Last October, a federal jury convicted Rudy Giuliani associate Lev Parnas on criminal campaign finance charges for concealing the source of a $325,000 contribution to a group backing then President Donald Trump.
But seven months later, according to a decision that hasn’t yet been made public, the Federal Election Commission—the agency tasked with civil enforcement of campaign finance regulations—failed to muster enough votes to enforce the same law.
The outcome was disclosed last week in an exhibit attached to a brief that Parnas’ attorney filed ahead of his client’s sentencing, scheduled for Wednesday. It’s the latest in a series of bemusing non-decisions from the notoriously sclerotic FEC, whose Republican commissioners have declined time and again to take action against accused violators, even in the face of evidence of wrongdoing.
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The irony wasn’t lost on Parnas’ defense counsel, Joe Bondy, who quoted from a letter of notice that the FEC sent his client informing him that the matter had been closed.
The initial complaint had underpinned the charges for which Parnas was ultimately convicted, Bondy pointed out. Yet somehow, he said, the FEC still had “insufficient votes to find reason to believe that [Parnas] knowingly and willfully violated” the same law.
The FEC’s letter to Parnas, dated June 2, also noted that “the Commission was equally divided on whether to dismiss the allegation as a matter of prosecutorial discretion,” and had closed the matter. The vote went down on May 22, and the full file will be published later this week.
That complete file will hang some flesh on the bare-bones notice sent to Parnas. It will reveal how the six commissioners voted, as well as the in-house general counsel’s legal analysis of the violations. The file will also likely contain possible responses and legal arguments from the defendants.
The FEC commissioners—a six-person panel evenly divided, by statute, between Democrats and Republicans—have long taken fire from government watchdogs and liberals for failing to act on what even their own attorneys say appear to be clear-cut violations. The blame, these critics say, falls squarely on the GOP commissioners, who routinely kill investigations in split decisions.
In an extreme example, The Daily Beast reported in March that Trump boasted an improbable record of 43-0 in FEC investigations, despite numerous instances where the agency’s own lawyers found evidence of wrongdoing—a record he’s improved on since.
FEC Commissioner Ellen Weintraub, a Democrat who voted in favor of taking action against Parnas, pushed back on the notion that the ruling played to Parnas’ favor, and warned against reading too far into the top-line statements in the short letter of notice.
Weintraub told The Daily Beast that some commissioners prefer to refrain from further action after a criminal prosecution. The complete file is more complex, she said, cautioning that Parnas’ defense team “should not view this as an exoneration.”
“As a general matter, it has been true historically that there are commissioners who prefer not to go forward against somebody in a civil context if they’ve already been prosecuted in a criminal context, because they feel that the government doesn’t have further interest,” Weintraub said. “But no, this should not be viewed in any way as an exoneration.”
The FEC first got notice of the straw donation allegations in a complaint that the bipartisan watchdog Campaign Legal Center filed in July 2018. (The Daily Beast’s Lachlan Markay was first to identify the straw contribution, which led to the complaint; CLC then flagged its findings for federal law enforcement.)
The CLC complaint—and the DOJ’s later indictment—alleges that Parnas and his then associate Igor Fruman set up a fake company to funnel $325,000 to the pro-Trump super PAC America First Action, while concealing the true source of the money.
In reality, that contribution came from Parnas and Fruman themselves. Parnas and Fruman lied to the FEC in sworn affidavits about the source of the donation, prosecutors said, and leveraged the gift to curry favor in political circles, even rubbing elbows with Trump himself. (The false affidavits were prepared by Giuliani’s then law firm, Greenberg Traurig, Bondy told The Daily Beast.)
The colorful pair created the fake company—called “Global Energy Producers”—in order to keep their names off the sizable donation, and thus avoid tipping off creditors to the fact that they had access to money, federal prosecutors claimed. The business, they said, did not have any legit purpose or assets, and the money came from a personal mortgage loan Fruman had secured.
A jury found Parnas guilty last October; he’s since been on house arrest, recently obtaining enough freedom to work nights as a DoorDash delivery man, according to Bondy’s pre-sentencing report.
But Fruman landed a cooperation deal with the feds and pleaded guilty last September to soliciting foreign donations—some of which went to GOP Senate candidate Adam Laxalt. Fruman did not face charges for the straw donor scheme, and in January was sentenced to a year and a day in prison.
Giuliani recruited Parnas and Fruman to assist in his efforts to dig up dirt on Trump’s top political rival, Joe Biden—a convoluted plot that ultimately led to the first impeachment of Giuliani’s client, Trump, for withholding U.S. military aide in an attempt to extort Ukrainian President Volodymyr Zelensky into investigating the Bidens.
The trio also got wrapped up in an adjacent shady venture, called Fraud Guarantee, which the government ultimately pinned on Parnas and another associate, David Correia. In March, Parnas pleaded guilty to fraud charges in connection to that scheme.
Parnas, however, was denied a cooperation agreement. He faces sentencing on Wednesday. The FEC will publish the full file, including the commissioners’ legal reasoning, on Thursday.
