National News

Mueller Refers Three Foreign Lobbying Cases to New York Prosecutors

Posted August 1, 2018 2:12 a.m. EDT
Updated August 1, 2018 2:18 a.m. EDT

WASHINGTON — Robert Mueller, the special counsel, has referred three investigations into possible illicit foreign lobbying by Washington insiders to federal prosecutors in New York who are already handling the case against President Donald Trump’s former lawyer, according to multiple people familiar with the cases.

The cases cut across party lines, focusing on both powerful Democratic and Republican players in Washington, including one whom Trump has repeatedly targeted — Democratic superlobbyist Tony Podesta. The cases are unlikely to provoke an outburst from Trump similar to the one he unleashed in April after prosecutors raided the home and office of Michael Cohen, then the president’s lawyer. But these cases do represent a challenge to Washington’s elite, many of whom have earned rich paydays lobbying for foreign interests.

They also tie into the special counsel investigation of Trump: All three cases are linked to Paul Manafort, the president’s former campaign chairman, whose trial on financial fraud charges began Tuesday in Alexandria, Virginia.

Manafort earned tens of millions of dollars lobbying for Ukrainian politicians with ties to Russia, and he drew other Washington lobbyists and lawyers into the work. Now, all three cases being taken on by the U.S. attorney’s office in Manhattan are examining whether those lobbyists failed to register as foreign agents, as is required by law, and how they were paid, said people familiar with the investigations.

The cases involve Gregory Craig, who served as the White House counsel under President Barack Obama before leaving to work for the law firm Skadden, Arps, Slate, Meagher & Flom; former Rep. Vin Weber, R-Minn., who joined Mercury Public Affairs, a lobbying firm, after leaving Congress; and Podesta, a high-powered Washington lobbyist whose brother, John Podesta, was the chairman of Hillary Clinton’s 2016 presidential campaign.

The three men have not been charged with any crimes, those familiar with the cases said.

But the cases have progressed far enough that Mueller’s team has subpoenaed or requested documents, and his investigators have interviewed Craig, people familiar with the investigations said.

All three men were informed in the late winter or early spring that Mueller was handing off the investigations to prosecutors in New York, the people briefed on the cases said.

The referrals were first reported by CNN, and none of the men could immediately be reached for comment. Peter Carr, a spokesman for Mueller, declined to comment.

A former senior official at the Justice Department, who spoke on the condition of anonymity to discuss an open investigation, said that the special counsel had referred some cases under the Foreign Agents Registration Act to the federal prosecutors in Manhattan and to other parts of the Justice Department. The former official would not provide details of the cases. But the official did say that prosecutors in the department’s criminal and national security divisions periodically meet with Mueller’s team to discuss whether cases are appropriate targets for the special counsel, who is investigating Russia’s interference in the 2016 presidential election and whether any associates of Trump aided the Russian campaign.

Mueller’s specific mandate appeared to be why prosecutors in New York took on the investigation into Cohen, who helped Trump navigate thorny personal and business dilemmas in more than a decade serving as his fixer. Cohen now finds himself under legal scrutiny on issues far afield for Russian election interference, such as his ownership of taxi medallions and whether he paid hush money to a pornographic film star who claims to have had an affair with Trump.

Mueller and others at the Justice Department appear to have determined that the examination of lobbying for foreign powers, like Cohen’s business dealings, could fall beyond the special counsel’s mandate.

But it was unclear why the jurisdiction for the lobbying cases was changed. Unlike Cohen’s business, which was based in New York, the lobbying took place in Washington, although payments for the work from overseas most likely flowed through New York.

Under U.S. law, anyone who lobbies or conducts public relations on behalf of a foreign interest in the United States must register with the Justice Department. The law carries stiff penalties, including up to five years in prison. But it had rarely been enforced and thus was widely ignored, until recently.

Now, it appears to have become a weapon for prosecutors. Michael Flynn, the former national security adviser, was facing possible charges of violating the law over his secret work for the Turkey during the campaign before he agreed to cooperate with Mueller last year.

The three cases referred to prosecutors in New York appear to be another sign that the Justice Department intends to more strenuously enforce the law. Yet, as the cases show, such investigations often confront prosecutors with interlaced financial arrangements that can prove difficult to untangle.

The Podesta Group, Podesta’s firm; Mercury Public Affairs, where Weber worked; and Skadden, where Craig practiced, were all recruited by Manafort to assist with his work in Ukraine on behalf of that country’s president at the time, Viktor Yanukovych, who was considered a Kremlin ally.

But two of the firms — the Podesta Group and Mercury Public Affairs — were retained through a nonprofit group in Brussels, the European Center for a Modern Ukraine. The nonprofit was directed by Manafort, and the firms lobbied in Washington on behalf of the nonprofit for what Manafort billed as Yanukovych’s efforts to move Ukraine into the West.

The firms were paid more than $1.1 million each for the work. But they did not initially register to lobby with the Justice Department as foreign agents. Doing so would have required them to make detailed disclosures of the lobbying activity they had performed.

They instead had filed less detailed lobbying reports with Congress. They then retroactively registered to lobby for foreigners with the Justice Department in 2017.

Skadden was hired directly by Yanukovych’s government to analyze the prosecution of one of Yanukovych’s leading political rivals, former Prime Minister Yulia Tymoshenko. Led by Craig, the firm published a report in 2012 that was used — mostly without success — to try to allay concerns about Yanukovych’s leadership in Washington.

Skadden also did not register its activity under lobbying rules, despite Craig himself being involved in promoting the report to journalists and members of Congress — activity that experts said should have prompted registration requirements.

Craig left Skadden in April as investigators made inquiries about his work with Manafort. While the departure was presented as voluntary, a lawyer familiar with the situation said that Craig was forced out.

Mueller’s team repeatedly referenced the work of the firms in his filings in Manafort’s case, including accusing Manafort and his longtime deputy of using an offshore account to “funnel $4 million to pay for the report” from Skadden.

Mueller’s team also indicted a Skadden lawyer who worked with Manafort on the report. The lawyer pleaded guilty to lying to investigators about his communications with a former Trump campaign aide and has already completed a jail sentence.