In Request for Special Master, the Lev Parnas Prosecutors Hint at Prior Filter Team Searches on Rudy

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The day after the search on Rudy Giuliani and a single Victoria Toensing phone, the prosecutors on the Lev Parnas case wrote a letter to the judge in that case, Paul Oetken, asking that he appoint a Special Master to review the content of their phones before turning that content over to prosecutors. It was unsealed yesterday after Rudy and Toensing’s lawyers got to review the redactions and add any they wanted. Oetken has ordered a briefing schedule about how this should proceed, which will extend through May 17.

The letter suggests certain things:

  • The participation of Oetken and the Parnas prosecution team (Rebekah Donalski, Nicolas Roos, and Aline Flodr) is consistent with this investigation arising out of the Parnas investigation, as has been reported.
  • These searches were approved on April 21, which was the day after Lisa Monaco was confirmed on April 20. That suggests she approved of this search. It’s normal for the Deputy Attorney General to sign off on controversial searches like this, and this suggests they waited to have the confirmed DAG sign off rather than have John Carlin, who had been acting DAG until Monaco was confirmed.
  • A court in Maryland signed off on the seizure of Toensing’s phone before SDNY signed off on the search of it.
  • The letter cites two exceptional circumstances when it might be appropriate to appoint a Special Master: when the attorney-client privilege would involve the President, and so implicate executive privilege, and when the attorney is involved in matters “adverse to the United States Attorney Office.” It’s not clear if prosecutors have something specific in mind with the latter reference, but it’s certainly possible that this concerns matters that one or the other lawyer has clients who are before SDNY.
  • Seemingly to explain why Rudy and Toensing aren’t making this request, the letter notes that defendants normally do but, in this case, “there is no pending criminal case against the subjects of the search.” Make of that what you will.
  • The government is basically asking for the same initial rules to be applied as were applied in the Michael Cohen case. They don’t, however, ask that any legal discussions be submitted to the public docket, which is something that happened in Cohen’s case that seemed to dissuade Trump from making frivolous claims of attorney-client privilege.

The most interesting bit of the letter, however, comes after a redacted passage with two redacted footnotes.

That introduces the following discussion:

The Government believes that its use of a filter team to conduct a review pursuant to established protocols is sufficient to protect applicable privileges and that [one line redacted] given that the searches [redacted] were done in an overt manner. [half line redacted] as well as the unusually sensitive privilege issues that the Warrants may implicate, the Government considers it appropriate for the Court to appoint a special master to make the privilege determinations as to materials seized pursuant to the Warrants. In particular, the overt and public nature of these warrants necessitates, as Judge Wood observed, the appointment of a special master under the “perception of fairness, not fairness itself.”

That is,  the government is explaining — in a letter that preempts any demand from Rudy and Toensing — that they don’t really need to do it this way, but partly because this search was public, it justifies doing so here.

But remember that the search of these devices is not the only one alleged. Rudy and his lawyer, Robert Costello, claim that SDNY also got a “covert” warrant for Rudy’s iCloud account sometime in late 2019.

A lawyer for former New York City mayor and Donald Trump attorney Rudy Giuliani said the Justice Department revealed on a Thursday conference call that the feds had penetrated Giuliani’s iCloud long before Wednesday’s search warrants were executed.

“I was told about it today in a conference call with the [U.S.] Attorney’s office,” attorney Robert Costello, a longtime friend of Giuliani’s, told The Daily Beast on Thursday night. “They told me they obtained a ‘covert warrant’ for Giuliani’s iCloud account in ‘late 2019.’ They have reviewed this information for a year and a half without telling us or [fellow Trump-aligned attorney] Victoria Toensing.”

During an appearance on Tucker Carlson’s Fox News show on Thursday night, Giuliani himself briefly referenced the warrant to search his iCloud account. “In the middle of the impeachment defense, they invaded, without telling me, my iCloud,” the Trump confidant said. “They took documents that are privileged. And then they unilaterally decided what they could read and not read. So the prosecutors at the Justice Department spied on me.”

A year and a half would put the search in October 2019, quite possibly before impeachment had formally started, and around the time when Lev Parnas and Igor Fruman were first charged. It likely put it at a time when Trump had no overt defense needs, and so no acknowledged privilege here (unless you count John Dowd’s October 3 letter to Congress that effectively put Trump in a joint defense agreement with Parnas and Fruman and alleged Russian mobster Dmitro Firtash).

I had thought this earlier reference might have been to a preservation order served to Apple, but the redacted passages are consistent with there having been a real search, one for which SDNY used only a taint team to weed out what was genuinely privileged. And there was clearly probable cause: Rudy was the business partner of two people charged for their business doings.

According to the terms of this letter, in the case of a covert search like the one Rudy claims occurred, there would be less cause for a Special Master.

Which is to say this letter may be more about the searches that have already occurred rather than the forthcoming exploitation that will be done with the oversight of a Special Master.

Government Refuses to Let Steve Bannon Sneak Away from His Federal Fraud Indictment

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On February 11, Steve Bannon’s pardon was lodged in his federal docket with no explanation, entered with a date of January 19. As compared to the Mike Flynn pardon, there was no DOJ request to dismiss the prosecution nor an indication that Bannon had accepted it.

Apparently, on February 18, Bannon’s lawyer wrote Judge Analisa Torres an email requesting that she dismiss the indictment against Bannon. In response, yesterday the government submitted a letter agreeing that Bannon can be terminated from the docket and have his bond returned, but opposing that the indictment be dismissed.

As prosecutors explain, a pardon is only meant to forgive punishment, it is not intended to forget the crime. And if the court dismissed the indictment, prosecutors point out, it would have consequences beyond the pardon.

The fact that Bannon was pardoned does not extinguish the fact that a grand jury found probable cause to believe that he committed the offenses set forth in the Indictment, nor does it undercut the evidence of his involvement therein which the Government expects to elicit as part of its presentation at trial. Were the Court to dismiss the Indictment against Bannon, it could have a broader effect than the pardon itself, among other things potentially relieving Bannon of certain consequences not covered by the pardon.

[snip]

Accordingly, because Bannon does not set forth any legal authority for the proposition that a court should dismiss an indictment following a pardon, and the only stated basis for his request is to “clarify” his status, the Court should deny the request.

The government also demands that Bannon file the letter in the docket.

Finally, the Court should direct Bannon to publicly file his February 18th letter on the docket. Bannon’s counsel submitted the letter to the Court by email—and therefore effectively under seal—because, in his view, “Bannon should no longer be a defendant in the case.” However, until the defendant is administratively terminated, he remains a named defendant and more important, Bannon’s status in the case is not a basis to make his submission under seal.

The government submitted the filing on the same day that CNN reported an accelerating state investigation into Bannon for the same crimes.

The Manhattan district attorney’s office has subpoenaed financial records related to Steve Bannon’s crowd-funding border-wall effort, signaling that its criminal investigation into former President Donald Trump’s chief strategist is advancing, according to people familiar with the matter.

Prosecutors sent the subpoenas after Trump pardoned Bannon in late January for federal conspiracy crimes tied to the southern border-wall project, making Bannon among the Trump world figures — including the former president — subjects of criminal investigations by Manhattan district attorney Cyrus Vance.

The grand jury subpoenas were sent to Wells Fargo, one of the financial institutions that handled some of the accounts used in the fundraising effort, and to GoFundMe, the crowdfunding platform where Bannon’s project, “We Build the Wall,” once operated, the people said.

The state grand jury investigation revives the possibility that Bannon, the conservative and outspoken political strategist, could face state criminal charges after shedding the federal case last month.

In addition to the criminal investigation, the New Jersey attorney general’s office has launched a civil inquiry into We Build the Wall. In September, the New Jersey Division of Consumer Affairs subpoenaed We Build the Wall for documents seeking a wide range of records, according to court filings.

This all suggests that Bannon may be in a far worse place for having obtained a Trump pardon.

In mentioning its intent to elicit testimony of Bannon’s actions in the letter, the government seems to be alluding to the fact that Bannon is a named co-conspirator. They will want (and need) to introduce his actions and statements as a co-conspirator into evidence to convict the others. Thus, it is important for prosecutors that he remain a named — albeit pardoned — co-conspirator in the Federal crimes.

