‘Shpilkin method’: Statistical tool gauges voter fraud in Putin landslide

As many as half of all the votes reported for Vladimir Putin in Russia’s presidential election last week were fraudulent, according to Russian independent media reports using a statistical method devised by analyst Sergey Shpilkin to estimate the extent of voter manipulation.

Russian President Vladimir Putin claimed a landslide victory on Sunday that will keep him in power until at least 2030, following a three-day presidential election that Western critics dismissed as neither free nor fair.

The criticism is shared by Russia’s remaining independent media outlets, which have published their estimates of the extent of voter manipulation during the March 15-17 election that saw Putin clinch a fifth term in office with a record 87% of ballots cast.

Massive fraud

“Around 22 million ballots officially in favour of Vladimir Putin were falsified,” said the Russian investigative journalism website Meduza, which interviewed Russian electoral analyst Ivan Shukshin.

Important Stories, another investigative news website, gave a similar number, estimating that 21.9 million false votes were cast for the incumbent president.

The opposition media outlet Novaya Gazeta Europe came up with an even bigger number, claiming that 31.6 million ballots were falsified in Putin’s favour.

That figure “corresponds to almost 50 percent of all the votes cast in the president’s favour, according to the Central Election Commission [Putin received 64.7 million votes]”, said Jeff Hawn, a Russia expert at the London School of Economics.

All three estimates suggest that “fraud on a scale unprecedented in Russian electoral history” was committed, added Matthew Wyman, a specialist in Russian politics at Keele University in the UK.

The three news outlets all used the same algorithmic method to estimate the extent of voter fraud. It is named after Russian statistician Sergey Shpilkin, who developed it a decade ago.

Shpilkin’s work analysing Russian elections has won him several prestigious independent awards in Russia, including the PolitProsvet prize for electoral research awarded in 2012 by the Liberal Mission Foundation.

However, he has also made some powerful enemies by denouncing electoral fraud. In February 2023, Shpilkin was added to Russia’s list of “foreign agents”.

Shady turnout figures

The Shpilkin method “offers a simple way of quantitatively assessing electoral fraud in Russia, whereas most other approaches focus on detecting whether or not fraud has been committed”, said Dmitry Kogan, an Estonia-based statistician who has worked with Shpilkin and others to develop tools for analysing election results. 

This approach – used by Meduza, Important Stories and Novaya Gazeta – is based “on the turnout at each polling station”, said Kogan.

The aim is to identify polling stations where turnout does not appear to be abnormally high, and then use them as benchmarks to get an idea of the actual vote distribution between the various candidates.

In theory, the share of votes in favour of each candidate does not change – or does so only marginally –according to turnout rate.

In other words, the Shpilkin method has been able to determine that in Russia, candidate A always has an average X percent of the vote and candidate B around Y percent, whether there are 100, 200 or more voters in an “honest” polling station.

In polling stations with high voter turnout, “we realised that this proportional change in vote distribution completely disappears, and that Vladimir Putin is the main beneficiary of the additional votes cast”, said Alexander Shen, a mathematician and statistician at the French National Centre for Scientific Research’s Laboratory of Computer Science, Robotics and Microelectronics in Montpellier. .

To quantify the fraud, Putin’s score is compared with what the result would have been if the distribution of votes had been the same as at an “honest” polling station. The resulting discrepancy with his official score gives an idea of the extent to which the results were manipulated in his favour.

The Shpilkin method makes it possible to put a figure on the “ballot box stuffing and accounting tricks to add votes for Vladimir Putin”, said Shen.

Limitations of the Shpilkin method

However, “this procedure would be useless if the authorities used more subtle methods to rig the results”, Kogan cautioned. 

For instance, if the “fraudsters” took votes away from one of the candidates and attributed them to Putin, the Shpilkin method would no longer work, he explained.

“The fact that the authorities seem to be continuously using the most basic methods shows that it doesn’t bother them that people are aware of the manipulation,” Kogan added.

Another problem with the Shpilkin method is that it requires “at least a few polling stations where you can be reasonably sure that no fraud has occurred”, said Kogan, for whom that condition was not easy to be sure about in last week’s presidential election.

“I’m not sure we can really reconstruct a realistic distribution of votes between the candidates, because I don’t know if there is enough usable data,” added Shen.

Does this negate the validity of the estimates put forward by independent Russian media?

Kogan said he stopped trying to quantify electoral fraud in Russia in 2021. He explained: “At the time, I estimated that nearly 20 million votes in the Duma [lower house] election had been falsified. Then I said to myself, ‘what’s the point in going to all this trouble if the ballots were completely rigged?’”

Nevertheless, he said it is important to have estimates based on the Shpilkin method because even if it is difficult to get a precise idea, “the order of magnitude is probably right”. 

These rough estimates are also “an important political weapon”, said Wyman, stressing the need to “undermine the narrative of the Russian authorities, who claim that the high turnout and the vote in favour of Putin demonstrate that the country is united”.

It is also an important message to the international community, added Hawn.

“The stereotype is that Russians naturally vote for authoritarian figures,” he said. “By showing how inflated the figures are, this is a way of proving that the reality is far more nuanced.”

This article has been translated from the original in French

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Trump unable to pay $464m bond in New York fraud case, his lawyers say

Donald Trump’s lawyers told a New York appellate court Monday that it’s impossible for him to post a bond covering the full amount of a $454 million civil fraud judgment while he appeals, suggesting the former president’s legal losses have put him in a serious cash crunch.

Trump‘s lawyers wrote in a court filing that “obtaining an appeal bond in the full amount” of the judgment “is not possible under the circumstances presented.” Trump claimed last year that he has “fairly substantially over $400 million in cash,” but back-to-back courtroom defeats have pushed his legal debt north of a half-billion dollars.

Citing rejections from more than 30 bond underwriters, Trump’s lawyers asked the state’s intermediate appeals court to reverse a prior ruling requiring that he post a bond covering the full amount in order to halt enforcement while he appeals the judgment in New York Attorney General Letitia James’ lawsuit.

Trump’s financial constraints are being laid bare as he appeals Judge Arthur Engoron’s Feb. 16 ruling that he and his co-defendants schemed for years to deceive banks and insurers by inflating his wealth on financial statements used to secure loans and make deals.

If the appeals court does not intervene, James can seek to enforce the judgment starting March 25. James, a Democrat, has said she will seek to seize some of Trump’s assets if he is unable to pay.

With interest, Trump owes the state $456.8 million. That amount is increasing nearly $112,000 each day. In all, he and co-defendants, including his company, sons Eric and Donald Trump Jr. and other executives, owe $467.3 million. To obtain a bond, they would be required to post collateral covering 120% of the judgment, or about $557.5 million, Trump’s lawyers said.

Trump maintains that he is worth several billion dollars, but much of his wealth is tied up in his skyscrapers, golf courses and other properties. Few underwriters were willing to issue such a large bond and none would accept Trump’s real estate assets as collateral, instead requiring cash or cash equivalents, such as stocks or bonds, his lawyers said.

Trump’s lawyers said freeing up cash by offloading some of Trump’s properties in a “fire sale” would be impractical because such cut-rate deals would result in massive, irrecoverable losses.

Not mentioned in Trump’s court filings Monday was the presumptive Republican presidential nominee’s potential financial windfall from a looming deal to put his social media company, Trump Media & Technology Group, on the stock market under the ticker symbol DJT.

A shareholder meeting is scheduled for Friday. If the deal is approved, Trump would own at least 58% of shares in the company, which runs his Truth Social platform. Depending on share price, that could be worth several billion dollars.

Trump is asking a full panel of the intermediate appeals court, the Appellate Division of the state’s trial court, to stay the Engoron judgment while he appeals. His lawyers previously proposed a $100 million bond, but Appellate Division Judge Anil C. Singh rejected that after an emergency hearing on Feb. 28. A stay is a legal mechanism pausing collection of a judgment during an appeal.

In a court filing last week, Senior Assistant Solicitor General Dennis Fan urged the full appellate panel to reject what he dubbed the defense’s “trust us” argument, contending that without a bond to secure the judgment Trump may attempt to evade enforcement at a later date and force the state to “expend substantial public resources” to collect the money owed.

