Florida businessmen with ties to Giuliani, Ukraine arrested

A spokesperson for the U.S. District Court for the Southern District of New York confirmed that Lev Parnas and Igor Fruman are in federal custody.
Igor Fruman - Lev Parnas
Igor Fruman - Lev Parnas [ Miami Herald ]
Published Oct. 10, 2019|Updated Oct. 11, 2019

Two South Florida businessmen embroiled in an impeachment investigation involving efforts by President Donald Trump to pursue dirt in Ukraine on his political opponents were arrested by the FBI Wednesday night and charged with running a scheme to purchase U.S. political influence with illicit foreign campaign cash.

Lev Parnas and Igor Fruman, both clients of Trump attorney Rudy Giuliani, were taken into custody at Dulles International Airport in Virginia. They were arrested while attempting to board a one-way flight out of the country, according to Geoffrey S. Berman, the U.S. Attorney for the Southern District of New York.

The men, and two other business associates, are accused in a New York grand jury indictment of masking the source of their donations to federal candidates and political committees and secretly working with a foreign national with “Russian roots” to steer up to $2 million into Nevada politics. At the same time, prosecutors also say they were lobbying a congressman on behalf of a Ukrainian government official.

“They sought political influence not only to advance their own financial interests but to advance the political interests of at least one foreign official: a Ukrainian government official who sought the dismissal of a U.S. ambassador to Ukraine,” Berman said during a Thursday press conference.

The arrests of Fruman and Parnas raise questions about donations made last year to Florida politicians, including U.S. Sen. Rick Scott and Gov. Ron DeSantis. After the arrests, DeSantis announced Thursday that his political committee would return a $50,000 donation from the men’s company last year.

RELATED: Giuliani associated named in Ukraine inquiry raised money for DeSantis

The arrests also came hours before the two men were subpoenaed by three House committees investigating their work in Ukraine on behalf of Trump attorney Giuliani to procure what they’ve claimed is explosive information about former Vice President Joe Biden and his son, Hunter Biden.

“The violations are pretty clear-cut even based on publicly available records,” said Brendan Fischer, director of federal reform for the Campaign Legal Center, a nonpartisan watchdog group that filed a complaint last year over a $325,000 contribution to a pro-Trump Super PAC by a Parnas and Fruman company. “The intersection of the campaign-finance violations with the impeachment inquiry and the Ukrainian narrative adds an additional layer of intrigue.”

This Facebook screen shot provided by The Campaign Legal Center, shows in the left photo, Lev Parnas, left, with former Rep. Pete Sessions, R-Texas.  In the right photo from left are Lev Parnas, former Rep. Pete Sessions, R-Texas and David Correia, on Capitol Hill in Washington, posted on May 9, 2018.  (The Campaign Legal Center via AP)
This Facebook screen shot provided by The Campaign Legal Center, shows in the left photo, Lev Parnas, left, with former Rep. Pete Sessions, R-Texas. In the right photo from left are Lev Parnas, former Rep. Pete Sessions, R-Texas and David Correia, on Capitol Hill in Washington, posted on May 9, 2018. (The Campaign Legal Center via AP) [ AP ]
This Facebook screen shot provided by The Campaign Legal Center, shows from left, Donald Trump, Jr., Tommy Hicks, Jr., Lev Parnas and Igor Fruman, posted on May 21, 2018.  (The Campaign Legal Center via AP)
This Facebook screen shot provided by The Campaign Legal Center, shows from left, Donald Trump, Jr., Tommy Hicks, Jr., Lev Parnas and Igor Fruman, posted on May 21, 2018. (The Campaign Legal Center via AP) [ AP ]

Giuliani told Fox News Thursday that the timing of the arrest of his clients was “suspect.” The two men from Eastern Europe — Parnus was born in Ukraine and Fruman in Belarus — had lunch with Giuliani at the Trump International Hotel in Washington Wednesday just before they headed to the airport, according to the Wall Street Journal, which first reported their arrest.

Trump, speaking to reporters Thursday on the White House lawn, denied knowing the men.

“I don’t know about them,” Trump said. “I don’t know what they do.”

Trump, who has appeared in multiple photos with the two men, said, “I have pictures with everybody.”

The indictment states that Parnas and Fruman began attending political fundraisers in March 2018 with the aim of ingratiating themselves with U.S. politicians. And they created a limited liability company called Global Energy Producers to conceal the source of their campaign contributions.

The company gave contributions with money that was ostensibly produced by the company’s own operations, but prosecutors say the money actually came from “a private lending transaction between Fruman and third parties.”

