December 9, 2022 / by 

 

Another Late September Russian Influence Peddler Indictment

EDNY just rolled out an indictment against Andrii Derkach — the Russian-backed Ukrainian who was pitching Hunter Biden dirt to Rudy Giuliani in December 2020 — on charges of money laundering to hide his ownership of some Condos in CA, which are being seized.

Both the EDNY

“The conduct of this Kremlin asset, who was sanctioned for trying to poison our democracy, has shown he is ready, willing, and capable of exploiting our banking system in order to advance his illicit goals. The U.S. will not be a safe haven where criminals, oligarchs or sanctioned entities can hide their ill-gotten gains or influence our elections,” stated United States Attorney Peace. “This Office, together with our law enforcement partners, will use every tool available to prosecute those who evade sanctions and abuse the U.S. financial system, and we will identify, freeze and seize criminal proceeds whenever and wherever possible.”

“Kremlin-backed Ukrainian politician and oligarch, Andrii Derkach, was sanctioned for his efforts to influence the 2020 U.S. Presidential election on behalf of the Russian Intelligence Services. While participating in a scripted Russian disinformation campaign seeking to undermine U.S. institutions, Derkach simultaneously conspired to fraudulently benefit from a Western lifestyle for himself and his family in the United States. The FBI will continue to use all the tools at its disposal to identify Russian intelligence operations, disrupt Russian information laundering networks, and bring to justice those who seek to engage in criminal conspiracies to undermine the integrity of U.S elections and evade U.S. sanctions,” stated Assistant Director-in-Charge Driscoll. [my emphasis]

And DOJ press releases

In conducting that travel to, and spending time in, the United States, Derkach was actively involved in deceiving U.S. law enforcement and border authorities even prior to his SDN designation. For example, in December 2019 and February 2020, Derkach was in the United States to meet with U.S. persons and conduct media appearances. To obtain a U.S. visa, and to ostensibly attend meetings and conferences related to human rights issues in Ukraine, Derkach retained the services of a U.S.-based consulting firm (Firm-1). The written contract purported to be between Firm-l and a Ukrainian shipping company and did not refer to Derkach, notwithstanding Derkach’s direct involvement in the provision of services that the contract purported to reflect. In or about and between July 2018 and December 2018, Derkach paid Firm-l approximately $100,000. In a July 2018 email communication with Firm-l, Derkach’s representative expressed concern that, “given the fact that my client [Derkach] is a politically exposed person, as well as the statements he made concerning Ukraine’s interference into U.S. elections and the insider information we have in our possession,” the visa application process could be potentially complicated for Derkach. [my emphasis]

… Mention things that involve the former President’s personal lawyer. But even the indictment, which gets a bit more explicit about his trips to meet with Rudy, don’t name him.

The most interesting detail, for now, is that the actual indictment date was September 26, putting it in the same week when DOJ was prioritizing all the charges against Oleg Derpiaska and his associates. The delay appears to have involved filing the forfeiture against Derkach’s CA property.

But I suspect we’ll see more delayed disclosures from late September.


Welcome to the Jim Jordan and James Comer Look the Other Way Committees, Brought to You By Access Journalism

In an article published 112 days before the November election, Politico included this sentence about all the investigations Republicans planned to conduct if they won the House.

Republicans on the [Oversight] committee plan to hold high-profile probes into Hunter Biden’s dealings with overseas clients, but they also want to hone in on eliminating wasteful government spending in an effort to align the panel with the GOP’s broader agenda.

Politico’s Jordain Carney did not note the irony of planning, almost four months before the election, an investigation into foreign efforts to gain influence by paying the then Vice President’s son years ago, next to a claim to want to eliminate wasteful spending. He just described it as if yet another investigation into Hunter Biden, even as DOJ continued its own investigation, wasn’t an obvious waste of government resources.

Politico’s Olivia Beavers didn’t point that out either in a 1,400-word profile in August on James Comer entitled, “Meet the GOP’s future king of Biden investigations,” the kind of sycophantic profile designed to ensure future access, known as a “beat sweetener.” (Beaver is currently described as a Breaking News Reporter; this profile was posted 3 days after the search of Mar-a-Lago.) She did acknowledge that these investigations were, “directing the party’s pent-up frustration and aggression toward Democrats after years in the minority,” not any desire to make government work or eliminate wasteful spending. But she nevertheless allowed Comer and his colleagues to claim that an investigation into Joe Biden’s son could be credible — that it would somehow be more credible than the bullshit we expect from Marjorie Taylor Greene.

He’s long been known on both sides of the aisle as a sharp and affable colleague, and has the tendency to lean in with a hushed voice, almost conspiratorially, only to crack a well-timed joke that’s often at his own expense. Beyond that personal appeal, though, Comer emphasized it’s his priority to ensure the oversight panel’s work remains “credible.”

That’s a tricky path to tread, given his party’s investigative priorities are still subject to the whims of former President Donald Trump as well as an increasingly zealous conservative base and media apparatus. But Comer’s particularly well-suited to the task, according to more than two dozen House Republicans interviewed. And if he manages to do it right, it could provide a launching pad to higher office — Comer is not discounting a future bid for Senate or Kentucky governor, though that likely wouldn’t occur until after his four remaining years leading the panel.

“I’m not going to be chasing some of these right-wing blogs and some of their conspiracy theories,” Comer told POLITICO in an hour-long interview conducted in a rented RV trailer that his campaign had parked at the picnic. “We’ll look into anything, but we’re not going to declare a probe or an investigation unless we have proof.”

[snip]

And though Comer has said Hunter Biden would likely get subpoenaed in the event of a declined invitation to the committee next year, he doesn’t want to appear trigger-happy with issuing subpoenas, either.

“This isn’t a dog-and-pony show. This isn’t a committee where everybody’s gonna scream and be outraged and try to make the witnesses look like fools,” he said, before nodding at House Democrats’ past probes of the Trump campaign and Russian election interference. “Unlike Adam Schiff, we’re gonna have something concrete, substantive on Hunter Biden or I’m not going to talk about Hunter Biden.”

Beavers didn’t mention the platitudes she included in her August article when she reported, yesterday, on the press conference Comer and Jim Jordan have scheduled for today, less than 24 hours after the 218th House seat for Republicans was called, to talk about the investigation into Hunter Biden.

Reps. Jim Jordan (R-Ohio) and James Comer (R-Ky.) discussed plans to investigate politicization in federal law enforcement and Hunter Biden’s business affairs.

“We are going to make it very clear that this is now an investigation of President Biden,” Comer said, referring to a planned Republican press conference Thursday about the president and his son’s business dealings.

Beavers has let Comer forget the claim, which she printed as good faith in August, that Comer was “not going to declare a probe or an investigation unless we have proof.”

Olivia. Comer lied to you in August. As a journalist, you might want to call that out.

There is no functioning democracy in which the opposition party’s first act after winning a majority should be investigating the private citizen son of the President for actions taken three to six years earlier, particularly not as a four year criminal investigation into Hunter Biden — still overseen by a Trump appointee — continues.

There is no sane argument for doing so. Sure, foreign countries paid Hunter lots of money as a means to access his father. But according to an October leak from FBI agents pressuring to charge the President’s son (one that Comer pitched on Fox News), which claimed there was enough evidence to charge Hunter Biden for tax and weapons charges but which made no mention of foreign influence peddling charges, that foreign influence peddling apparently doesn’t amount to a crime. Nothing foreign countries did with Hunter Biden is different from what Turkey did with Mike Flynn, Ukraine did with Paul Manafort, Israel did with George Papadopoulos, and multiple countries did with Elliot Broidy. Jim Jordan and James Comer not only had no problem with that foreign influence peddling, they attacked the FBI for investigating them.

If James Comer and Jim Jordan really cared about foreign influence peddling, they would care that, since leaving the White House, the Trump family has entered into more than $3.6 billion of deals with Saudi Arabia ($2 billion to Jared’s investment fund, a $1.6 billion real estate development in Oman announced the day before Trump’s re-election bid, and a golf deal of still-undisclosed value; Judd Legum has a good post summarizing what we know about this relationship). Given that the Oversight panel under Carolyn Maloney already launched an investigation into Jared’s fund — like Hunter Biden’s funding, notable because of the obvious inexperience of the recipient — Comer could treat himself and American taxpayers with respect by more generally investigating the adequacy of protection against foreign influence, made more acute in the wake of the opinion in the Steve Wynn case that guts DOJ’s ability to enforce FARA.