A full bond is necessary, Fan wrote, in part because Trump’s lawyers “have never demonstrated that Mr. Trump’s liquid assets — which may fluctuate over time — will be enough to satisfy the full amount of this judgment following appeal.”

Trump’s lawyers asked the Appellate Division panel to consider oral arguments on its request, and preemptively sought permission to appeal a losing result to the state’s highest court, the Court of Appeals.

Singh did grant some of Trump’s requests, including pausing a three-year ban on him seeking loans from New York banks. In their court filing Monday, Trump’s lawyers did not address whether they have sought a bank loan to cover the cost of the judgment or obtain cash for use as bond collateral.

Trump appealed on Feb. 26, a few days after Engoron’s judgment was made official. His lawyers have asked the Appellate Division to decide whether Engoron “committed errors of law and/or fact” and whether he abused his discretion or “acted in excess” of his jurisdiction.

Trump wasn’t required to pay his penalty or post a bond in order to appeal, and filing the appeal did not automatically halt enforcement of the judgment. Trump would receive an automatic stay if he were to put up money, assets or an appeal bond covering what he owes.

Gary Giulietti, an insurance broker friend enlisted by Trump to help obtain an appeal bond, wrote in an affidavit Monday: “A bond of this size is rarely, if ever, seen. In the unusual circumstance that a bond of this size is issued, it is provided to the largest public companies in the world, not to individuals or privately held businesses.”

Giulietti, who acts as an insurance broker for Trump’s company, testified at the civil fraud trial as an expert witness called by Trump’s lawyers. In his ruling, Engoron observed that some of Giulietti’s testimony was contradicted by other witnesses, including a different defense expert. He noted that Giulietti’s company collected $1.2 million in commissions on its Trump accounts in 2022.

In all, Trump has more than $543 million in personal legal liabilities from three civil court judgments in the past year. Bonding requirements could add at least $100 million to that total.

In January, a jury ordered Trump to pay $83.3 million to writer E. Jean Carroll for defaming her after she accused him in 2019 of sexually assaulting her in a Manhattan department store in the 1990s. Earlier this month, after his lawyers made similar arguments that he be excused from posting a bond, Trump did secure a $91.6 million bond to cover 110% of the Carroll judgment while he appeals.

Last year, a jury ordered Trump to pay Carroll $5 million in a related trial. In that case, rather than post a bond, Trump put more than $5.5 million in cash in an escrow account while he appeals.


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Ivanka Trump Testifies: Ex-President’s Daughter Distances Herself From Fraud Allegations As Emails Show Concerns About Trump’s Net Worth


Former President Donald Trump’s daughter Ivanka Trump took the stand at her father’s ongoing civil fraud trial Wednesday, repeatedly claiming she couldn’t recall any involvement with business deals at the heart of the New York Attorney General’s allegations about the case—as emails show she played a key role.

Key Facts

Ivanka Trump, formerly an executive vice president at the Trump Organization, testified Wednesday in the civil case, in which the attorney general alleges her father, brothers and the Trump Organization committed fraud by misstating valuations on financial statements prepared for financial institutions, which were used to obtain more favorable business deals and reflect a higher net worth for the ex-president.

Ivanka Trump—who was previously a defendant before being dismissed from the case—distanced herself from those statements of financial condition, denying she played a role in preparing them or had any recollection of them, and repeatedly denied any recollection of email exchanges shown at the trial that show her playing significant roles in deals that involved the financial statements, including at Trump National Doral resort in Miami and the company’s former hotel in Washington, D.C.

Her husband Jared Kushner introduced the ex-president to the head of Deutsche Bank’s Private Wealth Management division, which ultimately lent the company and ex-president money at a better rate than its commercial real estate, though Ivanka Trump claimed she “[didn’t]

Deutsche Bank’s private wealth management division required Trump to have a net worth of at least $3 billion in order to secure a loan with favorable rates through them for the Doral resort—which Trump Organization attorney Jason Greenblatt had concerns about, according to an email shown at trial, writing to Ivanka Trump that the requirement “would seem to be a problem?”

“That we have known from day one,” Ivanka Trump responded in an email, saying guaranteeing the deal was “the only way to get proceeds/term and principle where we want them,” though she asked Deutsche Bank to lower the requirement from $3 billion to $2 billion—even as the company claimed on its financial statement the ex-president’s net worth was over $4 billion.

Deutsche Bank also expressed concerns with a request from Ivanka Trump in 2016 for a $50 million unsecured loan—which would not require any collateral—writing in an email that the request suggests that “liquidity is an issue for your Dad” and former President Donald Trump didn’t have sufficient cash flow.


The attorney general’s office also suggested that Trump’s presidential candidacy played a role in Deutsche Bank’s consideration over whether to expand its loan to the Trump Organization. Emails showed that bankers were wary of approving an unsecured loan for the company during the election, writing the bank’s decision against extending the loan was “a global corporate decision to maintain neutrality to any political situation and not lend money to a highly politically exposed person.” (Deutsche Bank declined to comment to Forbes on the emails.)

Chief Critic

Attorneys for the former president strongly opposed the state’s questioning of Ivanka Trump Wednesday morning, claiming it went beyond the scope of the attorney general’s subpoena for her testimony and the statute of limitations, with the ex-president’s daughter at one point being briefly excused from the courtroom as lawyers quarreled with the judge over what they believed was an irrelevant question. Former President Donald Trump’s attorney Christopher Kise argued Ivanka Trump had been “dragged here to testify,” after she tried to fight her subpoena. After saying the Trump Organization transformed a “hulking relic” into its D.C. hotel, Judge Arthur Engoron responded he was “starting to sound like your client.”

What To Watch For

Ivanka Trump’s testimony is scheduled to continue on Wednesday and potentially into Thursday, with the defendants’ attorneys slated to question her once the state has wrapped up. The former president’s daughter marks the state’s final witness before Trump’s attorneys present their case to the court, and the trial is scheduled to continue through mid-December. The trial carries potentially high stakes for the Trumps if Judge Arthur Engoron rules against them, with consequences including a $250 million fine and barring Trump and his sons from running New York businesses.

Key Background

New York Attorney General Letitia James sued Trump, his children—including Ivanka Trump prior to her dismissal from the case—other business associates and the Trump Organization, arguing the ex-president and his co-defendants misstated the values of assets on financial documents more than 200 times between 2011 and 2021. The legal complaint includes allegations over false numbers regarding Mar-A-Lago, the Washington, D.C., hotel and the ex-president’s Manhattan penthouse, among other properties. Ivanka Trump’s testimony caps off a week of the Trump family taking the stand, with brothers Donald Trump Jr. and Eric Trump testifying in the trial last week and the ex-president testifying on Monday. Similarly to Ivanka, her brothers—who also served as executive vice presidents at the company—denied any involvement with statements of financial condition, even as they signed off on the documents and attested to their accuracy. The former president spent his testimony downplaying his involvement with the financial statements, falsely claiming a disclaimer in them made them “worthless,” as well as sparring with the judge.

Surprising Fact

Ivanka Trump has kept a fairly low profile since her father left the White House. She hasn’t attended high-profile events like the Met Gala and declined to join the Trump 2024 campaign.

Further Reading

Live From The Courtroom: Ivanka Trump Testifies In Dad’s Fraud Trial (Forbes)

Ivanka Trump Testifying In Fraud Trial Today—Here’s What To Expect (Forbes)

Ivanka Trump Helped Her Dad Lie About His Net Worth (Forbes)

Trump Thought His D.C. Hotel Would Bring In Twice As Much Money As It Did (Forbes)

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#Ivanka #Trump #Testifies #ExPresidents #Daughter #Distances #Fraud #Allegations #Emails #Show #Concerns #Trumps #Net #Worth

Trump turns New York fraud trial into campaign stop, ‘a witch hunt’

Donald Trump’s court appearances are no longer distractions from his campaign to return to the White House. They are central to it.

The dynamic was on full display Monday as the former president and GOP front-runner returned to New York for the opening day of a civil fraud trial accusing him of grossly inflating the value of his businesses.

Trump was under no obligation to appear Monday and did not address the court. But he nonetheless seized the opportunity to create a media spectacle that ensured he was back in the spotlight. And he once again portrayed himself as a victim of a politicized justice system — a posture that has helped him emerge as the undisputed leader of the 2024 GOP primary.

