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The Little Noticed Jay Clayton Pick at SDNY

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Amid the Star Wars bar menagerie of Trump Administration picks, that of Jay Clayton to be US Attorney for SDNY has gone little noticed.

But it was among the earliest picks Trump announced, on November 14, like that of Mike Huckabee to be Ambassador to Israel on November 12, weirdly early, bespeaking an unusual set of priorities.

Here’s how NYT — reporters who know the Sovereign District well — covered the Clayton pick.

President-elect Donald J. Trump on Thursday said he would pick Jay Clayton, the top Wall Street enforcer in the first Trump administration, as the head federal prosecutor for the Southern District of New York, a critical post for an incoming president who has vowed revenge on those who pursued him in the courts.

Mr. Trump made the announcement on his social media platform Truth Social, where he called Mr. Clayton “a highly respected business leader, counsel and public servant.” Mr. Clayton still must be confirmed by the Senate.

The office of U.S. attorney for the Southern District of New York is considered one of the most prestigious federal prosecutor’s offices in the nation. It holds sway over some of America’s most powerful businesses and financial institutions, and it has aggressively targeted politicians accused of corruption.

[snip]

Mr. Clayton is not a former prosecutor — often seen as a prerequisite to being named as a Southern District U.S. attorney — but he has long wanted the Manhattan post, said Steven Peikin, a lawyer at Sullivan & Cromwell who served as his co-director of enforcement at the S.E.C.

In fact, toward the end of his tenure at the S.E.C., Mr. Clayton nearly got the job when he emerged as a potential candidate to replace Geoffrey S. Berman, a Trump-appointee who then held the post.

In a surprise move, the attorney general at the time, William P. Barr, announced in June 2020 that Mr. Berman had resigned as U.S. attorney for the Southern District and Mr. Clayton would replace him. But Mr. Berman denied he had stepped down. He was then fired by President Trump, an action he did not contest after he was assured his deputy, Audrey Strauss, would lead the office.

The affair was worrisome to some Justice Department officials because at the time Mr. Berman’s office was handling cases involving people close to Mr. Trump. The episode raised concerns about possible political interference in criminal investigations.

Mr. Berman, in a statement to The New York Times on Thursday evening, said of Mr. Clayton, “Jay is an exceptional lawyer and will be an excellent United States attorney.”

Clayton is a grownup, though not a prosecutor. But Trump attempted to install him once before as a way to oust the incumbent US Attorney and — it is widely understood — in an attempt to thwart ongoing investigations into Trump’s people.

Even in spite of their expertise, I don’t see a NYT story on what happened next.

First, on November 18, Merrick Garland visited SDNY to encourage AUSAs there to continue on: “You will continue in the Department’s mission, what has always been its mission: to uphold the rule of law, to keep our country safe, and to protect civil rights.”

Then on Monday, the current US Attorney for SDNY, Damian Williams, announced he would resign on December 13, leaving his Deputy, Edward Kim, in charge.

Damian Williams, the United States Attorney for the Southern District of New York, who has served as the chief federal law enforcement officer in the district, announced today his intention to resign his position as United States Attorney, effective 11:59 p.m. on December 13, 2024. Edward Y. Kim, who currently serves as Deputy United States Attorney, will become the Acting United States Attorney upon his departure.

U.S. Attorney Damian Williams said: “Today is a bittersweet day for me, as I announce my resignation as United States Attorney for the Southern District of New York. It is bitter in the sense that I am leaving my dream job, leading an institution I love that is filled with the finest public servants in the world. It is sweet in that I am confident I am leaving at a time when the Office is functioning at an incredibly high level – upholding and exceeding its already high standard of excellence, integrity, and independence. That success is due to the career attorneys, staff members, and law enforcement agents of this Office. Working with them during my tenure has been a privilege of a lifetime. They are worthy custodians of this Office’s tradition of doing the right thing, the right way, for the right reasons. They are patriots. They are my family. And I will miss them dearly.

In spite of NYT’s apparent reticence (or, perhaps, ongoing reporting), it was big news: WaPo’s coverage noted Williams’ close ties to Garland and Bill Barr’s past effort, described by NYT, to install Clayton as a means to oust Williams.

NYPost’s coverage instead focused on the boon this may present for Eric Adams’ case, even while noting that prosecutors plan to supersede the indictment and have a December 20 status hearing scheduled. By the end of NYPost’s story, they had moderated their headline claim that Williams’ move, will “make way for Trump’s replacement.” As they acknowledged, Williams’ resignation doesn’t make way for Clayton, at least not before he is confirmed; it makes way for Kim as the interim Acting US Attorney.

Clayton’s appointment still requires confirmation by the US Senate.

Until then, Williams’ deputy, Edward Y. Kim, is set to take over as acting US Attorney when he steps down.

We’ll see how all this plays out, as we saw how it played out in June 2020, when Barr tried to remove Geoffrey Berman before SDNY took action in August 2020 against Steve Bannon and his co-conspirators and tried to advance the investigation into Rudy Giuliani, only to have Berman lawyer up and invoke succession rules to ensure that his Deputy Audrey Strauss would continue. Unless SDNY judges take action to protect Kim, I think Trump can just replace him with another Acting US Attorney on January 20, though I’m not an SDNY lawyer and they have ways of working the law.

In any case, by announcing the Clayton pick so early, Trump ensures that incoming SJC Republicans can prioritize his confirmation — and since he’s a much higher caliber pick than Trump’s other picks — it could go quickly.

But it’s likely not Adams’ prosecution (much less Diddy’s, which NYPost also invoked) that Trump’s early pick of Clayton was an attempt to redirect. For a variety of reasons, I expect Trump will include Adams in the pardon-palooza that will kick off his Administration.

Indeed, I can’t help but notice that Trump announced this pick one day after the FBI seized the devices of Polymarket CEO Shayne Coplan on November 13.

The FBI seized a cellphone and other electronic devices of betting site Polymarket’s CEO, Shayne Coplan, in a raid on his New York City apartment early Wednesday, according to a source familiar with the matter.

