How a local Brooklyn blogger helped uncover Manafort's alleged money laundering
'It pays to be involved in your own community, you know?'
This story was originally broadcast on November 4, 2017.
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 scheme, let 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," Kelly said. "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.
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.
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 said that the brownstone stood out from the other properties on the street.
"Renovation had started and then stopped," she recalled. "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."
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 said.
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 said 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," she said. "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 against the brownstone, which had been purchased four years earlier for roughly $3 million.
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'," she explained. "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 said. "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 said. "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."
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 said. "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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