To start from McCarthy's conclusion, McCarthy concludes that Papadopoulos' interaction with Joseph Mifsud and Alexander Downer was purposely distorted and reframed to obscure the FBI's reliance on the Steele Dossier.
Prior to early July, when the FBI began receiving Steele-dossier reports (which the State Department would also soon receive), the intelligence community — particularly the CIA, under the direction of its hyperpolitical director, John Brennan — had been theorizing that the Trump campaign was in a corrupt relationship with Russia. Thanks to the Steele dossier, even before Downer reported his conversation with Papadopoulos to the State Department, the Obama administration had already been operating on the theory that Russia was planning to assist the Trump campaign through the anonymous release of information that would be damaging to Clinton. They had already conveniently fit the hacked DNC emails into this theory.
Downer’s report enabled the Obama administration to cover an investigative theory it was already pursuing with a report from a friendly foreign government, as if that report had triggered the Trump-Russia investigation. In order to pull that off, however, it was necessary to distort what Papadopoulos had told Downer.
That's McCarthy's conclusion. To reach it, he needs to show that Papadopoulos' role was, in fact, systematically distorted. And that, I believe, he does. The easiest way to get a handle on what Mueller does in his Dossier is to go back to the beginning with McCarthy and watch McCarthy compare what is presented in the prosecution of Papadopoulos with what Mueller says about Papadopoulos in his Dossier.
McCarthy first points out this sleight of hand by Mueller:
Other than Papadopoulos’s own word, there is no evidence — none — that he was told about emails by Joseph Mifsud, a Maltese academic whom the FBI and the Mueller investigation deceptively portrayed as a Russian agent. As I’ve previously detailed, because the investigation could not establish that Mifsud was a Russian agent, Mueller’s charge against Papadopoulos is artfully framed to obscure this weakness. Carefully parsed, Mueller allegation is that Papadopoulos had reason to believe Mifsud was a Russian agent — not that Mifsud actually was one.
If Mifsud is the asset of any foreign intelligence service, it is Britain’s — but that is a story for another day.
Now, in another context, what Papadopoulos "had reason to believe"--with, as McCarthy points out, the false insinuation that Mifsud actually was a Russian agent--might have some relevance, but it doesn't in this context. McCarthy then does on to show how Mueller builds off the misconception he has created:
Although Papadopoulos is extensively quoted in the Mueller report, the prosecutors avoid any quote from Downer regarding what Papadopoulos told him at the meeting. This is consistent with Mueller’s false-statements charge against Papadopoulos, which includes the aforementioned 14-page “Statement of the Offense” that studiously omits any reference to Papadopoulos’s May 6 meeting with Downer, notwithstanding that it was the most consequential event in Papadopoulos’s case. (See pp. 7–8, in which the chronology skips from May 4 to May 13 as if nothing significant happened in between.)
Instead, Mueller carefully describes not what Papadopoulos said to Downer, but what Downer understood Papadopoulos had “suggested,” namely that
"the Trump Campaign had received indications from the Russian government that it could assist the Campaign through the anonymous release of information that would be damaging to Hillary Clinton."
The “Trump Campaign” here is Papadopoulos; the “Russian government” is Mifsud. But Papadopoulos was as low-ranking as it got in the Trump campaign, and Mifsud — the source of the “indications” — was not part of the Russian government at all.
And McCarthy follows that up by showing that what Mueller is doing is creating in the readers' minds impressions of what the facts might be or might have appeared to be, while avoiding making any actual factual assertions:
Moreover, the Mueller report does not allege that Papadopoulos ever claimed Mifsud told him the Russians would try to help Trump by anonymously releasing information damaging to Clinton. Again, instead of quoting Papadopoulos, prosecutors repeatedly and disingenuously stress the “suggestion” that Papadopoulos purportedly made — as if the relevant thing were the operation of Downer’s mind rather than the words that Papadopoulos actually used.
What McCarthy is saying here is that any misunderstanding on the part of Downer is utterly irrelevant--unless we are provided the actual words that Papadopoulos used. But, this Mueller declines to do, instead "repeatedly and disingenuously" stressing some purported "suggestion" that they--Mueller and his prosecutors--claim that Papadopoulos made to Downer. But it's a "suggestion" based on words that Mueller never provides to us!
Again, there are other opportunities for Mueller to provide us with the relevant facts regarding Papadopoulos, but he always somehow fails to do so:
Prosecutors acknowledge that Papadopoulos’s conversation with Downer is “contained in the FBI case-opening document and related materials” (Vol. I, p. 89, n. 465). But Mueller’s report does not quote these materials, even though it extensively quotes other investigative documents. Mueller does not tell us what Papadopoulos said.
Here is how the report puts it (Vol. I, p. 192) in explaining why Papadopoulos was interviewed in late January 2017 (my italics):
"Investigators approached Papadopoulos for an interview based on his role as a foreign policy advisor to the Trump Campaign and his suggestion to a foreign government representative [Downer] that Russia had indicated it could assist the Campaign through the anonymous release of information damaging to candidate Clinton.
The “suggestion” that Papadopoulos said such a thing is sheer invention. ...
Note that well. Papadopoulos is said to have "suggested" that there had been an "indication." We are not told what words were used. But what all these "suggestions" and "indications" based on words that are never quoted leads to is this:
Papadopoulos never told Downer anything about emails. Moreover, the Mueller report provides no basis for Papadopoulos to have known that Russia was planning the anonymous release of information damaging to Clinton in order to help Trump; nor does the Mueller report allege that Papadopoulos actually told Downer such a thing.
The State Department’s report to the FBI claiming that Papadopoulos had “suggested” these things to Downer was manufactured to portray a false connection between (a) what Papadopoulos told Downer and (b) the hacking and publication of the DNC emails. That false connection then became the rationale for formally opening the FBI’s Trump-Russia investigation — paper cover for an investigation of the Trump campaign that was already under way.
All of this actually works well with a discussion I recently had with commenter Mike Sylwester (Briefly Noted: Trey Gowdy On The Opening EC And Consensual Monitoring). That discussion arose from a statement that Lisa Page made in her House testimony that
“July 28th  … we received the predicating information for the Russia investigation.”
Now, there's every reason in the world to assume that at that point the FBI was already in possession of the Steele Dossier information that McCarthy, rightly, believes the FBI in reality relied upon to open their Trump-Russia investigation. So what's this about receiving "predicating information" on July 28th? I believe the explanation is that Page is not referring to a complete package of predication but rather to the Papadopoulos related material that provided the FBI with the "cover" (McCarthy's own word) for "an investigation of the Trump campaign that was already under way." This material was not predicating information in the true sense--McCarthy has amply demonstrated how actually threadbare it is. Rather, it was the material that, artfully and deceptively packaged, provided support and cover for the original Steele Dossier narrative that formed the true basis for the investigation. It allowed the FBI to claim that it was receiving similar accounts from multiple sources, rather than simply from Steele, thus significantly bolstering their story in the eyes of people like FISC judges, who would later be reading essentially the same probable cause.
Again, McCarthy provides lots more detail, but it's all starting to hang together. Which must be tremendously worrying for a lot of people, including Team Mueller members.