Lev Parnas can’t catch a break. The Soviet-born businessman who teamed up with Rudy Giuliani to dig for dirt on President Donald Trump’s perceived political foes in Ukraine has pleaded not guilty to federal criminal charges. But now a jilted investor in a years-old movie deal gone bad is going after the $200,000 that Parnas put up to get out of jail while he awaits trial.
That money secured Parnas’ $1 million bail bond in New York, where he faces allegations that he and a group of business associates knowingly violated campaign-finance laws in order to ingratiate themselves with Trump and grease the wheels for business interests in the U.S. and Ukraine.
It was a sizable cash payment for a man who is so deeply in debt. Parnas still owes more than $500,000 to a former business associate who won a federal court judgment against him in 2013. In fact, efforts in state and federal courts in Florida to recoup that money have resulted in the release of documents that are largely responsible for the legal predicament in which Parnas currently finds himself.
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It’s getting hard to overstate just how destructive those deadbeat habits have been to a man who had briefly bought his way into the upper echelons of Trump-era Republican politics.
The conditions of Parnas’ release from pretrial detention stipulate that he can only travel between the Eastern District of Virginia, where he was arrested, the Southern District of New York, where he faces trial, the Southern District of Florida, where he lives, and the District of Columbia. He was also forced to surrender his passport and pledge not to speak with any of his co-defendants without counsel present.
His bail was set at $1 million, and the court required that Parnas’ personal recognizance bond be co-signed by “two financially responsible persons,” who ended up being his wife and his eldest son. The bond was secured with a $200,000 cash deposit, which Parnas’ wife Svetlana paid by check, according to a copy of a receipt of that transaction in the court record. That money was initially paid to the Eastern District of Virginia to secure Parnas’ release after his arrest, and subsequently transferred to the Southern District of New York after his arraignment there.
That six-figure transaction quickly caught the eye of Tony Andre, a lawyer from Aventura, Florida, who represents Michael Pues, Parnas’ one-time business associate. In 2011, at Parnas’ urging, Pues withdrew $350,000 from his parents’ retirement trust to invest in a movie, tentatively titled Anatomy of an Assassin. The film was to star Jack Nicholson, and Parnas somehow found himself in the position of soliciting investment for it.
The project fizzled, and Pues sued Parnas to recoup the money. In 2013, he won a federal civil judgment in Florida. For six years, he and Andre have tried, unsuccessfully, to recoup that money.
On Monday, Andre took the latest, and most unusual, step yet to make his client whole: He moved to garnish a U.S. district court for the money that he now knows the court is holding on Parnas’ behalf in the form of bail bond collateral.
Locating Parnas’ assets has been a challenge for Andre and Pues for the precise reasons spelled out in the Justice Department’s indictment against him. Much of the criminal complaint focused on companies run by Parnas and his associates, chiefly Global Energy Producers LLC, that conducted little if any actual business but were allegedly used to funnel political contributions to high-profile Republicans. In effect, prosecutors say, those companies were legal alter egos of Parnas and his associates, created to obscure the sources and flows of money under Parnas’ control.
So for Andre, the documented existence of a pool of $200,000 of Parnas’ money was a prime opportunity, and he’s moving to recoup at least some of that for Pues, who says Parnas nearly ruined him financially.
Whether that gambit will succeed is another question. “It’s not impossible that the garnishment could be granted, but it’s not terribly likely,” said Kellen Funk, a professor at Columbia Law School and the author of American Bail: A History of Wealth and Pretrial Detention in the United States. Legal questions raised by Andre’s motion are both complicated and, for those steeped in the technical issues at play, very interesting. “This is a law professor’s dream of a civil procedure exam question,” he wrote in an email.
“The Second Circuit, whose rulings control the district courts of New York, has permitted garnishment of bail funds to satisfy civil judgments if there’s a reasonable nexus between the civil losses and the criminal allegations that led to the requirement of cash bail,” Funk explained.
Your humble PAY DIRT correspondent is not a lawyer and is thoroughly unqualified to assess whether such a nexus exists in this case. But there are some key facts that seem to weigh in Andre’s favor. Chief among them is that the same factors that have for years prevented Pues from recouping the money Parnas owes him also undergird some key allegations in DOJ’s criminal complaint.
The alleged use of corporate alter egos is central to both the civil and criminal matters. In the case of the former, it has made it difficult for Andre and Pues to nail down Parnas assets that they can go after in order to collect their 2013 judgment. If those assets are technically owned by a corporation, not by Parnas individually, they can’t be recouped. But court filings in that case make clear that Andre has long suspected GEP and other Parnas-affiliated companies of existing for the sole purpose of masking Parnas’ individual control over those assets—and hence protecting those assets from creditors, of which he’s had many.