The scene was much like the one that has played out over and over since the spring as Trump has reported to courthouses and a local jail to be processed in four criminal indictments. Once again, reporters waited in line overnight to snag seats in the courtroom; news helicopters tracked his motorcade journey from Trump Tower to the courthouse in lower Manhattan; and cable networks carried the spectacle live on TV.

The appearance demonstrated how deftly Trump has used his legal woes to benefit his campaign. The former president’s Monday appearance drew far more attention than a standard campaign rally would have offered. And it gave Trump a fresh opportunity to rile up his base and gin his fundraising with claims that the cases he faces are nothing more than a coordinated attempt to damage his campaign.

“It’s a scam, it’s a sham,” he said in the morning. “It’s a witch hunt and a disgrace.”

While some rivals had once thought Trump’s long list of legal woes might dissuade Republican voters from choosing him as their nominee, his standing in the GOP primary has only improved since before the indictments and helped him raise millions of dollars.

While other politicians might shy away from drawing additional attention to accusations of wrongdoing, Trump took full advantage of the cameras.

He addressed the media assembled outside the courtroom multiple times throughout the day, railing against the case and offering commentary.

“Every lawyer would say, ‘Don’t talk.’ Every candidate would obey the lawyer. Trump just throws out the playbook,” said former White House press secretary Ari Fleischer.

Fleischer said that, for Trump, the lines between campaigning and the courtroom have now been erased.

“Every day is a day on the stump, whether it’s in Iowa, New Hampshire or in the courtroom,” he said, adding, “Every appearance is an opportunity to ring a bell, strike a message, say he’s the victim of a weaponized Justice Department and he’s the only one who can change Washington.”

The civil fraud case, brought by New York Attorney General Letitia James, accuses Trump and his company of deceiving banks, insurers and others by chronically overstating his wealth by as much as $3.6 billion.

Judge Arthur Engoron has already ruled that Trump committed fraud. If upheld on appeal, the case could cost the former president control of some of his most prized properties, including Trump Tower, a Wall Street office building and golf courses. James is also seeking $250 million in penalties and a ban on Trump doing business in New York.

Trump spent the day seated at the defense table observing the proceedings, at times leaning to confer with his lawyers.

The former president grew visibly angry during the morning’s opening statements, railing against the suggestion that he was worth less than he claimed and blasting both the judge and James. Trump sneered at the state attorney general as he walked past her on his way out of the courtroom during a lunch break, cocking his head toward her and glaring.

But by the end of the day, Trump’s mood had changed. He exited the courtroom claiming he’d scored a victory, pointing to comments that he said showed the judge coming around to the defense view that most of the suit’s allegations happened too long ago to be considered. Kevin Wallace, a lawyer in James’ office, promised to link the cited incidents to a more recent loan agreement.

Still, Trump complained that he’d “love to be campaigning instead of doing this.”

“This was for politics,” he said. “Now, it has been very successful for them because they took me off the campaign trail ‘cause I’ve been sitting in a courthouse all day long instead of being in Iowa, New Hampshire, South Carolina or a lot of other places I could be at.”

This will be the reality of his campaign going forward as he alternates between visits to early voting states and courtrooms, including to testify later in the New York civil trial. On Feb. 15, he will have to make an in-person court appearance in New York ahead of a criminal trial in which he is accused of misclassifying hush money payments made to women during his 2016 campaign. His federal trial in Washington on charges related to his efforts to overturn the 2020 election is tentatively set to begin March 4, his New York trial is set to begin March 25 and his federal trial in the Mar-a-Lago documents case is set to begin on May 20.

His trial in Georgia over his efforts to subvert the results of the state’s 2020 election hasn’t yet been scheduled.

Plans for Trump to attend the New York trial’s first days were first revealed in legal filings last week. Lawyers representing Trump in a separate lawsuit against his former lawyer Michael Cohen used his appearance to put off a deposition.

Trump had also said in May that he wanted to attend an earlier civil trial brought by writer E. Jean Carroll accusing him of rape, but did not end up doing so. A jury found him liable for sexually assaulting her in a department store dressing room.

In a post on his social media site, Trump said he wanted to appear in court Monday “to fight for my name and reputation.”

“I want to watch this witch hunt myself,” he told reporters. “I’ve been going through a witch hunt for years, but this is really now getting dirty.”

Trump is expected to return to testify in the case in several weeks.


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Trump Fraud Trial: AG Argues Ex-President Gained $1 Billion Through Fraud As His Attorney Claims Trump Is ‘Right About Real Estate’


The trial determining whether former President Donald Trump and his business committed fraud by inflating their assets began with opening statements on Monday, as the New York attorney general’s office argued Trump knowingly committed widespread fraud while his lawyer claimed the former president did nothing wrong.

Key Facts

New York AG Letitia James is suing Trump, his business associates—including his sons—and the Trump Organization, claiming they fraudulently inflated the value of business assets in order to obtain more favorable business terms and boost Trump’s net worth by as much as $3.6 billion.

Though Judge Arthur Engoron has already found Trump and his business liable for fraud by misstating the value of their assets, attorney Kevin Wallace from the AG’s office said Monday prosecutors will argue at trial the “defendants engaged in repeated, persistent illegal acts in the conduct of business,” including falsification of business records and insurance fraud, and that there’s “ample evidence” showing the defendants knew the fraudulent valuations were false, as quoted by the New York Times and Washington Post.

Prosecutors showed testimony from ex-Trump attorney Michael Cohen alleging he and then-Trump Organization CFO Allen Weisselberg would inflate the value of Trump’s assets in order to boost his net worth so he would be higher on Forbesbillionaires list, with Cohen testifying they would “use each of [Trump’s]

Reuters reports the AG’s attorney claimed Trump garnered more than $1 billion as a result of his fraudulent reporting, and Wallace alleged the false valuations also resulted in the Trump Organization getting more favorable interest rates and persuading banks to to take on hidden risk “to the tune of hundreds of millions of dollars,” as quoted by CNN.

Trump’s attorney Christopher Kise argued in his opening statement the former president has made “many billions of dollars being right about real estate investments” and “did not make any false statements” or act fraudulently, as quoted by the Times, alleging the valuations were subjective and that in real estate, “buyers have a view, sellers have a view, none of them are wrong.”

Kise argued the banks that lent money to Trump made money and that any disparate valuations did not have an impact, noting Deutsche Bank underwrote a loan to Trump even though it valued his net worth as being $2 billion less than he did.

What To Watch For

The trial against Trump and his company is expected to last until December, and Clifford Robert, who represents Trump’s sons in the case, told the court Monday that Trump, Eric Trump and Donald Trump Jr., will all testify as part of the trial. The trial is a bench trial, meaning the judge will decide the case and not a jury, which Engoron noted Monday was because nobody in the case requested a jury. Engoron has already ordered Trump’s business certificates to be canceled as part of his ruling finding the former president liable for fraud, but the trial will determine what other penalties Trump and his company could face, including a $250 million fine and barring Trump from any commercial real estate acquisitions, or blocking him and his children leading any New York companies for the next five years.

Crucial Quote

“While it may be one thing to exaggerate for Forbes magazine … you cannot do it while conducting business in the state of New York,” Wallace said during his opening statement, as quoted by CNN.

Chief Critic

“There was no intent to defraud, there was no illegality, there was no default, there was no breach, there was no reliance from the banks, there were no unjust profits, and there were no victims,” Kise argued in his opening statement Monday, as quoted by Reuters.

Forbes Valuation

$2.5 billion. That’s Trump’s estimated net worth, according to Forbes’ real-time tracker, and he ranked 1217th on our 2023 billionaires’ list. In the years covered by the lawsuit, 2011 to 2021, Trump’s net worth as estimated by Forbes ranged between $2.4 billion in 2011 to $4.5 billion in 2015. Prior to James’ lawsuit, Forbes had exposed previous Trump efforts to misstate the size and value of his real estate properties, including exaggerating the size of his Manhattan penthouse, which has been cited in the attorney general’s case against Trump.


