WASHINGTON - Two associates of President Donald Trump's personal attorney Rudy Giuliani have been arrested on charges they schemed to funnel foreign money to U.S. politicians while trying to influence U.S.-Ukraine relations, according to a newly unsealed indictment.
The two men, Lev Parnas and Igor Fruman, who had been helping Giuliani investigate Democratic presidential candidate and former vice president Joe Biden, were arrested Wednesday evening at Dulles International Airport outside of Washington, D.C., where they had one-way tickets on a flight out of the country, officials said.
Parnas and Fruman have been under investigation by the U.S. attorney's office in Manhattan. After a court appearance Thursday in Alexandria, Virginia, the pair were approved for release on $1 million bond each, under the condition they remain at their Florida homes with GPS monitoring and third-party custodians. They will remain in jail until those conditions are met. They did not enter a plea to the charges.
Wednesday's arrests mark the first criminal charges to emerge from the U.S. government's suddenly controversial relationship with Ukraine - a complex web of financial and political interactions linking diplomacy to alleged violations of campaign finance law.
The indictment does not allege any wrongdoing by the president or his campaign, but the charges of political donations made for the secret benefit of foreign interests adds to the growing legal and political pressure on Trump and his attorney as they try to fend off Democrats' impeachment efforts.
"These allegations are not about some technicality, a civil violation or an error on a form," said William Sweeney, Jr., head of the FBI's office in New York. "This investigation is about corrupt behavior, deliberate lawbreaking."
Jay Sekulow, another lawyer representing Trump, said: “As the indictment states neither the President nor the [Trump] campaign were aware of the allegations.”
But the men’s’ lawyer, John Dowd, told Congress in a statement earlier this week that they had been assisting Giuliani in his work on behalf of the president. The two also claimed in interviews and social media posts to have attended an eight-person session with Trump in Washington in May 2018 to discuss the upcoming midterm elections.
According to the indictment unsealed in New York, Parnas, Fruman and other defendants "conspired to circumvent the federal laws against foreign influence by engaging in a scheme to funnel foreign money to candidates for federal and state office so that the defendants could buy potential influence with the candidates, campaigns, and the candidates' governments."
The indictment doesn't name the recipients of the money, but they are identifiable by facts in the document that correspond with campaign finance records.
The Justice Department charges that Parnas and Fruman disguised the source of a $325,000 donation made in 2018 to America First, the main pro-Trump super PAC, by giving the money in the name of Global Energy Producers (GEP), a purported liquefied natural gas company that Parnas and Fruman controlled. Federal prosecutors say the company was a front used to disguise the funds' true source and that the money for the political action committee came from "a private lending transaction between Fruman and third parties."
The indictment does not offer any further detail about the source of the money, and does not publicly identify America First as the recipient. But after the charges were announced, the political action committee issued a statement acknowledging the donation from GEP. The statement says America First has not spent that money, but instead placed it in a separate bank account amid the legal controversy.
"We take our legal obligations seriously and scrupulously comply with the law and any suggestion otherwise is false," the super PAC said in its statement.
The indictment does not mention Giuliani or suggest that he was connected to the alleged crimes. A person familiar with the investigation said federal agents are scrutinizing Giuliani's dealings with Parnas and Fruman, but cautioned that this was to be expected as the FBI examines the pair's finances.
Since late 2018, the two Florida-based business executives have been assisting Giuliani's push to get Ukrainian officials to investigate Biden and his son, as well as Giuliani's claim that Democrats conspired with Ukrainians in the 2016 campaign.
In an interview Thursday, Giuliani declined to answer specific questions about the arrest of his two associates or his financial dealings them, citing his past legal work for them.
"They helped me find people," Giuliani said, mentioning former Ukrainian government officials. He repeatedly declined to confirm whether he'd dined with them Wednesday at the Trump hotel in Washington, as the Wall Street Journal has reported.
Giuliani, the former mayor of New York City and at one time a high-ranking Justice Department official, said he had no reason to believe he was under investigation by the FBI, and defended his associates.
"I certainly am not going to disavow them. I have no reason to doubt them. Everything I've known about them says they would not commit a crime," Giuliani said.
Parnas has previously told The Washington Post that Giuliani is a "very good friend" whom he got to know in 2016 while fundraising for Trump.
Prosecutors said Parnas, a Ukraine-born U.S citizen, and Fruman, a Belarus-born U.S. citizen, schemed to exceed campaign donation limits in giving money to an unnamed U.S. congressman, at the same time they were asking that congressman to get the U.S. ambassador to Ukraine removed from her job.
In the spring of 2018, Parnas met with the congressman seeking his "assistance in causing the U.S. government to remove or recall the then-U.S. Ambassador to Ukraine," the indictment alleges. "Parnas's efforts to remove the Ambassador were conducted, at least in part, at the request of one or more Ukrainian government officials."
Parnas has previously said he and Fruman helped set up a Skype call for Giuliani in late 2018 with Viktor Shokin, who was Ukraine's prosecutor general from 2015 to 2016, and an in-person meeting in New York this past January with Yuri Lutsenko, then Ukraine's top prosecutor, who had urged the removal of the ambassador, Marie Yovanovich.
The indictment does not identify the congressman by name, but public campaign records indicate he is former Texas Republican Pete Sessions, who lost his reelection bid last year. In a statement, Sessions said he did not know if he was the congressman mentioned in the indictment, but denied any wrongdoing.
"If I am 'Congressman One', I could not have had any knowledge of the scheme described in the indictment or have involvement or coordination of it," Sessions said.
In May 2018, around the time the indictment says that Parnas and Fruman committed to raising $20,000 for the congressman, Sessions wrote a letter to Secretary of State Mike Pompeo complaining that Yovanovitch was biased against Trump. A year later she was recalled from her post, after Giuliani told Trump that she needed to go.
