UNTIL THIS week Lev Parnas and Igor Fruman, two Florida-based businessmen, played supporting roles in the impeachment drama surrounding President Donald Trump. Messrs Parnas and Fruman acted as intermediaries between Rudy Giuliani, the former mayor of New York and current lawyer to the president, and various prosecutors in Ukraine, in his attempts to discredit the family of Joe Biden. On October 9th the pair of former Soviet émigrés, identified by Mr Giuliani as his clients, moved centre stage. They were arrested at Dulles airport, just outside Washington, DC, as they were preparing to leave the country, and charged with making false statements and breaking America’s campaign-finance laws. What does this mean for the impeachment inquiry under way in the House, and for Mr Giuliani?
The indictment describes a scheme to funnel money to American politicians, including Mr Trump and “congressman-1”, who has been widely identified as Pete Sessions, a Republican who represented suburban Dallas for 11 terms. The indictment says Messrs Parnas and Fruman were working to advance “their personal financial interests and the political interests of at least one Ukrainian government official with whom they were working.” The document also alleges that the pair donated $325,000, disguising the true source of those funds, to an outfit that spent around $3m in the 2018 congressional election to boost Mr Sessions’s chances. Like much about the scheme, this went awry. Mr Sessions lost to Colin Allred, a Democrat. Among the brilliant ruses Mr Fruman allegedly used to disguise his identity was to make contributions in the name of “Igor Furman”.
Soon after committing to raise money for Mr Sessions, the pair allegedly met him to seek his help in removing Marie Yovanovitch, who at the time was America’s ambassador to Ukraine. Mr Sessions then wrote to Mike Pompeo, the secretary of state, claiming that Ms Yovanovitch had spoken “privately and repeatedly about her disdain for the current administration” (something which, if true, would not make her unusual among State Department employees). Mr Trump ordered her removed in May this year.
It is worth noting that under America’s permissive campaign-finance laws none of this would have been illegal if the funds donated had come from a legitimate money-making activity in America and had been given by American citizens. Messrs Parnas and Fruman seemed to believe they had the influence-buying business in America figured out. They planned to enter the recreational-marijuana business, again, according to the indictment, with disguised money from a foreign source. Having missed the deadline to apply for a licence in Nevada, Mr Fruman allegedly funnelled $10,000 from a foreign source to a Nevada state politician, in an effort to get him to change the rules. But, as the indictment notes, this business venture “did not come to fruition”.
Who are Messrs Parnas and Fruman, and what did they want from the administration or from a Texas congressman? Mr Parnas is a former stockbroker with a trail of unpaid debts. Mr Fruman was best known as the owner of a beach club in Odessa and the red-light Buddha Bar in Kiev, where rich foreigners could meet escorts. Late in 2018 the duo from Odessa, a Black Sea port immortalised in Isaak Babel’s stories about Jewish gangsters and opportunists written a century ago, pitched up in Kiev offering something different: connections to Mr Giuliani and access to the White House. They had the photographs of themselves with Mr Trump to prove it. Such power-selfies are another standard part of creating the impression of influence in Washington, which is almost as marketable as the real thing.
In 2016 Mr Parnas had contributed $50,000 to the Trump campaign. This was despite the fact that the same year a federal judge in New York had ordered Mr Parnas to pay more than $500,000 to an investor in a failed project to produce a Hollywood film called “Anatomy of an Assassin”. Mr Parnas has still not repaid the money and is being pursued over the debt in Florida, according to court records. This did not prevent him in 2018 from paying $325,000 to the pro-Trump America First Action, a super-PAC active in the 2020 election. Shortly before making the donation, Mr Parnas and Mr Fruman were invited for a closed-door meeting with Mr Trump in Washington. Within a week of that meeting America First recorded a payment from a firm called Global Energy Producers (GEP). The company was registered a month earlier and appeared to have no turnover or business. All it had was a logo.
The donation prompted a complaint from Campaign Legal Center, a non-partisan watchdog, to the Federal Election Commission. It alleged that the pair violated the rules “by making contributions to America First Action, in the name of another person, namely GEP.” Then it got worse. It also alleged that GEP was not the actual source of the donation and “America First Action knowingly accepted a contribution in the name of another, violated its reporting obligations, and filed a falsified report with the Commission.” Records obtained as a result of a civil case in the US District Court in Florida showed that a real-estate lawyer “who specialises in navigating rules for foreign buyers using shell companies to launder money through US real estate” transferred $1.26m from a client trust-account to a company set up by Mr Parnas and his wife. Two days later, according to the Campaign Legal Center, that company, Aaron Investments, contributed $325,000 to America First Action via a wire transfer. America First Action then falsely attributed that contribution to “Global Energy Producers, LLC” on its report filed with the commission.
Breaches of campaign-finance law are frequent enough. But even the hungriest fundraisers know that accepting donations from foreigners is forbidden. Those with long memories will remember the controversy stirred up by Republicans in 2015 over whether donations by foreigners to the Clintons’ charitable foundation amounted to influence-peddling.
The significance of the arrest of Messrs Parnas and Fruman could go beyond campaign finance, though. While they were touting their American connections and soliciting information for Mr Giuliani, the pair peddled their own business idea. This involved steering lucrative energy contracts in Ukraine to companies controlled by Trump allies. According to a report by AP, a news agency, they also floated the idea of changing the management of Naftogaz, Ukraine’s state energy firm, to facilitate those deals and to facilitate the sale of American liquefied natural gas (LNG) to Ukraine. In response, Mr Parnas told the Ukrainian media that he indeed discussed the sale of American LNG to Ukraine, but denied he wanted to change the management of Naftogaz.
The effort to install a friendlier management team at the helm of Naftogaz was taken up by America’s energy secretary, Rick Perry, in his conversations with Volodymyr Zelensky, the new Ukrainian president. Last week Mr Trump told a group of Republican lawmakers that it had been Mr Perry who had prompted the phone call to Mr Zelensky on July 25th, in which Mr Trump asked for an investigation into Joe Biden, his political rival; that, in turn, led House Democrats to launch the impeachment inquiry. Mr Trump said Mr Perry wanted him to discuss “something about an LNG”. A spokesperson for the US Energy Department said that Mr Perry’s conversations with Ukrainian officials about Naftogaz were part of his efforts to reform the country’s energy sector and create an environment in which Western companies could do business.
Messrs Parnas and Fruman appeared briefly in a court but made no plea. Their story could provide a script for a better Hollywood movie than the ill-fated “Anatomy of an Assassin”. Mr Giuliani already has one troublesome client in Mr Trump. He might not survive the addition of two more. As for the president himself, it seems the White House’s refusal to co-operate with the impeachment inquiry will not be enough to prevent further revelations about his administration’s dealings in Ukraine.
Dig deeper: The backstory to impeachment: From Paul Manafort to Donald Trump’s fateful phone call