Trump was present in court on Monday as the trial got underway and listened to the opening statements, with the Times reporting that during the hearing he alternated between appearing “bored” and “angry” and was seen yawning and “fidgeting in his seat.” The former president addressed reporters after opening statements concluded, saying, “We’re going to be here for months with a judge that already made up his mind. It’s ridiculous.” “Other than that, things went very well,” Trump added.

Key Background

James sued Trump, his business associates and company in November 2022 following a yearslong investigation, alleging the ex-president and his company had made more than 200 false statements that misstated the value of his assets to get more favorable business deals and inflate his own net worth. The AG opened the investigation in March 2019 based on congressional testimony by Cohen, who said Trump had fraudulently inflated or deflated the value of his assets on financial statements for personal gain. The lawsuit makes such claims as that Trump overstated the size of his Manhattan penthouse and overvalued Mar-A-Lago by falsely claiming it’s a private residence. Engoron agreed Trump inflated the valuations in his ruling last week finding Trump and his company liable for fraud, writing Trump’s depictions of the valuations as being merely subjective are out of “a fantasy world, not the real world.” Of his penthouse overstatement, Engoron wrote, “A discrepancy of this order of magnitude, by a real estate developer sizing up his own living space of decades, can only be considered fraud.” Trump has maintained the allegations against him and his company are false and a “witch hunt,” repeatedly attacking James and Engoron as being biased against him.

Further Reading

Trump Arrives In Manhattan Court As Fraud Trial Kicks Off (Forbes)

Trump Committed Fraud By Inflating His Assets, Judge Rules (Forbes)

How Trump, Master Of Avoiding Paper Trails, Finally Got Caught With One (Forbes)

The Definitive Net Worth Of Donald Trump (Forbes)

How Forbes Exposed Trump’s Lies About The Size Of His Penthouse (Forbes)

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Trump Committed Fraud By Inflating His Assets, Judge Rules


Former President Donald Trump and his company committed fraud by overstating the value of their assets, a New York judge ruled Tuesday, siding with state Attorney General Letitia James in her wide-ranging suit against the former president and the Trump Organization, which is still set to go to trial next week with a narrower scope.

Key Facts

James sued Trump, the Trump Organization and his business associates—including Trump’s children—for fraud, alleging in civil court the ex-president made hundreds of false statements that inflated the value of Trump Organization assets to boost his net worth and obtain more favorable business deals.

Manhattan-based Judge Arthur Engoron found Trump and the other defendants committed fraud, releasing his opinion Tuesday, six days before the case is set to go to trial, after James’ office argued Engoron should rule on the issue now because “no trial is required” to find Trump liable.

Engoron wrote that the documents uncovered in the case “clearly contain fraudulent valuations that defendants used in business,” and none of Trump’s defenses hold up, including his claim that he could always find a “buyer from Saudi Arabia” for one property or that measuring square footage is a “subjective process.”

The judge pointed to several Trump properties that were overvalued, including Mar-A-Lago, a building on Park Avenue, an estate in Westchester County and his penthouse in Trump Tower—which had an inflated square footage even after Forbes asked him about the exaggeration, Engoron notes.

As a result, Engoron canceled several of Trump’s business certificates and ordered the dissolution of Trump-related LLCs.

Engoron also sanctioned several of Trump’s attorneys $7,500 for making arguments the court had repeatedly tossed out.

Trump and his co-defendants opposed James’ motion to rule on the fraud question right away, arguing in court the valuations were subjective and James is just “uneducated” about real estate, and brought their own motion asking the court to rule in their favor and throw the case out entirely ahead of trial.

What To Watch For:

The trial against Trump and his business allies is set to begin on Monday and run until December, though that date remains slightly up in the air. An appeals court temporarily delayed the trial earlier this month amid a lawsuit between Trump and the judge—the appellate judges will hear arguments this week, and could let the trial proceed as scheduled. While Engoron already ruled on part of the case by finding Trump and his co-defendants guilty of fraud, the trial will still go forward on other allegations—such as falsifying business records, financial statements and committing insurance fraud—as well as determining whether there was intent to commit fraud and the damages Trump and his co-defendants will face. Trump’s attorneys said in a statement Tuesday that “While the full impact of the decision remains unclear, what is clear is that President Trump will seek all available appellate remedies to rectify this miscarriage of justice.”

What We Don’t Know:

What punishments Trump and his business could face at trial. James’ lawsuit asks the court to impose a range of penalties on the defendants, including barring Trump from engaging in any commercial real estate acquisitions for five years, blocking him and his children from serving as officers or directors in any New York business and forcing the defendants to pay an approximately $250 million fine.

Big Number:

$3.6 billion. That’s how much Trump inflated his net worth by overstating the value of his assets on financial documents, James alleged in court filings, calling the number a “conservative” estimate. The AG alleges Trump used the exaggerated assets to inflate his net worth by between $1.9 billion and $3.6 billion per year between 2011 and 2021, including by misstating the value of his properties at Trump Tower and Mar-A-Lago in Florida, which the lawsuit alleges Trump valued as a private residence instead of a social club.

Chief Critic:

Trump’s attorneys argued in court that the ex-president didn’t fraudulently overstate the value of his assets, but rather claimed the valuations were accurate based on Trump’s “perspective [as] a creative and visionary real estate developer who sees the potential and value of properties that others do not.” Trump attorney Christopher Kise argued at a hearing Friday: “The case comes down to prosecuting the defendants for engaging in successful business transactions.” In a statement Tuesday, Trump’s attorneys called the action an “outrageous decision” that is “completely unhinged from the facts and governing law.”

Forbes Valuation:

$2.5 billion. That’s Trump’s estimated net worth, according to Forbes’ real-time tracker. Forbes has exposed previous Trump efforts to misstate the size and value of his real estate properties, including exaggerating the size of his Manhattan penthouse, which was cited in James’ lawsuit.

Key Background:

James sued Trump, his company and his business associates in September 2022, following a years-long investigation that began in March 2019. Trump was deposed as part of the investigation, though he refused to answer questions and invoked his Fifth Amendment rights, after being held in contempt of court for not complying with the subpoena. Since James filed the lawsuit, the AG has notched a win in court as Engoron appointed an independent monitor to oversee the Trump Organization’s activities, though an appeals court also dismissed James’ claims against Ivanka Trump in the case and forced Engoron to narrow the case. The Trump Organization has separately been found guilty of tax fraud in a different case brought by the Manhattan district attorney, in which the company was ordered to pay $1.6 million for a scheme in which executives were paid through personal expenses that weren’t taxed, such as private school tuition, apartments and car leases.

Further Reading:

Checks & Imbalances: A Forbes Look At The Trump Fraud Lawsuit (Forbes)

Exclusive Recording, Documents Bolster Trump Fraud Lawsuit (Forbes)

Trump Inflated Net Worth By $3.6 Billion, New York Attorney General Says (Forbes)

NY AG James Sues Trump For Fraud (Forbes)

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#Trump #Committed #Fraud #Inflating #Assets #Judge #Rules

Meet The Billionaire Who Built A Fortune ‘Price-Gouging’ Customers Like The Pentagon

These are good times for Nicholas Howley. TransDigm, the airplane-parts maker he cofounded, has sidestepped allegations of excess profits of as much as 4,436%, the stock has hit record highs, and Forbes has determined that Howley’s net worth now has three commas.

By Jeremy Bogaisky Forbes Staff

Lawmakers had a lot of questions at a January 2022 congressional hearing into what they called price-gouging in military contracting, featuring parts-supplier TransDigm Group.

Nicholas Howley, the company’s cofounder, board chair and former CEO, didn’t have a lot of answers.

One question: Did your company refuse to give pricing data to the military?

“I don’t know,” Howley replied.

Was Howley aware that his compensation as CEO was more than the CEOs of Raytheon, Boeing and Lockheed Martin combined?

“I don’t know.”

Seventeen times Howley ended up answering, “I don’t know.” Which infuriated Rep. Katie Porter (D-Calif.). “For $68 million a year,” she told Howley, referring to his 2020 compensation, “you need to know what’s going on in your company.”

What Porter and everybody else didn’t know: Howley has made out much better than that.

Since TransDigm went public in 2006, Forbes estimates that Howley has amassed a fortune of $1.1 billion. That’s based on his disclosures of TransDigm stock sales and publicly reported CEO compensation before he stepped down to become board chair in 2018.