Forcing Bannon’s attorney to submit the letter in the docket itself will effectively force him to officially accept the pardon, which prosecutors will then argue is admission of guilt, making the co-conspirator evidence from him even more valuable by association.

The public filing may also be necessary before Cy Vance can request the grand jury materials from Judge Torres, as referenced in the CNN piece.

And, of course, rather than facing a sentence at some Club Fed prison, Bannon might now be facing a crappier New York State prison like Rikers.

All that’s before any other federal charges facing Bannon related for foreign influence peddling.

It was never going to be easy for Bannon to pull off a Trump pardon. Thus far, his attorney Robert Costello may be making things worse.

Trump Prepares to Pardon Massive Tax Cheat Paul Manafort While Claiming that Suspected Midscale Tax Cheat Hunter Biden Disqualifies Joe

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Poor Glenn Greenwald. After news broke that Hunter Biden was under investigation for things that have nothing to do with the allegations Rudy Giuliani was pressing from a laptop purportedly left at a repair office, Glenn wrote a post (purportedly unlocked, though it’s not) claiming that everyone who had said Rudy’s attempts to float claims from the Biden laptop was Russian disinformation had been proven wrong.

Since then, Donald Trump himself connected the investigation to his call to Volodymyr Zelenskyy, part of Rudy’s work with a bunch of Russian-backed Ukrainians — at least one of whom has since been sanctioned by the Trump Treasury Department as a Russian agent — to dig up dirt on Hunter Biden.

And the NYT published a story that revealed that the Pittsburgh US Attorney’s office — set up to vet the crap coming from Rudy because of his and therefore its ties to Russian agents — got the laptop.

Even worse for Glenn, the story revealed that those agents being run by a hyper-political US Attorney examined the laptop and found nothing.

The F.B.I. viewed the investigative steps into Mr. Biden that Mr. Brady sought as unwarranted because the Delaware inquiry involving money laundering had fizzled out and because they were skeptical of Mr. Giuliani’s material. For example, they had already examined a laptop owned by Mr. Biden and an external hard drive that had been abandoned at a computer store in Wilmington and found nothing to advance the inquiry.

In other words, people with subpoena power, under pressure to find something incriminating against Hunter Biden in the laptop that Glenn demanded the press drop everything to focus on, had nothing of real investigative interest on it. The DE investigation purportedly comes from normal channels, like Suspicious Activity Reports and divorce proceedings. Importantly, every report thus far say the investigation doesn’t implicate the President-Elect, the key thing those waggling the laptop tried to claim.

Which was part of the point of it being disinformation: Stupid people could and did take things out of context and insinuate something nefarious was going on without evidence that it was, all because some of the emails on the laptop were “authentic.”

Meanwhile, the DE US Attorney’s office has actually been investigating Hunter Biden for longer than the entire Mueller investigation, at least two full years. They have reportedly ruled out a money laundering case but are now scrutinizing the younger Biden for tax crimes.

In 2018, the F.B.I. and the U.S. attorney’s office in Wilmington, Del., quietly began investigating whether Hunter Biden had violated money laundering laws, according to people with knowledge of the inquiry.

Investigators eventually determined that the money laundering aspect of the Hunter Biden inquiry was not going to lead to charges. But they had discovered potential tax law violations and felt they had the makings of a strong tax case against him, according to several people familiar with the matter. The inquiry came to involve I.R.S. agents.

Donald Trump is taking the report that the original US Attorney’s office investigating the President-Elect’s son, in Delaware, has focused on tax crimes after ruling out money laundering as proof that the entire Biden Administration will be brought down by the legal troubles of someone who will not be given a nepotism appointment in the White House.

Donald Trump almost certainly will, sometime over the next 38 days, pardon his former campaign manager, Paul Manafort, for crimes involving both money laundering and tax crimes. Paulie’s crimes were at least one order of magnitude bigger than the ones for which Hunter Biden is being investigated (and Biden seems to believe he told his tax advisors honestly what he had earned, which Paulie was shown not to have at trial).

In other words, over the next several weeks, Trump will pardon Paulie for a crime far larger than the ones that — he claims — are of a magnitude that should disqualify someone not named Hunter Biden.

That’s worth keeping in mind in the days ahead.

Steve Bannon Hires a Pardon Broker (and Rudy Giuliani Lawyer) to Replace His Competent Lawyer

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Steve Bannon just filed notice of what lawyer will defend him in his SDNY prosecution for defrauding Trump chumps. He had been represented by the very competent Bill Burck. But after Bannon started making death threats against Anthony Fauci and Christopher Wray, Burck dropped him.

Instead, Bannon hired Robert Costello.

TO THE CLERK OF COURT AND ALL PARTIES OF RECORD: PLEASE TAKE NOTICE that Robert J. Costello of Davidoff Hutcher & Citron, LLP, with offices located at 605 Third Avenue, New York, New York 10158, hereby appears on behalf of Defendant Stephen Bannon.

Costello represents Rudy Giuliani in his many sordid influence peddling investigations.

He’s also the guy who tried to buy Michael Cohen’s silence with a pardon, an investigation that fairly obviously got referred under Mueller. I guess that makes it clear what Bannon’s defense strategy will be.

The problem is, SDNY is now on notice (if they weren’t already by Trump’s promises that “Bannon will be okay”). So they can simply share their case file with New York State, where fraud is also a crime.

I may be missing something but I don’t think Trump’s evil genius is on his A game.

From Failed Whistleblower to Journalistic Source: Natalie Sours Edwards Mounts a Credible Public Interest Defense

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Natalie Sours Edwards, one of the sources for a series of BuzzFeed stories on Treasury and a larger, global series on Suspicious Activity Reports, submitted her sentencing memorandum last night. It is probably the most convincing example of a whistleblower-turned-leaker telling her story to explain why she did what she did. And while she was charged under a different statute than the Espionage Act — there’s a specific law prohibiting the leaking of SARs — it is a laudable effort to make a public interest defense.

She spends much of her submission (as most do) describing her background — her Native American upbringing, the series of jobs she had after obtaining a PhD in national security decision-making, first at ATF, then at CIA, and then at Treasury’s FinCEN. Not long after she moved to Treasury, she grew concerned about a number of things she was seeing: She believed Treasury was making some organizational changes without first getting congressional approval.

By April of 2016, TFI was considering a proposal to move several employees from FinCEN to OIA. May Sours Edwards and other members of FinCEN’s upper management questioned the legality of the proposed realignment. In an email to John Farley, Acting Director of Executive Office for Asset Forfeiture (TEOAF), Dr. Edwards raised concerns about whether the transfers would be consistent with Congressional appropriations and whether OIA was moving forward in spite of a direction from the Senate Select Committee on Intelligence not to proceed until the Committee had reviewed the plans for the reallocation of funds.

She was concerned — as was the Privacy and Civil Liberties Oversight Board — that Treasury had never instituted guidelines protecting Americans’ privacy when accessing records under 12333. (I had written about this problem before this period.)

Did OIA, as a member of the intelligence community, have the authority to collect and retain data domestically. Under Executive Order 12333 (“E.O. 12333”) IC entities, which OIA is, are permitted to collect information on “United States persons” only if the organization has promulgated guidelines for doing so and had them reviewed and approved by the Attorney General.11 Dr. Edwards questioned whether OIA had signed guidelines. Counsel for OIA hostilely, in Dr. Edwards’ estimation, disagreed with her interpretation of EO 12333. She believed he deliberately denigrated her during the meeting in front of the other participants in an attempt to bully her into agreeing with his position. She did not acquiesce.

11Executive Order 12333 provides in pertinent part as follows. “2:3 Collection of Information. Agencies within the Intelligence Community are authorized to collect, retain or disseminate information concerning United States persons only in accordance with procedures established by the head of the agency concerned and approved by the Attorney General, consistent with the authorities provided in Part 1 of this Order.”

After she had shared these concerns with Congress, she believed that Jacob Lew had knowingly lied to Congress about whether there were whistleblowers at Treasury.

