Friday November 03, 2017

How a local Brooklyn blogger helped uncover Manafort's alleged money laundering

The Manafort-owned property at 377 Union St, nestled amidst a row of historic brownstones in the Carroll Gardens neighbourhood of Brooklyn, New York.

The Manafort-owned property at 377 Union St, nestled amidst a row of historic brownstones in the Carroll Gardens neighbourhood of Brooklyn, New York. (Katia Kelly)

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When Katia Kelly first noticed that renovations had stalled at a brownstone in her Brooklyn neighbourhood, she had no idea that she'd stumbled upon evidence of an alleged multimillion-dollar money-laundering schemelet alone one involving the former campaign manager for U.S. President Donald Trump.

"It was a lovely February day, I was out with my camera and just happened to see this house on Union Street, which has rows of beautiful, well-preserved, historic brownstones," says Kelly. "And this one in particular just looked really, really unkempt."

Her curiosity piqued, Kelly decided to do some digging. Those instincts turned out to be well-placed.

Trump Russia Probe

Paul Manafort accompanied by his lawyer Kevin Downing, right, arrives at U.S. Federal Court, in Washington, Thursday, Nov. 2, 2017. (Jose Luis Magana/Associated Press)

The shabby brownstone belonged to former top Trump campaign official Paul Manafort — and it had an unusual financial history, including several mortgages worth millions of dollars more than the value of the home.

Katia Kelly

Katia Kelly, author of the Brooklyn blog "Pardon Me for Asking." (Max Kelly)

When Kelly wrote about her findings in a blog post, the story made national headlines, and the property was back in the news again this week.

On Monday, the brownstone at 377 Union St. was named as one of the properties in the high-profile indictment against  Manafort, allegedly part of a money-laundering scheme worth $75 million US.

The indictment alleges that Manafort and his business associate, Rick Gates, laundered money through multiple U.S. and foreign entities to hide payments from authorities in the U.S.

When Kelly stumbled upon the property at 377 Union St. in February, few knew how significant it would become.

                                

The property at 377 Union

Kelly says that the brownstone stood out from the other properties on the street.

"Renovation had started and then stopped," she recalls. "There was a big chain in front of a sheet of plywood that was over the front door. There were broken windows."

"I was surprised that a contractor would leave it in such a condition."  - Brooklyn blogger Katia Kelly

The house didn't appear to be in a state of active construction.

"It was the middle of the week, so I was surprised that a contractor would leave it in such a condition. There was lots of trash in the front yard, and like I said, the whole house just looked unkempt."

Kelly made a mental note for her blog, and was walking away from the property when she ran into a resident of Union Street.

"I walked a little bit further and one of the residents on Union Street saw me and said, 'Do you want a scoop?' And I mean, I thought it was kind of funny; and I said, 'sure'."

"She said, 'Guess who lives on this block?' And you know, honestly, I thought that she was going to say maybe a movie star or something like that. And I was really surprised when she said Paul Manafort."

"'The Paul Manafort?' I couldn't believe it."

377 Union St - Stop Work order

Katia Kelly spotted this 'stop work' order, dated Jan. 31, 2017, outside the property at 377 Union St. (Katia Kelly)

                       

Following the paper trail

Kelly immediately got to work verifying the neighbour's tip.

Once she had proof that the brownstone did indeed belong to Trump's former campaign manager, she started digging into the property's history.

"I went home and I spent a lot of time in front of my computer ... looking at New York City records, which then led me to the finances," she says.

"You know, someone as powerful as Paul Manafort — I thought, 'why would he need to go and take all that extra cash to buy a property that really was not worth as much as the mortgages?'" - Brooklyn blogger Katia Kelly

It didn't take her long to notice some unusual activity associated with the property.

Kelly says the first red flag went up when she noticed that Manafort had secured several loans on the property that far exceeded the value of the house.

"That kind of raised a couple of issues," Kelly says. "You know, someone as powerful as Paul Manafort, I thought, 'why would he need to go and take all that extra cash to buy a property that really was not worth as much as the mortgages?'"

Reporting by Kelly and others revealed that in January Manafort had borrowed nearly $7 million on the brownstone, which had been purchased four years earlier for roughly $3 million.

According to WNYC, the loans came from a bank run by Stephen Calk, who was named to Trump's economic advisory panel. The loans were dated Jan. 17, 2017, just a few days prior to Trump's inauguration.

377 Union St - Construction 2

On a neighbourhood stroll, Kelly immediately noticed the signs of stopped construction outside the property. (Katia Kelly)

           

A local blog goes international

Kelly knew her findings were important.

Still, she sat on the information for at least 24 hours before she published it online. She also consulted her husband and two grown children for advice about how to handle the information.

"Nobody knows your neighbourhood as well as you do." - Brooklyn blogger Katia Kelly

"I said, 'Gee, you know, I came across something here and I'm not quite sure what to do with it'," Kelly explains. "And they encouraged me and said, 'Well, you know, you don't know what this all means, but I think it's important that you should put it out there'."

So Kelly hit 'publish' and the results were remarkable.

"It just kind of exploded," she says. "Other media outlets, three or four days later, came across it and posted about it. So for at least two or three weeks my site meter was spiking."

"It pays to be involved in your own community, you know?" she says. "Nobody knows your neighbourhood as well as you do. And things that happened with the Manafort investment only can happen when people really don't care and don't look into what's happening next door to them."

377 Union St

A front view of the Manafort-owned property at 377 Union St. in February 2017. (Katia Kelly)

                 

Opening the door to scrutiny

Kelly's research caught the eye of two local lawyers, Matt Termine and Julian Russo, who started their own investigative blog called "377 Union."

The pair spent hours digging through public records and found various unusual financial transactions involving the brownstone, in addition to several other Manafort-owned properties.

The story was eventually picked up by mainstream media outlets including The New Yorker and WNYC.

"Obviously my little part in this — it's small," Kelly says. "But I like to think that at least it showed people in the neighbourhood, and maybe people in Washington, and people doing the investigation that real estate was being used to launder money."

"I'm awfully proud of my tiny little part that I played."


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