The company’s markets wagered correctly and controversially in Donald Trump’s favor in bets on who would win the presidential election, even though opinion polls showed a tight race.

Coplan, 26, was home when numerous agents entered his apartment Wednesday and he turned over his devices to authorities, the source said, adding that he has not been arrested or charged. The source said it is not clear whether Coplan or Polymarket are targets of an investigation.

“New phone, who dis?” Coplan posted on X after the raid.

Polymarket, which Coplan founded in 2020, has recently been the subject of intense debate and scrutiny over its creation of election betting markets. It brought in more than $3.6 billion from bets placed on the presidential election, including $1.5 billion on Trump and $1 billion on Vice President Kamala Harris, according to an NBC News analysis.

Speculation has swirled around the identities of major bettors who wagered on Trump and whether or not the odds and the existence of the markets could have had an effect on voters.

Though U.S. election betting is newly legal in some circumstances, Polymarket is not supposed to allow U.S. users after the Commodity Futures Trading Commission halted its operations in 2022, but its user base largely operates through cryptocurrency, which allows for easy anonymity.

There are other investigations that Trump might be trying to interrupt with this quick appointment. But the Polymarket investigation — in which FBI got a probable cause warrant targeting someone who helped Trump’s campaign within days of the election — is likely one of them.

Once before, Trump tried to install Jay Clayton at SDNY to block investigations into his people. This time around, Trump will have to find a different path than just firing the incumbent US Attorney. Because he already quit.

Eric Adams Indicted

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In half an hour, Damian Williams will announce the indictment of Eric Adams on charges relating to funding from Turkey.

While the indictment is extensive — 49 pages of narrative — it appears to address just the Turkish side of the scheme, with five charges:

  • Conspiracy to commit wire fraud, bribery, and solicitation of foreign donation
  • Wire fraud
  • Foreign Donation
  • Foreign Donation
  • Bribery

The scheme started in 2015.

In 2015, ERIC ADAMS, the defendant, took two official trips to Turkey. His first trip, in August 2015, was arranged by the Turkish Consulate General in New York City (the “Turkish Consulate”) and paid for in part by the Turkish Consulate and in pa1t by a for-profit educational conglomerate based in Istanbul (the “Turkish University”). The second trip, in December 2015, was arranged by the Turkish Official and a Turkish entrepreneur (the “Promoter”) whose business includes organizing events to introduce Turkish corporations and businesspeople to politicians, celebrities, and others whose influence may benefit the corporations an businesspeople, For both trips, ADAMS received free business class tickets on the Turkish Airline. Unlike ADAMS ‘s subsequent travel with the Turkish Airline, ADAMS reported his 2015 travel to Turkey on financial disclosure forms filed with the New York City Conflict of Interest Board (the “COIB”), as he was required to do annually at all times relevant to this Indictment.

There’s no FARA component here, though it does describe Turkey demanding his help getting approval to open Turkish House.

On or about September 5, 2021, the Turkish Official began asking ADAMS, both directly and through the Adams Staffer, to intervene with the Commissioner of the FDNY (the “FDNY Commissioner”) in order to secure a TCO for the Turkish House. ADAMS, the Turkish Official, and the Adams Staffer discussed these requests through phone calls and electronic messages. In a phone call to the Adams Staffer, the Turkish Official stated that because Turkey had supported ADAMS, it was now “his tum” to support Turkey. The Adams Staffer relayed this message to ADAMS, and ADAMS responded, “I know.

One paragraph describes how, after they came for Adams’ phones last year, he changed his password and then “forgot it.”

On November 6, 2023, FBI agents executed a search warrant for the electronic devices used by ERIC ADAMS, the defendant. Although ADAMS was carrying several electronic devices, including two cellphones, he was not carrying his personal cellphone, which is the device he used to communicate about the conduct described in this indictment. When ADAMS produced his personal cellphone the next day in response to a subpoena, it was “locked,” such that the device required a password to open. ADAMS claimed that after he learned about the investigation into his conduct, he changed the password on November 5, 2024 [sic], and increased the complexity of his password from four digits to six. ADAMS had done this, he claimed, to prevent members of his staff from inadvertently or intentionally deleting the contents of his phone because, according to ADAMS, he wished to preserve the contents of his phone due to the investigation. But, ADAMS further claimed, he had forgotten the password he had just set, and thus was unable to provide the FBI with a password that would unlock the phone.

It’s not going to take the FBI very long to break a 6-digit password, you bozo.

I predict Williams will say this investigation is ongoing and the time for anyone with information to share “is now.”

Update: Williams: “This investigation continues, … and I encourage anyone with information to come forward and do so before it’s too late.”

Nailed it!!

Notably: when describing the danger of illegal donations, Williams built a hierarch: illegal, foreign, foreign power. The use of “foreign power” suggests he could add FARA or Foreign Agent charges pretty easily.

The Still Ongoing Investigation into Where that Robert Menendez Cash Came From

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Among the most interesting stories I’ve read on Robert Menendez since his indictment is this story, from the day before the indictment.

I find it interesting for how much of the story NBC already had — but more importantly, details from NBC that don’t show up in the indictment. The story reports on two of three prongs that appear in the indictment: It provides passing coverage of the IS EG Halal financing (though offers few specifics of the Egyptian favors) and extensive coverage of the Fred Daibes relationship.

The NBC story actually attributes the Mercedes, which the indictment directly ties to Menendez’ intervention in the state prosecution of a Jose Uribe associate, to IS EG Halal (Uribe does have ties to Wael Hana’s company). NBC doesn’t mention Menendez’s alleged intervention in the state prosecution of Uribe’s associate. Of more interest, it also describes a “a luxury D.C. apartment” that may have come from Hana’s company which is not mentioned at all in the indictment.

The story notes IRS-CI’s involvement in the case (as did Damian Williams at his presser announcing the charges); there’s no sign of tax charges, yet, in the indictment, or for that matter, of campaign disclosure violations (something the NYT reporter who has followed this closely is focused on).