On September 22, 2016, Treasury Secretary Jacob Lew testified before the House Financial Services Committee. https://www.c-span.org/video/?415661- 1/secretary-jack-lew-testifies-financial-stability-report&start=9046. Representative Fitzpatrick specifically asked him whether the proposed realignment was consistent with the existing budget, the issue Dr. Edwards had been raising. He also the Secretary whether there were any whistleblowers at Treasury. Representatives Jeb Hensarling and Sean Duffy later sent a follow-up congressional letter to Secretary Lew, expressing concern that the proposed “changes may violate appropriations requirements, civil service rules, and constraints on gathering and use of financial intelligence data.” They also noted that it was “troubling that Treasury is moving forward with the proposed reallocation with the intention to complete the process before a new Administration takes over in January 2017 and despite bipartisan requests to process at a more deliberate pace.” Id.

Something else of significance happened during the hearing. In response to a question from Representative Fitzpatrick, Secretary Lew stated that he was unaware of any whistleblowers in the Treasury Department. Dr. Edwards was taken aback and concerned. She was a whistleblower, a fact well known to Treasury OIG.

In the wake of that hearing, she believed that her clearance was pulled, briefly, as retaliation.

On September 27, 2016, a week after the contentious OIA-FinCEN meeting, someone at OIA ordered that Dr. Edward’s SCI (Sensitive Compartmentalized Information) clearance and her access to the SCIF (Sensitive Compartmentalized Information Facility) be revoked. Dr. Edwards questioned the basis for the action. Her clearance was reinstated the following day. Email of September 28, 2016, from May Edwards to Elizabeth Ortiz, attached hereto as Exhibit XX

She submitted two whistleblower complaints — to Treasury IG and to OSC. The latter found that she had engaged in protected activity (meaning that she had been a whistleblower), but ruled against her claims of retaliation on narrow grounds.

By letter dated May 21, 2018, OSC informed Dr. Edwards that they were closing her file. OSC concluded that Dr. Edwards’ reports to her “leadership, OIG, Congress and OSC all likely constitute ‘protected activity’ or whistleblowing under the law.” May 21, 2018, letter from OSC to Dr. Edwards, attached hereto as Exhibit HHH at 4. Further, Dr. Edwards could establish that her “management knew about [her] whistleblowing regarding, at a minimum, the issues [she] raised directly to them.” However, OSC made several findings that it concluded were fatal to Dr. Edwards’ claim that she had been retaliated against as a whistleblower. OSC could not find that there was a substantial likelihood that Treasury Secretary Lew knew of Dr. Edwards’ allegations when he testified before Congress that there were no whistleblowers in Treasury. Id. at 3. The email that outlined OMB’s direction to Treasury on communicating with Congress about the FinCEN/TSI realignment was not improper because it appeared to be directing Treasury officials not to discuss the issue in their official capacities as opposed to directing them in their individual capacities on their rights to report suspected wrongdoing to Congress

A Treasury IG Report ruled against her based on an alternative explanation provided for why the PKI of FinCEN employees had been pulled.

While finding that the problem with the IC PKI certificates was solely the result of inadvertence, the author of the audit did note that “the present working relationship between OIA and FinCEN related to the IC PKI process is strained.” Id. at 3. The two Treasury components had a “fundamental disagreement” about FinCEN’s need for access to the IC PKIs and more broadly about FinCEN’s autonomy.

She even explains how — after she started working with Jason Leopold — Ron Wyden complained that FinCEN was withholding information on Russian interference and its ties with Donald Trump.

In addition to her concern about OIA’s handling of realignment and the PKIs issue, Dr. Edwards grew to question whether FinCEN was providing complete information in response to Congressional requests for information. She was not alone in that belief. On May 10, 2017, Senator Ron Wyden made a floor statement placing a hold on the nomination of Sigal Mandelker for the position of Under Secretary of TFI. His office issued a statement explaining the Senator’s reasoning:

Senator Ron Wyden, D-Ore., today placed a hold on the nomination of Sigal Mandelker to be Under Secretary of the Treasury for Terrorism and Financial Intelligence. Wyden said he will maintain that hold until the Treasury Department provides the Senate Intelligence Committee and Senate Finance Committee information and documents related to Russia and its financial dealings with President Trump and his associates.

On Tuesday, May 9, Senate Intelligence Committee Vice Chairman Mark Warner announced that the Committee had made a request to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). https://www.wyden.senate.gov/news/press-releases/wyden-announces-hold-ontreasury-nominee-until-administration-produces-documents-on-russian-dealingswith-trump-associates. On September 22, 2017, Senator Wyden put a hold on another Treasury Assistant Secretary nominee, Isabelle Patelunas, again because of Treasury’s “refusal to provide documents related to Russia.” https:// www.wyden.senate.gov/news/press-releases/wyden-announces-hold-ontreasury-nominee-over-agencys-refusal-to-provide-documents-related-to-russia.

It’s in that context that — she described — she started working with Leopold to get Congress to return its attention to misconduct at Treasury.

When Congress’ attention to the issues May believed vitally affected the security of this country flagged, she began communicating with Jason Leopold, a reporter with the online publication BuzzFeed News. He told her that he shared her concern for national security. He assured her that the only way to revive Congressional interest was through media attention. He promised to – and did – introduce her to additional Congressional staffers. At his encouragement, she provided him with Suspicious Activity Reports (“SARs”) and other internal Treasury Department documents. He wrote articles that disclosed that information. She was arrested. He was not.

[snip]

Although Congress by then had done little to curb Treasury’s behavior, Dr. Edwards continued to believe that the only way to ensure that those responsible for the improper behavior were held accountable was through Congress. Leopold encouraged this belief: By writing articles, he could get the proper attention for the issues she believed were of vital importance to national security. This was a theme he returned to more than once when he sought information from Dr. Edwards: He could use what she gave him to write stories that would force Congress to investigate her allegations. (September 27, 2017: “We do need to keep momentum going so this story is crucial.” October 16, 2017: “We are going for the next story – keep momentum going with 12333.” January 11, 2018: “Listen, I am going to make a case that we need to leak something and report it. I am going to reach out to some of your colleagues. But this is getting ridiculous and I need to get their attention…By their attention I mean Congress).

Importantly, given the way she was charged (with a conspiracy to leak these SARs, with Leopold identified as a co-conspirator would be) she describes how hard Leopold worked to champion her efforts in Congress.

Throughout 2017 and 2018, Leopold told Dr. Edwards in their WhatsApp conversations that he was committed to her cause of uncovering and remedying corruption in the Treasury Department. He told her at times that he was acting on behalf of Congressional staff members in seeking information from her. He sought to arrange meetings for Dr. Edwards with members of Congress or their staff. Such meetings did take place. Leopold attended meetings with Dr. Edwards. Staffers encouraged Dr. Edwards to provide information they sought about the inner workings of the Treasury Department, including whether the requirements of the Bank Secrecy Act were being enforced by financial institutions as required to assist U.S. government agencies.

Remember: Before the global SARs reporting effort came out, Treasury issued a statement that can only be viewed as an attempt at prior restraint, a threat against Leopold.

Edwards’ sentencing memorandum says that the Probation office recommended two years of probation.

Dr. Sours Edwards faces no mandatory minimum term of incarceration. As discussed above, the relevant range under the United States Sentencing Guidelines, both as stipulated in the plea agreement and as determined by United States Probation, is zero to six months. PSR at ¶4, p. 28. Probation has recommended that the Court sentence Dr. Sours Edwards to a two-year term of Probation.

It is unclear whether this will work — whether Edwards will get probation. It is equally unclear whether Leopold’s laudable efforts to double down on his reporting, to raise global attention to the issue, will bring about reform at banks or in the US.

But this is what every other leaker I’ve covered has tried to do, far less persuasively: an attempt to make a public interest defense for leaking to a journalist.

Roger Stone Demanded Lists from Rick Gates at Least Nine Times During the 2016 Election

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For a whole slew of reasons, I want to point out a detail in an exhibit released in Roger Stone’s trial: He asked for “lists” — once explicitly described as donor lists, but described as voter registration lists by Stone’s attorney, Bruce Rogow, at trial — from Rick Gates at least nine times:

4/30/16, 2:37:22 PM [Stone to Gates]: Obtain the donor list- I Need it soon to effect [sic] California!!

