Guiliani’s associates sought cannabis licenses in Florida before arrest

Lev Parnas and Igor Fruman — now subpoenaed to turn over documents in the impeachment investigation into President Donald Trump — sought to invest in one of Florida’s state-issued cannabis licenses.
Igor Fruman - Lev Parnas
Igor Fruman - Lev Parnas [ Miami Herald ]
Published Oct. 17, 2019

Two South Florida businessmen indicted last week on charges they illegally funneled foreign money into U.S. politics in an attempt to purchase influence in Washington and cannabis licenses in multiple U.S. states also pursued entry into Florida’s medical marijuana industry, the Miami Herald has learned.

Lev Parnas and Igor Fruman — naturalized citizens now subpoenaed to turn over documents in the impeachment investigation into President Donald Trump — sought to invest in one of Florida’s state-issued cannabis licenses, according to three sources familiar with their efforts.

As recently as May, Parnas and Fruman were speaking to attorneys in Florida’s marijuana industry about purchasing a stake in any one of the 22 companies licensed by the state to grow marijuana. But their plan appears to have been unsuccessful due to an inability to prove that they had the cash.

“I don’t think they ever had a substantive conversation with anybody in the weed business,” said a marijuana lobbyist familiar with their ambitions.

The revelations deepen the intrigue around the duo’s efforts to use campaign donations to ingratiate themselves with the most powerful politicians in state and federal government.

The money they spread around to political campaigns over the last three years apparently helped them work their way into Trump’s orbit, where they forged a relationship with his personal attorney, Rudy Giuliani. Last week, one day after they were arrested while trying to board a one-way flight out of the country, Fruman and Parnas were subpoenaed by House Democrats to turn over documents related to their efforts to help Giuliani make connections with Ukrainian officials in the pursuit of unfounded allegations against former Vice President Joe Biden.

The two men contributed more than $725,000 to state and federal campaigns over the last three years, according to the indictment, Florida elections records and the campaign finance watchdog organization OpenSecrets. About half the donations were made through Global Energy Producers, a Delaware corporation that federal prosecutors say was a shell company.

Prosecutors also say the men were secretly planning to spend up to $2 million of a foreign business partner’s money in Nevada and other states on political campaigns while pursuing marijuana licenses. Parnas was born in Ukraine and Fruman in Belarus.

Foreign money cannot be used to fund political donations — but it is often found in the marijuana business.

The cannabis industry is dominated by cash and foreign investors due to banking restrictions, making it an easy and potentially lucrative target for cash- and foreign investors — and a possible repository for tainted money. The FBI took the unusual step four months ago of warning about public corruption in the marijuana industry in western states, where they said an individual license can go for as much as $500,000.

“We see people willing to pay large amounts of money to get in to the industry,” Supervisory Special Agent Regino Chavez said in a short podcast released in August by the FBI.

In Nevada, where pot is legal for recreational use, regulators issued 61 marijuana licenses last December.

In Florida, where Chief Financial Officer Jimmy Patronis recently cautioned about companies doing business “in duffle bags of cash,” a license can sell for as high as $55 million. Florida allows the use of marijuana for medical purposes, though there are petition drives to make the drug legal for recreational use as well.

“They were absolutely trying to buy a [cannabis] license in Florida,” a second marijuana lobbyist said of Fruman and Parnas. “I’m aware of it.”

According to the indictment, Fruman, Parnas, and business partners Andrey Kukushkin and David Correia, began working in Nevada back in June of 2018 to gain a marijuana license. Correia was arrested Wednesday in New York. The other three men were already in custody.

Prosecutors say they planned to create a marijuana company, and Correia created a table of planned political contributions worth up to $2 million in a “multi-state license strategy,” the indictment says. A foreign investor — prosecutors didn’t name him in the indictment but noted that Kukushkin wanted to hide the investor’s “Russian roots” — made two deposits of $500,000 each into a bank account to help finance the donations.

The group failed to obtain a license because it applied too late in the state process, according to the indictment. But prosecutors said Parnas, Fruman, Correia and the foreign business partner “continued to meet into the spring of 2019” in discussion of their marijuana business.

The governor of Nevada has responded to the details of Fruman and Parnas’ indictment by forming a panel on marijuana industry corruption. Florida is not mentioned in the grand jury indictment released Oct. 10, but Fruman, from Sunny Isles Beach, and Parnas, from Boca Raton, were active both in politics and in business in the state during the 2018 elections.

“This was a guy who was at [Republican National Committee] functions, Trump Victory functions. He was at a lot of these things,” Gov. Ron DeSantis, whose political committee took $50,000 from the duo’s alleged shell company last year, told reporters Wednesday during a press conference in Jupiter.

He said Parnas, who also attended high-dollar fundraisers for DeSantis during his gubernatorial campaign, “was viewed as one of the top supporters of the president in Florida.” DeSantis returned the $50,000 contribution following the release of the sealed grand jury indictment.

Fruman and Parnas also gave a combined $35,000 in 2017 and 2018 individually and through a limited liability company to a political committee supporting Republican Agriculture Commissioner Adam Putnam’s run for governor. The Miami Herald made multiple attempts to reach Putnam last week and this week through the chairman of his political committee, at numbers listed for him and in emails to the company where he is CEO, Ducks Unlimited.

The extent and timing of the duo’s efforts to invest in Florida’s medical marijuana industry isn’t entirely clear, but they began talking to contacts in the industry as early as the spring of 2018 and as recently as May. That’s when Fruman, Parnas and a third person not named in the indictment approached an industry attorney to inquire about help investing in a license, the attorney said.

But the attorney, who spoke to the Miami Herald on condition of anonymity, said the men had no proof that they had access to the cash they promised to invest.

“It became clear that the money wasn’t readily available,” the attorney said.

The attorney said the men also approached at least one other attorney about investing in a license. The men did not end up hiring a lawyer, and did not approach the state directly, the source said.

Florida marijuana regulators confirmed Tuesday that they did not speak with Parnas or Fruman.

Courtney Coppola, marijuana program coordinator for the Florida Department of Health, said through a spokesman that she has “neither met nor spoken with” Fruman or Parnas. Agriculture Commissioner and former marijuana lobbyist Nikki Fried, and her cannabis czar, Holly Bell, say they weren’t approached, either.

“Neither the commissioner nor Holly have met or spoken with either person,” Fried spokesman Franco Ripple wrote in an email.

Jeff Sharkey and Taylor Biehl, both lobbyists and leaders of the Medical Marijuana Business Association of Florida, said they’ve had zero dealings with Fruman and Parnas, and remain wary of foreign investors who seem to have lots of cash at the ready for investment into Florida’s pot industry.

“I’m skeptical of all these people,” Biehl said. “I’ve talked to foreigners, I’ve talked to Russians in Naples. I’ve always been skeptical of that kind of stuff.”