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Lev Parnas, Giuliani Associate, Faces New Fraud Charges
Mr. Parnas, who participated in a campaign to dig up dirt on the president’s political rivals, is accused of swindling investors.
By William K. Rashbaum and
Lev Parnas, the Soviet-born businessman who teamed up with Rudolph W. Giuliani to collect damaging information on President Trump’s political rivals, faced new federal charges Thursday that he duped investors in a company he founded that ostensibly protected consumers against fraud.
Mr. Parnas, who already had been indicted on charges of campaign finance violations in October 2019, was accused in an updated indictment of conspiring to defraud investors in the start-up he created, Fraud Guarantee. The indictment also charged Mr. Parnas, who broke from President Trump and Mr. Giuliani late last year, with additional campaign finance violations.
The new indictment was announced by the United States attorney’s office in Manhattan and by the F.B.I., which also brought the earlier case against Mr. Parnas and three other men. The new charges expand an already wide-ranging criminal investigation that has loomed over the president’s inner circle.
Mr. Giuliani, who is the president’s personal lawyer, has also been under investigation by the same federal prosecutors, who have examined whether he illegally lobbied the Trump administration on behalf of a Ukrainian official. Mr. Giuliani has said he did nothing wrong, and prosecutors have not accused him of any misconduct.
The new round of charges does not center on Mr. Parnas’s work overseas with Mr. Giuliani, but on the start-up, Fraud Guarantee, and additional allegations of campaign finance crimes. Still, coming less than two months before the presidential election, the new charges recall a damaging incident in Mr. Trump’s tenure.
Prosecutors said Mr. Parnas persuaded an array of investors to pump more than $2 million into the company, which was intended to offer an insurance-like product to protect consumers. But Fraud Guarantee never got off the ground.
“We couldn’t say it better ourselves — the behavior alleged today is indeed fraudulent — guaranteed,” William F. Sweeney, the head of the New York F.B.I. office, said in a news release announcing the charges with the acting United States attorney, Audrey Strauss.
Mr. Parnas, 48, and his partner in the venture, David Correia, were charged with wire fraud conspiracy.
Mr. Parnas’s attorney, Joseph A. Bondy, said his client was pleased the case could now move forward. “Lev Parnas has been on strict home confinement for nearly one year, waiting for this superseding indictment, which contains no surprises,” he said.
Lawyers for Mr. Correia and the two other defendants declined to comment.
Mr. Parnas was a regular presence in Trump donor circles before the first indictment last year, which heightened scrutiny of his dealings with Mr. Giuliani. Mr. Parnas and Mr. Giuliani played a central role in a dirt-digging campaign aimed at Mr. Trump’s political rivals that led to the president’s impeachment last year.
In early 2019, Mr. Parnas, his associate, Igor Fruman, and Mr. Giuliani tried to persuade Ukraine to investigate Hunter Biden, the son of Joseph R. Biden Jr., the former vice president who is now the Democratic nominee for president.
Working for Mr. Giuliani, they also tried to dig up damaging information on Marie L. Yovanovitch, then the American ambassador to Ukraine. Mr. Trump eventually removed Ms. Yovanovitch from her post last year, a decision that was at the heart of his impeachment trial.
The investigation into Mr. Giuliani focused in part on whether he had worked to oust Ms. Yovanovitch at the behest of a Ukrainian official, which might violate laws governing lobbying on behalf of foreign governments. Mr. Giuliani has maintained that he was working for Mr. Trump, not the Ukrainian government.
Mr. Giuliani was still facing scrutiny over the summer, though the current status of the investigation was unclear on Thursday.
“To be honest, I don’t know that there ever was a Rudy Giuliani investigation,” said Robert J. Costello, a lawyer for the former New York mayor. “The fact that your name comes up doesn’t mean that you’re a target.” The prosecutors, he said, have not subpoenaed Mr. Giuliani or sought to speak with him.
On Thursday, prosecutors disclosed in a footnote in a letter to the judge presiding over the case that he had agreed to keep some information secret because their investigation is ongoing. They did not elaborate.
In the aftermath of his initial indictment, Mr. Parnas fired his Trump-aligned lawyers and cooperated with House impeachment investigators. Mr. Parnas has accused Mr. Trump of knowing about the campaign to collect dirt on his opponents.
In addition to Mr. Parnas, the new charges also accuse Mr. Correia, Mr. Fruman and a fourth man named in the earlier indictment, Andrey Kukushkin, of several additional crimes related to campaign finance.
For Mr. Parnas and Mr. Correia, the additional fraud and campaign finance counts carry a maximum of 20 years in prison if they are convicted, far more time than they had faced on the previous charges.
Mr. Parnas and Mr. Fruman had been charged in the earlier indictment with campaign finance violations, including misrepresenting the source of a $325,000 donation to a pro-Trump fund-raising committee. The donation was made under the name of an energy company, though they were the true source of the contribution, that indictment had charged.
Fraud Guarantee was something of a passion project for Mr. Parnas, who has said he worked for years to get it off the ground, urging fellow Trump donors to invest in the venture.
In the indictment unsealed on Thursday, prosecutors accused Mr. Parnas and Mr. Correia of misleading investors in the company into thinking their money would be used to launch the business.
Instead, the two men withdrew hundreds of thousands of dollars in cash, transferred it to their own accounts and spent it on rent, luxury car leases and other “apparently personal expenditures,” mostly for Mr. Parnas, the indictment said.
Then, in 2018, Mr. Parnas and Mr. Correia turned to Mr. Giuliani for help.
He and Mr. Correia had noticed that Mr. Giuliani had publicly endorsed LifeLock, a company that offered identity theft protection. They thought Mr. Giuliani could do the same for Fraud Guarantee.
After arranging an introduction through a mutual acquaintance, Mr. Parnas and Mr. Correia pitched the company to Mr. Giuliani. In the following weeks, Mr. Parnas agreed to make an initial payment of $500,000 to Mr. Giuliani’s consulting firm, and the pair began to strike up a friendship, The Times has reported.
For months, Mr. Parnas failed to come up with the payment to Mr. Giuliani, who was growing impatient. But by September 2018, Mr. Parnas persuaded Charles Gucciardo, a Long Island lawyer and Republican donor whom he had recently met, to invest in Fraud Guarantee and to pay Mr. Giuliani directly.
Mr. Gucciardo and his payment to Mr. Giuliani’s firm appear to be referenced in Thursday’s indictment, though it did not name either man.
Mr. Correia soon wrote to the company’s other investors, saying that Mr. Giuliani was “willing to put his name and reputation on the line” for Fraud Guarantee and “open doors.”
From there, Mr. Parnas, who was born in Ukraine, and Mr. Fruman, a Belarus native, joined with Mr. Giuliani on the Ukraine mission.
Michael Rothfeld contributed reporting.
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