With today’s press conference, you will see a bunch of journalists like Olivia Beavers treating this as a serious pursuit rather than pointing out all the hypocrisy and waste it entails as well as the lies they credulously printed during the election about it. You will see Beavers rewarding politicians for squandering government resources to do this, rather than calling them out for the hypocrisy of their actions.

Maybe, if Comer becomes Governor of Kentucky, Beavers will have the inside track on access to him. I guess then it will have been worth it for her.

This Hunter Biden obsession has been allowed to continue already for three years not just because it has been Fox’s non-stop programming choice to distract from more important matters, but because journalists who consider themselves straight journalists, not Fox propagandists, choose not to call out the rank hypocrisy and waste of it all.

For any self-respecting journalist, the story going forward should be about how stupid and hypocritical all this is, what a waste of government resources.

We’re about to find out how few self-respecting journalists there are in DC.

Update: NBC journalist Scott Wong’s piece on the GOP plans for investigations was similarly supine. The funniest part of it is that it treated a 1,000 page “report,” consisting almost entirely of letters Jordan sent, as if it were substantive. I unpacked the details NBC could have disclosed to readers here.

Meanwhile, this Carl Hulse piece doesn’t disclose to readers that Marjory Taylor Greene’s investigation into the jail conditions of January 6 defendants, besides being an attempt to protect potential co-conspirators, also is falsely premised on claims that the January 6 defendants are treated worse (and not better) than other defendants as well as false claims that many of the pre-trial detainees are misdemeanants.


Tom Barrack Acquitted on All Counts

According to multiple outlets, a jury just acquitted Tom Barrack on all counts — both the charges that he acted as a foreign agent of Mohammed bin Zayed and the charges that he lied to obstruct the investigation.

Barrack (and his aide Matthew Grimes) were really well lawyered throughout this case and succeeded in excluding a good deal of critical evidence, including evidence proving venue in EDNY. It’s not inconceivable that the jury acquitted on venue alone.

Barrack argued, at length on the stand, that he did what he did because he wanted to, not because he was acting at the behest of Mohammed bin Zayed. He was charged under 18 USC 951 (not FARA), which covers a gray zone of conduct that really gets to motive.

I’m most interested in why the jury acquitted on the false statements charges, which included basic questions about whether Barrack had dowloaded WhatsApp. His attorneys did a lot of work to question the FBI agent and the production of the 302s from the 2019 FBI interview in question.

At some point down the road, I hope to read the transcripts to get a better sense of what happened (the coverage from the trial was remarkably thin). But it’s a testament to what can happen when DOJ charges an aggressive case against someone with good lawyers.


“Fuck! Two years or three years, screw you, they will get you when it’s time”

About 26 pages into a 40-page indictment of Quanzhong An and his daughter Guangyang An — which was obtained last week but rolled out at a press conference yesterday — the indictment shifts tracks dramatically.

Up until that point, it lays out in detail An’s role in China’s efforts, dating back to 2002, to convince John Doe-1 and his son, referred to as John Doe-2 in the indictment, to return to China. But then at page 26, it starts to lay out alleged money laundering, showing how Quanzhong An transferred almost $4 million from China to the US over six years by transferring it in increments at or just under $50,000 in the name of family members.

From in or about 2016 through the present, the defendants QUANZHONG AN and GUANYANG AN conspired with others to engage in a money laundering scheme. During this period, the conspirators sent and caused to be sent millions of dollars in wire transfers from the PRC to the United States. As these activities violated applicable PRC law regarding capital flight — which imposed a limit of $50,000 per person annually for total foreign exchange settlement — the conspirators engaged in deceptive tactics designed to frustrate and impede the Anti-Money Laundering (“AML”) controls of the U.S. financial institutions, so that the defendants and the coconspirators could enjoy continued access to the U.S.-based bank accounts.

Here’s what a fraction of the transfers look like.

To be clear, the reason these transfers were made in $50,000 increments was to comply with Chinese transfer restrictions, not US ones. This is charged as money laundering in the US because (as the indictment notes) it involved false statements to banks and layering and other tactics to hide the ruse. But it also appears to be a violation of Chinese law, the same kind of law that the person targeted for repatriation by An allegedly violated.

As FBI Director Chris Wray noted at yesterday’s press conference,

Two of the subjects who targeted him, two of the defendants charged today, are themselves actually involved in a scheme to launder millions of dollars. And as if that weren’t enough evidence that the real purpose of their operation was political, they gave their victim a deadline to return by: the 20th CCP Congress earlier this month.

The money laundering belies the claim that China is pushing for John Doe-1’s repatriation out of some concern about financial corruption.

It may provide context, too, to details earlier in the indictment that described how An became involved in efforts to coerce John Doe-1 to return to China. As described, his efforts to lure John Doe-1 back to China started in 2017, when he showed up at John Doe-1’s home to locate him and his son. A year later, his daughter Guangyang accompanied a family member’s boss to the house in 2018, where they left a note and were captured on John Doe-1’s security camera, as shown in the picture.

In August 2019, one of the Chinese-based co-conspirators sent a message to John Doe-1 claiming that An was just helping out out of patriotism.

An Quanzhong is a patriotic businessman in the U.S. and the head of the Chinese Business Association of New York. He was originally from Zaozhuang, Shandong, and has given strong support to the government’s work. He is willing to communicate with [John Doe-1] and pay for [John Doe-1] to help the government recover the loss without anything in return. At the same time, he is willing to provide enough funds to guarantee [John Doe-1’s] return and cover his expenses needed to return home.

Starting in 2020, An started meeting with the son, John Doe-2, meetings which were consensually recorded (meaning either the FBI was already involved or John Doe-2 is really smart).

At a January 2020 meeting, An explained to the son what he was up to, admitted to the 2017 visit to the house, and explained that he would pay the money John Doe-1 allegedly owes to the Chinese state and put him up in his Chinese home if he returned.  John Doe-2 asked why he was willing to pay that amount, and An explained that he was trying to get the Chinese government to view him as a good guy.

QUANZHONG AN responded that he had donated over 100 million yuan to the PRC government the previous year and that the PRC government “will be very happy if this thing is settle[d].” QUANZHONG AN boasted that, if he assisted with John Doe-1’s repatriation, the PRC government “will not see [QUANZHONG AN] as a bad guy because [he has] done so many good things, even donating money to society.”

In a July 2021 meeting with John Doe-2, also lawfully monitored, An repeated the promise that John Doe-1 would not be detained if he returned, then explained he was involved in part because of his business interests.

QUANZHONG AN also acknowledged how his business interests prompted his involvement in John Doe-1’s case. QUANZHONG AN explained, “[A]s you know, there are many ways to make it work in China. It’s hard to do business in China.” QUANZHONG AN claimed that he had succeeded by making donations to the PRC government. QUANZHONG AN further claimed that “he had donated over 300 million yuan over the years to the PRC government.”

In a July 2022 call that An brokered to take place at a hotel he owns in Flushing, one of the Chinese co-conspirators told John Doe-2 that he should return before the Party Conference (the October 20 arrest took place in the middle of it, which spanned from October 16 to October 22), because, “In case there is a change, I am afraid that it doesn’t work in favor of the old man” (which I believe is a reference to John Doe-1’s father, in China).

In recent weeks, the detention motion for the father and daughter describes, An met with John Doe-2 again, this time with a confession for John Doe-1 to sign in advance of the Party Congress.

More recently, Quanzhong An met with John Doe-2 again on September 29, 2022. During this meeting, Quanzhong An pressed for John Doe-1 to execute an agreement to return to the PRC in advance of the CCP’s 20th National Congress, which began on October 16, 2022. As part of such agreement, Quanzhong An sought a written confession from John Doe-1, which would be submitted directly to the PRC government. This morning, incident to Quanzhong An’s arrest, agents located a photograph of what appears to be a sample confession for John Doe-1 to use.

Instead of returning, the implication is, DOJ finalized this indictment on October 7, and the FBI arrested An and his daughter. The indictment includes two forfeiture provisions, and lists three properties. After his arrest last week, An was given a CJA attorney, suggesting the considerable assets he has in the US may be tied up in those forfeitures.

