This story originally appeared in The Daily Beast newsletter Pay Dirt. Sign up for that newsletter HERE.
We’ve been closely following Global Energy Producers LLC and its huge donation to pro-Trump super PAC America First Action in May, and have now received information indicating the company is looking to cash in on one of President Donald Trump’s major new economic and foreign-policy initiatives.
By way of background, GEP was incorporated in Delaware in April, and proceeded to make a $325,000 contribution to America First and a $50,000 donation to a PAC supporting GOP Rep. Ron DeSantis’ Florida gubernatorial campaign. Two of the company’s executives, Igor Fruman and Lev Parnas, have also made some sizable contributions to a number of high-profile Republican political groups. Fruman has told U.S. Russian-language media that he joined Trump at a donor retreat at Mar-a-Lago in March and again at a private meeting with the president in Washington about two weeks before GEP’s America First contribution. Over the weekend, Parnas was spotted in Jerusalem, partying with a number of prominent Republican officials and donors, including U.S. Ambassador to Israel David Friedman and former Arkansas Gov. Mike Huckabee.
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Last week’s PAY DIRT covered an Federal Election Commission complaint alleging that GEP might be an illegal campaign-finance conduit created to mask the actual sources of its political contributions. The lack of public information about the company, the complaint suggested, indicated that it wasn’t doing much in the way of actual business, and instead that it may have been set up for the sole purpose of making political contributions.
My numerous attempts to reach GEP, Fruman, and Parnas were not successful (after reaching out to the latter via Facebook message, Parnas appears to have deleted or locked his Facebook account), but just this week, a spokesman for the company sent me a statement pushing back on that FEC complaint. “The amount donated to America First PAC represents only a small fraction of the operating costs of GEP,” the statement said. “The implication that GEP is some sort of shell company couldn’t be further from the truth.”
The statement went on to confirm the first bit of real information I’ve seen about what exactly GEP does. “The company is committed to a long-term plan to export American LNG [liquified natural gas] and is in the process of partnering with major industry leaders both domestically and internationally to achieve that end,” its spokesman wrote.
That statement dovetailed with information from a source who told me GEP is eyeing ways to get in on the financial windfall that will ensue from Trump’s attempts to open up more European markets to U.S. LNG exports. He announced that plan in a press conference with Italy’s prime minister this week. The idea is not just a financial proposal, but a geopolitical one: Trump hopes to blunt Russian financial power in Europe by supplanting its European energy-market share, which the Kremlin has used to squeeze Russian gas-reliant Eastern European governments in particular. First on the agenda is encouraging EU countries to construct between nine and 11 new LNG terminals to which U.S. exporters can send the product.
It was not immediately clear which stage of the process GEP hopes to get involved in—terminal or pipeline construction, transportation, fuel extraction, etc.—and its spokesman didn’t respond to a request for additional details about the company’s plans. But Trump has aimed his ire at a new Russian pipeline designed to supply Germany with LNG via a route that circumvents Ukraine, where Fruman already does extensive business via an import-export company with significant interests in the country’s agricultural and luxury-goods sectors.
Two things are clear: First, that GEP appears to be doing more than last week’s FEC complaint gave it credit for, and second, that the company is looking to improve its political standing with the Trump administration and its allies at the precise time that the administration is eyeing policies that could be very good financially for GEP and its executives.
LLC Red Flags Draw More Conduit Contribution Complaints
Two more high-dollar Republican donors are the targets of a new FEC complaint alleging a similar conduit contribution scheme to the one detailed in last week’s complaint against GEP. Both companies were incorporated in Delaware about a month before making six-figure political contributions, and there’s no record of either of them doing any business beyond that.
The firms are called Highway 76 LLC and Blue Magnolia Investments LLC. The latter was formed on April 24, and on May 30 donated $100,000 to DefendArizona, a super PAC supporting Arizona Senate candidate Martha McSally. Highway 76 was formed on May 23, and donated $100,000 to DefendArizona on June 30.
“Based on published reports, complainants have reason to believe that any person(s) who created, operated, and/or contributed to Blue Magnolia or Highway 76 may have violated” federal election law, alleges the Campaign Legal Center, the good-government group that filed the complaint, “by making contributions to DefendArizona in the name of another person.”
The issue of LLC conduit contributions is one of the few areas where the FEC has recently taken concrete steps toward greater political transparency. From 2010 to 2016, the commission sat on a number of complaints alleging that various companies were illegally hiding the identities of high-dollar super PAC donors. But in late 2016, the FEC’s three Republican commissioners conceded that it was within the commission’s purview, and consistent with the First Amendment, to examine “whether the funds used to make a contribution were intentionally funneled through a closely held corporation or corporate LLC for the purpose of making a contribution that evades the [Federal Election Campaign] Act’s reporting requirements, making the individual, not the corporation or corporate LLC, the true source of the funds.”