5/11/16, 7:16:14 AM [Stone to Gates]: Get the list. I don’t care about anything else.

5/11/16, 1:08:05 PM [Stone to Gates]: Get the list !!!!!!!

5/13/16, 1:52:51 AM [Stone to Gates]: Tried – corey trying desperately to tie me to New PAC and Trump seems to be unaware that this PA

5/13/16, 1:15:31 AM [Gates to Stone]: New updates.

5/13/16, 1:32:00 PM [Stone to Gates]: Can make sure Manafort makes sure Trump knows about Sovereignty PAC-???

5/15/16, 2:36:32 PM [Gates to Stone]: Did you see the positive press o. AS PAC? Hope it holds.

5/17/16, 3:54:53 PM [Stone to Gates]: Get the list.

5/17/16, 7:19:20 PM[Stone to Gates]: Get the list – “u need to reconcile against FEC report” crucial

6/21/16, 3:54:40 PM [Stone to Gates]: Lists Friday ??? please

7/2/16, 5:59:17 PM [Stone to Gates]: Lists? You said last weds

9/21/16, 10:30:25 PM [Stone to Gates]: Please get me lists – please.

9/26/16, 8:30:22 PM [Stone to Gates]: Lists????

9/28/16, 1:43:14 AM [Stone to Gates]: Are u going to send me the lists in time for me to use? do me no good after the election

10/19/16, 5:00:14 PM [Stone to Gates]: Lists…..pls

It’s not entirely clear why they were included at trial. The government had talked about introducing 404b information showing Stone illegally coordinating with the campaign, but there was more focus, on that point, on Stone’s discussions with Steve Bannon about obtaining funding from Rebekah Mercer while the latter was campaign manager.

Perhaps the defense wanted to include these exchanges as proof that Stone’s conversations with Gates focused more often on lists than on WikiLeaks. In his cross examination of Gates, Rogow got Trump’s former Deputy Campaign Manager to confirm that Stone, “continually asked questions about voter registration lists.”

Q. Mr. Stone’s role in the campaign dealt with voter registration lists, primarily, didn’t it?

A. I didn’t know what Mr. Stone was responsible for prior to when I arrived. When I arrived, Mr. Stone had already left the campaign.

Q. Did Mr. Stone continually ask questions about voter registration lists?

A. He did.

To be clear: I’m completely agnostic what Stone’s requests were about. But there are a slew of possibilities.

One reason I raise it — given a Campaign Legal Center complaint to the FEC, alleging that Trump laundered $170 million in campaign funding through Brad Parscale’s firms and news today of Parscale’s attempt at self-harm yesterday — pertains to some comments that Paul Manafort made in a September 27, 2016 interview:

Stone had a PAC that was not well funded and he wanted Manafort to designate it as the favored PAC for the campaign, but Manafort did not want to. Lewandowski also had a PAC and wanted the same thing, and Manafort did not want to deal with internal politics related to their PACs. He thought it was a good idea to have a designated PAC, he just did not want it to be either Stone’s or Lewandowski’s.

[snip]

Manafort was not sure how Stone made his money. Manafort knew Stone wrote books and gave speeches and did some consulting. Manafort knew Stone was working on a book about the Trump campaign and consulted with different candidates and on various referenda. Manafort did not know Stone’s client base. Manafort was not familiar with the company Citroen.

Manafort’s comments are positively hilarious. He presents this as a battle between Stone and Corey Lewandowski over who could make the most profit off of illegally coordinating with the campaign. That battle was real, and cut throat.

But at the time Stone and Lewandowski were fighting that out, Manafort’s allies had their own PAC that prosecutors at least suspected that Manafort used as a kick back system to get paid. Manafort didn’t want anyone else to be the official illegally coordinating campaign, presumably, because he wanted his PAC to have that role. And at the time Manafort made this comment in September 2018, he was pretty aggressively trying to hide how his own PAC worked.

The investigation into Manafort’s PAC has been closed, whether because Bill Barr shut it down or prosecutors gave up trying to untangle it.

But the CLC complaint into Trump’s current campaign alleges that one of Parscale’s firms, American Made Media Holding Corporation, serves as a pass through for campaign vendor services that are therefore improperly shielded from campaign finance reporting.

Approximately one month after AMMC’s formation, the Trump campaign began reporting sizable payments to AMMC, and AMMC soon became the Trump campaign’s largest vendor. Since 2019, the Trump campaign has reported paying $106 million to AMMC for an array of general purposes, including placed media, consulting, online advertising, SMS advertising, and more; the Trump Make America Great Again Committee has reported over $61 million in payments to AMMC, largely for online advertising.

Available evidence indicates that AMMC is not directly providing those services to the Trump campaign, but instead is acting as a “clearinghouse”10 that disburses Trump campaign funds to other vendors, “effectively shielding the identities of the underlying contractors being paid for Trump campaign work.”11 In several instances, Trump campaign officials and public reports have described other firms as major contractors providing services to the Trump campaign, yet those contractors’ names do not appear on the Trump campaign’s reports filed with the Commission; instead, it appears that the Trump campaign reports payments to AMMC, which then passes on the funds to the intended payees.

For example, Trump campaign officials have spoken publicly about directing and managing the development of a mobile app produced by the software company Phunware, yet the Trump campaign has not reported direct payments to the company. Other public records suggest that the Trump campaign is contracting with Realtime Media and Opn Sesame— firms headed by the Trump campaign’s digital director, Gary Coby12—yet neither firm has appeared on the campaign’s reports filed with the FEC. Federal Communications Commission (“FCC”) records show that the Trump campaign’s ads are placed by the firm Harris Sikes Media, but the campaign has not reported payments to that firm during the 2019-20 election cycle. Available evidence indicates that the Trump campaign is selecting, directing, and controlling these vendors and their work, yet is failing to report payments to the firms and is instead using AMMC as a conduit for its payments to the firms. Other possible vendors that the campaign may be paying through AMMC, such as those providing services for direct mail, software, subscriptions, or video production—all services for which the campaign has also described paying AMMC this cycle—are not ascertainable through public records.

In addition, CLC reviews some of the reporting that Parscale pays a number of people — notably Don Jr’s girlfriend and Eric Trump’s wife — for their work on the campaign.

Additionally, the Trump campaign is currently paying Parscale Strategy, the consulting firm of former Trump campaign manager Brad Parscale, approximately $48,000 a month for “strategy consulting,” and, according to multiple media reports, using Parscale Strategy as a conduit for salary payments to particular campaign staff.13

[snip]

Similarly, in a July 15, 2020 article reporting on Parscale’s change of position within the campaign, the Washington Post reported that Parscale’s “firm, Parscale Strategy, bills for the campaign salaries of Lara Trump and Kimberly Guilfoyle, the wife and girlfriend respectively of Trump’s two oldest sons, Eric and Donald Jr.”93

In the 2020 cycle, the Trump campaign has not directly reported making any salary payments to campaign manager Brad Parscale, nor has it reported any salary payments to Kimberly Guilfoyle or Lara Trump.94

This is the kind of scheme that the NYT described in its blockbuster report on Trump’s tax returns, though in that case the “consultant” was Ivanka.

Examining the Trump Organization’s tax records, a curious pattern emerges: Between 2010 and 2018, Mr. Trump wrote off some $26 million in unexplained “consulting fees” as a business expense across nearly all of his projects.

In most cases the fees were roughly one-fifth of his income: In Azerbaijan, Mr. Trump collected $5 million on a hotel deal and reported $1.1 million in consulting fees, while in Dubai it was $3 million with a $630,000 fee, and so on.

Mysterious big payments in business deals can raise red flags, particularly in places where bribes or kickbacks to middlemen are routine. But there is no evidence that Mr. Trump, who mostly licenses his name to other people’s projects and is not involved in securing government approvals, has engaged in such practices.

Rather, there appears to be a closer-to-home explanation for at least some of the fees: Mr. Trump reduced his taxable income by treating a family member as a consultant, and then deducting the fee as a cost of doing business.