In other words, this appears to be a story of how the Chinese government used An’s own violations of Chinese law not to rein him in, but to coerce him to pursue the return of a long-sought exile. The US government is effectively using the leverage China had over An, because of his alleged money laundering, to impose far greater penalties — both financially and (because of stiff penalties on money laundering) in terms of criminal exposure — on his involvement in the matter here in the US.

This was one of three charging documents rolled out yesterday in a very high-level press conference involving Attorney General Merrick Garland, Deputy Attorney General Lisa Monaco, National Security Division head Matthew Olsen, and FBI Director Chris Wray. Those three sets of charges are:

  • Charging two suspected Chinese intelligence officers — both in China — who paid a double agent for what they believed was secret information pertaining to the 2018 prosecution of Huawei on racketeering charges. (press release)
  • Charging four Ministry of State Security officers — all in China — in conjunction with their unsuccessful attempt to recruit a former law enforcement officer while on two trips to China (one in 2008, the second in 2018) and their successful recruitment of an unnamed and uncharged US permanent resident co-conspirator who took actions in New Jersey. (press release)
  • As noted, the indictment charging US permanent resident Quanzhong An, his US citizen daughter Guangyang An, along with five Chinese based individuals, four of whom are members of the Provincial Commission for Discipline Inspection for their efforts to lure a long-term US resident back to China. (press release, which was issued on the day of arrest, October 20)

On their face, the charges seemed quite unrelated (indeed, Wray acknowledged as much). On its face, the press conference seemed to be another of the showy ones designed to get attention precisely because most of those affected are overseas, out of the reach of law enforcement. (Compare that press conference to the more discreet rollout of the three indictments targeting Oleg Deripaska and his associates, charges that take more overt cooperation with other countries, to say nothing of even more juggling of ongoing sensitivities.)

Which raises the question of why now, why these cases. In response to a direct question about whether the timing of this related to the party conference — mentioned in the An indictment and in Wray’s prepared remarks — that solidified Xi Jinpeng’s third term, Wray said only that, “we bring cases when we’re ready.”

It may be that An was lured back to the US for his arrest based on that timing, which would in turn explain the timing of that arrest (which was announced, though not docketed, last week). But that would only explain why that case was rolled out, and it was already public last week.

An and his daughter are the only people described to be arrested in these documents.

But there is a Co-Conspirator-1 named in the New Jersey indictment (which was filed on October 20, the same day the An arrest took place) whose apparent US presence is unexplained in the indictment and yesterday’s press conference.

That indictment seems like it’s an investigation that started when a former law enforcement officer was recruited in China in 2008, which alerted the US government to the identity of Wang Lin, who in 2016 traveled to the Bahamas to begin recruiting CC-1, first by tasking him or her with delivering a $35,000 payment in the US. Then, in 2016, another of the co-conspirators, Wang Qiang, traveled with CC-1’s Chinese family members and had a series of discussions about working for China. In one, Wang expressed concern that the US had planted surveillance equipment on one of his phones at the airport.

During the same conversation, CC-1 also discussed with CC-l’s two family members, in sum and substance, what s/he believed to be the United States’ surveillance capabilities. CC-1 also told her/his family members that WANG QIANG had expressed concern when he (WANG QIANG) entered the United States that customs officials had installed surveillance equipment on one of his telephones at the airport, and that WANG QIANG was concerned about numbers for several contacts in North Korea that he had in his phones. CC-1 stated, in sum and substance, that WANG QIANG was “a low-level” official and should not have been concerned that he would be known to United States authorities.

It seems Wang was right to be concerned, because a series of damning conversations involving Wang and CC-1 were “lawfully recorded.”

WANG and CC-1 continued to discuss working on behalf of the PRC and obtaining information for the PRC in furtherance of its intelligence-gathering operations. Among other things, CC-1 stated thats/he “like(s) to do it,” meaning working for the PRC. CC-1 complained, however, that “[it] would be fine if there were more money.” CC-1 continued, stating, “It will work if you can truly pull off something big, things like the fucking U.S. high tech, anything that is important, right?” CC-1 then stated that “We are the ones who do the fucking work.” CC-1 also noted that “it is just a business,” that “they pay you for each job done,” and that “they will pay you again if they use you again.”

WANG QIANG and CC-1 continued to express fear about getting caught. Indeed, CC-1 stated thats/he did not “want to get into any trouble now.” CC-1 advised WANG QIANG, “If you don’t need to travel, it should be safe to stay in China. If you need to travel, fuck! The U.S. is very capable, I am telling you. You can’t run away from them.” CC-1 continued, “The Americans are really capable. Fuck! Two years or three years, screw you, they will get you when it’s time. . . . On the other hand, I have no use to them if I go back. I have no use to them if I go back to China.” During the conversation, WANG QIANG stated his belief that individuals working for the PRC “will be abandoned in the future.” [my emphasis]

There’s no other explanation for what happened with CC-1. And absent a 2018 offer to the law enforcement officer on a trip to China in 2018, these charges would be time-barred; I wonder whether that former law enforcement officer has a tie to the double agent described in the Huawei indictment (though timing wise, he cannot be the same person). Of that double agent from the Huawai case, Wray yesterday said, “we very rarely get a chance to publicly thank” double agents working in operations targeting China and other foreign countries.

But the pattern shown in the An indictment holds: the recruitment via Chinese associates using family ties of permanent residents in the US.

That is, at least two of these indictments appear to be based off far deeper investigative work than that FBI had previously pursued, in which they tried to catch scholars in false statements regarding dual Chinese and US-funding.

At yesterday’s press conference, someone asked (seemingly pointing to the ongoing threat of espionage from China), “Was it a mistake to get rid of the China initiative?”

The China Initiative was a Trump Administration effort that resulted in a series of high profile failed prosecutions and that sowed discrimination against Chinese and Chinese-Americans working in technical roles.

Garland responded by saying that,

These cases make quite clear we are unrelenting in our efforts to prevent the government of China from economic espionage, from operating in the United States as foreign agents, from trying to affect our rule of law, our judicial system, from trying to target or recruit Americans to help them … we have not in any way changed our focus on those kind of behaviors by China.

Olsen added,

We have stayed very focused on the threat that PRC poses to our values, to our institutions. We speak through our cases, and we speak to those cases today. I think what we are charging today in terms of the range and persistence of the threat that we see from the PRC demonstrates that we have remained relentless on that threat and we will continue to be focused on that threat going forward.

Asked by the same apparent Trump booster whether he had just gotten rid of the name, Olsen responded,

We ended the China Initiative earlier this year after a lengthy review and adopted a broader strategy focused on the range of threats that we face from a variety of nation-states, and that’s the strategy we’re carrying forward.

What DOJ spoke through its cases yesterday suggests they’re using longer-term operations to target a more fundamental recruiting effort and only unwinding them, one by one, as such interlocking efforts require it.

Update: In juggling some quotes I cut the part from which the title comes. I’ve added it back in (h/t higgs boson) and fixed another detail.


Fronting for OVD: A Third Deripaska-Focused Indictment from Late September

DOJ rolled out two sanctions-related indictments targeting Russia yesterday. One, charged in Connecticut, accuses some Latvians and a Ukranian of attempting to purchase and re-export a jig grinder to “individuals in Russia.”

The indictment alleges that, beginning in 2018, Eriks Mamonovs, 33, and Vadims Ananics, 46, both citizens of Latvia who operated CNC Weld, a Latvia-based corporation, conspired with Stanislav Romanyuk, 37, a citizen of Ukraine and resident of Estonia who operated Estonia-based BY Trade OU, and others, including Janis Uzbalis, 46, of Latvia, and individuals in Russia and a Russia-based company, to violate U.S. export laws and regulations and smuggle a jig grinder that was manufactured in Connecticut to Russia. A jig grinder is a high-precision grinding machine system that does not require a license to export to European Union countries, but does require a license for export and reexport to Russia because of its potential application in nuclear proliferation and defense programs. [my emphasis]

The Latvians accused were arrested Tuesday; Ukranian Stanislav Romanyuk was arrested in Estonia on June 13. The actual indictment — described as a superseding indictment — was obtained on July 7, but is not yet publicly docketed.

The other indictment, which was charged in Brooklyn, charges five Russians — one of whom was arrested in Germany, the other in Italy, both on Monday — along with a Spaniard and a Venezuelan, for sanctions violations and money laundering.