To critics, TransDigm is a symbol of corporate greed. Its playbook: buy companies that are the only ones that make particular aircraft parts and jack up prices for customers who don’t have alternatives. Reviews by the Pentagon’s inspector general in 2019 and 2021 found that immediately after acquiring a company, TransDigm raised prices on 44 of 46 items, and reaped profit margins as high as 4,436% over the 15% that investigators deemed reasonable. It was all legal. Still, a former employee described TransDigm as a “cancer.” Another told Forbes that the company is the “Satan of aircraft parts.”

To investors, however, TransDigm’s business model has proven ingenious. The Cleveland-based company has rung up a total return (stock-price appreciation plus dividends) of 29% annually since its IPO, according to FactSet data, with revenue growing over tenfold to $5.6 billion in fiscal 2022. That total return is No. 1 by a wide margin among U.S.-listed aerospace and defense companies over that span, roughly a third better than the next closest, rival parts-maker HEICO.

To taxpayers, TransDigm is a boondoggle. With $816 billion in funding, the Pentagon is the fifth-largest line item in the U.S. government’s $5.8 trillion budget for fiscal 2023. Overcharging for spare parts alone may have inflated defense spending by billions over the past two decades, according to Pentagon audits that looked at a universe of companies beyond just TransDigm. A review of a 2018 contract with a TransDigm unit found that the military would pay $119.3 million over 10 years for 100 parts that should have cost $28.3 million — $9 million a year up in smoke. Air travelers, too, pay higher fares due to what the House Oversight committee has called TransDigm’s “abusive pricing practices.” Airlines are the company’s biggest customers.

In a statement, the company said, “The Department of Defense audits of select contracts consistently concluded that TransDigm businesses followed all laws and regulations.” It also said, “The DoD typically receives a substantial discount to commercial market prices where available.”

Howley, 71, has generally avoided talking to the media. He didn’t respond to requests to speak to Forbes.

Howley isn’t the only TransDigm executive who’s gotten rich. The company awards big stock-option packages to executives, including the managers of its subsidiaries, contingent on meeting ambitious financial goals.

“It’s made many people quite wealthy,” Bob Henderson, who retired at the end of 2021 as vice chairman, told Forbes.

The company’s zeal for inflating prices is well documented. The Defense Department has conducted at least four investigations going back to 2006. All of them concluded that TransDigm has reaped excessive profits. In May, CBS’ 60 Minutes produced a segment on price-gouging that called out the company along with some of the biggest Pentagon contractors.

Less well-known is the relentless pressure to improve financial returns, and qualify executives for stock awards, that four former employees told Forbes has led managers to boost revenue with aggressive accounting maneuvers that could amount to fraud. And Forbes is reporting the billion-dollar wealth of the man behind the sprawling operation for the first time.

Birth Of TransDigm

Howley grew up in Havertown, a Philadelphia suburb, the son of the president of Lansdowne Steel & Iron, which made munitions for the U.S. military. (Like father, like son: a 1971 GAO report faulted the company for overstating costs to inflate pricing.) Howley worked there during high school and while studying mechanical engineering at Drexel University, he said last year on a podcast hosted by a business partner, private-equity investor Will Thorndike. “That was likely the best on-the-ground practical business experience I received in my life,” Howley said of Lansdowne, where he operated machine tools and got his first taste of management and finance.

After earning an MBA from Harvard in 1979, Howley landed at IMO Industries, an industrial conglomerate, where he was eventually tasked with setting up four underperforming aerospace parts units for sale. On the podcast, Howley described, at times gleefully, how he and his boss, Doug Peacock, maneuvered behind the scenes to buy the businesses themselves, negotiating a joint bid with the private-equity firm Kelso. When management realized what Peacock was up to, they fired him, but given Howley’s key role in the sale process they couldn’t easily jettison him, he said, despite suspicions he was in on it, too. There were other bidders, but “they weren’t going to get much help from me,” Howley said with a laugh.

Thus was born TransDigm in 1993. Howley and Peacock quickly arrived at a formula to grow industrial companies. “You can get the price up, you can get the cost down and you can generate new business,” Howley said on the podcast. “Almost anything else, tertiary at best.”

Bathroom Faucets

In 2022, TransDigm said about 90% of its sales were from proprietary products. Many of them might not seem special — things like valves, door latches and bathroom faucets. But the company takes advantage of peculiarities in the highly regulated nature of the aviation industry. Every part on a commercial aircraft, and the methods for manufacturing it, must be certified as safe and reliable by the Federal Aviation Administration. It’s a time-consuming and expensive process, and even with huge price hikes, most of TransDigm’s products remain a small part of the overall cost of an aircraft, mitigating the incentive for customers to seek out less expensive alternatives.

When an aircraft is under development, parts makers compete to win a place on it. That holds down prices. Companies may lose money or scratch out thin profits selling components to Boeing and Airbus during the initial production runs. But they have a freer hand in selling replacement parts to airlines and other operators — the so-called aftermarket. Planes can keep flying for decades after they’re no longer produced.

True to that formula, the aftermarket accounted for 55% of TransDigm’s sales last year, but roughly three-quarters of a measure of profit called Ebitda (earnings before interest, taxes, deductions and amortization).

One example is the case of a quick-disconnect coupling half, a small part that allows for the rapid connection and disconnection of fluid lines without tools. TransDigm sold it to the Pentagon in 2017 at a price that amounted to a 219% a year increase from 1991. On a subsequent purchase for the same price in 2018, the inspector general determined TransDigm booked an excess profit margin of 1,698%.

Prices and manufacturing costs have been redacted in reports the Defense Department releases to the public, but for a 2019 congressional hearing, House Democrats revealed that the inspector general found it cost TransDigm $173 to make a quick-disconnect coupling that it sold it to the Pentagon for $6,986.

While the Pentagon has not accused TransDigm of breaking any laws, something is definitely broken, starting with the rules governing defense acquisitions. A big reason the Pentagon hasn’t negotiated better deals is that TransDigm has been able to refuse its requests for cost information to gauge the fairness of its pricing. By law, military contractors don’t have to produce cost data on transactions below $2 million. Congress raised the limit in 2018 from $750,000, saying it wanted to cut red tape.

Voluntary Refund

Former TransDigm employees told House Oversight Committee staff that the company structured contracts to avoid hitting the thresholds that would trigger cost-reporting requirements. From 2017 through June 2019, 95% of TransDigm’s contracts fell below that level.

After getting pummeled in the 2019 hearing over the Pentagon inspector general’s findings, the company complied with a request to refund $16.1 million in overcharges. TransDigm has so far stiff-armed the Defense Department on another request — to return $20.8 million in excess profit found in a 2021 follow-up review. TransDigm claims that the 15% profit limit the inspector general’s report set is arbitrary and the review’s methodology was flawed because it excluded legitimate costs.


Here are five types of spare parts TransDigm sold to the Defense Department with profit margins as high as 4,436% over what the Pentagon inspector general deemed a fair level (15%), according to a 2019 report.

There’s one area where TransDigm may have broken rules. The Pentagon’s inspector general said in 2019 it had asked the Defense Criminal Investigative Service to look into allegations, first raised by the Washington business publication Capitol Forum, that the company failed to disclose in the federal contracting system that it was the owner of 12 subsidiaries that bid for Pentagon business. That would make it harder for the military to track TransDigm’s pattern of price hikes.

A spokesperson for the inspector general’s office told Forbes she could neither confirm nor deny that an investigation was underway. TransDigm didn’t respond to Forbes’ request to comment on the matter.

For all the attention directed at its relationship with the Pentagon, TransDigm’s direct sales to the military account for less than 10% of its revenue, according to Howley’s congressional testimony. More quietly, the company’s aggressive price increases have also ruffled feathers with airlines.

“They hate [TransDigm] with a passion, but they have no choice,” a former employee at subsidiary AvtechTyee told Forbes. “You don’t like it, your plane doesn’t fly.”

Plane makers can be caught in the middle. The airline customers complain to Boeing that TransDigm prices are high, and that’s making it hard to manage cost,” Abdol Moabery, CEO of GA Telesis, a company that repairs planes and distributes parts, told Forbes. “Boeing didn’t contract TransDigm to make these parts. Boeing contracted a company that TransDigm bought.” Boeing declined to comment.