Thus the FEC signaled that it would, in the future, prosecute such illicit conduits where “there is evidence indicating that the corporate entity did not have income from assets, investment earnings, business revenues, or bona fide capital investments, or was created and operated for the sole purpose of making political contributions.”
The challenge, as the GEP example shows, is determining definitively whether a recently formed corporate entity has actually engaged in any bona fide business beyond its disclosed political contributions. Many of these entities—including GEP, Highway 71, and Blue Magnolia—are incorporated in Delaware, which discloses next to nothing about the corporate structures of companies formed in the state.
Groups like the Campaign Legal Center are forced to rely on the public record to try to determine whether a corporate donor is a legitimate, operating company, or simply a shell created to mask a donor’s identity. Brendan Fischer, CLC’s director of federal and FEC reform programs, said the telltale sign is whether “an LLC with no public footprint makes a big donation to a super PAC shortly after its creation.”
Investigations into such companies might determine that they are in fact legitimate business operations. But at the very least, Fischer said, the FEC has signaled that it will pursue such investigations. “Donors who want to stay anonymous might be gambling that the FEC's Republican commissioners were not serious when they said they'll be enforcing the law moving forward,” he said. “We’ll see if they are right.”
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After Deadline, Trump Legal Defense Fund Donors Remain a Mystery
In February, President Trump set up a legal defense fund, structured as a political action committee, to pay expenses for White House aides and allies caught up in the investigation into Russian meddling in the 2016 election. The Patriot Legal Expense Fund Trust’s disclosure of donors and expenditures for the second quarter was due July 15. But the IRS website that tracks PAC filings has no record of those disclosures.
Mark Serrano, a spokesman for the group, told me on July 19 that the Form 8872, as the filing is called, had been submitted to the IRS, and that the agency was simply taking its time making it publicly available on its website. But the same form for other legal expense funds on the same filing schedule, such as the one set up by Missouri Gov. Eric Greitens, were publicly available on the IRS website by July 16. Serrano didn’t respond to multiple follow-up inquiries independently seeking a copy of the quarterly filing.
The good-government group Public Citizen filed a complaint with the IRS on July 19 alleging that Trump’s legal expense fund is illegally keeping its finances hidden from public view.
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Trump Skeptic Sasse’s New Group Cozies Up to POTUS
Nebraska Republican Sen. Ben Sasse has earned a reputation as a thorn in President Trump’s side, one of the few in his party willing to consistently and vocally object to Trump’s frequent public outbursts and deviations from his party’s traditional conservative positions on major issues. But when it comes to building its list of social-media contacts and supporter emails, Sasse’s new nonprofit group is apparently finding that cozying up to Trump is an effective strategy.
America 101, the nonprofit Sasse started this summer, is helmed by Mark Fahleson, the former head of the Nebraska Republican Party. The group’s website mostly hews to Sasse’s brand of conservative politics as it focuses on social capital, fiscal conservatism, education, and the family, with few mentions of the president among dozens of blog posts promoting Sasse and other prominent and allied Republicans.
Its Facebook presence is a different story. The group has bought 38 ads on the platform, the vast majority of which seek petition signatures asking Sasse to support, or thanking him for supporting, Judge Brett Kavanaugh’s nomination to the Supreme Court. Twenty-four of the group’s Facebook ads mention Trump, and most seek to associate Sasse with the president. Messages accompanying the ads include “Senator Sasse and President Trump agree—Judge Kavanaugh is a strong conservative, and the right pick for the Supreme Court,” “Tell Sasse: thank you for supporting Trump’s pick—and don’t let up!” and “We can’t let partisan obstruction in the Senate derail Trump’s nominee!”
That’s fairly standard Republican messaging at the moment, but for Sasse, who’s built a name for himself as a Republican Trump critic, the efforts to associate him with the president, even on an issue where they unquestionably agree, is significant. Sasse’s Senate office, of course, sees it otherwise. “Conservative senator supports constitutionalist nominee. Story at 11,” quipped his spokesman, James Wegman. But what would be unquestionably on-brand for nearly every other Senate Republican is far less so for Sasse, who, whether he likes it or not, has come to represent the last remnants of Republican skepticism of the party’s president.
But the rationale for America 101’s Facebook appeals is clear: Trump is tremendously popular among Republican voters, and a very potent political force. He can also be a powerful acquisition name for new organizations such as America 101 that are looking to build their email and social-media contacts.
Also of note are the states that America 101 has chosen to target with its ads. Recent ones have been placed in the Facebook feeds of voters in Sasse’s home state. Before that, the ads weren’t targeted at all; they mostly showed up in states in proportion to their populations. But initially, America 101 ads were targeted to states with obvious significance for a future presidential contest: They showed up in Iowa, New Hampshire, South Carolina, and Florida.
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