Rudy Giuliani associates among 4 facing conspiracy, campaign finance charges

Two Florida businessmen tied to U.S. President Donald Trump's personal lawyer Rudy Giuliani have been arrested on allegations of campaign finance violations resulting from a $325,000 US donation to a political action committee supporting Trump's re-election.

Lev Parnas and Igor Fruman were arrested on a four-count indictment that includes charges of conspiracy, making false statements to the Federal Election Commission and falsification of records.

Parnas and Fruman were central to Giuliani's efforts to get government officials in Ukraine to investigate business dealings by former vice-president Joe Biden and his son, Hunter, in the war-torn former Soviet republic.

While the indictments do not suggest wrongdoing by the president, they are likely to add fuel to the burgeoning House impeachment inquiry, raising additional questions about whether those close to Trump and Giuliani sought to use their influence to affect U.S. foreign policy decisions.

House Democrats subpoenaed Parnas and Fruman on Thursday for documents they have so far refused to produce to three House committees. The panels have previously subpoenaed Giuliani.

Records show Parnas and Fruman used wire transfers from a corporate entity they controlled to make a $325,000 US donation to the America First Action committee in 2018. But wire transfer records that became public through a lawsuit show the corporate entity reported as making the transaction was not the true source of the money.

Marie Yovanovitch, centre, is shown in March meeting with officials in Kyiv from the government of then-president Petro Poroshenko. Yovanovitch, recalled as ambassador to Ukraine in May, is scheduled to give a deposition in House of Representatives committees on Friday. (Mikhail Palinchak/Presidential Press Service Pool Photo via AP)

Prosecutors also allege Parnas urged a U.S. congressman to seek the ouster of the U.S. ambassador to Ukraine, Marie (Masha) Yovanovitch, at the behest of Ukrainian government officials. That happened about the same time Parnas and Fruman committed to raising more than $20,000 for the politician.

Yovanovitch is expected to appear Friday in a closed session before three House committees.

The congressman wasn't identified by name in court papers, but the donations to "Congressman 1" in the indictment match campaign finance reports for former congressman Pete Sessions, a Texas Republican who lost his re-election bid in November 2018. In May 2018, Parnas posted a photo of himself and his business partner, David Correia, with onetime attorney general Jeff Sessions in his Capitol Hill office, with the caption "Hard at work !!" 

John Dowd, a lawyer for the men, hung up on an Associated Press reporter calling about the case.

Giuliani said he couldn't comment on the case and that he didn't represent them in campaign finance matters.

The men, who were arrested at Dulles International Airport, were expected to appear later Thursday in Federal Court in Virginia.

Illegal foreign contributions alleged

Correia, an American businessman, and Andrew Kukushkin, a Ukrainian-born U.S. citizen, were also charged.

The indictment says Parnas and Fruman "sought to advance their personal financial interests and the political interests of at least one Ukrainian government official with whom they were working" and took steps to conceal it from third parties, including creditors. They created a limited liability corporation, Global Energy Producers, and "intentionally caused certain large contributions to be reported in the name of GEP instead of in their own names," according to the indictment.

Prosecutors charge that the two men falsely claimed the contributions came from a liquefied natural gas business. At that point, the company had no income or significant assets, according to the indictment.

Prosecutors allege that Parnas and Fruman conspired to make illegal contributions in an effort to skirt the limit on federal campaign contributions. The men are also accused of making contributions to candidates for state and federal office, joint fundraising committees and independent expenditure committees in the names of other people.

The political donations were made "for the purpose of gaining influence with politicians, so as to advance their own personal financial interests and the political interests of Ukrainian government officials, including at least one Ukrainian government official with whom they were working," the indictment charges.

The commitment to raise more than $20,000 for the congressman was made in May and June 2018. The lawmaker had also received about $3 million in independent expenditures from a super political action committee that Parnas and Fruman had been funding. A super PAC can raise and spend unlimited amounts of money in support of a candidate, but isn't allowed to directly co-ordinate with the official campaign.

The indictment also charges that Kukushkin conspired with the three other defendants to make political contributions, funded by a foreign national, to politicians seeking state and federal office "to gain influence with candidates as to policies that would benefit a future business venture."

Rudy Giuliani has come under scrutiny for his interactions with Ukraine on behalf of President Donald Trump, which did not occur in an official State Department or national security capacity. (Pablo Martinez Monsivais/The Associated Press)

An unnamed foreigner wired $500,000 from a bank account overseas through New York to the defendants for political contributions to two political candidates for state office in Nevada, the indictment alleges. Foreigners are not permitted to contribute to U.S. elections.

The indictment accuses the four men of also participating in a scheme to acquire retail marijuana licences through donations to local and federal politicians in New York, Nevada and other states. In September of last year, the indictment says, Correia drafted a table of political contributions and donations that was subsequently circulated to the defendants and an unidentified foreign national.

The PAC donation in May 2018 was part of a flurry of political spending tied to Parnas and Fruman, with at least $478,000 US in donations flowing to GOP campaigns and PACs in little more than two months.

The money enabled the relatively unknown entrepreneurs to quickly gain access to the highest levels of the Republican Party, including face-to-face meetings with Trump at the White House and Mar-a-Lago in Florida.

The AP reported last week that Parnas and Fruman helped arrange a January meeting in New York between Ukraine's former top prosecutor, Yuri Lutsenko, and Giuliani, as well as other meetings with top government officials.

Giuliani's efforts to launch a Ukrainian corruption investigation were echoed by Trump in his July 25 call with Ukraine's president, Volodymyr Zelensky. That conversation is now at the heart of a burgeoning congressional impeachment inquiry.

A whistleblower complaint by an unnamed intelligence official makes reference to "associates" of Giuliani in Ukraine who were attempting to make contact with Zelensky's team, though it's not clear that refers to Parnas and Fruman. That could put the two men squarely in the middle of the investigation into Giuliani's activities.

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