The “consultants” are not identified in the tax records. But evidence of this arrangement was gleaned by comparing the confidential tax records to the financial disclosures Ivanka Trump filed when she joined the White House staff in 2017. Ms. Trump reported receiving payments from a consulting company she co-owned, totaling $747,622, that exactly matched consulting fees claimed as tax deductions by the Trump Organization for hotel projects in Vancouver and Hawaii.

When CLC filed an FEC complaint against the grift of Lev Parnas and Igor Fruman in 2018, they shared the complaint with SDNY, which is what led to the prosecution of Rudy’s grifters. Here, the appropriate venue would likely be FL or TX (so less likely to pursue a vigorous investigation), but given CLC’s past practice, one should assume it’s likely the information was shared.

In 2016, Trump engaged in all sorts of dodgy campaign financing. But possibly because his key advisors were in such a cutthroat competition with each other, only the now-closed Manafort investigation and the inauguration funding got much scrutiny.

But now, with everything centralized in Parscale’s sports cars, it may be easier to see the grift.

Then there’s what Cambridge Analytica did, some independently and some with the campaign. Channel 4 in the UK has a story today on how aggressively Trump suppressed the black vote.

Finally, I think it’s also important to note that Trump’s Deputy Campaign Manager was being asked (there’s only one indication, May 13, 2016, that Gates delivered, and even that’s not definite) to provide Trump’s rat-fucker with voting lists in a parallel time table as he was providing Russian intelligence officer Konstantin Kilimnik polling data. In September, Russian hackers would spend much of the month making copies of Hillary’s analytics on AWS.

In any case, Trump continues to be surrounded by people who are clearly grifting off their work with him, without much clarity on how they’re doing so and what the implications of all that are.

No Honor Among Troll Faces: The Latest Lawfare against Prigozhin’s Trolls

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Yesterday, Treasury sanctioned four people for election interference. Rudy Giuliani associate Andreii Derkach has gotten most of the attention. But Treasury also sanctioned three people associated with Yevgeniy Prigozhin’s troll operation.

Today, Treasury also designated three IRA actors pursuant to E.O. 13694, as amended by E.O. 13757, and E.O. 13848 for having acted or purported to act for or on behalf of, directly or indirectly, the IRA, an entity designated pursuant to E.O. 13694, as amended, and E.O. 13848. Russian nationals Artem Lifshits, Anton Andreyev, and Darya Aslanova, as employees of the IRA, supported the IRA’s cryptocurrency accounts. The IRA uses cryptocurrency to fund activities in furtherance of their ongoing malign influence operations around the world.

The identifying information announcement provides not just passport and date of birth information (which is normal), but for two of the sanctioned individuals, it includes 17 and 6 crypto-currency addresses, respectively.

ANDREYEV, Anton Nikolaeyvich (Cyrillic: АНДРЕЕВ, Антон Николаевич), 9 3 Bloshevikov Prospect Apt 35, Saint Petersburg, Russia; DOB 03 Mar 1985; POB Saint Petersburg, Russia; nationality Russia; Email Address [email protected]; Gender Male;

Digital Currency Address – XBT 1Fz29BQp82pE3vXXcsZoMNQ3KSHfMzfMe3;

alt. Digital Currency Address – XBT 1AeSq93WDNdLoEJ92sex7T8xQZoYYm8BtS;

alt. Digital Currency Address – XBT 1AoxtfiBQ22DvbhqAN9Ctb8sULMRhrdwTr;

alt. Digital Currency Address – XBT 18Qj1THHuETfYhuRDZycXJbWwDMGw73Poa;

alt. Digital Currency Address – XBT 1MnbhWe5wr7Ut45ReyQsm96PwnM9jD7KaH;

alt. Digital Currency Address – XBT 1DYFJ6CuBvrxyoQSuBzVsNcetY9tvdsrag;

alt. Digital Currency Address – XBT 15Pt4NwZaUmMUwS2bQbyyncc7mzgWShtv8;

alt. Digital Currency Address – XBT 1PhqQpaGCrqSxQ6QDXcv14QCd1U98Zp34E;

alt. Digital Currency Address – XBT 13YBQr2Cp1YY3xqq2qngaPb7ca1o4ugeq6;

alt. Digital Currency Address – XBT 1KgudqxMfYaGzqAA7MS4DcsqejtMteqhix;

alt. Digital Currency Address – XBT 1FRyL9gmFGbzfYDAB4iY9836DJe3KSnjP9;

alt. Digital Currency Address – XBT 1DbShx4r8i2XesthoDBf5EkYWz5dsKEusV;

Digital Currency Address – ETH 0x8576acc5c05d6ce88f4e49bf65bdf0c62f91353c;

Phone Number 79315403678;

Digital Currency Address – LTC LWnbjLYUfqeokfbWM4FcU7uk2FP2DSxuWS;

alt. Digital Currency Address – LTC LaYUy1DGfVSuSF5KbPhbLrm8kRotqiwUJn;

Digital Currency Address – ZEC t1WSKwCDL1QYRRUrCCknEs5tDLhtGVYu9KM;

Digital Currency Address – BSV 12sjrrhoFEsedNRhtgwvvRqjFTh8fZTDX9; Passport 4005504207 (Russia) (individual) [CYBER2] [ELECTION-EO13848].

[snip]

LIFSHITS, Artem Mikhaylovich (Cyrillic: ЛИФШИЦ, Артем Михайлович), Primorsky Prospect 159, Saint Petersburg 197374, Russia; DOB 26 Dec 1992; nationality Russia; Email Address [email protected]; alt. Email Address [email protected]; Gender Male;

Digital Currency Address – XBT 12udabs2TkX7NXCSj6KpqXfakjE52ZPLhz;

alt. Digital Currency Address – XBT 1DT3tenf14cxz9WFNxmYrXFbB6TFiVWA9U;

Digital Currency Address – ETH 0x901bb9583b24d97e995513c6778dc6888ab6870e;

alt. Digital Currency Address – ETH 0xa7e5d5a720f06526557c513402f2e6b5fa20b00;

Phone Number 79110354982;

Digital Currency Address – LTC Leo3j36nn1JcsUQruytQhFUdCdCH5YHMR3;

Digital Currency Address – DASH Xs3vzQmNvAxRa3Xo8XzQqUb3BMgb9EogF4; Passport 719032284 (individual) [CYBER2] [ELECTION-EO13848].

Yesterday, EDVA also announced a single criminal charge of conspiracy to commit wire fraud against one of the sanctioned people, Artem Lifshits, who in 2017 was head of the “Translator Department [or Project],” which is what the troll project focusing on the US is called. As the excerpt above notes, Lifshits actually got fewer of his cryptocurrency accounts sanctioned than another of the targets, Anton Andreyev.

I’d like to look at how the criminal complaint complements the two other sets of charges against Prigozhin’s troll operation, the indictment against 13 of the actual trolls as well as some of the companies involved (here’s a very long post on that prosecution), and Prigozhin himself and a complaint against one of the accountants involved, Elena Alekseevna Khusyaynova (here’s my post on that). Along with renewing and fleshing out the case against Prigozhin, the complaint may be an effort to sow discord within Prigozhin’s operation, by alerting him that some of his employees may be helping themselves to company troll funds.

The affidavit by a Secret Service Agent supporting the complaint incorporates the other two legal actions and includes them as exhibits to this charge. It even includes a footnote explaining why DOJ dismissed the charges against Prigozhin’s shell companies.

On March 16, 2020, the United States dismissed Concord Management and Consulting LLC from the Indictment. Concord “availed itself of the Court’s jurisdiction to obtain discovery from the United States . . . while positioning itself to evade any real obligations or responsibility,” even refusing to produce a corporate representative despite “appearing” through counsel. Mot. to Dismiss Concord Defs., 2, 6, United States v. Internet Research Agency, et. al, 1:18-cr-32 (DLF) (D.D.C. Mar. 16, 2020). In light of the defendant’s conduct, the United States dismissed these parties from the Indictment, stating substantial federal interests were no longer served by continuing the proceedings against them. See id. at 9. The Indictment remains pending and active as to thirteen named individual defendants and the IRA.