Payment for NDA GmbH’s illicit activities was often consummated in U.S. dollars routed through U.S. financial institutions and correspondent bank accounts.  To facilitate these transactions, Orekhov and his coconspirators used fictitious companies, falsified “Know Your Customer” documentation and bank accounts in high-risk jurisdictions, causing U.S. banks to process tens of millions of dollars in violation of U.S. sanctions and other criminal laws.  In one conversation with Soto, Orekhov bragged that “there were no worries…this is the shittiest bank in the Emirates…they pay to everything.”  The scheme also utilized bulk cash drops with couriers in Russia and Latin America, as well as cryptocurrency transfers worth millions of dollars, to effectuate these transactions and launder the proceeds.

It, too, focuses on the military aspect of the scheme — and even claims to have found components obtained through this network on the battlefield in Ukraine.

As alleged, Orekov has served as the part owner, Chief Executive Officer and Managing Director of Nord-Deutsche Industrieanlagenbau GmbH (NDA GmbH), a privately held industrial equipment and commodity trading company located in Hamburg, Germany.  The other owner of NDA GmbH is Artem Uss, the son of the governor of Russia’s Krasnoyarsk Krai region.  Kuzurgasheva served as the Chief Executive Officer of one of the scheme’s shell companies and worked for NDA GmbH under Orekhov.  Using NDA GmbH as a front company, Orekhov and Kuzurgasheva sourced and purchased sensitive military and dual-use technologies from U.S. manufacturers, including advanced semiconductors and microprocessors used in fighter aircraft, missile systems, smart munitions, radar, satellites and other space-based military applications.  These items were shipped to Russian end users, including sanctioned companies controlled by Telegin and Tulyakov, such as Radioavtomatika, Radioexport and Abtronics, that serviced Russia’s defense sector.  Some of the same electronic components obtained through the criminal scheme have been found in Russian weapons platforms seized on the battlefield in Ukraine.

But there’s a significant component of the Brooklyn indictment that focuses on Oleg Deripaska and Rusal. The lead defendant, Yury Orekhov, is described as a former procurement manager for what the indictment makes clear is Deripaska and Rusal. [Note, the indictment variably transliterates his name Orekov and Orekhov; I’ll use the latter.]

OREKHOV previously worked as a procurement manager for a publicly-traded Russian aluminum company (the “Aluminum Company”) controlled by a Russian billionaire and industrialist (the “Oligarch”), an individual whose identity is known to the Grand Jury.

The identify of Rusal (and therefore Derispaska) is confirmed in a paragraph that describes the period of Rusal’s sanctions (which Reuters noted here).

On August 3, 2021, USS sent OREKHOV a draft communication to the Aluminum Company regarding business dealings with NDA GmbH. The letter began, “During the sanctions period, the Company [NDA GmbH] began to supply fuel oil for [the Aluminum Company in Guinea].” Notably, the Aluminum Company was included in the SDN List from on or about April 6, 2018 through on or about January 27, 2019.

For example, Orekhov and Artem Uss are accused of laundering money to purchase oil from Venezuela’s sanctioned PDVSA for the use of Rusal. The indictment cites communications from Orekhov to a trader Juanfe Serrano, referencing the sanctions against Deripaska.

Indeed, as reflected in numerous documents from the Aluminum Company and NDA GmbPI, the defendants YURY OREKOV and ARTEM USS repeatedly purchased oil from PDVSA, causing U.S. financial institutions to process U.S. dollar-denominated payments, and supplied it to the Aluminum Company. For example, in a March 2020 draft letter addressed to a Deputy of the State Duma (one of the chambers of Russian parliament), who was an associate of the Oligarch, NDA GmbH proposed alternate sources of supply for “[Aluminum Company] procurement,” including using a “small, aggressive trader” that “conducts high-risk transactions in the Caribbean region, including with the Venezuelan state-owned company PDVSA, which is under sanctions, [and] has excess profits due to a 40% discount on the selling price of oil.” On or about December 4, 2021, in a series of electronic communications between OREKHOV and the defendant JUAN FERNANDO SERRANO PONCE, OREKHOV wrote, “this is our mother company pasting a link to the Aluminum Company’s website and a link to the Oligarch’s Wikipedia page. OREKHOV stated, “He [the Oligarch] is under sanctions as well. That’s why we [are] acting from this company [NDA GmbH]. As fronting.” SERRANO responded, “My partner also haha … he is very close to the government. He is one of the influence people in Venezuela. Super close to the Vice President.” SERRANO pasted a link showing search results for a Venezuelan lawyer and businessman who was currently wanted by U.S. authorities for bribery and money laundering, an individual whose identity is known to the Grand Jury. Later, in a series of communications between OREKHOV and SERRANO in or about March 2022, OREKHOV sought a “term contract with [PDVSA]” for “1 million [barrels of oil] per month,” and clarified that, “with [the Aluminum Company] it’s an annual contract, every month, every month … this is stable for sure.” [my emphasis]

As described, the smuggling involved spans Germany, Venezuela, Dubai, Malaysia, Panama, China, and Australia, among other countries. Seven US companies are identified. In addition, there’s an Individual 1 tied to a “California-based consulting and logistics company” who met with Orekhov in Europe in 2019.

The entire indictment — and the timeline laid out in the conspiracy part — almost feels like two indictments: one that spans 2018 through January 2020 (when Bill Barr was trying to shut down inconvenient investigations) and a second one that restarted after Russia’s Ukraine invasion.

In two different paragraphs pages apart, the indictment describes a conversation that Uss and Orekhov had on March 30 of this year, after the expanded invasion of Ukraine started. While much of the context seems left out, it seems that Orekhov was getting cold feet on Russia.

28. On March 30, 2022, the defendant YURY OREKHOV asked the defendant ARTEM USS, “Have you decided to leave Russia?” USS joked in response, “[Y]ou want to be an international fugitive? It’s too much.” OREKHOV replied, “[A]nd you? Would you like to? 1 can arrange, very easy.”

[snip]

37. In a March 30, 2022 message exchange between the defendants YURY OREKHOV and ARTEM USS regarding NDA GmbH’s business with the Aluminum Company, USS wrote to OREKHOV, “[I]f you’re serious … I will meet with [the Oligarch’s initials] when 1 return to Moscow . . . and I will convey to him personally your desire to pay off all debt… if you don’t want to work with Russia now and it’s really toxic, then don’t work. I will follow this closely.”

That’s the kind of person who might be willing to make a deal.

As I said above, this is the third indictment of Deripaska-linked figures obtained in late September. The timeline looks like this:

September 21: Deripaska property manager Graham Bonham-Carter indicted in SDNY

September 26: Orekhov et al indicted in EDNY

September 28: Superseding indictment obtained against Olga Shriki, Deripaska, and others

September 29: Deripaska’s US-based associate Shriki arrested

October 11: Bonham-Carter arrested in the UK

October 17: Yury Orekhov and Artem Uss arrested in Germany and Italy, respectively

In less than a month, then, DOJ has charged Deripaska, both a US and UK based manager, and someone involved in illicit procurement for Deripaska and the Russian government, with arrests of those three key associates.

The announcements for all three describe the involvement in National Security Division’s Counterintelligence and Export Control Section — the spying section (the Connecticut announcement lists an NSD trial attorney, but it’s unclear whether he is specifically in the CECS section). The Orekhov indictment even describes that a CECS prosecutor will play a part in the prosecution. That implies DOJ’s interest goes beyond just sanctions violations.

It’s fairly impressive work and no doubt unbelievably complicated coordination, given all the other countries involved. But it feels like there might be a few more things in the work. As noted, while the indictment charging Deripaska personally moves for forfeiture of Deripaska’s three US-based properties, Shriki is not described as the primary person running those properties.


Oleg Deripaska Indicted for His Anchor Baby and Flowers for a TV Host

SDNY just unsealed an indictment against Oleg Deripaska and three others for sanctions violations. Just one person — naturalized US Citizen Olga Shikri — was in the US to be arrested. The other main consequences from this indictment will be the forfeiture of property related to the sanctions violations. The indictment lists the three properties that were searched last year.

The central allegations in the indictment pertain to efforts — successful with a first child, and unsuccessful with a second — to set up Deripaska’s girlfriend to give birth in the US and via that process, obtain US citizenship for the child.