TransDigm’s counterargument is that the expense and effort it puts in to deliver reliable parts quickly, so planes don’t languish idle on the ground, is worth the sting of higher prices. “Customers should not have to worry about our product and if they’re going to get it when they need it,” said Henderson, the retired TransDigm executive. “That comes with price.”

Shipping Parts Prematurely

At TransDigm subsidiary AvtechTyee, which makes structural components and audio and flight-deck systems, pressure to perform led managers to commit fraud, said Phyllis Santistevan-Sullivan, who was AvtechTyee’s finance chief and worked there from 2018 until she was fired in May 2021.

In a lawsuit filed in February, Santistevan-Sullivan claimed the company improperly sped up booking revenue to meet aggressive quarterly financial targets and pushed favorable numbers into the future when they weren’t needed for the current period. Santistevan-Sullivan says she was fired in retaliation for pushing back at the practices. She told Forbes she presumes similar things happen at other TransDigm units. “You could see presidents that weren’t meeting their goals would be let go,” she said. “If you can’t meet your budget, you’re not going to be around very long.”

Howley acknowledged on the podcast that the company is quick to replace underperforming executives.

In a court filing, TransDigm’s lawyers denied the allegations in Santistevan-Sullivan’s lawsuit and said she was fired for poor performance. The company declined a request from Forbes to comment further. A trial is scheduled for December 2024.

Santistevan-Sullivan said she discovered that $400,000 of revenue was improperly booked on a new project for Boeing, though no product was shipped, nor was Boeing invoiced.

She said the company also sent a prototype part to defense giant Lockheed Martin in 2019, almost a year before it was ready, so that hundreds of thousands of dollars in revenue could be recorded that quarter. Lockheed sent it back.

The former AvtechTyee employee who spoke anonymously corroborated Santistevan-Sullivan’s account of the Lockheed Martin incident, but said she was wrong in one respect — the part had actually been shipped to Lockheed prematurely twice to book milestone payments. “By the second time they were no longer really enjoying us very much,” he said.

Lockheed declined to comment.

Santistevan-Sullivan and the former employee said the part was shipped to Lockheed over the objections of engineers on the orders of Kevin Hanson, AvtechTyee’s vice president of sales and marketing. An idiosyncrasy of TransDigm is that sales and marketing chiefs are the No. 2 executives behind the subsidiary presidents, former employees told Forbes.

The former employee said the revenue booked from shipping the unfinished part was crucial to hitting quarterly targets, which were key to executive promotions. Missing the quarter’s revenue target “would have derailed [Hanson’s] ascendancy,” he told Forbes.

Hanson was promoted to president of the TransDigm subsidiary Korry Electronics in October 2021. He didn’t respond to a request for comment.

Improper revenue recognition is one of the most common types of financial fraud, accounting for 40% of fraud enforcement actions by the Securities and Exchange Commission between 2014 and 2019, according to a study by the Anti-Fraud Collaboration. The SEC didn’t respond to Forbes’ questions about TransDigm.

Acing The Audits

Two former finance employees at another subsidiary told Forbes that when TransDigm buys a company, it’s aggressive about setting up the so-called opening balance sheet — the basis against which future revenue and profit growth will be measured. The company books unusually high reserves for inventory losses and marginally profitable part-supply agreements that can be used as a “kitty” to boost revenue in the first few years after an acquisition, they said.

Creating high reserves reduces the book value of the acquired company, which requires TransDigm to record high amounts of what bookkeepers call goodwill to account for the difference between the company’s value and the purchase price. Goodwill essentially is a statement of confidence by TransDigm that it will make up the difference in value by improving the business.

TransDigm reported goodwill in 2022 that’s 48% of its total assets — an unusually high share, said Francine McKenna, an accounting expert and former Wharton lecturer who publishes a newsletter called The Dig. The company has only booked a hit to goodwill in its earnings once, in 2017. Both are “massive” red flags that TransDigm may be overpaying for its acquisitions and not acknowledging cases in which it hasn’t reaped the returns it expected, McKenna said.

TransDigm didn’t respond to questions about its accounting practices, but said in its statement that the company “undergoes thorough internal and external audits.”

Clear Skies

After years of government reports documenting TransDigm’s aggressive pricing, some things may be starting to change.

Rule-writing is under way on a measure passed by Congress last year that will give the Defense Logistics Agency, which handles purchasing for the Pentagon, the ability to compel companies to provide more information to back up claims that an item they’re selling to the military is identical to ones they sell to civilian customers. Companies have taken advantage of loose definitions of what counts as commercial products under regulations that absolve them of the responsibility to release cost data to determine if prices are reasonable on the presumption that those prices are governed by market forces and should be spared government red tape.

DLA has made slow progress on a program to reverse-engineer parts made by TransDigm to spark competition, which would, theoretically at least, lead to lower prices. It completed the process with 13 parts and said it received competitive bids for an unspecified number. That’s out of a universe of 986 parts DLA sourced from TransDigm that it identified as initial candidates.

Analyst Ken Herbert of RBC Capital Markets said he doubts there will be much interest from industry given the small quantities that the Pentagon orders of many of the parts. “I’m skeptical DLA can get enough companies fired up to take on the risk and make the investments,” he said.

Meanwhile, it’s clear skies for TransDigm’s commercial business. Air travel has rebounded from pandemic lows and airlines are clamoring for more planes while Boeing and Airbus are struggling to meet demand. The result is airlines holding onto older planes longer, and continuing to take jets out of storage that were parked in 2020. That means they’re spending more on maintenance and aftermarket parts — TransDigm’s sweet spot. Because of supply chain disruptions, airlines are also building higher inventories of parts. Even after TransDigm stock reached an all-time high last week, it remains a top pick for a number of Wall Street analysts.

TransDigm has had leverage to carry out some of its highest price increases ever, said Herbert. Airlines, rather than fighting it, are passing on the costs in higher airfares. “It’s sort of a perfect storm in a positive way for a company like TransDigm,” he said.

With assistance from Robert LaFranco.


MORE FROM FORBESThis Startup Wants To Fight Bladder Cancer With A Genetically Engineered VirusMORE FROM FORBESThe Top 10 Richest People In The World (August 2023)MORE FROM FORBESThis Grammy Winner Now Has A Best-Selling Brand At WalmartMORE FROM FORBESThe Age Of Disruption: Meet The 50 Over 50 2023MORE FROM FORBESFracking Pioneer Harold Hamm Explains How America Became The World’s Energy Superpower

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China’s ‘secret’ police: What does it do? Why is the world worried?

The story so far: China is once again in the crosshairs of the West over its ‘secret police stations’, this time ruffling Germany’s feathers. On May 15, Berlin stated that Beijing was still operating two so-called ‘overseas’ police stations in Germany.

In November 2022, Berlin called upon Beijing to shut down extraterritorial police stations in the country. Beijing, in February 2023, responded that what it called its ‘service stations’ ­were closed.

However, a German interior ministry spokesperson stated that the police stations were “not fixed-location offices, but mobile facilities” from which official duties were being conducted on behalf of Beijing. Berlin said it is reassessing bilateral relations with Beijing, even though China remains Germany’s largest trading partner.

Canada, Netherlands, United Kingdom, and the United States have also confronted China about its ‘secret police stations’ on their soil.

How did China’s secret police stations begin?

China claimed that the rise of ‘online fraud’ by Chinese nationals around the world was why it set up these ‘service stations’, as per an investigation done by Spain-based group Safeguard Defenders.

In 2018, the Chinese district of Fujian launched an operation to stop scammers from going overseas. The operation took stringent steps against suspected scammers, like demolishing their properties, banning them from trains, suspending medical and other government subsidies, and banning their children from schools.

The operation was applauded by the Chinese Communist party (CPC) and expanded in 2021, with a task force of 70 to target people overseas involved in fraud and illegal cross-border travel. The Public Security Bureau (PSB), assisted by local cadres and police authorities, was tasked with taking ‘anti-fraud’ measures abroad. The headquarters of the operation was in China’s Yunnan province and other centres were set up in south-eastern Chinese provinces Nantong, Wenzhou, and Qingtian, apart from Fuzhou.

