Paul Manafort managed to escape the majority of his seven-and-a-half year prison sentence on fraud and conspiracy charges with a last-minute pardon from former president Donald Trump.
But he could not escape his lender.
Manafort, Trump’s former campaign manager, and his wife, Kathleen, are losing their Brooklyn townhouse to a foreclosure sale after reaching a deal with their lender, Federal Savings Bank. A public auction is scheduled for Feb. 16 at a Brooklyn courthouse.
The townhouse at 377 Union Street in Carroll Gardens was cited in a 2017 indictment in which special counsel Robert Mueller alleged that Manafort bought the townhouse as part of a money laundering and tax evasion scheme.
Manafort originally agreed to forfeit the property, along with three Manhattan apartments and his Hamptons estate, to the government as part of a plea deal with federal prosecutors in 2018.
That agreement was nixed in late 2020, when Manafort received a pardon from Trump, who called him a victim of “perhaps the greatest witch hunt in American history.” As a result, Manafort was able to keep his properties.
Meanwhile, his lender claimed that he had been skipping payments on two mortgages on the Brooklyn property. Federal Savings Bank provided the loans in January 2017 at a costly interest rate of 7.25 percent and a late charge of 5 percent. The loans matured in January 2018.
In March 2021, Federal Savings Bank sued in federal court, alleging that Manafort owed $8.3 million on the mortgages.
Manafort’s legal team filed a number of motions seeking extensions, claiming that certain information sought by the lender was in the possession of the U.S. Department of Justice, as Manafort’s computer and electronic devices had been confiscated by the special counsel as part of the criminal proceedings.
Neither Manafort’s lawyer nor Federal Savings Bank immediately returned requests for comment.
The two parties reached an agreement last year, acknowledging that $6.3 million was owed on the mortgages and sending the townhouse to a foreclosure sale. As part of the deal, the Manaforts agreed to not interfere with the foreclosure proceedings or file for bankruptcy.
On Monday, Federal Savings Bank’s former chairman and CEO, Stephen Calk, was sentenced to one year in prison for directing the lender to issue “millions of dollars in high-risk loans” to Manafort in exchange for a position in Trump’s 2016 presidential campaign, the Department of Justice announced. Calk was convicted on federal bribery charges in July.
Manafort paid around $3 million for the townhouse in 2012 before undertaking a lengthy renovation to convert the 4,400-square-foot brownstone from a multifamily dwelling to a single-family home.
Neighbors claimed the house was empty and became an eyesore, with piles of snow, steel beams and dirty cinder blocks littering the front yard, according to the New York Post.
In 2017, Manafort came close to a deal to list the property, sources told The Real Deal. Brad Zackson, an associate of Manafort’s at the time, said it could list for up to $9 million. But those plans ended after Manafort’s plea deal.
Matthew Mannion of Mannion Auctions is conducting the legally required advertising for the foreclosure sale.
Federal Savings Bank previously sought to foreclose on another Manafort property, his estate at 174 Jobs Lane in Bridgehampton. But the lender eventually dropped its lawsuit, and Manafort sold the house for just over $10 million in October, property records show.
Manafort was convicted in two separate cases brought forward by Mueller.
In a federal case in Alexandra, Virginia, Manafort was convicted of five counts of tax fraud, two counts of bank fraud and one count of failure to disclose a foreign bank account. Later, in a federal case in Washington, D.C., Manafort struck a plea deal on two conspiracy charges related to his lobbying work for Ukrainian politicians.