Then, in or about 2020, SHRIKI and BARDAKOVA helped DERIPASKA’s girlfriend, VORONINA, travel from Russia to the United States so she could give birth to DERIPASKA’s and VORONINA’s child in the United States.  Despite DERIPASKA’s ongoing support for the Russian regime, he funded hundreds of thousands of dollars of transactions so that his child could take advantage of the U.S. healthcare system and U.S. birthright.  SHRIKI orchestrated the payment of approximately $300,000 worth of U.S. medical care, housing, childcare, and other logistics to aid VORONINA and DERIPASKA’s efforts to help VORONINA give birth in the United States, which resulted in the child receiving U.S. citizenship.  DERIPASKA counseled VORONINA on obtaining a visa to travel to the United States, including by telling her to be “careful” ahead of an interview by U.S. immigration authorities.  VORONINA thereafter applied for and obtained a U.S. visa for a purported ten-day tourism visit without disclosing her intent to travel and stay in the United States for approximately six months to give birth to DERIPASKA’s child.  Following the birth, SHRIKI, BARDAKOVA, and VORONINA conspired to conceal the name of the child’s true father, DERIPASKA, going so far as to change, slightly, the spelling of the child’s last name.

Later, in or about 2022, at DERIPASKA’s further behest and for his further benefit, SHRIKI and BARDAKOVA attempted to facilitate VORONINA’s return to the United States to give birth to DERIPASKA’s and VORONINA’s second child.  This second attempt included BARDAKOVA and VORONINA’s attempt to use false statements to conceal DERIPASKA’s funding and secure VORONINA’s entry into the United States – an attempt that was thwarted, and VORONINA was denied entry and returned immediately to Istanbul, through which she had flown from Russia to the United States.

In addition to a music studio sold in 2019, the indictment refers to other purchases in the US, including Easter flowers for a US TV host.

BARDAKOVA – largely based in Russia – directed SHRIKI to engage in particular illegal transactions on DERIPASKA’s behalf.  These instructions included directing SHRIKI to obtain U.S. goods and technology for DERIPASKA.  Moreover, between in or about May 2018 and in or about 2020, BARDAKOVA instructed SHRIKI to purchase and send flower and gift deliveries on behalf of DERIPASKA to DERIPASKA’s social contacts in the United States and Canada.  The deliveries included, among others, Easter gift deliveries to a U.S. television host, two flower deliveries to a then-former Canadian Parliament member, and two flower deliveries in 2020 to VORONINA while she was in the United States in 2020 to give birth to DERIPASKA’s child.

Perhaps most interesting to me is that the investigation was active in 2020, in the wake of Geoffrey Berman’s firing. Shriki is accused of destroying records in advance of a September 23 grand jury appearance. This was the period when Barr was furiously cleaning up all remaining traces of the Russian investigation (and it was the same month when Yevgeniy Prigozhin’s Interpol red notice was withdrawn, even though the indictment against him in the US remains).

In Berman’s book (which I’ll write about one of these days), he makes it quite clear Barr was protecting Rudy in this period. Was he also protecting Deripaska?

Update: Interesting timing! Andy Beshear announced he has recouped the $15 Million Matt Bevin dumped in Deripaska’s aluminum venture in KY.


NARA May Have Pre-Existing Legal Obligations with Respect to Documents Covered by Aileen Cannon’s Order

On Monday, Aileen Cannon told the government that it can only access 11,282 documents legally owned by the National Archives and currently possessed by DOJ to do an assessment of the damage Trump did by storing those records in a poorly-secured storage closet and desk drawer.

We’ll learn more in coming days about how the government will respond to Cannon’s usurpation of the President’s authority over these documents.

But I want to note that there may be competing legal obligations, on NARA at least, that may affect the government’s response.

NARA has been responding to at least four pending legal obligations as the fight over Trump’s stolen documents has gone on:

  • A series of subpoenas from the January 6 Committee that the Supreme Court has already ruled has precedence over any claims of privilege made by Trump
  • Two subpoenas from DOJ’s team investigating January 6, one obtained in May, covering everything NARA has provided to the J6C, and a second one served on NARA on August 17; these subpoenas would also be covered under SCOTUS’ ruling rejecting Trump’s privilege claims
  • Discovery in Tom Barrack’s case, whose trial starts on September 19 (DOJ informed Barrack they had requested Trump White House materials from NARA on April 5)
  • A subpoena from Peter Strzok in his lawsuit over his firing and privacy act violations

For all of them, NARA has a legal obligation that precedes Judge Cannon’s order. So if any of the material owned by NARA that Cannon has enjoined for Trump’s benefit is covered by these subpoenas and the Barrack discovery request, it will give NARA an additional need to intervene, on top of the fact that Cannon has made decisions about property owned by NARA.

I don’t hold out hope that the August 8 seizure has much pertaining to either January 6 investigation. Given that none of the boxes include clippings that post-date November, its unlikely they include government documents from the same period.

 

Plus, given the timing, I suspect the more recent subpoena from Thomas Windom to NARA pertains to materials turned over to NARA by Mark Meadows after the Mar-a-Lago search. Because Meadows originally turned those communications over to J6C directly, they would not have been covered by the prior subpoena, which obtained everything NARA turned over to J6C, which wouldn’t have included Meadows’ texts.

Meadows’ submission to the Archives was part of a request for all electronic communications covered under the Presidential Records Act. The Archives had become aware earlier this year it did not have everything from Meadows after seeing what he had turned over to the House select committee investigating January 6, 2021. Details of Meadows’ submissions to the Archives and the engagement between the two sides have not been previously reported.

“It could be a coincidence, but within a week of the August 8 search on Mar-a-Lago, much more started coming in,” one source familiar with the discussions said.

The second subpoena would have been served days after Meadows started providing these texts.

The possibility that some of the documents seized on August 8 would be discoverable in Barrack’s case is likely higher, particularly given the news that Trump had hoarded at least one document about “a foreign government’s nuclear-defense readiness.” Barrack is accused of working to influence White House policy on issues pertaining to UAE, Saudi Arabia, and Qatar that might be implicated by classified documents. If the date of clippings in a particular box reflect the age of the government documents also found in that box, then about 18 boxes seized in August (those marked in purple, above) include records from the period covered by Barrack’s superseding indictment.

That said, whether any such materials would count as being in possession of DOJ is another issue. They are currently in possession of team at DOJ that significantly overlaps with the people prosecuting Barrack for serving as an Agent of the Emirates without telling the Attorney General.

Strzok’s subpoena may be the most likely to cover materials either turned over belatedly or seized on August 8 (though his subpoena was scoped, with DOJ involvement, at a time after the FBI was aware of Trump’s document theft). It asks for:

  1. Records concerning Sarah Isgur’s engagement with reporters from the Washington Post or New York Times about Peter Strzok and/or Lisa Page on or about December 1 and 2, 2017.
  2. Records dated July 1, 2017 through December 12, 2017 concerning or reflecting any communications with members of the press related to Peter Strzok and/or Lisa Page.
  3. Records dated July 1, 2017 through December 12, 2017 concerning or reflecting text messages between Peter Strzok and Lisa Page.
  4. Records dated July 1, 2017 through August 9, 2018 concerning Peter Strzok’s employment at the FBI.

That materials covered by this subpoena made their way at some point to Mar-a-Lago is likely. That’s because of the obsession with records relating to Crossfire Hurricane in the days when Trump was stealing documents — virtually all of those would “concern” Strzok’s FBI employment.

In Mr. Trump’s last weeks in office, Mr. Meadows, with the president’s blessing, prodded federal law enforcement agencies to declassify a binder of Crossfire Hurricane materials that included unreleased information about the F.B.I.’s investigative steps and text messages between two former top F.B.I. officials, Peter Strzok and Lisa Page, who had sharply criticized Mr. Trump in their private communications during the 2016 election.

The F.B.I. worried that releasing more information could compromise the bureau, according to people familiar with the debate. Mr. Meadows dismissed those arguments, saying that Mr. Trump himself wanted the information declassified and disseminated, they said.

Just three days before Mr. Trump’s last day in office, the White House and the F.B.I. settled on a set of redactions, and Mr. Trump declassified the rest of the binder. Mr. Meadows intended to give the binder to at least one conservative journalist, according to multiple people familiar with his plan. But he reversed course after Justice Department officials pointed out that disseminating the messages between Mr. Strzok and Ms. Page could run afoul of privacy law, opening officials up to suits.

None of those documents or any other materials pertaining to the Russia investigation were believed to be in the cache of documents recovered by the F.B.I. during the search of Mar-a-Lago, according to a person with knowledge of the situation.

