The indictment of Trump campaign officials Paul Manafort and Rick Gates on Monday is, among many other things, the most significant prosecution of a Foreign Agents Registration Act violation ever.
Manafort and Gates have been charged with a litany of federal crimes including conspiracy against the United States and tax fraud. They’re also accused of having acted as agents of a foreign power—in this case, the Ukrainian government under the pro-Russia former president Viktor Yanukovych—without registering their activities with the Department of Justice, as is required by law under FARA. The DOJ’s FARA unit is small, and the law is easy to skirt or violate and get away with it, and it’s commonplace on K Street to do so. Which is why the possibility that Manafort and Gates could go to prison for violating FARA could have reverberations across the lobbying world.
“There has not been as high a profile prosecution for FARA as this one, in recent decades,” said Joseph Sandler, an attorney and expert on FARA compliance with the firm Sandler Reiff Lamb Rosenstein & Birkenstock. “This will certainly cause individuals and firms who rep foreign governments and government-controlled organizations in a variety of ways, to take the FARA requirements much more seriously going forward.”
The highest-profile recent FARA prosecutions in recent decades include the Russian spy ring arrested in 2010, who were charged with violating the law, and the Cuban 5 spy ring in 1998. But for highly paid Washington lobbyists representing foreign governments, these prosecutions are rare.
The indictment alleges that Manafort and Gates were deeply involved in the lobbying work that two firms, which are not named in the indictment, did on behalf of the European Centre for a Modern Ukraine, a Brussels-based group which was essentially a front for Yanukovych. And it alleges that they lied about this work, telling the government they had merely connected the Centre with the firms and left it at that. In fact, the indictment says, the two were basically running the show: “At the direction of Manafort and Gates, Company A and Company B engaged in extensive lobbying.” Manafort and Gates allegedly handled the firms’ being paid via offshore accounts.
Though the firms are not named in the indictment, all signs point to two major Washington lobbying outfits: Mercury and the Podesta Group, both of which received subpoenas from Mueller’s office in August and hired outside counsel to deal with the Manafort and Gates situation after an AP story last year identified the duo as having worked with the firms on the Ukraine matter. At the time, the Podesta Group’s Kimberly Fritts said in a statement that the firm had received assurances that the Centre did not secretly represent a foreign country or political party and that it was considering legal action against the Centre.
Fallout from the indictment was immediate at one of these firms on Monday, as Tony Podesta, the Democratic lobbyist and brother of Hillary Clinton’s campaign manager John Podesta, stepped down from the Podesta Group, Politico reported.
Vin Weber, the former congressman who was Mercury’s lead lobbyist on the account, told Yahoo last year that Manafort had recruited him for the effort, but would not tell him who was behind it. Weber did not immediately return a request for comment on Monday.
“It’s without a doubt the biggest FARA prosecution ever, and I think the facts outlined in the indictment raise big questions for the two firms,” said Matthew Miller, a former DOJ spokesman. “It wouldn’t surprise me to learn that people with either firm have been cooperating with Mueller, and we may see more guilty pleas in the near future.”
Though Manafort and Gates’ involvement wasn’t obvious at the time, the campaign being waged in Washington on behalf of the Centre was not particularly subtle.
Ahead of the 2012 Ukrainian parliamentary elections, the group planted talking points in the U.S. conservative media via an operative, George Scoville, who provided material and recruited bloggers from several websites to write Yanukovych-friendly pieces, as I reported in 2013. Scoville even gave them suggested tweets. One of the writers approached in this scheme told me at the time that they had been offered $500 as part of the deal. Scoville didn’t return a request for comment on Monday.
At the time, Mercury and the Podesta Group had only registered their advocacy for the group with the Senate under the Lobbying Disclosure Act, which requires much less stringent disclosures than FARA. Using a nominally independent front group as the client is one way lobbyists and those they represent get around FARA, which requires a great deal of disclosure about the contracts and the specific contacts lobbyists make on behalf of their clients. The law was passed as a way to counteract Nazi propaganda in the United States before World War II.
Mercury and Podesta disclosed their work for the Centre under FARA in April of this year, while Manafort filed just this past summer, reporting that his firm had collected $17.1 million in the arrangement.
“Manafort is not the exception to the rule, Manafort is indicative of the way in which many people working in this space view the interpretation of FARA,” said a former Podesta Group employee who spoke on condition of anonymity. At the initial meeting between lobbyists from both Podesta and Mercury before the work began in 2012, this person said, Rick Gates was present and the job was spoken of openly as work on behalf of the Ukrainian government. Representatives of Mercury and the Podesta Group did not immediately respond to requests for comment.
“People were flipping out about it at the time, and nobody did anything,” one Republican who was familiar with the Centre’s arrangement with the Podesta Group and Mercury at the time who spoke on the condition of anonymity said of the Ukraine lobbying.
The FARA unit of DOJ, the Republican said, is “toothless.”
Mueller, on the other hand, is evidently not.