As noted, however, the NBC story focuses much more closely on the Daibes prong of the investigation. It describes witnesses being asked if Menendez offered Daibes to interfere in the federal prosecution against him.

Sources say witnesses are now testifying before that federal grand jury. Part of the investigation centers on the senator’s ties to Fred Daibes, a New Jersey developer and one-time bank chairman. Officials with the FBI and IRS Criminal Investigation want to know if Daibes or his associates gave gold bars to the senator’s wife, Nadine Arslanian — gold bars worth as much as $400,000.

At the time of the gift handoff, Daibes was facing federal bank fraud charges that could have landed him up to a decade in federal prison.

Sources familiar with the matter say federal prosecutors have been asking if Menendez offered to help support Daibes with his criminal case by contacting Justice Department officials about the case. If the senator did offer to act in exchange for expensive gifts, legal experts say that could be a crime.

“For purposes of the Federal Extortion Act, it makes no difference if the senator took an official act so long as he accepted the money and there was knowledge the money was in exchange for that official influence, even if he never carried out what he had promised he would do,” NBC Legal Analyst Danny Cevallos said.

The indictment does not describe such an offer. The closest thing it describes is this exchange, after the prosecution of Fred Daibes was continued, when Nadine told Daibes that Menendez was “fixated” on Daibes’ fate:

On or about December 23, 2021, the trial of DAIBES, which had previously been scheduled for January 2022, was adjourned for reasons related to the COVID-19 pandemic. Later that day, DAIBES texted NADINE MENENDEZ, a/k/a “Nadine Arslanian,” the defendant, and asked how ROBERT MENENDEZ, the defendant, who had recently sustained a shoulder injury, was doing. NADINE MENENDEZ responded that MENENDEZ was doing better having heard that the trial date was adjourned, and that MENENDEZ was “FIXATED on it.” DAIBES responded, “Good I don’t want him to be upset over it. This is not his fault he was amazing in all he did he’s an amazing friend and as loyal as they come. How is the shoulder is he sleeping. Let me know if I can get him a recliner it helped me sleep.” DAIBES thereafter provided a recliner to MENENDEZ.

There’s also an incident where Daibes and Menendez, together, yell at Daibes’ attorney for not being aggressive enough; that’s not a crime, and in fact Menendez will use it to claim he intervened because he cared, not because he was paid.

NBC’s description of Menendez’ contact with US Attorney Phil Sellinger’s office differs in fairly significant ways from the indictment. It cites sources claiming that Menendez never contacted Sellinger or his office.

Sources told News 4 there is no indication U.S. Attorney Philip Sellinger or his office were ever contacted by the senator — but the two men had been close, with Sellinger appointed to the position with the senator’s support, and Sellinger previously serving as a campaign fundraiser for Menendez.

According to the indictment, Menendez did. The indictment alleges that Menendez raised Daibes before supporting Sellinger for the nomination.

In that meeting, MENENDEZ criticized the U.S. Attorney’s Office for the District of New Jersey’s prosecution of FRED DAIBES, the defendant, and said that he hoped that the Candidate would look into DAIBES’s case if the Candidate became the U.S. Attorney. MENENDEZ did not mention any other case in the meeting. After the meeting, the Candidate informed MENENDEZ that he might have to recuse himself from the DAIBES prosecution as a result of a matter he had handled in private practice involving DAIBES. MENENDEZ subsequently informed the Candidate that MENENDEZ would not put forward the Candidate’s name to the White House for a recommendation to be nominated by the President for the position of U.S. Attorney.

And Menendez allegedly called Sellinger’s First AUSA, Vikas Khanna.

b. On or about January 21, 2022, MENENDEZ called Official-3 and asked the identity of Official-3’s First Assistant U.S. Attorney (“Official-4”). As a result of Official3’s recusal, Official-4 had supervisory responsibility over the prosecution of DAIBES.

[snip]

d. On or about January 24, 2022, DAIBES’s Driver exchanged two brief calls with NADINE MENENDEZ. NADINE MENENDEZ then texted DAIBES, writing, “Thank you. Christmas in January.” DAIBES’s Driver’s fingerprints were later found on an envelope containing thousands of dollars of cash recovered from the residence of MENENDEZ and NADINE MENENDEZ in New Jersey. This envelope also bore DAIBES’s DNA and was marked with DAIBES’s return address. In or about the early afternoon of January 24, 2022— i.e., approximately two hours after NADINE MENENDEZ had texted DAIBES thanking him and writing “Christmas in January”—MENENDEZ called Official-4, in a call lasting for approximately 15 seconds. This was MENENDEZ’s first phone call to Official-4. On or about January 29, 2022—i.e., several days after NADINE MENENDEZ had texted DAIBES, thanking him and writing “Christmas in January”—MENENDEZ performed a Google search for “kilo of gold price.”

[snip]

45. Official-3 and Official-4 did not pass on to the prosecution team the fact that ROBERT MENENDEZ, the defendant, had contacted them as described in the above paragraphs, and they did not treat the case differently as a result of the above-described contacts. In or about April 2022, FRED DAIBES, the defendant, pled guilty pursuant to a plea agreement that provided for a probationary sentence.

Frankly, I find this part of the indictment unpersuasive, not just because the evidence presented only ever ties Daibes’ payments to proximate acts, not to a specific quid pro quo, but also because it is not explained how this case went from imminent trial to a sweet plea deal in four months.

A cooperation agreement in this investigation might explain it, but there’s no hint of that, though NBC seems to agree with me that that would explain what we’re looking at.

So one reason I find the NBC piece interesting is it portrays that prosecutors were still trying to obtain proof that this interference was a quid pro quo on the eve of the indictment. And SDNY didn’t provide that evidence in the indictment.

Couple that with two other details.