Side note: NYT’s sources are blowing smoke when they suggest DOJ under Trump would avoid new Privacy Act violations against Strzok and Page; a set of texts DOJ released on September 24, 2020 as part of Jeffrey Jensen’s effort to undermine the Mike Flynn prosecution had already constituted a new Privacy Act violation against them.

Notably, Strzok has been pursuing records about a January 22, 2018 meeting Jeff Sessions and Matt Whitaker attended at the White House.

Hours after that meeting (and a half hour call, from 3:20 to 3:50, between then Congressman Mark Meadows and the Attorney General), Jeff Sessions issued a press release about Strzok and Lisa Page.

Discovery has confirmed that the Attorney General released a press statement via email from Ms. Isgur to select reporters between 5:20 and 8:10 PM on January 22, roughly three hours after Attorney General Sessions returned from the White House. The statements promised, “If any wrongdoing were to be found to have caused this gap [in text messages between Mr. Strzok and Ms. Page], appropriate legal disciplinary action measure will be taken” and that the Department of Justice would “leave no stone unturned.” (See, e.g., Exhibit F). Based on Mr. Strzok’s review of the documents, it does not appear that this statement was planned prior to the January 22 White House meeting. It is not apparent from the documents produced in this action what deliberation lead to the issuance of that statement. For example, Mr. Strzok has not identified any drafts of the press release.

Any back-up to the White House side of that meeting — whether it has made its way back to NARA or not — would be included within the scope of Strzok’s subpoena. And even if NYT’s sources are correct that no Crossfire Hurricane documents were included among those seized in August (an uncertain claim given how much lying to the press Trump’s people have been doing), records covering Strzok’s firing would be broader than that.

The red rectangles, above, show the 17 documents seized in August for which the clippings would be in the temporal scope of Strzok’s subpoena.

I have no idea what happens if some of the boxes seized on August 8 include material responsive to these legal demands on NARA.

But if those boxes do include such materials, then it presents a competing — and pre-exisitng — legal obligation on the lawful owner of these records.

Update: Viget alerted me that I had not put an “X” by the leatherbound box reflecting its classified contents. I’ve fixed that!


Some Likely Exacerbating Factors that Would Contribute to a Trump Search

From the start of the reporting on Trump’s theft of classified documents, commentators have suggested that Trump was only under investigation for violations of the Presidential Records Act or 18 USC 2071.

Reports that in June, one of the four people who met with Trump’s lawyers on this issue was Jay Bratt, head of Counterintelligence & Export Control Section at DOJ, which investigates Espionage, makes it highly unlikely that those are the only things under investigation.

In early June, a handful of investigators made a rare visit to the property seeking more information about potentially classified material from Trump’s time in the White House that had been taken to Florida. The four investigators, including Jay Bratt, the chief of the counterintelligence and export control section at the Justice Department, sat down with two of Trump’s attorneys, Bobb and Evan Corcoran, according to a source present for the meeting.

At the beginning of the meeting, Trump stopped by and greeted the investigators near a dining room. After he left, without answering any questions, the investigators asked the attorneys if they could see where Trump was storing the documents. The attorneys took the investigators to the basement room where the boxes of materials were being stored, and the investigators looked around the room before eventually leaving, according to the source.

Even 18 USC 1924, which prohibits unlawfully taking classified information, would involve complications if the person who stole the materials were the former President. Admittedly, the fact that DOJ had an in-person meeting with Trump before conducting a search might mitigate those complications; Trump may be refusing to return documents rather than just not turning them over.

Still, it’s possible — likely even — that there are exacerbating factors that led DOJ to search Mar-a-Lago rather than just (as they did with Peter Navarro) suing to get the documents back.

Remember, this process started when the Archives came looking for things they knew must exist. Since then, they’ve had cause to look for known or expected Trump records in (at least) the January 6 investigation, the Tom Barrack prosecution, and the Peter Strzok lawsuit. The investigation into Rudy Giuliani’s influence peddling is another that might obviously lead to a search of Trump’s presidential records, not least because the Archives would know to look for things pertaining to Trump’s impeachments.

With that as background, Trump would be apt to take classified documents pertaining to the following topics:

  • The transcript of the “perfect phone call” with Volodymyr Zelenskyy and other documents pertaining to his first impeachment
  • Notes on his meetings with other foreign leaders, especially Vladimir Putin and Saudi royals, including Trump’s July 16, 2018 meeting with Putin in Helsinki
  • Information surrounding the Jamal Khashoggi execution (and other materials that make Jared Kushner’s current ties to Mohammed bin Salman suspect)
  • Policy discussions surrounding Qatar, which tie to other influence peddling investigations (for which Barrack asked specifically)
  • Intelligence reports on Russian influence operations
  • Details pertaining to security efforts in the lead-up to and during January 6
  • Intelligence reports adjacent to Trump’s false claims of election fraud (for example, pertaining to Venezuelan spying)
  • Highly sensitive NSA documents pertaining to a specific foreign country that Mike Ellis was trying to hoard as boxes were being packed in January 2021

For many if not most of these documents, if Trump were refusing to turn them over, it might amount to obstruction of known investigations or prosecutions — Barrack’s, Rudy’s, or Trump’s own, among others. Thus, refusing to turn them over, by itself, might constitute an additional crime, particularly if the stolen documents were particularly damning.

One more point about timing: An early CNN report on these stolen documents describes that a Deputy White House Counsel who had represented Trump in his first impeachment was liaising with the Archives on this point.

Longtime Archives lawyer Gary Stern first reached out to a person from the White House counsel’s office who had been designated as the President Records Act point of contact about the record-keeping issue, hoping to locate the missing items and initiate their swift transfer back to NARA, said multiple sources familiar with the matter. The person had served as one of Trump’s impeachment defense attorneys months earlier and, as deputy counsel, was among the White House officials typically involved in ensuring records were properly preserved during the transfer of power and Trump’s departure from office.

By description, this is likely either John Eisenberg (who hid the full transcript of the perfect phone call but who was not obviously involved in Trump’s first impeachment defense) or Pat Philbin (who was the titular Deputy White House Counsel and was overtly involved in that defense). If it’s the latter, then Philbin recently got a DOJ subpoena, albeit reportedly in conjunction with January 6. If so, DOJ might have recent testimony about documents that Trump was knowingly withholding from the Archives.


The “Subject” of Robert Costello’s Declination

Since April, the SDNY investigation into whether Rudy Giuliani worked as an unregistered foreign agent for Yuri Lutsenko has gone dark. I thought it possible that it had reached a dead end, but figured we’d learn if that were true when Rudy’s lawyer, Robert Costello, noisily announced that prosecutors told Rudy he was no longer a subject of the investigation.

Costello gave a version of that announcement yesterday to the NYT and at least one other outlet.

Only, he didn’t announce that prosecutors had told him Rudy was no longer a subject. On the contrary, Costello appears to confirm that Rudy remains a subject of investigation at SDNY. Costello used a different event — the return of Rudy’s seized devices — as his basis for saying he probably won’t be charged in the Lutsenko inquiry.

Because a broad swath of people routinely misrepresent what I have or am saying about Rudy, let me be very clear: I have no reason to doubt the NYT reporting or Costello’s claim that the investigation that Jeffrey Rosen intentionally circumscribed in 2020 into whether Rudy failed to register for his work for Ukrainian official Yuri Lutsenko will likely not result in charges.

But the specifics of what Costello said and did not say are of interest.

Before I look at what Costello said, a reminder that SDNY seized Rudy’s devices in April 2021. In September, they got Judge Paul Oetken to approve their preferred scope for a Special Master review of Rudy’s phones to include for review everything, regardless of subject, after January 1, 2018. In November and January, Special Master Barbara Jones turned over materials to the government. Half of the devices she reviewed covered just a focused period specific to the Ukraine investigation December 1, 2018 through May 31, 2019; the rest covered the entire period of review, January 1, 2018 through the April 2021 seizure. After Jones finished her privilege review, the material she turned over would be scoped (meaning, sorted for the material that matched the warrant(s) against Rudy) by the FBI. Jones’ last publicly posted report actually showed that the review of the single phone seized from Victoria Toensing’s phone was ongoing, with the involvement of Dmitry Firtash. Firtash had been represented by Toensing when the phone was seized but is now represented (again) by Lanny Davis. The last we heard from Jones in this case on January 21, she said, “I will confer with the Government and counsel for Mr. Giuliani and Ms. Toensing regarding additional review assignments.”