RELATED: Giuliani’s Ukrainian allies racked up debts in South Florida

The largest donation, $325,000 in May of 2018, went to America First Action, a Trump-affiliated Super PAC. Federal authorities also said Fruman gave two maximum donations to “congressman 1,” identified in multiple reports as former Rep. Pete Sessions, R-Texas. Both donations, a total of $5,400, were paid for by Fruman, though one was funneled through Parnas, a violation of campaign finance law, the indictment said.

Sessions lost his seat in November 2018. He is running for Congress again in 2020.

Around the same time the contributions to Sessions were made, Parnas met with him and “sought congressman 1’s assistance in causing the U.S. government to remove or recall the then-U.S. Ambassador to Ukraine,” the indictment said. The Ukraine ambassador, Marie Yovanovitch, was eventually dismissed by Trump after months of complaints by Giuliani and others that she was blocking a potential probe into Biden and his son, Hunter.

Sessions received a total of $3 million in campaign help from America First Action.

This Facebook screen shot provided by The Campaign Legal Center, shows President Donald Trump standing with Lev Parnas, top left photo, at the White House in Washington, posted on May 1, 2018.  (The Campaign Legal Center via AP)
This Facebook screen shot provided by The Campaign Legal Center, shows President Donald Trump standing with Lev Parnas, top left photo, at the White House in Washington, posted on May 1, 2018. (The Campaign Legal Center via AP) [ AP ]

“It’s campaign election fraud,” Democratic Miami Rep. Donna Shalala told the Miami Herald Thursday, during a tour of a Miami medical center with House Majority Leader Steny Hoyer.

The indictment also alleges that Parnas and Fruman received two $500,000 wire transfers from an unnamed foreign businessman to use for political contributions to state candidates in Nevada, where the two men and their indicted partners — David Correia and Andrey Kukushkin — were pursuing a recreational marijuana license.

The duo also gave more than $100,000 to political candidates in Florida, including DeSantis, Scott and U.S. Rep. Brian Mast, all Republicans. None of those contributions were mentioned in the indictment.

Still, following a Wednesday report from the Miami Herald that Parnas was a co-host on two fundraisers for DeSantis last year — including one featuring Donald Trump, Jr. — the governor’s office announced he would “return” a $50,000 contribution from Global Energy Producers to the federal government. Helen Ferré, a spokeswoman for the governor, called the allegations in New York “troubling.”

“Of course Governor DeSantis does not condone any illegal activity nor does he have a relationship with these individuals,” Ferré wrote Thursday in an email.

A Mast spokesman said he is also returning a $2,400 contribution from Fruman.

Fruman and Parnas appeared briefly in federal court on Thursday in Virginia for an initial hearing. Prosecutor Nicholas Rose told the judge the pair are considered a flight risk. U.S. Magistrate Judge Michael S. Nachmanoff later agreed to grant the men’s release on $1 million bond if they surrender their travel documents and agree to GPS monitoring and home detention, according to ABC News.

They appeared in court with criminal attorney Kevin Downing. Their attorney in the ongoing impeachment investigation, John Dowd, did not respond to a request for comment.

Following their arrest, the FBI executed a search warrant on Fruman’s Sunny Isles Beach condo in connection with the campaign finance investigation. A man who identified himself as Fruman’s son answered a call Thursday morning at a phone number linked to the condo, but immediately hung up.

RELATED: Florida businessmen with Giuliani ties won’t comply with impeachment inquiry

Back in Washington, the arrest of Fruman and Parnas was quickly followed by action from House Democrats.

Hours after the arrests, the three House committees leading the Trump impeachment inquiry announced they had issued subpoenas for Parnas and Fruman, who’d previously said through their attorney that they would not come willingly before Congress to give depositions.

Rep. Adam B. Schiff, chairman of the House Intelligence Committee, Rep. Elijah E. Cummings, chairman of the House Oversight Committee, and Rep. Eliot L. Engel, the chairman of the House Foreign Affairs Committee, sent Parnas and Fruman a subpoena demanding key documents by Oct. 16.

“Your clients are private citizens who are not employees of the Executive Branch,” Schiff, Cummings and Engel wrote. “They may not evade requests from Congress for documents and information necessary to conduct our inquiry. They are required by law to comply with the enclosed subpoenas. They are not exempted from this requirement merely because they happen to work with Mr. Giuliani, and they may not defy congressional subpoenas merely because President Trump has chosen the path of denial, defiance, and obstruction.”

Democrats are investigating Trump’s request that Ukraine’s president investigate Biden, a political rival, during a July 25 phone call. At the time, Trump’s administration was withholding U.S. military aid to Ukraine, where Parnas and Fruman had been acting as unofficial emissaries for Giuliani.