First, there’s the widely mocked line in the Menendez presser, attempting to explain the large amounts of cash found at his home:

For thirty years, I have withdrawn thousands of dollars of cash from my personal savings account, which I have kept for emergencies, and because of the history of my family facing confiscation in Cuba. Now this may seem old-fashioned. But these were monies drawn from my personal savings account based on the income that I have lawfully derived over those thirty years.

This story is at best a partial explanation for the cash shown in the indictment, much less the checks from Daibes and the gold bars (though Menendez has treated some, if not all, of the gold bars as Nadine’s property).

But consider the utility of it. Most reporters didn’t note Menendez’ silence about the gold bars (Menendez said he’d address other issues at trial). And for less credulous supporters of Menendez, such an explanation is all you need to offer to win their continued support. As with Trump, for the kind of political support you need to try to fight this out, the explanation doesn’t have to be plausible, it just needs to exist.

More interestingly, there’s probably enough truth in the statement — some of the cash the FBI seized in the search last year likely did come from Menendez’ bank account, regardless of why he withdrew it — that if prosecutors attempt to use this video at trial, it could backfire. Prosecutors have called to seize all this cash in forfeiture.

Over $480,000 in cash—much of it stuffed into envelopes and hidden in clothing, closets, and a safe—was discovered in the home, along with over $70,000 in NADINE MENENDEZ’s safe deposit box. Some of the envelopes contained the fingerprints and/or DNA of DAIBES or his driver. Other of the envelopes were found inside jackets bearing MENENDEZ’s name and hanging in his closet, as depicted below.

[snip]

A sum of $486,461 in U.S. currency seized from the Englewood Cliffs Premises on or about June 16, 2022.

But there’s not a shred of evidence that they have the ability to tie all of it — or even most of it — to the specific quid pro quos alleged in the indictment, for which it has better evidence of gold bars as payment. It may come from crime, but if it does, it may not come from this crime.

Prosecutors alleged that all of this $486,000 ties to the crimes alleged in the indictment. If Menendez can prove that some of it doesn’t, then he can use that overreach to discredit the prosecution.

As such, the statement — as ridiculous as it has justifiably been treated — seems partly a taunt. Menendez seems quite confident that prosecutors can’t trace a good deal of this cash, certainly not to these specific crimes, even if they can trace it to Daibes.

Note that Menendez’ claims to care about Egyptian human rights includes a similar taunt, referencing a meeting he had directly with Abdel Fattah El-Sisi. Whether and how and which Egyptians, including Sisi, have evidence to support Menendez’s defense will be a topic of extended litigation. Imagine trying to litigate testimony from the Egyptian President? Similarly, Menendez may demand testimony from his (still) fellow Senators, who witnessed another interaction he had with Sisi.

Which brings me to Damian Williams’ presser.

One reason I’m struck by the NBC story is it suggested there was still some work before prosecutors would be ready to indict, and yet they obtained an indictment — an indictment that doesn’t map the Daibes corruption as closely as I assume they would like — the very next day. Since then, we’ve learned that SDNY unsealed the indictment without first waiting to arrest Wael Hana at the airport, as they did yesterday. It’s highly unusual to indict someone in a way that maximizes their opportunity to flee the country, unless you have good reason to believe they won’t do that.

Hana didn’t take that opportunity to flee.

The whole thing seems either rushed, perhaps in response to disclosures like NBC’s, or tactical, an effort to advance a larger investigation.

As Williams said in his presser,

This investigation is very much ongoing. We are not done. And I want to encourage anyone with information to come forward and to come forward quickly.

That’s a version of the statement Williams made (though nowhere near as forceful) in his first presser on the Sam Bankman-Fried arrest — “come see us before we come see you” — which preceded the announcement of cooperation pleas from two key SBF associaties the following week, at which Williams again invited cooperators to come foward: “we are moving quickly and our patience is not eternal.”

I may be alone in this judgement, but I don’t think SDNY has the Daibes side of these alleged corruption — by far the bulk of the money — at all locked down. The Daibes corruption was the topic of Menendez’ taunt about cash; he may be confident that prosecutors won’t succeed in doing so.

But Damian Williams, at least, seems to believe more is coming.

Update: I didn’t see this NBC report on an ongoing counterintelligence investigation until after I posted. Note that statutes of limitation on some of the allegations in the indictment (which started more than five years ago) would have expired.

The Sordid Second Season of the Robert Menendez Bribery Series

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There’s a really sordid aspect regarding the timing of the indictment of Robert Menendez unveiled yesterday. Its timeline starts in February 2018, when Nadine Arslanian first starts dating the senior Senator from New Jersey. That was just weeks — possibly days! — after the last bribery case against Menendez ended.

So weeks after DOJ decided not to retry Menendez on his first bribery case, a then-unemployed woman, Nadine Arslanian, started dating the disgraced Senator and, within weeks of that, she alerted an Egyptian friend, Wael Hana, that she was dating him. That set off the most alarming — but probably not the stongest — part of the case: that Menendez was feeding Egypt information and ultimately set up a back channel with an Egyptian intelligence official, meeting at his home in Egypt in October 2021. Those are alarming allegations, but not allegations as clearly tied to financial payoffs to Menendez as some other things.

It’s like some TV producer decided to renew a series for a second season based off an entirely new story line slapped on the older story. “I know! We’ll throw a woman in the mix!”

Aside from that 2021 trip, much of the Egyptian influence operation happened before Nadine and Menendez were married in October 2020. For much of the period, Nadine complained she wasn’t being paid (in a no-work job at Hana’s Halal company). And some of the meetings between Menendez and the Egyptians would not be that far outside the norm for a Senate Foreign Relations Member, much less the Chair. The trip to Egypt, probably accidentally, was made official, giving Menendez legal cover for it. And the seeming bribery immediately upon his return — like a lot of the other payments in this period — came from a long-time Menendez fundraiser, Fred Daibes, or from a Hana associate, Jose Uribe, not directly from Hana.