In March, in the related SDNY counts, Lev Parnas filed to change his plea on the remaining charge against him and pled guilty on March 29. At a sentencing hearing on June 29 where the government scoffed at Parnas’ claims of cooperation and associated media blitzes, Judge Oetken sentenced Rudy’s former associate to 20 months in prison. That’s relevant because one identifiable source for yesterday’s NYT story was Parnas, who in fact telegraphed something was coming the day before. Parnas, it seems, has reason to believe Rudy and he won’t be charged for his Lutsenko work (this work was actually included in Parnas’ original 2019 indictment, but was removed in 2020).

The day before Parnas telegraphed such a story was coming, DOJ asked to unseal a July 29, 2021 Oetken opinion finding that a communication describing efforts that Alexander Mikhalev was making to hide his role in influence-peddling relating to some cannabis businesses in the US was crime-fraud excepted.

I believe what’s left was for Igor and Lev to establish who is going to be shareholder(s) of the NewCo and could we all use LLC’s as our proxy’s in it. I am just trying to establish core structure and how transparent should Andrey be exposed for the benefits of NewCo Transparency, his Russian roots and current political paranoia about it.

My wildarse guess is DOJ wants this unsealed so a different Federal entity can use the email to sanction Mikhalev for foreign influence peddling, but that’s just a WAG. SDNY’s letter asking for the unsealing reflects having obtained permission from Parnas’ attorney before the unsealing, so even though SDNY believes Parnas unreliable for the way he blabs to the press, there was recent communication with him on this point.

Back to Rudy. When last we heard, in April, CNN reported that SDNY might soon reach a charging decision on Rudy’s case because he provided investigators some possible passwords for several (the numbers here are inconsistent with the Special Master’s numbers) of the phones FBI couldn’t unlock.

Federal prosecutors may soon reach a charging decision regarding Rudy Giuliani’s foreign lobbying efforts involving Ukraine, after he helped investigators unlock several electronic devices that were seized by the FBI, according to multiple sources familiar with the probe.

Giuliani has also offered to appear for a separate interview to prove he has nothing to hide, his lawyer told CNN, renewing a proposal that federal prosecutors have previously rebuffed.

That, CNN’s sources claimed three months ago, could lead to a quick decision.

In recent weeks, Giuliani met with prosecutors and during the meeting he assisted them in unlocking three devices that investigators had been unable to open, according to people familiar with the investigation. It is unclear if Giuliani also answered questions from investigators during this meeting.

Giuliani provided a list of possible passwords to two other locked devices, the people said. Is it unknown if those passwords successfully unlocked those devices and how much relevant material is on the recently unlocked devices.

Now that several more devices are unlocked, that could speed up the review and ultimately lead to a quick decision over whether the former mayor of New York will face criminal charges. Unless new information comes to light that leads to new routes for authorities to pursue, federal prosecutors at the US Attorney’s Office in the Southern District of New York — which Giuliani led in the 1980s — are likely to decide whether to bring charges soon after the review, people familiar with the matter told CNN.

Even then, the anonymous sources talking about Rudy’s case suggested he would only be charged if new information came to light.

That claim showed up in yesterday’s NYT story, as well: DOJ had enough to seize Rudy’s devices, but found no smoking gun. Yesterday’s piece even linked the CNN story from April, which had suggested Rudy had met with prosecutors “in recent weeks,” but this time dating the meeting to February, so months before CNN reported that a recent event meant a decision was imminent and at least five months ago from today, and clarifying that Rudy had answered prosecutors’ questions.

One key new piece of news, however, was that DOJ had recently returned Rudy’s devices.

While prosecutors had enough evidence last year to persuade a judge to order the seizure of Mr. Giuliani’s electronic devices, they did not uncover a smoking gun in the records, said the people, who spoke on the condition of anonymity to discuss a federal investigation.

The prosecutors have not closed the investigation, and if new evidence were to emerge, they could still pursue Mr. Giuliani. But in a telling sign that the inquiry is close to wrapping up without an indictment, investigators recently returned the electronic devices to Mr. Giuliani, the people said. Mr. Giuliani also met with prosecutors and agents in February and answered their questions, a signal that his lawyers were confident he would not be charged.

We can assume that detail — that DOJ returned Rudy’s devices — likely came from Robert Costello because (as happens increasingly these days), another outlet — Reuters — quoted Costello on the record saying what NYT had granted someone anonymity to share.

FBI agents recently returned the cell phones and other electronic devices they had seized from Donald Trump’s former attorney Rudy Giuliani, in a possible sign the investigation into whether he failed to register as a foreign agent of Ukraine could be winding down, his attorney said on Wednesday.

Robert Costello, Giuliani’s lawyer, told Reuters he has not been officially notified yet whether federal prosecutors in Manhattan are closing the investigation.

But he said the return of the devices is a positive sign for his client.

“I have not been officially told that its [sic] over,” Costello said. “It is possible they could make some startling new discovery…but we have always been confident that he didn’t do anything wrong.”

The primary other new piece of news in the NYT story describes documents and texts — the likes of which have recently been returned to Robert Costello — detailing a purported review of Rudy’s contacts with Dmitry Firtash that started in June 2019.

Mr. Giuliani began contacting Mr. Firtash’s lawyers in June 2019 seeking information about corruption in Ukraine, around the time Mr. Trump was pressing Ukraine’s president, Volodymyr Zelensky, to investigate the Bidens. Mr. Firtash’s lawyers told Mr. Giuliani they did not know of anything relevant.

There is no indication Mr. Firtash assisted Mr. Giuliani in his attacks on the Bidens, and Mr. Davis said the oligarch “categorically denies ever helping Giuliani or anyone else in any effort to dig up dirt.”

Even so, in the summer of 2019, an associate of Mr. Giuliani, Lev Parnas, met with the oligarch and recommended he add new lawyers to his team, the husband and wife, who were helping Mr. Giuliani dig into the Bidens. Mr. Parnas was paid to serve as their interpreter, and Mr. Firtash agreed to pay for some of Mr. Parnas’s travel expenses.

The offer seemed ideal. Around this time, Mr. Giuliani was preparing to go to London, and wanted to determine who would cover his travel. “Running into money difficulties on trip to London,” Mr. Giuliani wrote to Mr. Parnas in a text message.

During the trip in late June, Mr. Giuliani met in a hotel conference room with some Firtash associates, including a banker whose cousin was a Burisma executive.

Mr. Davis said the purpose of the meeting was to discuss Mr. Firtash’s contention that his extradition was politically motivated, and his associates did not talk about Burisma. The oligarch’s associates did not seek Mr. Giuliani’s help, Mr. Davis added.

That day, Mr. Giuliani upgraded hotels to the Ritz London. Mr. Firtash’s company, Group DF, later covered the roughly $8,000 stay, interviews and records show. The next month, the company paid $36,000 for a private flight Mr. Giuliani took from the Dominican Republic to Washington. And that August, Mr. Giuliani traveled with a friend and a bodyguard to Spain at a cost of more than $30,000, an expense that was listed on an invoice to a Group DF assistant and a longtime adviser to Mr. Firtash.

Mr. Costello said that Mr. Giuliani “doesn’t know how it came about.”

Note: Much if not all of this activity pertaining to Firtash post-dates the temporal scope, which ended on May 31, 2019, of Jones’ prioritized reviews. For eight of Rudy’s phones, the privilege review would not (based on public records, anyway) have been complete on materials after that period when Rudy met with prosecutors in February. The material would be in the temporal scope of the known warrants, which extend through December 2019, but not the Special Master review of eight devices.

Firtash’s name also didn’t appear in Parnas’ description of the scope of the inquiry that he released via redaction fail last year.

In a chart, the Government identified that it had sought and seized a variety of undisclosed materials from multiple individuals, including: the iCloud and e-mail accounts of Rudolph Giuliani (11/04/19); the iCloud account of Victoria Toensing (11/04/19); an email account believed to belong to former Prosecutor General of Ukraine, Yuriy Lutsenko (11/6/19); an e-mail account believed to belong to the former head of the Ukrainian Fiscal Service, Roman Nasirov (12/10/19); the e-mail account of Victoria Toensing (12/13/19); the iPhone and iPad of pro-Trump Ukrainian businessman Alexander Levin (02/28/2020 and 3/02/2020); an iCloud account believed to belong to Roman Nasirov (03/03/2020); historical and prospective cell site information related to Rudolph Giuliani and Victoria Toensing (04/13/2021); electronic devices of Rudolph Giuliani and Giuliani Partners LLC (04/21/2021); and the iPhone of Victoria Toensing.

