Manafort indictment includes Delaware LLCs

WHYY | by Zoë Read

On Monday, Special Counsel Robert Mueller announced charges against three advisers to President Donald Trump’s campaign related to alleged coordination with the Russian government to sabotage Hillary Clinton’s campaign.

A Delaware legislator now is urging the release of a bill that aims to keep tabs on bad actors looking to hide tainted money in LLCs.

Former campaign chairman Paul Manafort pled not guilty to money laundering, tax fraud and foreign lobbying related to work in Ukraine.

The indictment states that of the 23 LLCs Manafort used in the alleged scheme, nine were in Delaware.

State Rep. John Kowalko, D-Delaware, said this illustrates Delaware’s complicity in enabling corruption through lax LLC licensing laws.

“I’m sure there are other entities out there that are questionable that we renew them year after year without a screening process,” he said.

Kowalko’s bill aims to create a process to weed out individuals and entities that use an LLC status to hide activities like money laundering, arms dealing, drug trafficking and human trafficking.

The law would put restrictions on individuals and entities identified by federal agencies as a threat to the country.

“This will enable us to guard against future intrusions, whether it be in the case of Backpage human trafficking, or El Chapo, who had a Delaware LLC with drug money, or other instances where it has been ascertained there are money launderers, drug money smugglers, arming of terrorist organizations that are filtering their money through Delaware LLCs, and it should not be difficult to identify these overtly threatening applicants,” Kowalko said.

“I think this bill is a first step to reigning in our enthusiasm to just sign everybody up for a $300 licensing fee.”

The bill, introduced in January, was considered in the House Judicial Committee in June, but was tabled.

Vice-chair, state Rep. Melanie George Smith, D-Bear, said she was concerned the bill had not gone through the Delaware State Bar Association’s Corporation Law. Matthew O’Toole of the association said the bill was vaguely-worded and felt the issue was best addressed at the federal level.

Kowalko is now urging his constituents to support the bill, which was first drafted by the Delaware Coalition for Open Government. He said while most LLCs are owned by legitimate businesses, Delaware could soon have a bad reputation if incidents of corruption aren’t prevented.

“It’s a wonderful program for businesses, but there are some illegitimate businesses sneaking under the radar,” Kowalko said.

“I want to ensure we have some system of checks and balances in place, and that would just be to screen them at this point, and then we can work from there to a more prevalent screening process of these applicants. Right now the system is too secretive and allows for any kind of ill-intentioned groups to take advantage of the formality and pleasure of being referred to a limited liability company.”

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