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Date TimeAugust 12, 2019
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Mueller-Fueled FARA Fear Grips Washington as Craig Goes to Trial
(Bloomberg) -- Gregory Craig has been a top White House lawyer, a partner in two prestigious Washington law firms, and a graduate of both Harvard University and Yale Law School. Just six years ago he was called one of America’s most influential lawyers.One title he’d like to avoid: convicted felon.Craig, who served as White House counsel during President Barack Obama’s first term, is set to face a jury Monday over criminal charges that could send him to prison for five years. He’s a rare Democrat caught up in Special Counsel Robert Mueller’s investigation into Russian election meddling. The former partner at Skadden Arps Slate Meagher & Flom LLP is accused of scheming to dupe the U.S. government about the extent of his work for a pro-Russian Ukrainian regime.His prosecution is the latest in a string of cases arising from probes into violations of the Foreign Agents Registration Act (FARA), which was rarely enforced until recently. The law, enacted in 1938 after a spike in domestic pro-Nazi messaging, requires disclosure by U.S. companies and people conducting “political or quasi-political” activities for a foreign government or official.New FARA registrations made public by the Justice Department jumped 46% from 2016 to 2017, the year Mueller was appointed as special counsel and homed in on the foreign dealings of former Trump campaign chairman Paul Manafort. Attorneys say this wasn’t a coincidence.“That’s what really got people’s attention,” Scott Thomas, head of Blank Rome LLP’s political practice, told Bloomberg in an interview.The “Manafort era” indicated that the Justice Department would be much bolder in its pursuit of violations, he said. In turn, both FARA registrations and enforcement “really picked up the pace.”Read More: Prominent Lawyer’s Indictment Puts Pressure on Foreign LobbyistsThis year’s crop of new FARA registrants is on track to top the 113 recorded in 2018. FARA-related criminal charges are on the rise, too.Craig’s prosecution is at least the fourth brought under the law in the past two years, and it’s the third specifically tied to allegations of illegal lobbying for the government of ex-Ukrainian President Viktor Yanukovych.Manafort, who’s now serving an aggregate prison term of seven and a half years, was indicted in October 2017 for failing to register as an agent of a foreign government and other charges.Former Manafort associate Rick Gates, who worked on Trump’s campaign and inauguration, pleaded guilty in early 2018 to similar charges, admitting he and Manafort failed to disclose their work for Ukraine. Gates agreed to cooperate with Mueller’s probe and was a witness in Manafort’s trial.In their case against Craig, prosecutors will again rely on Gates, whose credibility was repeatedly assailed by Manafort’s attorneys. They alleged that he’d engaged in an extramarital affair funded with money stolen from Manafort, lied to prosecutors and may have submitted false expenses to Trump’s campaign committee while working for it.Read More: Manafort Charged in New York Just After Federal SentencingMueller’s team uncovered evidence that in 2012, Manafort hired Craig and Skadden to develop a report refuting criticism of the Ukrainian government’s prosecution of former President Yulia Tymoshenko.One Skadden associate confessed to lying to investigators and the firm admitted it should have registered as an agent of the Ukrainian government. Skadden paid $4.6 million, the amount it earned from the Ukraine-related work, to settle the matter.The case cast a shadow on Craig, who managed the project. He left Skadden in 2018.“Lawyers are starting to worry -- and maybe they should have worried earlier -- about the boundaries of their legal work” and whether it’s subject to FARA, said Claire Finkelstein, a University of Pennsylvania law professor.U.S. District Judge Amy Berman Jackson recently narrowed the case against Craig, throwing out of one of the counts accusing him of lying to the government about his lobbying activities.Read More: In Craig Indictment, a Top Law Firm Tries to Hide LobbyingThe government had charged Craig with making false statements in, and omitting “material facts” from, a letter he sent to the Justice Department’s FARA unit in 2013. Jackson threw out the charge last week, saying it wasn’t clear exactly which documents are covered by the law.Now, the prosecution’s case rests on whether it can prove Craig lied and withheld information about the extent of his work for the Ukrainian government. The April 11 indictment accuses Craig of drafting “false and misleading” descriptions of his international media contacts for distribution to Skadden and the FARA unit, and of omitting key facts about his actions to further Ukraine’s public relations push.Read More: Senators Aim to Add Teeth to Law Used in Mueller’s Russia ProbeWashington attorney David Laufman said the recent spate of indictments was the result of increased enforcement efforts he supervised while working for the Justice Department’s Counter-intelligence and Export Section -- which oversaw the FARA unit -- starting in 2014.The unit began sending out what he called "more targeted" inquiries and more substantial requests for documents, sometimes prompted by the contents of news reports and other sources."There came a time when we took a fresh look at how we were meeting our responsibilities and assessed that we could be doing more,” he said, acknowledging there had been only handful of such cases in the years before his tenure.Laufman oversaw initial inquiries that later led to criminal cases against Manafort and Gates, former White House national security adviser Michael Flynn and businessman Bijan Kian. Laufman’s efforts have continued with the creation of a new section deputy chief’s position, filled by Manafort prosecutor Brandon Van Grack, to oversee the FARA unit."I wound up giving it a great deal more attention than I anticipated I would," Laufman said of FARA. He left the department last year for Washington law firm Wiggin and Dana LLP."There is considerably greater skittishness" now among those who work at the fringe of FARA registration requirements as a result of the prosecutions, Laufman said. "That spawns greater registration.”The case is U.S. v. Craig, 19-cr-125, U.S. District Court, District of Columbia (Washington).To contact the reporters on this story: Jacob Rund in Arlington, VA at jrund2@bloomberg.net;Andrew Harris in Washington at aharris16@bloomberg.netTo contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, ;Seth Stern at sstern22@bloomberg.net, Peter Blumberg, Peter JeffreyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

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