In other words, this story appears to start with Nadine’s friends exploiting the access she got through her relationship with Menendez. That, as alleged, is largely her corruption. And to prove the corruption, DOJ will need to prove that the payments she only belatedly got were not part of a legitimate job. It’s sketchy as hell. It raises questions about Foreign Agent laws (especially for Hana). But at least as presented in the indictment, that’s not the strongest evidence, certainly not against Menendez.

The stuff that more directly implicates Menendez is his intervention in several criminal investigations, first in the case of an Uribe associate, then in the case of Daibes, Menendez’ longtime fundraiser. Menendez allegedly tried to intervene with prosecutors to help an Uribe associate beat a state charge, and Daibes beat a federal charge, but as described, both cases resolved in probation plea deals without his interference having any effect.

The items DOJ claims must be forfeited as fruits of the crime provide a sense of how much more Daibes allegedly paid Menendez than Hana:

  • The Menendez’ residence in Englewood Cliffs (this may have originally belonged to Nadine, in which case the forfeiture stems from mortgage payments of $23,000 IS EG Halal made on the residence in July 2019)
  • The $75,000 2019 Mercedes C300 José Uribe paid for starting in 2019, which the Menendez’ tried to make look like a loan retroactively in July 2022; it’s not clear — and DOJ doesn’t say — whether the Mercedes was payoff for the Egyptian influence or for Menendez’ attempt to influence the prosecution of Uribe’s associate
  • $486,461 in cash, some of which bore Daibes’ DNA or fingerprints, one envelope of which had Menendez’ DNA, some of which was stashed in a Menendez jacket
  • $79,760 in cash seized in Nadine’s safe deposit box
  • 2 1-KG bars of gold seized on June 16, 2022; these — and at least two others that Nadine sold for around $120,000 in March 2022 — likely came from Daibes
  • 11 1-ounce bars of gold seized on June 16, 2022; these were likely what remained of 22 ounces total, originally valued at around $39,600, purchased by Hana after some meetings with Egyptian officials on June 23, 2021
  • An account tied to Strategic International Business Consultants, which Nadine formed in June 2019 after IS EG Halal got its monopoly and to which IS EG Halal paid three $10,000 payments in August, September, and November 2019

So the Mercedes (worth $75,000) at least appears to be payoff for Menendez’ efforts to help an Uribe associate beat a state case. As noted, the indictment says prosecutors shielded the investigative team from Menendez’ interference, but Uribe and the associate nevertheless had a celebratory dinner with Menendez attributing his legal good fortune to Menendez.

Because the roughly $100,000 in payments from Hana — with the exception of the one-ounce gold bars — came through IS EG Halal, DOJ will need to prove that Nadine’s no-work job really wasn’t a job or at least not a legal one.

The bulk of the payments, around $720,000 in cash and gold (the indictment also references checks not itemized here), came from Daibes. While he had financial ties to Hana, he also had a long-lasting relationship as a fundraiser for Menendez, and DOJ doesn’t lay out when the money came in. Given the extent of that relationship, Menendez’ intervention with the US Attorney’s office (and his equivocations about supporting Phil Sellinger’s appointment) are corrupt as hell but not unusual for Washington.

After all, Attorney General Garland only got confirmed after assuring Lindsey Graham and other Senators that he would continue the politically influenced criminal investigations into Hunter Biden and (by John Durham) of Hillary Clinton and her associates. And the entire House GOP is continuing such demands to this day, in part because their Sugar Daddy, Donald Trump, demands it.

There has to be something more to the Daibes’ money, something not laid out in this indictment. Particularly given that there are no campaign finance allegations, DOJ has not ruled out that Menendez was just on a regular take from Daibes. It simply doesn’t account for the amount of money Daibes allegedly gave Menendez, nor does it tie that money to specific quid pro quos.

(Daily Beast reports that Daibes has or had ties with the Italian mafia.)

Similarly, there must be more explanation to the Daibes’ plea deal. This indictment suggests that Sellinger’s First AUSA, Vikas Khanna, rebuffed Menendez’ efforts to intervene in the Daibes case, just like NJ state prosecutors rebuffed his efforts to intervene in the case of the Uribe associate who nevertheless attributed his plea to Menendez. The NJ USAO only belatedly clarified that Sellinger was recused and the plea had been approved by Khanna on the day of the indictment. And it’s hard to explain the repeated continuances of Daibes’ sentencing, first in September 2022, then in December 2022, then in March 2023, then in July 2023; sentencing for Daibes and his co-defendant is currently set for October 23, 2023. The sentencing submissions submitted in August 2022 remain sealed. If Daibes started cooperating in this case after the June 2022 searches of the other co-defendants, it might make sense, but there’s no hint of that.

Likewise, there’s no ready explanation for why SDNY is prosecuting this instead of NJ USAO. Rather than any mention that this got referred from one of those NJ offices, which is what you would hope happened if a politician attempted to influence a prosecution, the indictment establishes venue in fairly tangential acts (marked in blue in the timeline below): Two dinners Menendez and Nadine had in Manhattan, the loan payments Uribe arranged through a bank in the Bronx, and a text Nadine sent on September 5, 2019.

Finally, it’s not clear whether this investigation arose out of an investigation — perhaps for being a foreign agent, which inexplicably is not included in this indictment — into Hana, which led up to the search of his phone in November 2019 but which doesn’t appear to have alarmed anyone, or out of further scrutiny of Daibes.

Or maybe, after the prosecution failed the last time, DOJ Public Integrity (which was heavily involved in the first prosecution of Menendez) just kept watching, knowing he’d stumble again.

Some of the overt acts in this indictment — most notably when Menendez provided sensitive information about embassy staffing to the Egyptians — happened more than five years ago, so they’re only included as part of a conspiracy that continued for years after that. But I wouldn’t rule out that we get more clarity about all this money in a superseding indictment.

Update: Added the detail that the June 21, 2021 meeting with Egypt’s Intelligence head pertained to Egypt’s role in the Jamal Khashoggi assassination.

