Former Trump Campaign Chairman Paul Manafort Charged in Russia Probe

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WASHINGTON—Former Trump campaign manager Paul Manafort was taken into custody Monday on charges that he laundered more than $18 million in funds from his work for a pro-Russia party in Ukraine through offshore accounts.

Prosecutors said he used the funds for what they described as a “lavish lifestyle,” including spending millions of dollars on antique rugs, landscaping, cars and clothing, without reporting it to the Internal Revenue Service, according to the indictment unsealed Monday.

Mr. Manafort’s longtime business associate and Trump campaign official Richard Gates, referred to in the indictment as Mr. Manafort’s “right-hand man,” was charged with helping Mr. Manafort transfer funds and spending more than $3 million himself, including on his mortgage and interior decorating services. Neither defendant reported the income, prosecutors said.

The sweeping indictment accused the pair of working for the pro-Russia party in Ukraine between 2006 to 2015, laundering money through 2016, and continuing the conspiracy in 2017. The charges don’t appear to relate to the men’s work on President Donald Trump’s 2016 campaign.

The action, marking the first charges by Special Counsel Robert Mueller, reflect a new phase in his wide-ranging probe, which is focused on Russian interference in the 2016 election but can wrap in any other issues that arise as prosecutors pursue that inquiry.

Messrs. Manafort and Gates were expected in court later Monday.

Mr. Manafort and his attorney, Kevin Downing, arrived about 8:15 a.m. at the FBI’s Washington field office. Mr. Manafort didn’t respond to questions as he entered the building.

Mr. Manafort’s spokesman, Jason Maloni, has said in the past that Mr. Manafort didn’t collude with the Russian government to help Moscow interfere in the 2016 election. He couldn’t be reached for comment on Monday.

A lawyer for Mr. Gates didn’t immediately respond to a request for comment.

In order to hide the payments, prosecutors said Messrs. Manafort and Gates laundered their money through “scores” of U.S. and foreign corporations, partnerships and bank accounts, including in Cyprus, Saint Vincent and the Seychelles.

The indictment also accuses the pair of responding to 2016 Justice Department inquiries about the work with a “series of false and misleading statements.”

“Manafort used his hidden overseas wealth to enjoy a lavish lifestyle in the United States, without paying taxes on his income,” the indictment reads.

The indictment describes a complicated scheme that Mr. Manafort allegedly undertook to use offshore accounts to purchase multi-million dollar properties in the U.S. and take out loans on them, allowing him to obtain cash in the U.S. without reporting and paying taxes on the income.

Mr. Gates allegedly helped Mr. Manafort in opening the offshore accounts and moving money from them. Mr. Gates also used those accounts to pay for personal expenses “including his mortgage, children’s tuition and interior decorating of his Virginia residence,” prosecutors said.

Mr. Mueller’s team, which includes 16 attorneys versed in public-corruption, fraud and national-security matters and more than two dozen FBI agents, has been presenting evidence before a federal grand jury in Washington since July.

Besides investigating Russian influence in the election, Mr. Mueller has been investigating whether Mr. Trump obstructed justice in his firing earlier this year of James Comey as FBI director, and the business dealings of several former Trump aides, according to people familiar with the matter. Mr. Mueller was appointed to the special counsel role just after the president’s firing of Mr. Comey.

Mr. Trump and his lawyers have denied any obstruction and any collusion between his campaign and Russia. Mr. Trump has repeatedly labeled the Mueller investigation a “witch hunt.” Russia has denied interference in the campaign.

Mr. Manafort, a 68-year-old veteran political operative who has done extensive work overseas, served as Trump campaign chairman for several months in mid-2016 before resigning amid questions about his past consulting work for Ukrainian political figures.