After some introductory matter, the affidavit:

  • Describes the Lakhta disinformation project generally, including a brief overview of its attempts to sow discord between December 2016 through May 2018, incorporating some but not all of the examples from the Khusyaynova complaint, and adding a few new ones, including three paragraphs on use, starting in July 2019 of a cover company located in Accra, Ghana.
  • Describes how in October 2018 the Secret Service started investigating the role of cryptocurrency in the operation.
  • Explains that Lifshits served as head of the Translator Department.
  • Describes how Lifshits transferred money from a BTC account opened using the stolen identity of “T.W.” to his own personal account, the central allegation of wire fraud laid out in the indictment.

The basic proof accusing Lifshits of using T.B.’s stolen identity to open a Bitcoin account that he then used to transfer money into his own account relies on very basic metadata analysis obtained using legal process:

  • Evidence backing the selectors of Lifshits tie to his biological person and one of the cryptocurrency accounts he transferred money into (including two other Internet troll employees’ address book entries with his phone number, one of which referred to him as “Troll Face”).
  • Evidence showing Lifshits applying to Project Lakhta in July 2015 and appearing on rosters of Project Lakhta employees dated January 28, 2017 to October 26, 2017.
  • A description of finding order confirmations in the known IRA email, allforusa, from a criminal marketplace that sold fraudulent identities (this might be Richard Pinedo’s site).
  • Two paragraphs describing interviews with T.W. and another identity theft victim, T.B.,  in which they said he had never owned any cryptocurrency themselves and had not authorized anyone to do so on their behalf.
  • IP analysis showing Lifshits accessing cryptocurrency addresses (including his own) from an IRA IP address, as well as from a US-based account set up using a stolen identity but controlled by IRA.
  • IP address analysis showing him accessing the T.W. cryptocurrency account at the same time he accessed one of his own accounts, into which he transferred funds.
  • User Agent String analysis showing those accounts being accessed by the same browser.
  • IP analysis establishing venue in EDVA via some AWS servers.

In other words, the complaint, after invoking the two other legal actions against IRA and Prigozhin, finds one manager amid Prigozhin’s employees and shows some very basic metadata evidence — relying on neither intelligence nor some of the more sophisticated blockchain analysis the US government would like to hide — to accuse the manager, Lifshits, of wire fraud because of a financial transfer involving the stolen identity of an American.

There are two interesting aspects of the complaint, besides the way it slowly builds the case against Prigozhin via interlocking accusations.

First, a key passage of all this describes that Lifshits made this transfer “for personal gain.”

60. On or about December 29, 2017, LIFSHITS accessed and used the T.W. Exchange 1 Account to conduct an electronic transfer of funds from the T.W. Exchange 1 Account to his personal Exchange 3 account. This transaction is publicly viewable on the Bitcoin blockchain and USSS confirmed its existence through other investigative means.

61. On or about December 29, 2017, LIFSHITS used United States IP Address 1 at 15:35 UTC to access his Exchange 3 account. Then, three minutes later, he used the same IP address to access the T.W. Exchange 1 Account. This is on the same day that the T.W. Exchange 1 Account sent an electronic funds transfer to LIFSHITS’ Exchange 3 account.

62. With this transaction, LIFSHITS (1) intentionally and voluntarily devised or participated in a scheme to defraud — as evidenced by controlling and using a fraudulent cryptocurrency account, and (2) used interstate wire communications to further the fraud — as evidenced by the online cryptocurrency transactions.

It doesn’t say, one way or another, whether this was a sanctioned transfer of funds out of an IRA-controlled account or not. The government may have used this 34-page affidavit not only to flesh out the case against Prigozhin, but also to reveal that one of his employees is bilking him, effectively stealing trolling funds.

But the complaint also mentions a Co-Conspirator 1, who along with Lifshits bought identities using cryptocurrency.

Law enforcement obtained a search warrant for the contents of the email account [email protected], which as stated above is associated with a cryptocurrency account linked to both LIFSHITS and Co-Conspirator 1. During a review of the emails, law enforcement located “Order Confirmation” emails received from an online criminal marketplace that sells fraudulent passports and similar identification documents (the “Criminal Marketplace”). These emails corresponded to purchases of United States driver licenses that reflected the real names, addresses, and dates of birth of United States identity theft victims. This type of personally identifiable information is a “means of identification” as defined in Title 18, United States Code, Section 1028(d)(7).

It describes Co-Conspirator 1 as the sole other beneficiary of transfers out of a different IRA trolling account (though also suggests that one of the guys charged in the larger indictment might also be conducting such transfers as well).

The T.W. Exchange 1 Account reflected debits to several beneficiaries, including accounts registered to LIFSHITS and another known Project Lakhta member (“Co-Conspirator 1”). The IP activity associated with the T.W. Exchange 1 Account also matched the IP address activity of cryptocurrency accounts registered to LIFSHITS and Vladimir Venkov, who is charged in the USAO-DC Indictment.

It then introduces an account based off a different stolen identity, that of T.B., from which funds were transferred into an account controlled by the Co-Conspirator.

USSS identified a second account, which was hosted at another United States cryptocurrency exchange (“Exchange 2”). The Exchange 2 account was registered to a known Project Lakhta email account, [email protected] (hereinafter the “AllforUSA Exchange 2 Account”).7 Project Lakhta members opened the AllforUSA Exchange 2 Account using the identifiers of T.B. According to Exchange 2’s records, Project Lakhta members solely funded the AllforUSA Exchange 2 Account with an incoming credit from an account also in the name of T.B. at a United States-based financial institution. This credit was used exclusively to fund outgoing payments to a Blockchain wallet that USSS investigators determined was controlled by Co-Conspirator 1.

Now, it may be that the government only introduced Co-Conspirator 1 to establish venue in EDVA (which went through the T.B. account).

But it sure sounds like it is describing Co-Conspirator 1 as engaging in the same kind of transfers from IRA accounts into his own personal accounts that it describes Lifshits as doing.

Perhaps stealing from the troll till is considered part of their official compensation (elsewhere, the complaint cites the salary of Lifshits, so the US government may know the answer). Or perhaps these guys whose cryptocurrency addresses just got published in a US sanction announcement have been stealing from Prigozhin, in which case the US Treasury just provided Prigozhin a lot of hints about how to prove it.

Treasury Threatens to Prosecute Reporters Trying to Reveal What Rod Rosenstein and Richard Burr Would Not

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WikiLeaks supporters like to claim the May 2019 superseding indictment against Assange uniquely threatens journalism by treating routine journalistic activities — such as requesting sensitive information — as part of a conspiracy to leak.* That’s not entirely true.

As I’ve noted, well before Assange’s superseding indictment, in October 2018, DOJ charged Natalie Sours Edwards — one of several presumed sources for a series of BuzzFeed stories on Suspicious Activities Reports pertaining to those investigated for their ties to Russia — in such a way to treat Jason Leopold as a co-conspirator. Both the complaint justifying her arrest and the indictment include a conspiracy charge that describes how Edwards (and another unindicted co-conspirator) worked with Reporter-1, including one request pertaining to Prevezon captured on Signal.

c. As noted above, the October 2018 Article regarded, among other things, Prevezon and the Investment Company. As recently as September 2018, EDWARDS and Reporter-1 engaged in the following conversation, via the Encrypted Application, in relevant part:

EDWARDS: I am not getting any hits on [the CEO of the Investment Company] do you have any idea what the association is if I had more information i could search in different areas

Reporter-1: If not on his name it would be [the Investment Company]. That’s the only other one [The CEO] is associated with Prevezon Well not associated His company is [the Investment Company]

On January 13, Edwards pled guilty to one charge, the conspiracy one, though without any sign of cooperation.

In fact, Edwards is not the only case charged like this. While he was charged after Assange’s superseding indictment, Henry Frese, a DIA analyst who leaked reports on China to some NBC reporters, was not just charged in a similar conspiracy charge, but was wiretapped to collect evidence implicating the reporters. Because he cooperated, there’s little to prevent Trump’s DOJ from charging the journalists after the election except Trump’s well-established support for an adversarial press.

The way in which DOJ charged Edwards has become newly critical given an announcement Treasury made yesterday, in the wake of reports about how Donald Trump was never investigated for his financial vulnerability to Russia. The unit of Treasury that collects and analyzes Suspicious Activity Reports released a statement threatening “various media outlets” who were planning to publish stories on SARs.