Timeline

Below, I’ve bolded key payments (there are other payments that DOJ does not date in the indictment). I’ve marked in pink the engagement and marriage of Nadine and Menendez, which may change the legal import of Nadine’s actions with Menendez. I’ve marked the acts that SDNY uses to establish venue in blue.

April 1, 2015: DOJ indicts Menendez and longterm associate, Salomen Melgen.

June 27, 2016: US v McDonnell decision.

July 17, 2017: Menendez moves to dismiss in light of US v McDonnell decision.

August 2017: State Department withholds $195 million in military support for Egypt and cancels $65.7 million in other financing.

November 16, 2017: Jury hangs in Salomon Melgen trial.

January 19, 2018: DOJ notices intent to retry case.

January 24, 2018: Judge William Walls grants Menendez’ Rule 29 motion on 7 of 18 counts.

January 31, 2018: DOJ moves to dismiss first bribery case.

February 2018: Nadine Arslanian, at the time unemployed, starts dating Menendez.

Early 2018: Nadine tells Hana she is dating Menendez.

March 2018: Menendez meets with Egyptian Official-1, Nadine, and Hana, without his professional staffers, in his DC Senate office and discusses foreign military funding.

April 2018: Uribe tells Hana that “the deal is to kill and stop all investigation”‘ of associate investigated for insurance fraud.

May 6, 2018: After meeting with Nadine and Hana (location uncertain), Menendez seeks out number and nationality of peoeple working at US Embassy in Cairo.

May 7, 2018: Menendez texts details of Embassy staffing to Nadine, who forwarded it to Hana, who forwarded it to Egyptian Official-2.

May 2018: Menendez has fancy dinner with Hana after which Hana texts Egyptian Official-1 that “the ban on small arms and ammunition to Egypt has been lifted.”

May 2018: Nadine gets Menendez to ghost write letter asking other Senators to release $300 million hold. He sends ghost-written letter to her via personal email; she sends it to Hana. Both delete the email.

Several months after March 2018: Nadine expresses hope that Egypt “replace him,” meaning Hana. 

June 30, 2018: Menendez, Nadine, and Hana meeting in Manhattan restaurant. 

July 2018: After meeting with Egyptian Official-1 set up by Nadine and Hana, Menendez tells Nadine he will sign off on $99 million sale to Egypt, stating that they have had such arms for many years and use them for counterterrorism in the Sinai.

October 30, 2018: Fred Daibes charged by US Attorney for obtaining loans under false pretenses.

December 2018: Nadine has car accident and starts complaining to Hana that she does not have a car.

January 27, 2019: Menendez, Nadine, and Hana meet at dinner (Uribe was invited but did not attend), after which Hana starts sending Nadine texts about Uribe associate’s criminal case. Nadine deleted those messages.

January 29, 2019: After reviewing texts with Nadine (which both deleted), Menendez attempts to pressure Official-2 to resolve the prosecution of Uribe’s associate. Official-2 does not intervene.

February 3, 2019: Nadine texts Hana, “I’m so excited to get a car next week !!”

2018 to 2019: Hana’s halal firm, which had no revenue, did not deliver on payments promised to Nadine.

March 12, 2019: Nadine and Uribe speak for 21 minutes, after which Uribe texts, “I am real. I will stand by my word.”

March 27, 2019: Uribe directs Nadine to a Mercedes dealer, after which she sends Menendez pictures to help pick a color.

April 2019: Uribe associate resolves case with guilty plea that was more favorable than prosecutors’ initial plea offer.

April 3, 2019: Nadine texts dealer saying Uribe told her to pick up car on April 5.

April 3, 2019: Uribe tells associate, “I need 15k cash this afternoon.”

April 4, 2019: Nadine texts Menendez that she’s going “to meet Jose for five minutes;” in the parking lot of a restaurant, he hands her $15,000 in cash.

April 5, 2019: Nadine uses the $15,0000 as a down payment to get the Mercedes, paying the rest with a loan based on false financing claims.

April 7, 2019: Egyptian government official informs Hana he’ll become sole certifier for halal imports.

April 8, 2019: Nadine texts Menendez, “seems like halal went through. It might be a fantastic 2019 all the way around.”

Spring 2019: Egypt grants Hana’s halal company, IS EG Halal, exclusive monopoly on certifiying meat exported from the US to Egypt as halal.

April and May 2019: USDA complains to Egypt about monopoly grant to IS EG Halal.

May 2019: Uribe starts paying off Nadine’s loan, via an associate’s Bronx business account, keeping his name out of it.

May 3, 2019: Uribe causes associate to pay off Nadine’s loan through bank in the Bronx.

May 21, 2019: Menendez, Hana, and Egyptian Official-3 meet twice, the second time at steakhouse in DC. They discuss human rights issue. Hana requests Menendez’ intervention on USDA objections to IS EG Halal monopoly.

May 22 and 23, 2019: Hana provides Nadine information on USDA objections. She texts them to Menendez, and later deletes them.

May 23, 2019: Menendez intervenes with USDA Official-1, asking him to stop interfering with IS EG Halal’s monopoly. Official-1 did not accede to demand, but IS EG Halal kept monopoly.

June 2019: Nadine forms Strategic International Business Consultants, LLC, explaining to a relative she would use it to get paid. “Every time I’m in a middle person for a deal I am asking to get paid and this is my consulting company.”

July 2019: After mortgage company moves to foreclose on Nadine, IS EG Halal pays $23,000 to bring Nadine’s mortgage current. As part of those discussions, Nadine said, “When I feel comfortable and plan the trip to Egypt [Hana] will be more powerful than the president of Egypt.” [DOJ does not allege Menendez was part of this discussion.]

July 2019: A New Jersey detective asks to interview Uribe’s associate, leading Menendez to attempt to intervene again.

July 31, 2019: Uribe contacts Nadine saying “We need to move fast” … “We can stop this.” Nadine responds that she will “address itfirst thing tomorrow morning or tonight depending on when he is home.” Menendez does Google search on State agency employing insurance fraud investigator.

August 30, 2019: IS EG Halal pays Nadine $10,000.

