Paul Manafort, the indicted former campaign manager for President Trump, should feel at ease knowing that Kevin Downing is his criminal defense attorney for his upcoming trial for tax evasion and other criminal counts. Downing, recently a partner with the Washington, DC, law firm of Miller & Chevalier, is an expert in white collar crime, particularly issues relating to offshore tax avoidance schemes, money laundering, and Foreign Corrupt Practices Act bribery payments. Before entering private practice, Downing served as a federal prosecutor for 15 years in the Department of Justice’s Tax Division, the law enforcement arm for the Internal Revenue Service.
Downing was responsible for the federal investigation of KPMG tax sheltering scheme, which ultimately saw the indictments of nine senior partners with the accounting firm. A federal judge later slapped Downing for letting his “zeal get in the way of [his] judgment.” However, when it came to the investigation of tax evasion by U.S. clients of the Swiss banking giant UBS AG, Downing got cold feet.
In 2008, Bradley Birkenfeld, an American banker-turned-whistleblower with UBS, turned over a wealth of internal UBS documents to Downing at the Justice Department. Ultimately, the United States was able to recoup $15 billion—and counting—in recovered tax-sheltered money from offshore accounts operated by UBS. How did Downing and the Justice Department thank Birkenfeld for his evidence? They arrested him, charged him with criminal conspiracy, and threw him in a federal prison for 30 months. It turns out that Downing answered to a higher authority and it included a group of Washington lobbyists and politicians who were in UBS’s hip pocket.
Ironically, after Birkenfeld got out of prison, the IRS rewarded him with the largest whistleblower qui tam payment in U.S. history: a whopping $104 million. Birkenfeld recounts his trials and tribulations in his book, “Lucifer’s Banker: The Untold Story of How I Destroyed Swiss Bank Secrecy.”
Birkenfeld recounts Downing’s initial reaction to the bank’s tax evader client lists, with names redacted and the identity of the bank masked, that the banker brought with him from Switzerland to Washington. Birkenfeld’s DC lawyers showed the lists to Downing while maintaining Birkenfeld’s and the bank’s anonymity. Downing looked over the lists of American tax cheats’ accounts and said to the two attorneys, “You’re telling us this is potentially the biggest tax fraud case in the world . . . And this is all you’ve got? Bring me some serious paperwork and we’ll talk.”
Nevertheless, Downing and his fellow prosecutor, Karen Kelly, decided to keep Birkenfeld’s thick folder of lists and told Birkenfeld’s lawyers, “Don’t call us. We’ll call you.” Later, Downing told one of Birkenfeld’s lawyers, “We’re not issuing any sort of subpoena for an anonymous snitch.” The fix was in. Downing and his colleagues were more interested in discovering the identity of the UBS whistleblower than in going after U.S. tax evaders. When the banker’s lawyers pressed Downing on granting their client immunity from prosecution, Downing responded, “No promises. He’s getting nothing until I meet this guy face-to-face.”
Birkenfeld decided to play ball with Downing, a decision that would eventually land him in federal prison. As far as Downing was concerned, Birkenfeld was a version of Benedict Arnold working within UBS and was prepared to do great harm to PEPs—Politically Exposed Persons in the United States. Downing showed that his true loyalties were with America’s most politically-connected fat cats—people like Paul Manafort, Donald Trump, Rudolph Giuliani, and Bill Clinton—and Downing’s soon-to-be new boss, Attorney General Eric Holder. It turned out that Holder’s law firm, Covington & Burling, had as one of their most lucrative clients, UBS Bank.
Downing became so protective of UBS and its tax-evading clients that Birkenfeld soon believed someone had to be pulling Downing’s strings. Birkenfeld mused, referring to Downing, “Who’s you fucking puppet master, Pinocchio?”
Downing did succeed in sending UBS a target letter. However, rather than a serious indication that Justice was planning to indict UBS, the letter was intended to let UBS know that it was under investigation and that gave UBS enough time to institute document destruction and impose travel bans on its senior executives. UBS was circling the wagons by destroying key evidence and keeping its executives out of harm’s way, all thanks to Downing’s tip-off to the bank.
In UBS’s later agreement with the U.S. government, the bank turned over a mere 12 names out of 52,000 U.S. tax evaders who had UBS off-shore accounts. That sweetheart deal was mainly the work of the new secretary of state, Hillary Clinton. After meeting with Swiss Foreign Minister Micheline Calmy-Rey and stressing the importance of UBS providing the Obama administration with lists of its U.S. clients, the bank turned over the 12 names. Shortly after the deal, the Clinton Foundation saw its contributions from UBS skyrocket from $60,000 to $600,000.
Birkenfeld was incarcerated at the Schuykill Federal Correctional Facility in Pennsylvania. The facility is a minimum-security prison, nicknamed “Camp Cupcake,” for U.S. political prisoners like Birkenfeld, former Qwest President and CEO Joe Nacchio, and former Army Delta Force officer Bill Hillard, who ratted out the CIA and Pentagon for running drugs in Southeast Asia during the Vietnam War. While Birkenfeld was doing his time at Schuykill, President Obama was on the golf links in Martha’s Vineyard with Robert Wolf, the chairman of UBS Americas. Apparently, Obama was not fazed in the least that UBS Americas’ Brazilian branch had been previously raided by the Brazilian police, largely as a result of Birkenfeld’s revelations to the Financial Times, and several of its executives sent to prison.
Manafort can take comfort that some of Downing’s friends and marionettes for the fat cats still occupy prosecutor positions in the Justice Department. Special Counsel Robert Mueller has shown that by keeping secret the arrest of former Trump campaign official George Papadopolous in July of this year, that he can run a tight ship. It is that penchant for secrecy that likely allowed Papadopoulos to wear a wire when meeting with unsuspecting Trump associates over the past four months. Mueller should also realize that Downing’s friends who remain in Justice serve different masters than the rule of law. The several dozen limited liability corporations and shell corporations maintained by Manafort and his co-defendant Richard Gates are part and parcel of the secret financial networks brought to light by Birkenfeld’s whistleblowing on UBS.
These networks of LLC and shells, which include those of Manafort and Gates, also involve those run by Donald Trump and his Commerce Secretary Wilbur Ross. These business entities are found in places from Cyprus and Saint Vincent and the Grenadines to Liechtenstein and Belize. Prosecutor Mueller may do himself a favor by familiarizing himself with the sordid actions of his court adversary, Downing, in the UBS case. Certainly, under every encyclopedic reference to “dirty prosecutor” should be a photo of Kevin Downing.
Previously published in the Wayne Madsen Report.
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Wayne Madsen is a Washington, DC-based investigative journalist and nationally-distributed columnist. He is the editor and publisher of the Wayne Madsen Report (subscription required).