The Financial Crimes Enforcement Network (FinCEN) is aware that various media outlets intend to publish a series of articles based on unlawfully disclosed Suspicious Activity Reports (SARs), as well as other sensitive government documents, from several years ago.  As FinCEN has stated previously, the unauthorized disclosure of SARs is a crime that can impact the national security of the United States, compromise law enforcement investigations, and threaten the safety and security of the institutions and individuals who file such reports.  FinCEN has referred this matter to the U.S. Department of Justice and the U.S. Department of the Treasury’s Office of Inspector General.

BuzzFeed has always treated their source for the Treasury story as a whistleblower, reporting not just a dispute over access to reports for intelligence reports, but also on the damning Russian information that got ignored.

As Edwards has moved closer to sentencing, she developed irreconcilable differences with her original attorneys over what she called a coerced guilty plea. And documents filed in the case provide some explanation why.

While the substance of her appeal is not entirely clear, it’s clear that she claimed legal access to certain documents — presumably SARs — as a whistleblower.

In the appellants “official capacity” as a government employee from 2015-Jan 2020 and as a whistleblower from 2015 to current, the specific documents were used during the Congressional Request Inquires & Letters from 2015-2018, the Office of Special Counsel’s investigations from 2017-2020 and the appellants legal access to the exculpatory material from 2018 to current per 31 C.F.R. § 103 “official disclosures responsive to a request from an appropriate Congressional committee or subcommittees; and prosecutorial disclosures mandated by statute or the Constitution, in connection with the statement of a government witness to be called at trial, the impeachment of a government witness, or as material exculpatory of a criminal defendant.1

As a government employee I could disclose any information in a SAR (including information in supporting documentation) to anyone, up to and including the person who is the subject of the SAR, so long as the disclosure was “necessary to fulfill the official duties of such officer or employee”2 which I did as a whistleblower and as an employee; however, once I medically resigned, 31 C.F.R. § 103 provided the legal exculpatory material as a whistleblower, administrative appellate and criminal defendant to disclose the information in court proceedings. Furthermore, the appellant was adhering to the courts upholding that disclosures must be specific and detailed, not vague allegations of wrongdoing regarding broad or imprecise matters. Linder v. Department of Justice, 122 M.S.P.R. 14, 14 (2014); Keefer v. Department of Agriculture, 82 M.S.P.R. 687, 10 (1999); Padilla v. Department of the Air Force, 55 M.S.P.R. 540, 543– 44 (1992).

After she tried to use the documents in her appeal of a whistleblower complaint, the Treasury Department Inspector General shared them with the prosecutors in her case, who in turn cited them in her presentencing report.

The agency has argued throughout the appellant no longer is an employee of the agency, the pro se appellant agrees. The agency Inspector General should not have been notified of the administrative proceedings of the court because the appellant is not an employee of the agency. There is no statue or policy that gives the agency the right to notify the agency IG of the “procedural motion” prior “to notify the other party”. Regulation 5 C.F.R. § 1201.55(a) does not state “notify Inspector General” rather it does state “to notify the other party”. The pro se appellant argues notifying the Inspector General prior to “the other party” is a violation of the pro se appellants fifth amendment.

[snip]

[T]he agency/agency IG notified the appellants criminal prosecutors of the disclosures in the IRA case. As explained above, the disclosures are permissible per 31 C.F.R. § 103. Due to the agency/agency IG notification to the government prosecutors, the prosecution requested increased sentencing in the sentencing report for the appellant/defendant thus violating the defendants fifth amendment in the criminal proceeding.

Edwards further claimed that the government withheld her original complaint to coerce her to plead guilty.

The Federal Judge found merit and significant concerns in the “letter and substantial documentation” the whistleblower defendant/appellant provided to the court concerning violation of fifth amendment, conflict of interests pertaining to the prosecution/counsel, coercion of the plea deal, criminal referral submitted against agency IG, the letter defendant sent to Attorney General Sessions and Special Counsel Mueller, etc., all elements withheld from the Federal court by both the prosecution and defense counsel.

Edwards has been assigned a new attorney (who may have convinced her not to submit this complaint as part of sentencing), and her sentencing has been pushed out to October.

There’s no way to assess the validity of her complaint or even her representation of what happened with the judge in her case, Gregory Woods. What her complaint shows, however, is that there’s a packet of information she sent to Mueller and Sessions (possibly implicating and/or also sent to Congress), summarizing some reports she believes got ignored.

If those reports show what Rod Rosenstein and Richard Burr worked so hard not to investigate, it might explain why Treasury is threatening legal consequences for reporting on them. And given how DOJ already structured this prosecution, they might well be threatening to treat reporting on the President’s vulnerabilities as a conspiracy to leak SARs protected by statute.

*WikiLeaks supporters also cite the risk of Assange being subjected to US Espionage Act prosecution. While that risk is real, in his case, the most dangerous charges (for leaking the names of US and Coalition informants) would likely be far easier to prosecute under the UK’s Official Secrets Act, which still could happen if he’s not extradited. The actions described in his indictment are arguably more explicitly criminalized in the UK than the US, even if their sentences are not as draconian.

Another Trump Campaign Manager Indicted for Money Laundering

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Steve Bannon and three associates just got indicted in SDNY for defrauding investors in their We Build the Wall “charity,” from which they skimmed about a million dollars.

The alleged fraud here is pretty garden variety: raising funds to pay for a wall and instead pocketing a good chunk of the money.

But it’s significant because it comes just months after Billy Barr tried to replace then-US Attorney Geoffrey Berman with a handpicked successor. Berman responded by insisting that all SDNY investigations would continue as they were proceeding, and he refused to resign until he ensured that his Deputy, Audrey Strauss, would take over.

No one knew this indictment was in the works (and the arrest, by postal agents, makes the surprise more delicious). Which means the other times that Barr has hastily replaced a US Attorney with a flunky could represent similar cases into fraud well beyond the Russian-related crimes we know about. (Note, the Timothy Shea indicted along with Bannon is not the Barr flunky named Timothy Shea whom Barr installed in DC.)Indeed, Erik Prince was a key advisor to this organization; there’s good reason to suspect that an investigation into him got killed at the same time Barr intervened in the Flynn and Stone prosecutions.

Michael Cohen warned the entire Republican Party. If they didn’t stop hanging out with Trump, they would go to jail.

He tried to warn them, anyway.

Lev Parnas Had A Remarkable Start On His Path To Fraud Guarantee

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Jim again here.

See update below.

Over the past few days, several sources of information about Lev Parnas’ history have come out. Perhaps the most complete picture of his early years came from this New Yorker interview shortly before his arrest:

Parnas was born in February, 1972, in the port city of Odessa, in southwestern Ukraine, which was then part of the Soviet Union. He was three when his family moved to the United States. “I came here as a legal immigrant, through a legal process,” he said. His family settled in Detroit, where they lived for about a year, before relocating to Brooklyn. When Parnas was sixteen, he worked at Kings Highway Realty, selling Trump Organization co-ops. “That was my first time knowing who Trump was, but, growing up in that area, you knew who Trump was, because his name was all over the place,” he said.

In 1995, when Parnas was twenty-three, he moved from Brooklyn to Florida.

I found the part about Kings Highway Realty and Trump co-ops especially useful, as I had been puzzled about one of the earlier passages from an interview with the Washington Post:

Parnas, 47, was born in Ukraine but moved with his family to the United States as a child and grew up in Brooklyn. He told The Washington Post in an interview conducted before his arrest that he got his start in real estate, selling Trump condos for Donald Trump’s father, Fred, then worked in shipping in the former Soviet Union before becoming a securities trader. He moved to Florida in the mid-1990s.

This passage had bothered me, because when we go back and look at Fred Trump’s career, condos play virtually no role. Fred built large, pedestrian apartment buildings, often with government assistance, in the outer boroughs that he retained ownership of and rented out to the middle class. Donald, as we know, concentrated early on opulent properties in Manhattan.

