Two businessmen linked to Trump Ukraine scandal arrested on U.S. charges

WASHINGTON/NEW YORK (Reuters) - Two foreign-born Florida businessmen who have been helping President Donald Trump's personal lawyer investigate political rival Joe Biden have been arrested on charges of funneling foreign money to U.S. political candidates and a pro-Trump election committee, authorities said on Thursday.

The arrests were the latest dramatic development in a political saga that threatens Trump's presidency.

They coincide with a Democratic-led U.S. House of Representatives impeachment inquiry centered on the Republican president's request in a July phone call for Ukrainian President Volodymyr Zelenskiy to investigate Biden, a leading contender for the November 2020 Democratic presidential nomination.

The businessmen, Lev Parnas and Igor Fruman, were arrested and charged in connection with a federal criminal case involving campaign finance laws, federal prosecutors in Manhattan said. Each was charged with two counts of conspiracy, one count of false statements and one of falsification of business records.

The two men were donors to a pro-Trump fundraising committee and the president's personal lawyer, Rudy Giuliani, has said they helped him as he sought to investigate former Vice President Biden and Biden's son Hunter.

Parnas is a Ukrainian businessman. Fruman is a real estate investor who was born in Belarus. Both, according to various media accounts, helped introduce Giuliani into top Ukrainian political circles.

Parnas and Fruman in May 2018 contributed $325,000 to a pro-Trump political action committee called America First Action, and the donation was falsely reported as coming from a purported natural gas company, according to the indictment.

The two men falsely claimed the company, called GEP, was "a real business enterprise" and that "its major purpose is energy trading, not political activity," the indictment said. In fact, it said, the company had no real business.

The two were arrested at Dulles airport in Virginia before a planned flight to Vienna on Wednesday night, sources familiar with the matter said.

Parnas and Fruman were accused of conspiring to "funnel foreign money to candidates for federal and state office," according to a federal court filing in New York.

John Dowd, the lawyer for Parnas and Fruman, declined to comment on the charges. Dowd previously represented Trump in former Special Counsel Robert Mueller's investigation that detailed Russian interference in the 2016 U.S. presidential campaign to boost Trump's candidacy.

Giuliani did not immediately return a request for comment. Last week he told Reuters, "Parnas and Igor helped me on certain things. They helped me with logistics. They know the Ukraine, they speak Russian. They helped me locate people in a few cases."

Jay Sekulow, a lawyer for the president, told Reuters that "neither the president nor the campaign was aware of their scheme," referring to the defendants.

Trump has denied wrongdoing and has described the impeachment probe as a partisan smear.

HOUSE SUBPOENAS

Both men were expected to figure in the House impeachment drive and had been asked to produce documents and give testimony. Parnas had been scheduled to take part in a deposition with House lawmakers on Thursday, with Fruman scheduled on Friday. Dowd had called the lawmakers' demands "unreasonable." House Democrats on Thursday issued subpoenas for the men to hand over the documents and testify at a later date

According to the indictment, Parnas also sought the help of a U.S. congressman - identified by a person familiar with the matter as Republican Pete Sessions - to get the Trump administration to remove the U.S. ambassador to Ukraine Marie Yovanovitch. Trump eventually did remove Yovanovitch and called her "bad news" in his July 25 call with Zelenskiy.

Giuliani told Reuters last week he had provided information to both Trump and the State Department about Yovanovitch, who he suggested was biased against Trump. Yovanovitch is scheduled to give testimony in the House impeachment inquiry.

Sessions lost his House seat last year to a Democrat. He did not immediately respond to a request for comment.

Prosecutors said Parnas, Fruman and others also conspired to funnel donations to state and federal candidates in multiple states to benefit a planned marijuana business funded by an unnamed foreign businessman. The business never came to fruition, according to the indictment.

Parnas and Fruman were due to appear at 2 p.m. ET (1800 GMT) in front of U.S. Magistrate Judge Michael Nachmanoff at the federal courthouse in Alexandria, Virginia, according to a spokesman for a federal prosecutor's office.

Two other people were charged in the indictment: David Correia, a U.S. businessman, and Andrey Kukushkin, a Ukrainian-born U.S. businessman. Kukushkin was due to appear in court later in the day in California.

Photos from Parnas's social media accounts show him meeting on various occasions with Trump, his son Donald Trump Jr., Sessions and Republican congressman Kevin Brady and former congressman Carlos Curbelo.

'CLERICAL THING'

In an interview last month, Parnas told Reuters that the FBI was investigating him but said he did not know why, and that he did nothing wrong. "I don't know what the FBI wants. I'm not going to comment, what they are doing. What they did."

"I don't think we know too much" about the investigation, Parnas said, but added that it had to be political. "When you have the heads of the Democratic Party not liking you, it's very easy to get the FBI involved."

Parnas said that any violations of Federal Election Commision rules were unwitting and a "clerical thing" because he was not an experienced political donor. Parnas said he was not trying to hide the source of the $325,000 donation.

Kelly Sadler, a spokeswoman for America First Action Political Action Committee, said the organization takes its legal obligations seriously and scrupulously complies with the law, adding any suggestion otherwise is false.

"In May 2018, America First Action received a $325,000 contribution and donor form from Global Energy Producers. In July 2018, a complaint was filed with the Federal Election Commission concerning this contribution."

Sadler added that there is separate litigation in Florida that concerns these funds.

"Accordingly, America First Action placed that contribution in a segregated bank account, it has not been used ... for any purpose and the funds will remain in this segregated account until these matters are resolved."

The Campaign Legal Center, a campaign finance nonprofit watchdog group, urged a U.S. government agency in a July 2018 complaint to investigate whether Parnas and Fruman had broken the law by using a shell company to disguise the source of the $325,000 donation to the pro-Trump political action committee.

"The fact that these two individuals were working with Giuliani and Ukrainian government officials to alter U.S. policy in that country will obviously be relevant to the impeachment investigation," Trevor Potter, the center's president, said in a statement.

Federal records show Parnas has donated a total of $25,200 to Republican candidates and political groups since the 2016 presidential election, including $2,700 to Representative Pete Sessions and $2,700 to House Republican Leader Kevin McCarthy. Fruman has donated $44,201 over that period to Republicans, including Sessions, the Republican National Committee and Trump's presidential campaign.

The U.S. attorney in Manhattan bringing the case, Geoffrey Berman, is a Trump appointee who served on his transition team after Trump was elected president to prepare for taking office in January 2017.

Nancy Pelosi, who as House Speaker is the top Democrat in the chamber, launched the impeachment inquiry last month after news emerged that Trump had sought foreign interference in the 2020 election.

A whistleblower complaint to Congress also raised concerns that Trump leveraged $400 million in U.S. aid to try to secure a promise from Ukraine's president to investigate Biden and his son.

The top Senate Democrat, Chuck Schumer, called the developments regarding Giuliani's associates "very troubling."

"Giuliani's been involved up to his neck in this entire mess. He has an obligation to testify under oath so he can be asked questions and so this can come to light," Schumer told reporters.

(Reporting by Andy Sulivan, Sarah N. Lynch, Ginger Gibson, David Morgan and Patricia Zengerle; Additional reporting by Aram Roston, Jan Wolfe and Karen Freifeld, Susan Heavey; Writing by Will Dunham; Editing by Frances Kerry and Howard Goller)

10/10/2019 18:51

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