The investigation was kicked off after a whistle-blower filed a complaint with the inspector general of the U.S. intelligence community alleging that Trump had pressured Ukrainian President Volodymyr Zelensky to investigate Biden. The complaint mentioned Parnas and Fruman, although not by name.

The two men, now American citizens, acted as couriers for Giuliani, a prominent Trump surrogate and former New York mayor, who had acknowledged he was seeking dirt in Ukraine on Biden and his son, Hunter. Giuliani alleged, without proof, that Biden got his son a lucrative seat on the board of a Ukrainian energy firm called Burisma Holdings.

Parnas told the Miami Herald last month that Ukraine’s government has access to information on alleged wrongdoing by Biden and his son and other U.S. officials overseas — but that the U.S. government had shown little interest in receiving it through official channels. Parnas said his and Fruman’s friendship with Giuliani was their avenue to get the information into the Trump administration’s hands.

“I got certain information and I thought it was my duty to hand it over,” he told the Miami Herald on Sept. 26.

Fruman and Parnas have also been accused by an American businessman of conspiring to enrich themselves through Ukrainian state contracts.

The Associated Press reported this month that the duo worked with Florida oil and asphalt magnate Harry Sargeant to pursue a coup at Ukraine’s state-owned gas distributor Naftogaz and steer contracts to their own venture. The businessman, Dale W. Perry, said in an interview that a Naftogaz executive who met in March with Sargeant, Fruman and Parnas in Houston told him the details of the meeting. He said the three men told the gas company executive that they would have an easier time once Yovanovitch, the Ukrainian ambassador, was ousted and a new CEO was installed at the company.

Sargeant confirmed that he, Fruman and Parnas met with a Naftogaz executive in Houston earlier this year, but he was adamant that no scheme was discussed.

Fruman and Parnas don’t appear to be big names in Ukraine, despite the spate of reports in the U.S. about their efforts there.

John Herbst, who served as U.S. ambassador to Ukraine from 2003 to 2006 — and since 2014 has headed a program on Ukraine and the broader Eurasia region for the think tank Atlantic Council — said he doesn’t recall anything about the pair.

“I have never heard their name in Ukraine until this issue arose. They are not well connected Ukrainians,” Herbst said in an interview.

Parnas, who like Fruman is from South Florida, told NPR he met Giuliani about two years ago through a mutual friend as he sought to expand his business. He said he contributed to campaigns to try to achieve “notoriety” for his company.

Reports by McClatchy and the Miami Herald showed that Fruman is an exporter of luxury goods and Parnas is a former stock broker who has left a long trail of debts in Florida and beyond.

Parnas has been sued repeatedly over unpaid debts and has faced eviction from several properties, federal and state court records show. During his career as a securities broker, he worked for three brokerages expelled from the industry by regulators.

“He financially ruined us,” Dianne Pues, whose husband, Michael Pues, is battling in Florida court to enforce a $500,000 judgment over a loan he made to Parnas, told the Herald in a previous interview. “Our lives have not been the same since the day we met him.”

Lawsuits filed in South Florida and New York by jilted Parnas business partners paint a complicated financial picture that calls into question the source of their political contributions.

The Campaign Legal Center alleged back in July of 2018 in a federal elections complaint that Global Energy Producers was acting as a straw donor when it reported that $325,000 donation to Trump-aligned Super PAC America First Action. The Pues’ lawsuit against Parnas in Florida subsequently unearthed documents showing the contribution actually came from another Parnas entity.

Dianne Pues called Parnas a “con man” and said David Correia, a Parnas partner also named in the indictment but not yet arrested, tried to use their political connections to intimidate her. Those claims match another jilted investor who said in court papers that Parnas and Fruman boasted of their ties to Giuliani and other GOP figures.

In an interview last month, Parnas acknowledged that there were problems with the source of his political contributions but attributed the issued to an honest misunderstanding of campaign finance law.

“We didn’t have the right accounts opened up,” he said. “I had no ideas of the rules and regulations. I made it very clear [to the super PAC] the donation was from Global Energy Producers.”

The Miami Herald has tried unsuccessfully for weeks to reach Correia, who along with Parnas founded a company called Fraud Guarantee that says it can protect investors from being scammed.

Little information was immediately available about Kukushkin, who was arrested in San Francisco.

Miami Herald reporters Samantha Gross, Bianca Padró Ocasio, Tess Riski and Jay H. Weaver, and McClatchy DC reporter Ben Wieder contributed to this report.