Fuzhou overseas service station in Italy

As of July 2022, 230,000 Chinese ‘suspects’ were ‘educated and persuaded to return to China’ from overseas to ‘confess crimes related to telecom fraud’, stated the Ministry of Public Security. To further crack down on fraud, China passed the ‘Anti-Telecom and Online Fraud Law (ATOFL) in September 2022, holding overseas Chinese citizens accountable for such crimes.

Nine ‘forbidden’ countries were listed as the main regions for fraudulent transactions by Chinese nationals and the public was warned from travelling to these nations. These include Turkey, UAE, Myanmar, Thailand, Malaysia, Laos, Cambodia, Philippines and Indonesia. Moreover, Chinese nationals were advised to return immediately if they had no ‘emergency reason’ to be in those nations.

Nine ‘forbidden’ countries listed by China for online fraud

Nine ‘forbidden’ countries listed by China for online fraud

These stringent crackdowns resulted in several innocent Chinese nationals being put on the suspect list, leading to mass deportation to China to face stringent action under ATOFL. Reports state that the ‘suspects’ were often lured into fraud through threats, smuggling and intimidation and faced severe measures like loss of power and water supply at their homes or the homes of their relatives.

Expansion of ‘secret police’ globally

In January 2022, reportedly to target ‘Chinese overseas suspects’, China widened its net setting up the first batch of 30 overseas police service stations in 25 cities across 21 countries . This included Canada, US, Italy, France, Spain, Ireland, UK, Suriname, Peru, Brazil, Chile, Panama, Argentina, Venezuela, Angola, South Africa, Tanzania, Myanmar, Cambodia, Kazakhstan, Philippines, Japan, Laos, Kyrgyzstan, Thailand, Korea, Sri Lanka, Ulaanbaatar, Papua New Guinea, Australia, New Zealand, and Fiji.

These were set up to do administrative work for Chinese citizens abroad like renewing Chinese driver licences, passport renewal and aid the diaspora with consular needs. However, extending the police stations’ jurisdiction, these centres also cracked down on all kinds of illegal and criminal activities involving overseas Chinese persons. Reports state that these centres have made arrests of Chinese suspects based on complaints and ‘persuaded’ such suspects to return to China to face legal action.

China has set up 104 overseas police stations in 53 countries

China has set up 104 overseas police stations in 53 countries

Moreover, reports state that these stations have become overseas contact points in Italy and Germany to carry out prosecution work such as transoceanic mediation, cross-border inquiries, video reports and complaints. With these expanded powers, these service stations are being to used to target Chinese nationals abroad, particularly dissidents opposed to the CPC and President Xi Jinping.

Global concern about China’s secret police

China’s tough crackdown on its overseas citizens via these service stations has raised concerns among several nations. They believe that Beijing is using these centres to circumvent bilateral extradition treaties, local authorities’ jurisdiction and United Nations Conventions to set up an alternative policing and judicial system in other countries. As of date, there are 102 overseas police stations in 53 countries, another investigation by Safeguard Defenders revealed.

In November 2022, twelve countries including the US, UK, Canada, Netherlands and Germany launched investigations to ascertain if Beijing established such centres in their territory. However, certain governments in Africa and Asia have entered into an explicit agreement with China to set up joint patrol stations, similar to an agreement signed by Italy signed with China in 2016.

Lu Jianwang, 61, a U.S. citizen charged with conspiring to act as an agent of the Chinese government by helping set up a Chinese ‘secret police station’ in New York, exits Brooklyn federal court after posting bond in New York City, U.S., April 17, 2023

Lu Jianwang, 61, a U.S. citizen charged with conspiring to act as an agent of the Chinese government by helping set up a Chinese ‘secret police station’ in New York, exits Brooklyn federal court after posting bond in New York City, U.S., April 17, 2023
| Photo Credit:
Bing Guan

Three such stations were exposed in Toronto, with the Canadian government issuing a ‘cease and desist’ order to them. Canadian Prime Minister Justin Trudeau raised concerns about these stations with Chinese President Xi Jinping at the G20 summit in Bali, Indonesia in November 2022.

In December 2022, two overseas Chinese service stations in Prague were closed by the Czech Republic authorities. When the Chinese staff were questioned, they refused to divulge any information. Similarly in the UK, four Chinese service stations were found in London, Glasgow and Belfast. While a probe was launched, no action has been taken.

Meanwhile, in the US, two New York residents were arrested by the Federal Bureau of Investigation (FBI) for allegedly operating a Chinese “secret police station” in the Chinatown district of Manhattan. The two accused have now been released on bond following an initial appearance in a Brooklyn federal court.

China’s denial

In the wake of the accusations, Chinese embassy spokespersons have maintained that the ‘secret police stations’ were ‘overseas service stations’ opened during the pandemic to assist nationals abroad with driver’s licence renewal and similar bureaucratic matters.

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Herschel, Grifty Walker

Herschel Walker — Hey! Stop throwing stuff at me, this is real news! — appears to have been up to some some mind-blowingly grifty shenanigans during his failed 2022 run against Sen. Raphael Warnock (D-Georgia) last year, according to reporting from the Daily Beast Wednesday. The Beast acquired a bunch of emails between Walker and a company owned by a longtime family friend of Walker’s, billionaire industrial mogul Dennis Washington, who made it big in molybdenum and copper mining in Montana in the ’70s and then expanded into industrialist stuff. (His novelty record, “Big In Molybdenum,” flopped, however.)

In March 2022, the Beast reports, Walker emailed an executive for one of Washington’s companies, conveniently named The Washington Corporations, to ask for money, which candidates do all the time, no big whoop. Except, as reporter Roger Sollenberger explains, candidates definitely don’t make the kind of ask Walker did, because it’s almost certainly illegal as fuck:

Walker wasn’t just asking for donations to his campaign; he was soliciting hundreds of thousands of dollars for his own personal company—a company that he never disclosed on his financial statements.

Emails obtained by The Daily Beast—and verified as authentic by a person with knowledge of the exchanges—show that Walker asked Washington to wire $535,200 directly to that undisclosed company, HR Talent, LLC.

And the emails reveal that not only did Washington complete Walker’s wire requests, he was under the impression that these were, in fact, political contributions

In the best possible circumstances, legal experts told The Daily Beast, the emails suggest violations of federal fundraising rules; in the worst case, they could be an indication of more serious crimes, such as wire fraud.

The story is very careful to point out that even though he’d never run for office before, Walker was very well briefed on campaign finance rules from the time he started running in 2021. In one of the emails to Washington, Walker even explained the limits that could be given to his campaign and to his super PAC, “34N22,” so he can’t very well claim he was just a simple country millionaire former football player who’d like to be a werewolf maybe.

While we do have to talk about donation amounts and such, we won’t be going into all the financial ins and outs, because 1) that’s already in the Daily Beast story, and also 2) that would be Math.

Sollenberger adds that after Washington’s people were informed by a third party that the money that had been wired to Walker’s company couldn’t actually be used for political purposes, an executive emailed Walker to ask if the money sent to HR Talent could be redirected to the super PAC instead, but that Walker “appears to have dismissed” those worries. The story now includes an update, noting that the day after it ran,

a spokesperson for Washington said Walker had refunded the money but did not respond to questions about when that happened.

Look, everything’s fine here, we’re fine. How are you?

When Walker was preparing for the runoff election against Raphael Warnock, a November 29 email from Tim McHugh, executive VP for the Washington Corporations, notes that after McHugh had spoken with Walker on the phone about a new $100,000 contribution to the campaign that Walker had requested, McHugh was informed that

“any funds sent to the HR Talent account cannot legally be used for political purposes. Political contributions must go to either the Team Herschel or 34N22 accounts. […] We will need your assistance to get the prior contributions made to the HR Talent account in March corrected.”

Sollenberger decodes that for us:

Walker was not allowed to solicit donations for the super PAC in excess of federal limits, which this amount of money explicitly was. But that was not McHugh’s concern; he was worried about the hundreds of thousands of dollars his boss had wired to HR Talent in March.

But instead of addressing those concerns, Walker wrote back with an email detailing how Washington and his two sons, Kyle and Kevin, could donate $10,800 to his campaign, his recount effort, and his super PAC, with the remainder to go to his company, HR Talent. Yes, again, right after McHugh said hey, I hear that can’t be used for your campaign.

