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United States v. Manafort

United States District Court, District of Columbia

May 15, 2018

UNITED STATES OF AMERICA,
v.
PAUL J. MANAFORT, JR., Defendant.

          MEMORANDUM OPINION AND ORDER

          AMY BERMAN JACKSON, United States District Judge

         On May 17, 2017, the Acting Attorney General of the United States appointed Robert S. Mueller III to serve as Special Counsel for the U.S. Department of Justice.[1] Paragraph (b) of the Appointment Order authorized him “to conduct the investigation confirmed by then-FBI Director James B. Comey in testimony before the House Permanent Select Committee on Intelligence on March 20, 2017, ” including:

(i) any links and/or coordination between the Russian government and individuals associated with the campaign of President Donald Trump; and
(ii) any matters that arose or may arise directly from the investigation; and
(iii) any other matters within the scope of 28 C.F.R. § 600.4(a).[2]

         As part of the Special Counsel's investigation, defendant Paul J. Manafort, Jr. was indicted on a number of charges relating to his lobbying and political consulting activities on behalf of Ukraine, the pro-Russia political party in Ukraine, and the former President of Ukraine who fled to Russia in 2014. See Indictment (Redacted) [Dkt. # 13]; Superseding Indictment [Dkt. # 201].

         Defendant Manafort has moved to dismiss the Superseding Indictment.[3] He contends that when the Acting Attorney General issued the Appointment Order, he exceeded limits imposed on his appointment authority by the Department of Justice Special Counsel Regulations, and that therefore, the Appointment Order, and the acts undertaken by the Special Counsel under its auspices, are invalid. Manafort also argues that even if the appointment was valid, the Special Counsel overstepped the authority he was granted when he investigated and prosecuted the particular charges in this case.

         It is important to note that Manafort does not challenge the entire Appointment Order; he objects only to paragraph (b)(ii), the grant of authority to pursue “any matters that arose or may arise directly from the investigation, ” which he claims is too broad. Thus, as Manafort acknowledges, his motion does not support the dismissal of any charges if they were properly brought under paragraphs (b)(i) or (iii) of the Appointment Order. See Tr. of Apr. 19, 2018 Mot. Hr'g [Dkt. # 281] (“Tr.”) at 8-9.

         The motion to dismiss will be denied for a number of reasons.

         First, the indictment falls squarely within that portion of the authority granted to the Special Counsel that Manafort finds unobjectionable: the order to investigate “any links and/or coordination between the Russian government and individuals associated with the campaign.” Appt. Order ¶ (b)(i). Manafort was, at one time, not merely “associated with, ” but the chairman of, the Presidential campaign, and his work on behalf of the Russia-backed Ukrainian political party and connections to other Russian figures are matters of public record. It was logical and appropriate for investigators tasked with the investigation of “any links” between the Russian government and individuals associated with the campaign to direct their attention to him. Thus, the Departmental regulations that Manafort claims were violated by paragraph (b)(ii) of the Appointment Order are not implicated here, and the motion, which supplies no other basis to dismiss the indictment, should be denied for that reason.[4]

         But even if one posits that the scrutiny of Manafort's alleged activities on behalf of Ukraine did not flow from the investigation of “links” to Russia that was assigned to the Special Counsel, and that instead, it was a “matter that arose” from that investigation, the indictment should not be dismissed. The second reason Manafort's motion fails is that the Department of Justice promulgated the Special Counsel Regulations for its own internal management, and they do not create any substantive rights for the benefit of individuals under investigation. This means that Manafort cannot predicate a motion to dismiss on the regulations.

         Also, even if a judge were to conclude that the regulations could give rise to rights that can be enforced in a courtroom, the Acting Attorney General did not violate those regulations when he exercised his statutory authority to authorize the Special Counsel to investigate not only “links and/or coordination, ” but also, “any matters that arose or may arise directly from the investigation.” The Acting Attorney General had the authority under the applicable statutes and regulations to define the Special Counsel's charter broadly. Therefore, paragraph (b)(ii) of the Appointment Order - which does not appear to bear on this indictment in any event - is not invalid on its face.

         Finally, the case did not arise in a vacuum, and the Special Counsel did not create his own job description. He was appointed to take over an existing investigation, and it appears from the chronology and the written record that the matters contained in the Superseding Indictment were already a part of the ongoing inquiry that was lawfully transferred to the Special Counsel by the Department of Justice in May of 2017. More important, the Acting Attorney General has confirmed in writing that he assigned the Special Counsel the specific responsibility to investigate the very allegations that comprise the Superseding Indictment. This is exactly what the Department of Justice regulations contemplate: a specific factual statement of the matters to be investigated. So to the extent the regulations bear on this case at all, they were not violated; the management of the investigation into the allegations against Manafort has been consistent with the objectives and requirements of the set of regulations as a whole, as well as the terms of the individual regulation upon which the defendant relies.

