Mueller likely to probe Gates’ moonlighting as movie producer | McClatchy Washington Bureau

Rick Gates, indicted last week with his former boss and mentor Paul Manafort in the special counsel investigation of Russia's meddling in the 2016 presidential election, is best known as a political consultant and lobbyist. In tandem with Manafort, he raked in tens of millions from Ukrainian and Russian oligarchs and a pro-Moscow Ukrainian political party. And when Manafort chaired Donald Trump's bid for the White House, Gates was his deputy.

Less well known is his sideline as a Hollywood producer. Gates has been involved in a handful of films, including this year’s Walk of Fame, which starred Clint Eastwood’s son Scott.

Some of Gates’ colleagues in those Tinseltown endeavors, however, have run into trouble with the law. Gates — who, with Manafort, was charged with money laundering and failing to disclose foreign banks accounts in the first public indictments to emerge from Special Counsel Robert Mueller's probe — was listed as providing backing for several films whose other producers have been accused of defrauding investors of millions of dollars.

One of the two producers he worked with, James David Williams, pleaded guilty last month in federal court to fraud, identity theft and money laundering in connection with a scheme — laid out in a related civil case — in which he and his co-defendants allegedly kept millions of dollars they told investors was destined for films that would star Nicholas Cage and Harry Connick Jr., among others.

Court filings show that Williams is a cooperating government witness. And typically, under such agreements, the government can request such a witness’s assistance in other investigations — such as Mueller’s.

Williams and Steven J. Brown, another producer, along with Minnesota Republican fundraiser Jerry Seppala, were ordered in March 2016 to pay back $10.5 million to one of the duped investors, Bill Busbice Jr., owner of a hunting company in Louisiana and, until recently, star of the reality show Wildgame Nation.

Gates' ties to Brown go beyond being co-producers, though. Manafort’s former lobbying firm, where Gates also worked, paid Brown $40,000 for political and media outreach he did in 2012 and 2013 on behalf a Ukrainian political party, Ukrainian Party of Regions.

Lawyers for Gates and Manafort did not respond to detailed questions about Gates’ film work and their ties to the Hollywood producers.

Gates himself has not been sued or charged in connection with any movies. But given that his co-producers have been, and that film production is known for being forgiving when it comes to clouding the original source of funds invested, experts say it’s extremely unlikely that Mueller is not investigating this part of Gates’ finances.

“Unfortunately for Mr Gates, what he's about to discover — if he hasn't already — is that every transaction he's ever been involved with will be excavated by law enforcement,” said Ross Delston, a D.C.-based lawyer and money laundering expert. “What they will be looking for are deals with similar characteristics to those Gates has been linked to in Russia-gate.

"Films are a great way to launder money since most films — the ones you have never heard of — lose money," Delston added.

Shell game

Rather than use Busbice’s money for films, Williams and Brown transferred it to personal accounts they used for lavish vacations, a Jaguar, payments on a yacht loan and initial payments on a $3.5 million home for Williams in Calabass, California, according to Busbice’s lawsuit. They sent Busbice and his lawyer false bank statements they created to mask their activity, the suit said.

The two producers also allegedly sent more than $100,000 of the fraudulently-obtained funds to a politically-oriented nonprofit called the Bipartisan Coalition for American Security, which was cochaired by former U.S. Sens. Joseph Lieberman (D-CT) and Scott Brown (R-MA) and whose advisory board was led by Elliott Broidy, a national deputy finance chair for the Republican National Committee. (Brown is now U.S. Ambassador to New Zealand.) The spokesman for the Bipartisan Coalition, Glenn Selig, is also a spokesman for Gates. Lieberman said, via email, that he recalled speaking at one fundraiser for the group, for which he received an honorarium. He said Broidy had asked him to participate in the group. Brown could not be reached for comment.

The solicitation of Busbice began one month after the last payment Brown received in March 2013 for work he had done for Manafort’s former lobbying firm, Davis Manafort Partners, Inc., in Ukraine. (Among other criminal charges in the Mueller indictments, Manafort and Gates are accused of making “false and misleading” statements about the scope of work they did for the Party of Regions in the same foreign lobbying reports that list the payments to Brown.)

Lawyers for Steven Brown and Seppala did not respond to requests for comment. Williams’ lawyer declined to comment.

It’s unclear whether Gates was investing his own money in the Hollywood films or precisely what his role was. Manafort and Gates jointly controlled several accounts listed in Mueller’s indictment that were used to conceal foreign payments. And according to a subsequent filing by Mueller’s team, Gates has since 2008 “incorporated or registered almost two dozen entities, in a variety of names in Delaware, Virginia and Nevada (and other overseas).”

The complicated structure of many movie deals can make it hard to keep track of all the sources of money involved, said Jack Blum, a Washington attorney who specializes in international tax and financial secrecy laws.

“Typically these movie arrangements are all set up offshore and there’s any number of shell companies,” he said. “Sometimes it’s six or seven companies and some of them are very hard to figure out.”

In recent years, there have been several instances of laundered money making its way into Hollywood films. Millions in funding for the Wolf of Wall Street is alleged to have been laundered from the Malaysian 1MDB fund, and this month Harvey Weinstein’s replacement as president at The Weinstein Company, David Glasser, was linked to an earlier mafia-related money laundering case.

Soviet ties

In arguing for strict travel restrictions to be imposed on Manafort and Gates as they await trial, federal prosecutors said that Gates and Manafort have each given conflicting information about their financial holdings, with Manafort providing estimates that varied by nearly $90 million in the span of a couple months in 2016, and Gates offering estimates that differed by more than $25 million in early 2016.

The two also have substantial foreign ties, according to the filing, including with “Ukranian and Russian oligarchs, who have provided millions of dollars to Manafort and Gates.”

Gates’s film connections also have a distinctly former Soviet flavor. An upcoming film that is backed in part by an entity tied to Gates is a Czech production directed and produced by Petr Jakl, a former Czech judo champion; Jakl appeared in several Hollywood films in the early 2000s, including xXx, starring Vin Diesel, and EuroTrip. Brown is listed as the film’s co-producer on the website for Jakl’s production company. Brown and Williams were also both executive producers for Jakl’s last production, 2015’s Ghoul, which was set and partially filmed in Ukraine.

Gates’s apparent continuing relationship with Brown and Williams after the civil and criminal charges brought against them is itself suspicious, Blum said. “What legitimate investor would put money into a movie that’s being produced by a couple of con-men?”