The same alleged use of corporate alter egos is integral to DOJ’s criminal allegations. GEP’s $325,000 contribution to the pro-Trump super PAC America First Action, the feds say, actually came from Parnas and his business associate Igor Fruman, and was routed through the newly formed corporation purely to mask its source. It’s just one of a number of dodgy financial relationships spelled out in the criminal complaint allegedly designed to hide details of Parnas’ and Fruman’s finances.
There’s also a more general nexus between the civil and criminal cases against Parnas: By all indications, DOJ would never have been aware of the information that informed its prosecution if Andre hadn’t been doggedly pursuing and exposing extensive information about Parnas’ finances.
That fact underscores a larger truth about Parnas that continues to bear itself out: Throughout his and Fruman’s ascendance as Republican donors and Giuliani confidants, Parnas’ lingering liabilities from years spent making less-than-reputable business deals have been a major albatross.
Most glaring is the Global Energy Producers contribution to America First. As Andre dug through Parnas’ finances, he found, and released in a court filing, wire-transfer records showing the contribution came not from GEP but from a totally different company run by Parnas, Aaron Investments I LLC. It’s illegal to make a political contribution in the name of another person or entity, and those wire transfers made it plain as day that something was seriously awry, possibility criminally so, with Parnas’ political and financial dealings. The GEP contribution is now at the heart of the criminal case against him.
But that wasn’t the only revelation to emerge in the Pues case. Andre also revealed that Parnas was in the employ of a high-powered Trumpworld lobbying firm, the Tallahassee-based Ballard Partners. Court records revealed a copy of a $22,500 check that Ballard wrote to Parnas last year, compensating him for a client referral.
As the Pues case intensified, Parnas and his colleagues also faced a separate lawsuit in Miami-Dade County from a GEP investor, a Russian-American energy executive named Felix Vulis, who said he’d been stiffed after lending the company $100,000. And once again, the GEP crew’s debt problems allowed more damaging information to emerge into public view.
That lawsuit revealed the extent to which, according to Vulis, Parnas and Fruman were luring financial backing for GEP with boasts of the immense political influence that their high-dollar donations were buying. “Defendants represented to Plaintiff that earlier in the year the Defendants had made several large personal contributions to various political organizations, including America First Action Inc. and Friends of Ron DeSantis, in excess of $400,000.00 in Defendant GEP’s name and that, as a result, Defendants and GEP had garnered substantial goodwill with various powerful political allies that would greatly assist the business of Defendant GEP,” Vulis’ complaint alleged.
GEP’s attorney at the time denied that any such boasts of political influence had taken place, and the case was settled under undisclosed terms earlier this year.
That lawsuit also raised the same questions as both the Pues lawsuit and DOJ’s criminal complaint about the use of GEP and other Parnas-run entities as illicit alter egos. Vulis’ complaint alleged that GEP “was in fact non-existent and the individual Defendants were the alter ego of Defendant GEP, [and] that Defendant GEP’s corporate form was used fraudulently or for an improper purpose to deprive Plaintiff of his funds.”
Indeed, documents filed in that lawsuit revealed that when Vulis wrote his $100,000 check to GEP, he described the payment in the memo line as a “loan to Igor and Lev.”
As it turned out, even the date on that check was noteworthy: Two days after Vulis wrote it, he too donated to DeSantis, writing a $10,000 check to the same PAC supporting the Republican’s Florida gubernatorial bid.
On the day that Parnas and Fruman were arrested, PAY DIRT recapped how we scoured public records to unearth the information that informed more than a year of reporting on them and their financial and political dealings. Little of that information would have been available to us were it not for the revelations trickling into public view through these lawsuits. And those lawsuits never would have been filed had Parnas and his associates paid their debts on time.
It’s also doubtful that the Justice Department would have been prompted to investigate and prosecute these alleged campaign-finance crimes had reporters and nonprofit ethics groups such as the Campaign Legal Center not pursued, synthesized, and published that information over the course of the 15 months from GEP’s America First donation to the filing of criminal charges last month.
In other words, Parnas, Fruman, and the rest of the crew might have gotten away with all of this but for some lingering debts that they would not or could not pay. Those deadbeat tendencies landed Parnas in the crosshairs of federal prosecutors, albeit indirectly. And now they could deal him a significant financial blow as well.
