DOUBLE SHOT

Mueller Probe Appears to Hit Democratic Powerhouses, Too

The indictments issued by special counsel Robert Mueller are bad news for Team Trump—and, it seems, for some of Washington’s best-connected Democrats.

The indictment of former Trump campaign boss Paul Manafort is likely causing bipartisan headaches. While it alleges that President Donald Trump’s former campaign chairman was a tax-dodging money-launderer in cahoots with an authoritarian Ukrainian regime, it also hints at a potential legal mess for one of Washington’s most powerful Democratic dynasties: the Podestas.

The indictment describes a cozy, coordinated relationship between Manafort, Ukraine’s Putin-friendly president Viktor Yanukovych, and two unnamed Washington lobbying firms, beginning in 2012. Lobbying disclosure forms show that the Podesta Group and Mercury LLC, two powerful Washington firms, started working alongside Manafort that year, and with the European Centre for Modern Ukraine –– a group the indictment describes as a cut-out for the Yanukovych government.

The AP reported in August that Manafort directed The Podesta Group and Mercury LLC as part of a “covert influence campaign.”

Multiple lobbyists tell The Daily Beast they are confident that the Podesta Group and Mercury LLC are the two firms the indictment refers to. NBC News quotes three sources with knowledge of the investigation who drew similar conclusions.

“I’m 99.9 percent sure that’s who it is,” said one longtime Washington attorney and lobbyist. “Those are the two firms who did this work.”

“Manafort and Tony [Podesta] were inseparable and driving the same train,” added a person familiar with the Mueller probe.

Tony Podesta was a major fundraiser for Hillary Clinton’s presidential campaign. His brother John, one of the most powerful Democrats in Washington, chaired that campaign. Together, they founded the Podesta Group.

As The Daily Beast noted earlier this year, the company connects foreign foreign government clients —including those with miserable human rights records—with D.C. power brokers. The Podesta Group has represented the governments of Vietnam, Azerbaijan and South Sudan.

Neither the Podesta Group nor Mercury LLC responded to multiple requests for comment. The Washington Post and NBC News reported over the summer that Mueller had subpoenaed those two firms regarding work they did with Manafort. And on Monday, Politico reported that Tony Podesta will step down as head of the firm.

The indictment, which was unsealed on Monday, lays out in detail the work that two lobbying firms –– presumably the Podesta Group and Mercury LLC –– did with Manafort.

It describes the allegedly unlawful lobbying work Manafort and his business partner, Rick Gates, did on behalf of a pro-Putin Ukrainian political party. The indictment says that Manafort and Gates worked for Viktor Yanukovych, his pro-Russia Party of Regions, and the Ukrainian government.

“As part of the scheme, in February 2012, MANAFORT and GATES solicited two Washington, D.C., firms (Company A and Company B) to lobby in the United States on behalf of Yanukovych, the Party of Regions, and the Government of Ukraine.”

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The indictment then indicates that Company A and Company B knew what they were doing.

“GATES wrote to Company A that it would be ‘representing the Government of Ukraine in [Washington,] DC’” the indictment continues.

And it says Manafort communicated about the work with Yanukovych, and that Gates shared Yanukovych’s directions with Company A and Company B. It also said Gates told those two companies to write assess their lobbying work that Manafort could then share with the “President” –– presumably meaning Yanukovych, who was Ukraine’s president at the time.

The indictment also said that Manafort and Gates arranged for the European Centre for a Modern Ukraine “to be the nominal client” of the two lobbying firms, and adds that it was actually controlled by Yanukovych and his allies.

As The Daily Beast detailed in August, The Podesta Group in 2012 started working for the Centre. The Podesta Group claimed its client was a benign non-governmental organization, not a foreign strongman or his domestic henchmen.

But the indictment says that the two lobbying companies were paid by offshore accounts associated with Manafort and Gates –– and not by the Centre.

Then the indictment details the coordination between Manafort, Gates, and the two unnamed companies: They had weekly phone calls and frequent emails; the companies gave them detailed reports on their work; Manafort and Gates kept Yanukovych up to speed on the companies’ lobbying; “both congratulated and reprimanded Company A and Company B on their lobbying work;” and paid them more than $2 million.

As part of their work for the Centre, the Podesta Group and Mercury LLC defended Ukraine’s 2012 elections and tried to persuade Washington power-brokers that Yanukovych would move the country closer to the U.S. and further away from Putin. To make that case, the Podesta Group distributed literature quoting close Putin allies –– but without giving readers that context.

Both the Podesta Group and Mercury LLC neglected to register with the Justice Department when they started working with Manafort for Yanukovych. This indictment suggests they should have known better.

“It certainly means they need to be lawyering up,” said the lobbyist, “because they are material witnesses.”

The indictment also suggests that Manafort secretly paid the high-powered law firm Skadden Arps $4 million for a report that whitewashed a politically charged prosecution.

“Manafort and Gates also lobbied in connection with the roll out of a report concerning the Tymoshenko trial commissioned by the Government of Ukraine. Manafort and Gates used one of their offshore accounts to funnel $4 million to pay secretly for the report,” the indictment says.

Though the indictment doesn’t name the firm, it appears to be Skadden Arps. Manafort had enlisted Skadden back then to look into the Yanukovych government’s prosecution of political rival, the ex-Ukrainian prime minister Yulia Tymoshenko.

According to a subsequent and since-dismissed lawsuit Tymoshenko filed in the U.S., as well as documents recovered in Ukraine after Yanukovych fled to Russia in 2014, Skadden only received declared payments of $13,000.

Tymoshenko’s legal team found that figure suspect, since Skadden Arps had multiple lawyers engaged in international travel for work that took over a month. They estimated that the Tymoshenko report ought to have been billed at $2 million.

“Based on the indictment, if it is referring to payments made to Skadden Arps, and if those payments are described as being circuitously made, then I am astonished such a major reputable law firm would have received payments in that manner,” said Kenneth McCallion, one of Tymoshenko’s lawyers.

One of the Skadden attorneys involved, according to documents recovered in 2014, was Greg Craig, Barack Obama’s first White House counsel. Craig enlisted Manafort’s “help” in receiving access to a relevant Ukrainian government office. Another Skadden attorney enlisted, per the Tymoshenko lawsuit, was Cliff Sloan, Obama’s State Department envoy for closing the Guantanamo Bay detention center.

Neither Craig, Sloan, nor another Skadden representative immediately replied to a request for comment on the alleged $4 million payment.