"At no time did I take any official action" after meeting with Parnas and Fruman, Sessions said, adding that he sent the letter because he had come to believe the ambassador was disparaging Trump in her conversations overseas.
Dowd, the attorney who has been representing Parnas and Fruman prior to the indictment, did not respond to requests for comment, but in a letter last week to lawmakers, he detailed the relationships that Parnas and Fruman have with people at the center of the Ukraine inquiry, including the president.
"Messrs. Parnas and Fruman assisted Mr. Giuliani in connection with his representation of President Trump," the letter said, while rejecting the House Intelligence Committee's request for information about their transactions, calling the demands an overbroad effort to "harass, intimidate and embarrass my clients."
Shortly after the indictment was unsealed Thursday, House investigators issued subpoenas for Parnas and Fruman, seeking "key documents" and their eventual testimony as part of the impeachment inquiry.
The 21-page indictment also alleges a separate scheme stretching from June 2018 to April of this year in which Parnas, Fruman and two other defendants, David Correia and Andrey Kukushkin, conspired to make political donations secretly funded by an unidentified Russian businessman in the hopes of winning support for a marijuana business.
The plan, according to prosecutors, was to acquire retail marijuana licenses in Nevada and other states. In September 2018, Parnas, Fruman, Correia, Kukushkin and the Russian businessman met in Las Vegas to discuss the venture, the indictment charges. However, the group made efforts to hide the foreign national's role because of what Kukushkin allegedly described as the businessman's "Russian roots and current political paranoia about it," the indictment alleges.
To fund the effort, the Russian businessman allegedly gave the others $1 million, and the American partners set out to try to win political backing for their business plan. The four defendants "used those funds transferred by Foreign National-1, in part, to attempt to gain influence and the appearance of influence with politicians and candidates," the indictment charges.
In October 2018, Parnas, Fruman and Kukushkin attended a campaign rally for an unidentified politician in Nevada, an event also attended by a different Nevada candidate for office, according to the indictment. They sent their Russian moneyman photographs of themselves posing with the second candidate, officials said. After the event, Fruman donated $10,000 to that second candidate, but authorities say it was actually the Russian's money.
The planned marijuana business faltered, however, when the men did not apply in time for a recreational marijuana license, missing a September 2018 deadline. Kukushkin told the Russian that they were "2 months too late to the game unless we change the rules" and suggested a particular Nevada state official's support was needed to take it further, according to the indictment.
Kukushkin was arrested in San Francisco, officials said, and a lawyer for him could not immediately be identified. Correia has not been arrested but federal agents expect him to surrender soon, according to one official.
Parnas and Fruman are charged with falsification of records and making false statements to the Federal Election Commission; all four defendants are charged with conspiracy.
Parnas and Fruman have little history of political involvement but ascended rapidly into a circle of elite Trump donors after Parnas gave $50,000 to support Trump's election in 2016.
In March 2018, Parnas and Fruman began scheming "to advance their personal financial interests and the political interests of at least one Ukrainian government official with whom they were working," according to the indictment. "To advance that scheme, they made a $325,000 contribution to an independent expenditure committee and a $15,000 donation to a second such committee."
Previous social media posts and interviews indicate the duo interacted with both Trump and his son Donald Trump Jr., and had attended events at Trump's Mar-a-Lago Club in Florida and at the White House. Fruman attended a fundraiser held at Mar-a-Lago in March 2018.
In a now-deleted Facebook post that was unearthed by BuzzFeed News and the Organized Crime and Corruption Reporting Project, Parnas displayed photos of himself and Trump at an event that apparently took place at the White House on May 1, 2018.
Later that month, Fruman gave an interview to a Brooklyn-based Russian-language publication, in which he said that he and Parnas had attended an eight person meeting with Trump in Washington the previous week to discuss the upcoming midterm elections. At the meeting, Fruman said he handed the president a personal note from Ukraine's top rabbi, which he said Trump read and then tucked in the breast-pocket of his jacket.
On May 21, 2018, Parnas posted a photo online of himself and Fruman with Trump Jr. and Tommy Hicks, a Republican fundraiser and close friend of the president's son, at what he wrote was a breakfast in California.
The president on Thursday told reporters he didn't know Parnas or Furman.
"I don't know those gentlemen. . . . Now, it's possible I have a picture with them, because I have a picture with everybody," Trump said.
Parnas has told The Post that he decided to get involved politically because he was a passionate supporter of Trump's candidacy after growing up in New York and selling Trump condos in the city when Trump's late father, Fred Trump, was still running the Trump Organization.
In May 2018, about six months before the men began working with Giuliani on his Biden investigation, a Florida business established by Parnas received a $1.26 million wire transfer from an account whose owner was represented by a real estate lawyer who specializes in assisting foreign buyers of U.S. property, court documents and corporate filings show.
Two days later, the pro-Trump super PAC, America First, reported receiving $325,000 from Global Energy Producers, the newly-created company controlled by Parnas and Fruman.
Last year, the nonprofit Campaign Legal Center filed a still-pending complaint with the FEC over the donation, alleging that it appeared to be a straw donation that masked the identity of the original contributor.
Parnas told the Miami Herald last week that the money for the super PAC donation was from proceeds from the sale of a Miami-area condominium.
The real estate lawyer involved in the transfer, Russell Jacobs, did not respond to requests for comment.
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The Washington Post’s Rachel Weiner, Matt Zapotosky, Josh Dawsey, Tom Hamburger, Alice Crites, Jacqueline Alemany, Paul Sonne and Mike DeBonis contributed to this report.