On April 11, 2019, a federal grand jury in the U.S. District Court for the District of Columbia returned an indictment charging Gregory B. Craig, a Washington-based lawyer, with making false statements and concealing material information about his activities on behalf of Ukraine from the Department of Justice, National Security Division’s Foreign Agents Registration Act Unit (FARA Unit).
Craig, 74, of Washington, D.C., was indicted for willfully falsifying and concealing material facts from the FARA Unit, in violation of Title 18, United States Code, Section 1001(a)(1), and for making false and misleading statements to the FARA Unit, in violation Title 22, United States Code, Section 618(a)(2).
The maximum penalties for the charged offenses are, respectively, five years’ imprisonment and a $250,000 fine, and five years’ imprisonment and a $10,000 fine.
The indictment details various emails allegedly sent by Craig prior to his firm’s engagement, in which Craig indicated he did not want to register as an agent for the Government of Ukraine, in part because he believed doing so could prevent him or others at the law firm from taking positions in the federal government in the future.
In addition, registration would have required Craig to disclose that a third party had paid his firm, Skadden Arps, Slate, Meagher & Flom LLP (hereafter Skadden) more than $4 million for preparing a report, and that Skadden had a parallel engagement with Ukraine to assist in the prosecution of Tymoshenko on additional charges. These disclosures, as well as the fact of registration itself, would have undermined the report and Craig’s perceived independence.
The indictment details various communications between Craig and his colleagues at Skadden. On January 17, 2019, Skadden entered into a settlement agreement with the U.S. Department of Justice, resolving its liability for violations of the Foreign Agents Registration Act (FARA).
The agreement evidences that Skadden acted as an agent of the Government of Ukraine within the meaning of FARA, 22 U.S.C. § 611 et seq., by participating in a public relations campaign directed at select members of the U.S. news media in 2012. In 2012 and 2013, in response to multiple inquiries from the Justice Department’s FARA Registration Unit about its role in that campaign, a partner then at Skadden made false and misleading statements to the FARA Unit. Thereafter, the FARA Unit concluded in 2013 that the firm did not have to register. In fact, Skadden was active in the public relations aspects of the report, but mislead the FARA Registration Unit in that regard. For instance, Gregory Craig, then the lead Skadden partner on the case, arranged for David E. Sanger of the New York Times to receive a copy of the report, then discussed the report with him. When more facts were known, Skadden was required to register in 2012. Skadden has agreed to register retroactively.
Skadden has agreed under the settlement to pay the U.S. Treasury more than $4.6 million, which it received in fees and expenses for its work with Ukraine, and to ensure that it has formal, robust procedures for responding to inquiries concerning its conduct from any federal government entity and ensuring FARA compliance as to its engagements on behalf of foreign clients.
The money that Craig and Skadden eventually received from a third party was arranged by Paul Manafort and came through a Cyprus bank account.
The settlement and Craig indictment may well cause other law firms and organizations with significant international practices to modify their client intake and training procedures.
The current issue of the IELR will report in more detail on the Craig indictment and its implications, including the announcement by the DOJ FARA Unit that they will no longer treat violations of FARA as routine administrative matters.