         As the Department explained when it issued the Special Counsel Regulations, the regulations were designed to “strike a balance between independence and accountability in certain sensitive investigations.” Final Rule, 64 Fed. Reg. 37, 038 (July 9, 1999). The regulations recognize that there will be occasions when the Attorney General or Acting Attorney General may determine that it would be in the public interest to appoint an outside Special Counsel to assume responsibility for a matter. In recognition of the conflict of interest or other extraordinary circumstances that prompted the appointment, the regulations preserve the Special Counsel's day-to-day independence to structure the investigation. They expect and require that he or she will exercise prosecutorial discretion when determining what charges to bring, informed by both the experience and integrity that led to the appointment, as well as the established rules, policies, and procedures of the Department.

         At the same time, the Department's Special Counsel Regulations call for ongoing communication and consultation, because the ultimate responsibility for the matter continues to rest with the Department hierarchy. When it promulgated the regulations, the Department anticipated that a Special Counsel, like any other prosecutor, could become aware of, and could have legitimate reasons to explore, paths that branch out naturally from the original investigation, as well as entirely new and disconnected allegations. The regulations establish a procedure to ensure that it is the Department of Justice, and not the Special Counsel himself or herself, who decides whether it should be the Special Counsel or attorneys within the Department of Justice who will pursue those lines of inquiry. The regulations place no boundaries on who can be investigated or what charges can be brought - what they address is who decides who the prosecutor will be. With respect to the investigation of the defendant that led to this indictment, the Acting Attorney General made that decision and confirmed it in writing, so the defendant has no grounds for complaint.

         It bears emphasizing at this stage that Manafort is presumed to be innocent of these charges, and it will be the prosecution's burden to prove him guilty beyond a reasonable doubt. But the indictment will not be dismissed, and the matter will proceed to trial.

         BACKGROUND

         On March 2, 2017, the United States Attorney General recused himself “from any existing or future investigations of any matters related in any way to the campaigns for President of the United States.” Press Release, U.S. Dep't of Justice, Attorney General Sessions Statement on Recusal (Mar. 2, 2017), https://www.justice.gov/opa/pr/attorney-general-sessions-statement- recusal. There was such an investigation underway, and on March 20, 2017, the Director of the FBI officially confirmed its existence in public testimony before an open session of Congress. He stated:

I have been authorized by the Department of Justice to confirm that the FBI, as part of our counterintelligence mission, is investigating the Russian government's efforts to interfere in the 2016 presidential election, and that includes investigating the nature of any links between individuals associated with the Trump campaign and the Russian government and whether there was any coordination between the campaign and Russia's efforts. As with any counterintelligence investigation, this will also include an assessment of whether any crimes were committed.

Statement of FBI Director James B. Comey, House Permanent Select Committee on Intelligence, Hearing on Russian Active Measures Investigation (Mar. 20, 2017), https://www.fbi.gov/news/ testimony/hpsci-hearing-titled-russian-active-measures-investigation (“Comey Testimony”).[5]

         In accordance with Department of Justice regulations, Deputy Attorney General Rod Rosenstein serves as the Acting Attorney General in cases in which the Attorney General is recused. See 28 C.F.R. § 600.1. In that capacity, he issued an order on May 17, 2017, appointing Robert Mueller to serve as Special Counsel for the U.S. Department of Justice. Appt. Order. The Acting Attorney General stated that he issued the order “[b]y virtue of the authority vested in me as Acting Attorney General, including 28 U.S.C. §§ 509, 510, and 515, in order to discharge my responsibility to provide supervision and management of the Department of Justice, and to ensure a full and thorough investigation of the Russian government's efforts to interfere in the 2016 presidential election.” Id.[6] The order authorized Mueller “to conduct the investigation confirmed by” then-Director Comey on March 20, and it noted that the Department's set of regulations concerning the appointment of Special Counsel would be applied to the appointment. See Id. ¶ (d), citing 28 C.F.R. §§ 600.4-600.10.

         On August 2, 2017, the Acting Attorney General issued a memorandum to the Special Counsel detailing the authority granted to him by the Appointment Order. Ex. C to Gov't Opp. (Redacted) [Dkt. # 244-3] (“Aug. 2 Mem.”). The August 2 memorandum explained that the Appointment Order had been “worded categorically in order to permit its public release without confirming specific investigations involving specific individuals, ” and that the memorandum, which was not a public document, set forth “a more specific description” of the authority conferred on May 17, 2017. Id. at 1. Of relevance to this case, the memorandum specified:

         The following allegations were within the scope of the Investigation at the time of your appointment and are within the scope of the [Appointment] Order:

* * *
• Allegations that Paul Manafort:
• Committed a crime or crimes by colluding with Russian government officials with respect to the Russian government's efforts to interfere with the 2016 election for President of the United States, in violation of United States law;
• Committed a crime or crimes arising out of payments he received from the Ukrainian government before and during the tenure of President Viktor Yanukovych; . . . .

