“It’s a messy legal situation,” said Margaret Love, who served as pardon attorney under Presidents George H.W. Bush and Bill Clinton.
DOJ conceded in federal court submissions Friday that Trump’s Dec. 23 pardon of Manafort has complicated legal proceedings where a Chicago bank and a secretive Nevada company are challenging the feds’ efforts to sell three multimillion-dollar homes owned by Manafort or related companies.
“The Manafort Pardon raises legal issues and policy considerations and a review of case law that the United States must consider,” government attorneys wrote in one filing.
“Given the limited case law regarding the effects of a pardon on ancillary proceedings under the modern statutory framework for forfeiture, the United States seeks additional time for review and coordination across the Department of Justice,” DOJ attorneys added in another submission.
Since 2018, lawyers for the Federal Savings Bank of Chicago and for Nevada-based Woodlawn LLC have been seeking court orders protecting their financial interests in mortgages on Manafort properties.
The Justice Department hasn’t definitively opposed those requests, but has said the firm and the bank need to provide more information before their claims can be addressed. DOJ lawyers have said the bank — which loaned Manafort $16 million — may have had knowledge or should have known of Manafort’s illicit activities.
Government attorneys have suggested the circumstances of the $1 million Woodlawn loan, issued by an unidentified California man two months before Manafort’s indictment — are suspicious.
However, in a new court filing Sunday, the bank’s lawyers told U.S. District Court Judge Amy Berman Jackson that Trump’s pardon of Manafort means the forfeiture cases should be abandoned immediately, allowing the bank to foreclose on its loan.
“It is hornbook law that a pardon disposes of all penalties, including forfeiture, imposed by a criminal conviction,” wrote Seetha Ramachandran of law firm Proskauer Rose. “It is astounding that the Government resists this well-established proposition and asks this Court for 44 days to grapple with it — in addition to the over three years it had to consider … a pardon’s effect.”
Manafort had served almost two years of his seven-and-a-half-year prison term before he was released to house arrest in May during a wave of early releases linked to the coronavirus pandemic. Trump’s pardon wiped out the rest of Manafort’s sentence and the legal effect of his 2018 convictions on charges including filing false tax returns, failing to report offshore bank accounts, bank fraud, failing to register as a foreign agent, money laundering and witness tampering.
The president’s grant of clemency also specifically said he was nullifying the $11 million in forfeiture and more than $31 million in restitution ordered in connection with Manafort’s convictions.
That language led to speculation that Manafort could try to unwind the portion of his plea deal that called for him to forfeit five properties as well as other assets.
However, the lead prosecutor on the cases against Manafort said last month that language in Manafort’s plea deal was designed to survive a potential Trump pardon.
“We foresaw a pardon so Manafort specifically agreed to civil forfeiture and relinquished all interest in the forfeited property,” former prosecutor Andrew Weissmann said in an email.
“The forfeiture was taken both criminally and civilly because we were concerned that if the president were to pardon Paul Manafort that the criminal forfeiture would be eradicated by the pardon, but a civil forfeiture is not,” Weissmann added on CNN.
Now, the bank’s lawyers are seeking to use the words of the former deputy to Special Counsel Robert Mueller to speed the dispute to a resolution.
“The Government had every reason to believe that such a pardon was forthcoming, and its effect should have been — and, as is clear, was — considered long ago,” Ramachandran wrote, pointing to Weissmann’s CNN appearance and similar comments on Twitter. “Plainly, this case is over.”
In one of their Friday filings, DOJ lawyers signaled that they are considering shifting gears to try to seize the properties through a civil forfeiture process rather than the one that flowed out of the criminal cases against Manafort.
Justice Department attorneys asked the judge to allow the government time to “determine whether it has available to it any other avenues to forfeit these properties.” The government filings also refer to policy considerations, which could be an allusion to the fact that DOJ will get new leadership from the Biden administration beginning in a little more than a week.
The resolution of the Chicago bank’s claim has faced one central stumbling block: In May 2019, the bank’s founder, Stephen Calk, was indicted on a charge that he illegally schemed to get posts in the Trump transition and the Trump administration by pressing for the federally-insured bank’s approval of $16 million in loans to Manafort.
In a wish list sent to Manafort, Calk expressed interest in serving as Defense secretary, Commerce secretary or Treasury secretary, as well as other jobs. He was named to a campaign economic advisory panel, but never got an administration post or nomination.
Jackson delayed the forfeiture proceedings until after Calk’s trial, scheduled to open Feb. 16 in New York. However, the case is facing a series of hurdles related to coronavirus. Four Illinois-based witnesses from the bank have asked to be excused from traveling to New York or to testify by video.
“There is no reason for me to postpone the trial and I don’t intend to,” Judge Lorna Schofield said during a telephone hearing Thursday. However, Calk’s lawyers have objected to major witnesses testifying by video. Schofield has signaled she may override those objections, but prosecutors have warned that could jeopardize Calk’s constitutional rights.
One thing that could stop Calk’s trial: a decision by Trump during his waning days in office to pardon the Manafort associate.
It’s unclear whether there’s any scenario in which Manafort recovers any of the money and property he agreed to forfeit in 2018. It seems clear that property already sold off can’t legally be returned to him, nor can bank accounts already finally seized.
“If you don’t have it in your hand or in the Treasury, it goes away with the pardon,” Love said.
With the bank waiting in the wings even if Manafort recovered some property, he would likely lose it in foreclosure. But Love said the bank has a decent claim that the Justice Department has to retreat from whatever forfeitures are not yet complete.
“It looks like to me there’s at least an argument that if what the government has got right now is just a paper that says you own [some property], they may not have anything,” she said.