September 3, 2019: Uribe texts Nadine saying, “Please don’t forget about me. I will never forget about you” … “I need peace.”

September 4, 2019: Menendez sets up meeting with NJ prosecutor for September 6.

September 5, 2019: Menendez, Nadine, and Uribe meet at Nadine’s house.

September 5, 2019: Nadine sends Uribe a text sent through cell tower in Manhattan.

September 6, 2019: Prosecutor meets with Menendez, Menendez informs Uribe the meeting was “very positive.”

September 9, 2019: Egyptian Official-3 texts Hana relaying that a State Department official told an Egyptian diplomatic official that “Senator Menendize put a hold on a billion $ of usaid to Egypt before the recess !!!!” Hana attempted to contact Nadine, then forwarded the Egyptian text to Daibes, who called Menendez and then responded that it wasn’t true.

September 2019: Menendez offered to provide assistance to Hana and Egypt during official trip to India, then later meets with Daibes, Hana, and Egyptian Official-3.

September 2019: Nadine complains to Daibes that Hana had not paid her. Daibes responds, “Nadine I personally gave Bob a check for September.”

September 2019: Nadine texts Menendez complaining that Hana has not left her an envelope, referencing a meeting Menendez had with senior Egyptian officials “last Saturday.” Nadine called Daibes.

September 21, 2019: Menendez, Hana, Daibes, and Egyptian Official-4 meet at restaurant in Manahattan.

September 28, 2019: IS EG Halal pays Nadine $10,000.

October 2019: Menendez and Nadine get engaged.

October 29, 2019: Uribe texts Nadine for an update. Menendez calls Uribe, after which he tells Nadine he is “a very happy person.”

After October 29, 2019: Menendez, Nadine, Uribe, and associate have celebratory dinner.

November 5, 2019: Uribe texts Nadine about automatic payments for Mercedes Benz.

November 5, 2019: IS EG Halal pays Nadine $10,000.

November 9, 2019: Uribe sets up automatic payments through another trucking company, ultimately paying $30,000 in addition to the cash down payment.

November 2019: Search of Hana’s cell phone reveals thousands of text messages with Nadine, many of which she had deleted.

March 2020: Nadine texts Egyptian Official-3 and offers to help, then setting up meeting with “the general,” after which Menendez intervenes to pressure State to increase its engagement on Grand Ethiopian Renaissance Dam.

October 2020: Menendez, Nadine, Egyptian Official-3 ,and Egyptian Official-4 meet for dinner in Edgewater, NJ.

October 2020: Menendez and Nadine get married.

December 2020: Menendez and Nadine have dinner meeting with Egyptian Official-3.

December 2020: Menendez meets with US Attorney candidate and complains about prosecution of Fred Daibes. US Attorney candidate tells Menedez he might have to recuse. Menendez told US Attorney candidate he would not recommend him.

Early 2021: IS EG Halal delivers two exercise machines and air purifier to Menendez home.

May 2, 2021: Advisor intervenes with US Attorney candidate about recusing, tells Menendez “you’ll be comfortable with what he says.” Menendez recommends candidate. After confirmation, he recuses.

June 21, 2021: Nadine and Egyptian Official-4 organized meeting between Menendez and Egyptian Intelligence Head Abbas Kamel, in advance of meeting with other Senators that day. Both Nadine and Menendez alert Egyptian Official-4 that other Senators were going to raise a human rights issue. Per this thread (ThreadReader is down right now but it’s here) and this Isikoff story, the human rights issue was Egypt’s involvement in the execution of Jamal Khashoggi.

June 23, 2021: Hana purchases 22 one ounce gold bars, each worth $1,800. Two were found at Menendez residence in June 2022 search.

October 2021: Nadine arranges trip for her and Menendez to Egypt, originally planned as unofficial visit. When a SFRC took steps that made it an official visit, Egyptian Official-4 said he might lose his job. During the trip, Menendez had meeting at home of Egyptian Official-5 (the intelligence official).

October 17, 2021: Driver for Fred Daibes picks up the Menendezes from trip to Egypt; the next day Menendez searches, “how much is one kilo of gold worth.”

December 23, 2021: Daibes’ trial adjourned. Daibes asks about Menendez’ shoulder injury. Nadine responds that Menendez is fixated on trial date. Daibes sent recliner to Menendez.

December 2021 through February 2022: Menendez asks Advisor to ask why US Attorney recused himself.

January 2022: Menendez sends Nadine a link about military sales to Egypt totally $2.5 billion; Nadine forwards ot Hana, saying that Menendez had to sign off on it.

January 21, 2022: Menendez called NJ US Attorney and asked for First AUSA name.

January 22, 2022: Menendez complains to Daibes that his attorney has not been aggressive enough.

January 24, 2022: Nadine has two calls with Daibes’ driver. “Christmas in January.” Thousands in cash with Daibes’ DNA later found at residence. 

January 29, 2022: Menendez searches for “kilo of gold price.”

January 31, 2022; Menendez calls First AUSA, then calls Daibes.

March 2022: Menendez asks Advisor to bring up Daibes at lunch with US Attorney, Advisor declines to do so.

March 30, 2022: Nadine thanks Daibes, then sells 2 1-KG gold bars to jeweler, each worth $60,000.

March 31, 2022: Two 1-KG gold bars Nadine provided to jeweler sold in Manhattan.

April 2022: Daibes pleads guilty to plea agreement providing probationary sentence. Sentencing has been continued repeatedly since plea.

June 2022: Federal agents approach Menendez, Nadine, and Uribe, after which Menendez pays Nadine $23,000 and Nadine pays Uribe $21,000.

June 16, 2022: Search discovers:

  • 2 1-KG gold bars
  • 9 1-ounce gold bars
  • 10 envelopes of cash, each with 10s of 1000s of dollars, bearing Daibes’ fingerprints, one which included fingerprints of Menendez

July 14, 2023: Sentencing for Daibes and co-defendant reset, for fourth time, for October 23, 2023.

