. ASONYE: 22 Mr. Andres? Mr. Asonye just has some minor Your Honor, two issues: the issue of the fine -- of the amount of the fine. 23 THE COURT: 24 MR. ASONYE: 25 No, Your Honor. All right. And also the government would request three additional conditions of supervised release when it's Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 95 of 99 U.S. v. Manafort 93 1 appropriate, Your Honor. 2 3 THE COURT: Well, go ahead and tell me what they are. 4 MR. ASONYE: Sure. Well, actually, I believe the 5 Court covered the first one, but explicitly to pay restitution 6 of $6,164,032 to the IRS in the supervised release. 7 THE COURT: 8 MR. ASONYE: 9 10 Yes, it is, but, Your Honor, we always ask for it when it's paid to the IRS as a condition of supervised release. 11 12 That's in the 28 million. THE COURT: ask for it? Well, I should do it because you always I'm not persuaded. 13 What's your next one? 14 MR. ASONYE: Again, in white collar cases, Your 15 Honor, the government typically asks that a condition of 16 supervised release, that the defendant not open any new credit 17 lines without the approval of the Court or probation. 18 19 THE COURT: Yes, I typically do that. I'll add that condition. 20 What else. 21 MR. ASONYE: And finally, that the defendant not 22 engage in any transactions above $10,000 without the approval 23 of the Court or probation. 24 THE COURT: Any objection to that, Mr. Downing? 25 MR. WESTLING: We do object to that, Your Honor. I Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 96 of 99 U.S. v. Manafort 94 1 don't see there's a basis here if a credit condition is 2 sufficient. 3 basis to the probation officer as part of any supervised 4 release term. 5 He'll have to report his financials on a regular I think it's excessive. THE COURT: I will require that he comply with any 6 request by the probation officer for financial information. 7 That's what I will require. 8 MR. ASONYE: 9 THE COURT: 10 Thank you, Your Honor. All right. Anything else, Mr. Downing? So we have only the issue of a fine. 11 MR. DOWNING: 12 THE COURT: Nothing else, Your Honor. I would impose a significant fine in 13 this case if it were not for the fact that there is a 14 $24 million restitution. 15 Now, as Mr. Andres pointed out, it may not come to 16 24 million. It may be -- or Mr. Asonye, I don't remember 17 which, but one of you pointed out, correctly, I think, that 18 ultimately his restitution may not be 24 million. 19 less. 20 be less. It may be It's never going to be less than 6 million, but it may 21 Is that right, Mr. Asonye? 22 MR. ASONYE: 23 THE COURT: That's correct, Your Honor. But 6 million is still a pretty 24 significant amount of restitution, and I often do not impose a 25 punitive fine where there is restitution in that amount. But Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 97 of 99 U.S. v. Manafort 95 1 you also point out that he has two very substantial assets, 2 two homes. 3 4 What I'm going to do in this case -- what is the guideline range on fines? 5 THE PROBATION: 6 THE COURT: 7 THE PROBATION: 8 THE COURT: 9 10 11 Your Honor, the low end is $50,000. What's the upper range? 25 million. $50,000 fine. If I had more information, it might be more, but it's punitive, and I think what I've done is sufficiently punitive. If anybody in this courtroom doesn't think so, go 12 and spend a day in the jail or penitentiary of the federal 13 government. 14 but he will receive credit for time already served. 15 Spend a week there. He has to spend 47 months, Now, I want to remove any doubt about that. So what 16 I'm going to do is enter an order nunc pro tunc that -- that 17 his bond violation occurred, because there was an adjudication 18 of that in another forum, but I'm going to make that nunc pro 19 tunc so he should receive credit for that. 20 that is that if he had been incarcerated by both Judge Jackson 21 and by this Court, he would still receive credit for both, and 22 I want him to receive credit for the nine months. 23 And the reason for It may be a matter of some interest, Mr. Downing, 24 for you to tell everybody here, I know I've received 25 information about it, why has Mr. Manafort been in isolation? Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 98 of 99 U.S. v. Manafort 96 1 MR. DOWNING: Your Honor, with respect to the 2 Marshals Service and the local sheriff's office that are 3 maintaining Mr. Manafort -- 4 5 6 THE COURT: So they do it because they want to protect his personal safety? MR. DOWNING: Correct, from the general population. 7 It's purely a safety issue because the thought is that if 8 Mr. Manafort would be in the general population, that there 9 are many folks out there that would want to do harm or 10 11 violence to him. THE COURT: Yes. And I will point out that I 12 received a lot of nutty communications which I have neither 13 read nor kept. 14 Maybe they're the authors. That won't surprise anybody in the courtroom. I don't know. I don't care. 15 Anything further today, Mr. Andres? 16 MR. ANDRES: 17 THE COURT: 18 MR. DOWNING: 19 THE COURT: 20 cooperation. No, Your Honor. Thank you very much. Mr. Downing? Nothing further, Your Honor. All right. I thank counsel for your Court stands in recess. 21 22 (Proceedings adjourned at 7:08 p.m.) 23 24 25 Tonia M. Harris OCR-USDC/EDVA 703-646-1438 EASTERN DISTRICT OF VIRGINIA Case 1:17-cr-00201-ABJ Document 544 Filed 03/11/19 Page 99 of 99 1 CERTIFICATE OF REPORTER 2 3 I, Tonia Harris, an Official Court Reporter for 4 the Eastern District of Virginia, do hereby certify that I 5 reported by machine shorthand, in my official capacity, the 6 proceedings had and testimony adduced upon the Sentencing 7 hearing in the case of the UNITED STATES OF AMERICA versus 8 PAUL J. MANAFORT, JR., Criminal Action No. 1:18-CR-83, in 9 said court on the 7th day of March, 2019. 10 I further certify that the foregoing 97 pages 11 constitute the official transcript of said proceedings, as 12 taken from my machine shorthand notes, my computer realtime 13 display, together with the backup tape recording of said 14 proceedings to the best of my ability. 15 16 In witness whereof, I have hereto subscribed my name, this March 7, 2019. 17 18 19 20 21 22 ______________________________ Tonia M. Harris, RPR Official Court Reporter 23 24 25 97