Paul Manafort, who has been charged with money-laundering conspiracy, false statements and acting as an unregistered foreign agent, argued Mueller exceeded his authority as the case was unrelated to Russian election interference.
A federal judge in Washington ruled Tuesday that special counsel Robert Mueller was working within his authority when he brought charges against President Donald Trump's former campaign chairman.
The decision was a setback for Paul Manafort in his defence against charges of money-laundering conspiracy, false statements and acting as an unregistered foreign agent. Manafort had argued that Mueller had exceeded his authority because the case was unrelated to Russian election interference.
But US District Judge Amy Berman Jackson disagreed, siding with prosecutors who had produced an August 2017 memo from Deputy Attorney General Rod Rosenstein. The memo shows Rosenstein authorised Mueller to investigate Manafort's Ukrainian work and related financial crimes.
Jackson had previously thrown out a civil case Manafort brought challenging Mueller's authority.
Peter Carr, a spokesman for the special counsel's office, declined to comment.
The decision allows one of two criminal cases against Manafort to proceed.
In addition to the Washington indictment, Manafort also faces charges in Virginia of bank fraud and tax evasion.
The Virginia indictment accuses him of hiding tens of millions of dollars he earned advising pro-Russia politicians in Ukraine from 2006 through 2015. It also accuses him of fraudulently obtaining millions in loans from financial institutions including while he worked for the Trump campaign.
None of the charges relate to allegations of Russian election interference and possible coordination with Trump associates, the main thrust of Mueller's public appointment order. Manafort has pleaded not guilty and denied any wrongdoing.
Manafort has filed a similar motion to dismiss his charges in Virginia. US District Judge T.S. Ellis III has yet to rule on it. Ellis had previously grilled Mueller's team on whether the case was within his mandate and questioned whether they brought the case to get Manafort to testify against Trump.