September 21, 2023: DOJ amends sentencing agreement to note that Phil Sellinger was recused and Vikas Khanna oversaw the Daibes prosecution.

September 21, 2023: Indictment

Oleg Deripaska’s UK-Based Property Manager, Graham Bonham-Carter, Arrested for Extradition

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Yesterday, SDNY announced the UK arrest, pursuant to a September 21 indictment, of Graham Bonham-Carter, for sanctions violations relating to his work for Oleg Deripaska. The announcement comes 12 days after the arrest of a US-based Deripaska manager, Olga Shriki. Shriki was charged along with Deripaska himself, his girlfriend Ekaterina Voronina, and a Russian-based manager, Natalia Bardakova via indictment obtained one week after Bonham-Carter’s (the indictment shows it was a superseding indictment, so the original Deripaska indictment likely pre-dates the Bonham-Carter one).

Most of what Bonham-Carter does for Deripaska takes place overseas. He manages Deripaska’s UK based home. And a firm he set up to manage Deripaska’s non-US properties in the wake of the US sanctions on Deripaska in 2018, GBCM Limited, appears to manage Deripaska’s that same London home and those in several other non-US countries.

On or about May 25, 2018, BONHAM-CARTER wrote in an email that “OVD [i.e., Deripaska] wants me to set up my own company to run the [Belgravia Square] house and to possibly include Japan, Italy, China and more.”  Less than two months later, on or about July 17, 2018, BONHAM-CARTER incorporated GBCM Limited.

The US got jurisdiction over Bonham-Carter based off several transactions: First, in 2021, Bonham-Carter allegedly sent a million dollars from a Russian bank held in the name of GBCM to Gracetown, Inc, the company that owns Deripaska’s three properties in the US. Then, from March 2020 to August 2021, Bonham-Carter attempted to get 18 pieces of artwork that had been purchased at a NY auction house by a shell company for Deripaska in 2008 shipped out of the country (when you’re as rich as Deripaska, apparently, you can forget you’ve got expensive artwork warehoused in NY for twelve years until sanctions make that problematic).

Based on these transactions, DOJ charged Bonham-Carter with conspiracy to violate sanctions (it doesn’t say whom he conspired with, but the charge is the same top-line charge in the Deripaska indictment), violation of sanctions, and — in conjunction with alleged false statements to the auction house, wire fraud.

As there was with the Shriki indictment, there’s a forfeiture clause in the Bonham-Carter indictment, but unlike the Shriki one, it doesn’t list out the property to be seized, not even the $1 million he sent to the US. I don’t know UK law well enough to know whether they could act against the London home under their own sanctions regime.

Aside from what I imagine will be an epic extradition fight from Bonham-Carter (Shriki herself is Very Well Lawyered), the details of all this are interesting because they were obviously coordinated, possibly with the original Deripaska indictment we haven’t seen.

But thus far, the charged sanctions violations are largely tangential — on top of selling a music studio and that million dollars, the transactions involve the artwork, sending Easter gifts, and anchoring Deripaska’s babies in the US (just one successfully). While the Deripaska indictment lists the bank account of tied to Shriki’s sale of a music studio for Deripaska as well as three properties owned by Gracetown Inc., most actions tied to the ownership and management of Gracetown are not yet covered by these indictments.

That suggests either that DOJ has constructed the indictments like this to avoid sharing really sensitive discovery or that there are other indictments pertaining to Gracetown yet to drop.

Update: Corrected to indicate that the artwork purchase was 18 pieces, not just one. h/t RC.

DOJ Unseals 18-Month Old Indictment against Lev Parnas’ Financial Backer

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Yesterday, SDNY unsealed an indictment against Andrey Muraviev, the Russian national who gave Lev Parnas and Igor Fruman $1 million to spend on pro-cannabis Republican politicians.

SDNY presented the indictment as part of an effort to protect US politics, and it was.

Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of an indictment against ANDREY MURAVIEV, a/k/a “Andrey Muravyov,” a Russian citizen, charging him with making illegal political contributions as a foreign national, and conspiring to make illegal political contributions as a foreign national in the names of straw donors. Muraviev is charged with conspiring with Lev Parnas, Andrey Kukushkin, and Igor Fruman, and others, who were convicted at trial or have pleaded guilty to these crimes.

U.S. Attorney Damian Williams said: “As alleged, Andrey Muraviev, a Russian national, attempted to influence the 2018 elections by conspiring to push a million dollars of his foreign funds to candidates and campaigns. He attempted to corrupt our political system to advance his business interests. The Southern District of New York is committed to rooting out efforts by foreigners to interfere with our elections.”

FBI Assistant Director-in-Charge Michael J. Driscoll said: “As alleged, Muraviev, a Russian foreign national, made illegal political contributions and conspired with Parnas, Kukushkin and Fruman to obscure their true source. The money Muraviev injected into our political system, as alleged, was directed to politicians with views favorable to his business interests and those of his co-conspirators. As today’s action demonstrates, we will continue to aggressively pursue all those who seek to illegally effect [sic] our nation’s elections.”

But I’m still not sure what explains the unsealing of the indictment yesterday. It’s actually exactly the same as S1 — obtained the same day on September 17, 2020 — only with Muraviev charged rather than described as Foreign National-1.

Indictment: October 9, 2019

S1 Indictment: September 17, 2020

S2 Indictment: September 17, 2020 (unsealed March 14, 2022)

s3 Indictment: August 26, 2021

It may be just part of the effort to roll out charges against as many people — along with Jack Hanick and Elena Branson — for Russian influence peddling as possible right now. It may relate to Lev Parnas’ plans to plead guilty to the remaining charged charge against him (the Marie Yovanovitch related charge from the original indictment was removed in S1 to await Rudy’s inclusion).

Or perhaps DOJ unsealed it to make it easier to share with some other entity, such as Federal prosecutors in Florida who are investigating some of the pro-cannabis politicians who received Muraviev’s laundered campaign money.