If there were any SDNY investigation into Firtash, you would expect to see warrants targeting his cloud content as well. It wasn’t in the warrants that Parnas had seen at the time of seizure.

So one thing this story (which also relies on Firtash lawyer Lanny Davis as a source) does is compare notes between suspects about the scope of SDNY’s interest in Rudy’s contact with Firtash. As NYT notes, it actually reveals that the investigation into Rudy was  broader than previously known, and broader than the scope of the known warrants as described by Parnas.

In any case, what Costello told Reuters and presumably told NYT is that 1) he recently got these phones (content from which likely contributed to this story) back and 2) SDNY has not told him that Rudy is no longer a subject.

Generally, if DOJ seizes items as part of a grand jury investigation, they can keep them:

  • So long as the grand jury investigation in which the property was seized is ongoing
  • Until such time as FBI fully exploits the devices (that is, until they crack passwords and identify deleted content)
  • During the pendency of a Special Master review
  • For use in a charged prosecution if the validity of an extraction might otherwise be challenged

This response to Project Veritas’ efforts to get their phones back in a different SDNY investigation lays out the precedents in the District.  If the grand jury investigation is closed, the subject of the investigation gets their property back, and Rudy has gotten his property back. So Costello fairly concludes that the known grand jury investigation into Rudy has been closed.

The thing is, if those materials are used for any other investigation — particularly now that they’ve been reviewed for privilege with kind of involvement from Costello that would amount to stipulation about the accuracy of the exploitation — would not be shared around DOJ as actual devices, some imaginary bag of Rudy Giuliani’s many phones passed from FBI agent to FBI agent. They’d be shared, via separate warrant from separate grand jury investigations, on hard drives of the post-privilege review content.

Costello can say with some confidence the grand jury investigation opened in 2019 won’t result in charges. But he doesn’t have a good explanation for why even SDNY has not told him Rudy is no longer a subject.

A more interesting part of the timing, to me, is that before Rudy got his devices back, a different part of DOJ obtained two rounds of subpoena returns from at least a dozen people asking (among other things) for all their post-October 1, 2020 communications to, from, or involving Rudy Giuliani or Victoria Toensing. Some of the people receiving those subpoenas would be hostile witnesses, themselves possible suspects of a crime. DOJ started, though, with people who had refused to take part of the fake elector scheme, who presumably could be expected to fully comply with the subpoena, including providing any Signal, WhatsApp, ProtonMail, or Telegram communications that might otherwise be unavailable.

The FBI likely has enough sets of subpoena returns including Rudy’s comms to know what content should be on his phones from when he was helping to plot a coup.

That’s the kind of thing FBI might have wanted to check before they released Rudy’s phones, to know how aggressively they had to look for potentially deleted content on the devices.


In Sentencing Memo, SDNY Scoffs at Lev Parnas’ Claims of Cooperation

The two sides have submitted sentencing memos for Lev Parnas’ scheduled June 29 sentencing. In the face of DOJ’s call for a 78 to 97 months sentence, Parnas is claiming that he “cooperated” with the 2019-20 House impeachment investigation. Parnas suggests that DOJ won’t give him a cooperation departure because they didn’t like what he had to say.

Apparently, the information Mr. Parnas wished to supply the Department of Justice in this case was information that it did not want to hear. Prosecutors kept Mr. Parnas at bay for months before finally hearing his proffer. When they did, it was principally used to thwart his potential trial testimony, rather than to consider his attempt to provide substantial assistance in good faith. Mr. Parnas’s cooperation with Congress was timely and material.

His media statements were intended to place information and evidence that was important to our national interest into the public domain—frequently at great risk to himself. And yet, from nearly the moment Mr. Parnas committed to cooperating with Congress and producing videos, photographs, documents, text messages, proton mail messages and other information, the value of this evidence was of undeniable significance.

But SDNY argues that Parnas did no more than comply with a subpoena, his civic duty.

Parnas’s compliance with the HPSCI subpoena does not justify a downward departure. His decision to produce documents in response to a duly issued subpoena is akin to a civic deed that is “ordinarily not relevant in determining whether a sentence should be outside the applicable guideline range.” § 5H1.11.

SDNY details at more length what transpired before Parnas started pitching his story to Congress: Parnas’ attorney, Joseph Bondy, provided a series of proffers that fell short of the truth. In November 2019, they told Parnas explicitly that his public campaign was harming his bid to cooperate.

Within a week of Parnas’s arrest, on October 16, 2019, Parnas’s counsel contacted the Government to indicate that Parnas was “really upset” that then-President Trump was “claiming he didn’t know [Parnas],” and that Parnas was interested in cooperating. 1 The Government then requested an attorney proffer—that is, a summary from Parnas’s attorney of what Parnas would be able to testify to at trial—in order to evaluate Parnas’s truthfulness and potential to provide substantial assistance. Parnas’s counsel provided a number of attorney proffers beginning on October 28, 2019, but the information was not fully credible and in material respects was plainly contradicted by the evidence the Government had gathered to date, which caused the Government to have serious concerns about Parnas’s credibility and candor. The Government had extended discussions with Parnas’s counsel in the weeks and months following Parnas’s arrest during which the Government pointed counsel to evidence that contradicted the attorney proffers.

Moreover, in an effort to encourage Parnas to be truthful, on November 6, 2019, the Government took the extraordinary step of meeting with Parnas and his counsel for a reverse proffer to explain, among other things, the evidence the Government had gathered against Parnas; what the cooperation process entailed; and that Parnas would have to be truthful and accept responsibility for his own crimes. At the close of that meeting, the Government informed Parnas that public spectacles, leaks, and social media postings could undermine his credibility and diminish his value as a potential cooperating witness. The Government also explained to Parnas how certain information he had provided through his attorney proffers had been contradicted by the evidence and was materially false. After that meeting, Parnas’s counsel wrote the Government to report that he could not “accept responsibility for criminal activity for which he is not guilty,” which based on discussions with counsel, the Government understood to be a reference to, among other things, the campaign finance and false statements offenses of which Parnas now stands convicted.

[snip]

As this Court is aware from pretrial litigation, the Government met with Parnas for a proffer on March 5, 2020. During that proffer, Parnas was not fully credible or forthcoming. He minimized, blamed others for the criminal conduct he has pled to and been convicted of, made statements that were inconsistent with the evidence, and the Government was ultimately unable to corroborate significant portions of what Parnas said. Due to his lack of credibility, candor, and unwillingness to accept responsibility, the Government did not meet with Parnas again for another proffer session and did not proceed with cooperation. [my emphasis]

The government seems far more worried that Judge Paul Oetken, who sentenced Parnas’ co-defendants to a year and a day, would give Parnas a lower than guidelines sentence to avoid a sentencing disparity than that he’d get credit for cooperation.

Parnas is playing that up, too, noting that Igor Fruman got released to a halfway house just three months after reporting.

Two of Mr. Parnas’s co-defendants, David Correia and Igor Fruman, were ultimately offered plea agreements to select counts of the indictment and entered guilty pleas. Mr. Parnas, who was not offered such a plea, proceeded to trial along with another co-defendant, Andrey Kukushkin, which ended in conviction on October 22, 2021. Mr. Parnas filed post-verdict motions for a judgment of acquittal and for a new trial, which were denied.

Thereafter, he entered a plea to the single remaining count against him–which had been previously severed—”the Fraud Guarantee” wire fraud conspiracy. All of Mr. Parnas’s co-defendants have been sentenced by the Court to 366 days’ imprisonment. Mr. Fruman, who surrendered to the custody of the Bureau of Prisons on March 14, 2022, has already been released to “residential reentry management.”

All of which is most interesting for the disposition of the charges relating to Yuri Lutsenko, which were part of the original indictment against Parnas and Fruman, but which were removed in a 2020 superseding indictment. These are the charges that Parnas and Fruman would face with Rudy Giuliani.

In April, Rudy offered what reporters presented as a last minute meeting, before prosecutors made an imminent decision on his prosecution, but nothing has come of it since then. Perhaps we’ll learn more after Parnas’ sentencing next week.

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Originally Posted @ https://www.emptywheel.net/foreign-influence/