As Sollenberger ‘splains,

The numbers suggest that Walker had worked out a $100,000 arrangement with each Washington, with 95 percent of their contributions going to Walker’s company instead of the super PAC. But while Dennis Washington’s $5,800 campaign donations from the time do appear in FEC records, the $95,400 never hit the super PAC’s account. Kyle and Kevin Washington did not donate any money after the November emails.

Long story short: There’s a lot of hinky stuff in the emails, and campaign finance experts told Sollenberger over and over that they’d never seen anything so insanely grifty:

Saurav Ghosh, director of federal reform at Campaign Legal Center, called the arrangement “jaw-dropping.” Jordan Libowitz, communications director at Citizens for Responsibility and Ethics in Washington, said if Walker “used the campaign to funnel money into his own business, that’s one of the biggest campaign finance crimes I’ve ever heard of.” Brendan Fischer, a campaign finance lawyer and deputy executive director of Documented, remarked that the exchanges were “stunning and, to my knowledge, without parallel in recent history.”

“Campaign finance laws are designed to prevent massive under-the-table payments like those described here,” Fischer said. “While we don’t have all the facts, these emails point to highly illegal, potentially even criminal activity.”

Libowitz even went so far as to suggest that Walker’s scheme appears to have out-Trumped Donald Trump, because while Trump used campaign donations at his own businesses over and over, there were actual goods and services being purchased at the going market rates (though perhaps on the high side of the going rate, ahem). “Here, the money isn’t being spent by the campaign on Herschel’s businesses,” Libowitz told Sollenberger. “The money never even goes to the campaign. It just goes straight to him.”

But wait, there’s more!

Ghosh, of the Campaign Legal Center, agreed that Walker appears to have violated campaign finance laws, calling the scheme “$500,000 of grift.”

“It appears to be a fake campaign solicitation, designed to just profit personally from someone. That’s brazen in a way that’s off the charts,” he said.

On top of that, Ghosh pointed out that campaign law requires candidates to report all their sources of income, so Walker’s failure to list HR Talent LLC in his financial statements appears to violate the law too. Further, Ghosh said, if Walker had misled Washington about where the money was going — as certainly seems to be the case — “Then we’re in the world of just defrauding somebody.”

“Sounds a lot like wire fraud if the money didn’t make it to the campaign or super PAC,” Ghosh said. “And the fact they tried to do it again shows they’re trying to squeeze this billionaire.”

So what happens now? That would be up to federal prosecutors, who we assume pay attention to the news. And golly, wouldn’t it be something if more on this came out, like with all the stuff on Clarence Thomas that started turning up after ProPublica did some digging?

If this does turn into an investigation, and an investigation turns into an arrest, we have two words of advice for the federal agents assigned to bring Mr. Walker in: Silver bullets.

[Daily Beast]

Yr Wonkette is funded by reader donations. If you can, please give $5 or $10 a month so we can keep shocking you with these astonishing Republican grift antics.

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Not just Qatargate: Eva Kaili also faces probe into EU kickbacks scheme

Press play to listen to this article

Voiced by artificial intelligence.

Qatargate aside, Eva Kaili is facing a world of pain for a different reason altogether. 

Documents seen by POLITICO reveal fresh details about a separate criminal investigation that the Greek EU lawmaker is facing regarding allegedly fraudulent payments involving four former assistants in the European Parliament from 2014 to 2020. 

The probe is looking at Kaili for three potential fraudulent activities: whether she misled Parliament about her assistants’ location and work activities; took a cut of their reimbursements for “fake” work trips she orchestrated; and also took kickbacks from part of their salaries, according to a letter from the European Public Prosecutor’s Office (EPPO) to Parliament President Roberta Metsola, seen by POLITICO. 

Another Greek EU lawmaker, Maria Spyraki, has also been part of the same probe. Investigators accuse her of misleading the institution about her assistants’ activities and of telling them to file expenses for fake work trips. However, the documents do not allege that Spyraki took kickbacks from salaries or false reimbursements.

In total, investigators say Kaili owes the European Parliament “around €100,000,” according to a person familiar with the case.

The details offer the first real insight into the inquiry since it became public in December, only days after Kaili was put in jail under suspicion that she was involved in an even bigger scandal, Qatargate — the alleged bribery ring that prosecutors say involved countries such as Qatar and Morocco paying off European Parliament members.

And with all Qatargate suspects now out of detention, and no new arrests since February, attention is now shifting to the fraud case. MEPs in the Parliament’s legal affairs committee will discuss Kaili’s case behind closed doors for the first time on Tuesday. 

Kaili, who was moved to house arrest earlier this month, is currently fighting the prosecutor’s request to strip her immunity — a privilege afforded to EU lawmakers. But the EU prosecutor’s office, which investigates criminal fraud linked to EU funds, has argued its probe is on solid ground.

“The current investigation pertains to strong suspicions of repeated fraud and/or other serious irregularities,” European Chief Prosecutor Laura Kövesi said in the letter seen by POLITICO, which was sent to Parliament in December and requested both Kaili and Spyraki be stripped of their immunity. 

EPPO declined to comment on the case for this article. Kaili, through an attorney, said she has promised to pay back any money owed and to comply with any recommendations. Spyraki told POLITICO that her case has nothing to do with Kaili, and she confirmed she has never been accused of taking kickbacks.

“I have no dispute on the budget based on my responsibility as supervisor,” she said. “I have already paid the relevant amount and I have already asked the services to reassess my case financially.”


The European prosecutor went public about the fraud inquiry on December 15, just days after Kaili had been arrested in Brussels in connection with Qatargate. 

The notice named both Kaili, who belonged to the center-left Socialists and Democrats grouping, and Spyraki, a former journalist and former spokesperson for the center-right Greek party New Democracy, which is affiliated with the large European People’s Party group in Brussels.

The announcement came the same day Kövesi sent her immunity-lifting request to Metsola. The documents also named four former staffers of Kaili and two former assistants to Spyraki as potentially participating in the different schemes. 

But officials publicly offered few specifics about the inquiry, only noting that it was unrelated to the Qatargate affair, which had also ensnared Kaili’s life partner Francesco Giorgi, as well as several other current and former EU lawmakers. 

Now the details are starting to emerge. 

According to the letter seen by POLITICO, the EPPO probe is examining both Kaili and Spyraki over irregularities regarding their assistants’ “physical presence at the place of employment” and “related European Parliament decisions on working time.”  

According to the same letter, another line of inquiry is “fake missions, submission of false supporting documents and undue reimbursement claims for missions expenses by the APAs on the request of Ms Kaili and Ms Spyraki.” APA is an acronym for accredited parliamentary assistant.

Eva Kaili poses for the “MEPs for #millennialvoices”campaign in 2016 | European Parliament

Kaili specifically is also under investigation for receiving “payback” from her assistants’ salaries and the falsified expenses.

The public prosecutor’s probe follows an investigation by the EU’s anti-fraud office, known as OLAF, which was completed on November 23 of last year. OLAF then transferred its case to EPPO, it said in a December statement.

OLAF said it would leave any follow-up to the public prosecutor’s office, declining to comment beyond its statement four months ago. 

Immunity fight

The EPPO case is also becoming entangled in the fight over whether to lift Kaili’s immunity.

Immunity is a special privilege MEPs enjoy that is intended to protect them from being arbitrarily prosecuted for what they say or do as EU lawmakers. It can be waived following a recommendation by the legal affairs committee and a vote by all MEPs.

Parliament is now starting that process for Kaili, having already kicked it off for Spyraki. MEPs will discuss Kaili’s immunity at the legal affairs committee gathering on Tuesday.

Investigators say Kaili owes the European Parliament “around €100,000” | European Parliament

Spyros Pappas, Kaili’s lawyer, argued that typically, such fraud cases are closed after OLAF finishes its probe — as it did with Kaili — with the lawmaker paying back whatever the office says is owed. He also questioned how officials could justify lifting immunity for actions that stretch back to 2014. 

“One cannot but question both the legality and the opportunity of the initiative taken by EPPO,” he said. “The answer can only be given by the General Court of Justice of the EU.”

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