Id. at 1-2. It concluded, “[y]ou therefore have authority to continue and complete the investigation of those matters.” Id. at 3.

         On October 27, 2017, a federal grand jury sitting in the District of Columbia returned an indictment against defendant Manafort and Richard W. Gates, III, Indictment (Redacted) [Dkt. # 13], which was superseded by an indictment against Manafort alone on February 23, 2018.[7]Superseding Indictment. The Superseding Indictment charges defendant with:

(1) conspiracy to defraud the United States from 2006 through 2017 by failing to file a foreign bank account report with the U.S. Treasury disclosing a financial interest in accounts and securities in a foreign country as required by the Bank Secrecy Act, 31 U.S.C. §§ 5314, 5322(a), id. ¶¶ 37-39;
(2) conspiracy to launder money from 2006 through 2016 in violation of 18 U.S.C. § 1956, id. ¶¶ 40-41;
(3) acting as an unregistered agent of a foreign principal from 2008 through 2014 in violation of the Foreign Agent Registration Act, 22 U.S.C. §§ 612, 618(a)(1), id. ¶¶ 42- 43;
(4) filing false and misleading statements with the Department of Justice in 2016 and 2017 in violation of the Foreign Agent Registration Act, id. ¶¶ 44-45; and
(5) making false statements to the United States in 2016 and 2017 in violation of 18 U.S.C. §§ 2, 1001(a), 3551 et seq., id. ¶¶ 46-47.[8]

         LEGAL FRAMEWORK

         There is a federal statute that governs who may litigate cases in the name of the United States, and it provides for the appointment of Special Counsel. Under 28 U.S.C. § 509, “[a]ll functions of other officers of the Department of Justice and all functions of agencies and employees of the Department . . . are vested in the Attorney General, ” 28 U.S.C. § 509, and Congress has provided that the Attorney General may “from time to time” delegate any of those functions as he or she “considers appropriate.” Id. § 510. According to section 515 of the statute:

any attorney specially appointed by the Attorney General under law, may, when specifically directed by the Attorney General, conduct any kind of legal proceeding, civil or criminal, including grand jury proceedings . . ., which United States attorneys are authorized by law to conduct.

Id. § 515(a).

         Manafort does not argue in his pleadings that any of the applicable federal statutes have been violated in this case.[9] He does complain that the Acting Attorney General violated Departmental regulations when appointing the Special Counsel.

         The Department of Justice has promulgated a set of regulations concerning the appointment and supervision of Special Counsel appointed pursuant to section 515. General Powers of Special Counsel, 28 C.F.R. §§ 600.1-600.10, citing 5 U.S.C. § 301; 28 U.S.C. §§ 509, 510, 515-519. The Department published the regulations in 1999 to “replace the procedures set out in the Independent Counsel Reauthorization Act of 1994, ” which had expired on June 30, 1999. Final Rule, 64 Fed. Reg. at 37, 038, 37, 041.

         The regulations provide that a Special Counsel may be appointed when the Attorney General “determines that criminal investigation of a person or matter is warranted” and that assigning a U.S. Attorney or other lawyer within the Department to conduct the investigation “would present a conflict of interest for the Department or other extraordinary circumstances.” 28 C.F.R. § 600.1; see also 64 Fed. Reg. at 37, 038 (explaining that Special Counsel may be appointed “when the Attorney General concludes that extraordinary circumstances exist such that the public interest would be served by removing a large degree of responsibility for a matter from the Department of Justice”). A person named as Special Counsel must be a lawyer “outside of the United States Government, ” with “a reputation for integrity and impartial decisionmaking, ” and with the “appropriate experience” to conduct the investigation “supported by an informed understanding of the criminal law and Department of Justice policies.” 28 C.F.R. § 600.3.

         According to section 600.4 of the regulations, it is up to the Attorney General (or Acting Attorney General) to define the scope of a Special Counsel's jurisdiction:

Original jurisdiction. The jurisdiction of a Special Counsel shall be established by the Attorney General. The Special Counsel will be provided with a specific factual statement of the matter to be investigated. The jurisdiction of a Special Counsel shall also include the authority to investigate and prosecute federal crimes committed in the course of, and with intent to interfere with, the Special Counsel's investigation, such as perjury, obstruction of justice, destruction of evidence, ...

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