The one Fred Trump property that bears the Trump name is Trump Village:

The seven towers of Trump Village were designed by the architect Morris Lapidus. The two near Ocean Parkway were rental buildings and were run by the Trump Organization until recent years. The five other buildings were in the state’s Mitchell-Lama program, which allows people with incomes below certain thresholds to enter lotteries for the right to buy co-op apartments at below-market prices.

The snippet above was published in the New York Times in 2010. That begins to resolve some of the apparent discrepancies in the Parnas statements in the different interviews. If he was selling property for Fred Trump, co-ops in Trump Village make the most sense. And by this time, the Trump Organization was managing the properties as Fred’s health was starting to decline.

Remarkably, Kings Highway Realty Corp., which was incorporated in 1977, is still in business. The address listed for it now is around 8 miles from Trump Village. That seems to fit with a first job for a 16-year-old growing up in Brooklyn, although selling real estate at 16 seems pretty advanced.  Further, as we see in Fred Trump’s obituary, he had a history of taking in young men looking for a career in real estate.

By the time Parnas started selling co-ops at Trump Village, Fred Trump was 82. The obituary suggests that Alzheimers set in around 1993, five years after Parnas started, but there appears to have been a single driving force in Fred’s life in this era:

Fred Trump’s real estate empire was not just scores of apartment buildings. It was also a mountain of cash, tens of millions of dollars in profits building up inside his businesses, banking records show. In one six-year span, from 1988 through 1993, Fred Trump reported $109.7 million in total income, now equivalent to $210.7 million. It was not unusual for tens of millions in Treasury bills and certificates of deposit to flow through his personal bank accounts each month.

Fred Trump was relentless and creative in finding ways to channel this wealth to his children. He made Donald not just his salaried employee but also his property manager, landlord, banker and consultant. He gave him loan after loan, many never repaid. He provided money for his car, money for his employees, money to buy stocks, money for his first Manhattan offices and money to renovate those offices. He gave him three trust funds. He gave him shares in multiple partnerships. He gave him $10,000 Christmas checks. He gave him laundry revenue from his buildings.

Much of his giving was structured to sidestep gift and inheritance taxes using methods tax experts described to The Times as improper or possibly illegal. Although Fred Trump became wealthy with help from federal housing subsidies, he insisted that it was manifestly unfair for the government to tax his fortune as it passed to his children. When he was in his 80s and beginning to slide into dementia, evading gift and estate taxes became a family affair, with Donald Trump playing a crucial role, interviews and newly obtained documents show.

So at the very time that Parnas came onto the scene, Fred was already slipping into dementia but singularly focused on channeling as much money as he could to Donald while avoiding taxes on the transfers. Did Parnas see these schemes as they developed? Did he even perhaps play a bit role? Recall that in one of the interviews he says he worked for the Trump Organization. The ultimate vehicle for funneling cash to Fred’s offspring came into being in 1992, and likely postdated Parnas’ time with Trump Village, but we have to wonder if Parnas saw the seeds of this one being planted, or was even one of the employees used in the scheme. Continuing in the Times article above:

The most overt fraud was All County Building Supply & Maintenance, a company formed by the Trump family in 1992. All County’s ostensible purpose was to be the purchasing agent for Fred Trump’s buildings, buying everything from boilers to cleaning supplies. It did no such thing, records and interviews show. Instead All County siphoned millions of dollars from Fred Trump’s empire by simply marking up purchases already made by his employees. Those millions, effectively untaxed gifts, then flowed to All County’s owners — Donald Trump, his siblings and a cousin. Fred Trump then used the padded All County receipts to justify bigger rent increases for thousands of tenants.

Something Parnas almost certainly had to have seen just before going to work with the Trump Organization was the story of David Bogatin, one of the first Russian purchasers of a Donald Trump property:

But Bogatin wasn’t deterred by the limited availability or the sky-high prices. The Russian plunked down $6 million to buy not one or two, but five luxury condos. The big check apparently caught the attention of the owner. According to Wayne Barrett, who investigated the deal for the Village Voice, Trump personally attended the closing, along with Bogatin.

/snip/

In 1987, just three years after he attended the closing with Trump, Bogatin pleaded guilty to taking part in a massive gasoline-bootlegging scheme with Russian mobsters. After he fled the country, the government seized his five condos at Trump Tower, saying that he had purchased them to “launder money, to shelter and hide assets.” A Senate investigation into organized crime later revealed that Bogatin was a leading figure in the Russian mob in New York. His family ties, in fact, led straight to the top: His brother ran a $150 million stock scam with none other than Semion Mogilevich, whom the FBI considers the “boss of bosses” of the Russian mafia. At the time, Mogilevich—feared even by his fellow gangsters as “the most powerful mobster in the world”—was expanding his multibillion-dollar international criminal syndicate into America.

How could that not have made an impression on Parnas, going to work just months after the Bogatin story exploded?

This leads us to a murky intermediary period in Parnas’ story.  Note that the Post interview, but not the New Yorker interview, mentions that he “worked in shipping in the former Soviet Union”. Also, this biography he eventually put on the Fraud Guarantee website mentions something similar:

Notably, in this version Parnas says he shipped “the first containers of freight between the United States and the former Soviet Union”. The Gorbachev government failed in December of 1991, when Parnas would have been 19, going on 20 the next February. And yet, somehow, this teenager, who had a couple of years selling real estate, suddenly jumps into the middle of a brand new opportunity on the world scene. Even more confusing is the fact that the former Soviet Union in those early years had a horrible economy:

The first seven years of Russia’s transition from the Soviet central planned economy (1991-1998) were not easy. This [period, which coincided with most of the regime of President Boris Yeltsin were, by most accounts, a time of economic chaos, if not near collapse and failure.

During the period, Russia lost close to 30% of its real gross domestic product (GDP), a decline reminiscent of the Great Depression of the 1930s in the United States.4 Russia also suffered very high rates of inflation– over 2,000% in 1992 and over 800% in 1993– before it declined to more tolerable, but still high, levels of around 20% by the end of the 1990s. The inflation robbed Russian citizens of their savings as the value of the ruble collapsed, eventually forcing the Russian government to sharply devalue the ruble on January 1, 1998, with 1 new ruble equaling 1,000 old rubles. As a hedge against inflation, some residents, who were in a position to do so, invested in hard assets such as art works, foreign currencies, and real estate.

So what would a teenager ship? Oh, I don’t know, maybe he figured something out at a time when the rich in the former Soviet Union were looking for hard assets.

The next phase in Parnas’ career becomes really fascinating. Note that all of these narratives say he moved from shipping (or directly from real estate) to securities. Again, he seems to have had remarkable luck in jumping into a senior position at an incredibly early age. I’ve been digging into the network of Parnas’ various corporate entities (and hope to write about them soon) and the earliest entry under his name in the Florida database is for Program Trading Corp., which was incorporated on September 25, 1992 in Boca Raton. That would have made Parnas just 20 years old when he suddenly became, at least on paper, a director and President (a partner I’ll address in later posts was CEO) of a stock trading firm. The timeline here seems a bit out of order. Parnas claims not to have moved to Florida until 1995, and yet his first company there was incorporated, with him involved, in 1992. Further, when we look into Parnas’ registration as a stock broker, we see that he is listed as passing the licensing exam on December 10, 1993 and he’s first registered with a brokerage firm a few days before that on December 6. This is over a year after Program Trading Corp. was founded.

I confess to not being familiar with the detailed workings of licensing and registration of stock brokers, but the rapid succession of firms at which Parnas was registered strikes me as strange and perhaps suggestive that his early days as a broker didn’t go well. From the early firms, it appears at least possible that Parnas was indeed still in New York as he passed the first exam and sold his first securities, but it still stands out as strange that his firm in Florida was already incorporated and waiting for him when he moved there in 1995.

It’s almost as if Lev Parnas was a “made man” at 23 with experience in real estate, shipping and securities, all enterprises known to be favored by those laundering cash coming out of the former Soviet Union.

Update October 17

It appears that Parnas didn’t actually become involved in Program Trading Corp. until late 1998. I’ve put strikethrough on the parts of this post that relied on a mistaken interpretation of the forms on file with the State of Florida. See the new post for an updated timeline of Parnas and Program Trading Corp. So Parnas may not have been “made man” until 1998 instead of 1995.