Paul Manafort and Rick Gates Sued for $26 Million Over Infamous Ukrainian Deal Gone Wrong

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Rick Gates, Paul Manafort
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Paul Manafort and Rick Gates are being sued for $26 million by a company with ties to Russia for a telecommunications deal in Ukraine gone awry.

According to court documents filed today in New York and obtained by The Blast, Surf Horizon Limited claims Manafort and Gates “vanished” more than $18.9 million they were given in 2008 to make an investment Manafort and Gates recommended — the purchase of stock and assets of Black Sea Cable, a group of Ukranian cable and internet companies.

Surf says they also paid Manafort and Gates $7.35 million in management fees in part to manage the deal.

They claim they didn’t know at the time, but the actual deal called for only $17.8 million and they claim the difference was distributed to two companies — one owned by Manafort and own by Gates. Surf says they did not authorize this payment.

“In essence,” the lawsuit states, “Defendants had taken for themselves personally more than $900,000 of the $18.9 million Surf paid to purchase Black Sea Cable, blatant self-dealing by fiduciaries.”

Surf claims that beginning in 2010, they repeatedly asked Manafort and Gates for updates on the investment. Surf says the last they heard, all the way back in 2011, “Gates falsely stated that efforts to sell Black Sea Cable were still underway. Upon information and belief, Gates was intending to, and did, deceive Surf into believing that the Partnership still owned Black Sea Cable, when, in fact, the Partnership already had lost its ownership of Black Sea Cable.”

Surf says they began to investigate the deal in 2014 and eventually “in response to a federal court subpoena, neither Manafort, nor Gates, provided any documents showing how Surf’s $26 million actually had been spent or what happened to its investment.”

In 2017, Surf says they finally “had proof that Defendants fraudulently and in breach of their fiduciary duties, had siphoned for themselves millions of dollars Surf had paid to Defendants’ alter ego companies.”

Surf accuses Manafort and Gates of “fraud, gross negligence, blatant disloyalty, and rapacious self-dealing.”

They are seeking $1.1 million for fraud, another $1.75 million for the legal fees it took to uncover the fraud, and “punitive damages in the amount of $25,000,000 for gross negligence and fraud on the part of Defendants.”

One of the main people behind Surf Horizon Limited is Russian oligarch Oleg Deripaska, whose ties to Manafort have landed him in hot water with the Mueller investigation.

A New York Times article last year about Manafort’s relationship with Deripaska quoted a representative for Manafort saying, “Manafort is not indebted to Mr. Deripaska or the Party of Regions, nor was he at the time he began working for the Trump campaign.”

The Blast reached out to lawyers for both Manafort and Gates. A lawyer for Gates responded by saying they could not respond due to a court order. No response from Manafort’s team.