The Real Backstory to the Arrest of Two Ukrainian-American Trump Donors

Rudy Giuliani speaking at a podium
Former Mayor Rudy Giuliani of New York speaking at a forum in Phoenix, Arizona. Photo by Gage Skidmore via Creative Commons.

The stunning arrest of Igor Fruman and Lev Parnas on criminal campaign finance charges arose directly from Campaign Legal Center’s (CLC’s) complaint to the Federal Election Commission (FEC) on this matter last year—and underscores the key roles these mysterious Rudy Giuliani associates with ties to Ukraine and big money have played in setting into motion a year-long influence effort. 

In July 2018, CLC uncovered how the Soviet-born Parnas and Fruman laundered six-figure contributions to President Trump’s super PAC through a shell corporation.

CLC’s complaint with the FEC helped trigger a series of revelations showing how the pair leveraged the access their contribution had afforded to deepen their connections with figures close to the president. 

The federal indictment charges Parnas and Fruman with conspiring to violate campaign finance law’s straw donor ban and foreign national contribution ban. And they were charged with two counts of lying to the FEC when responding to the allegations in CLC’s complaint. 

As the indictment describes, Parnas and Fruman engaged in this big money scheme to “buy potential influence with candidates, campaigns, and the candidates' governments.”

They used the access that their illegally laundered contributions afforded to promote and propel the same theories about Ukraine, the U.S. ambassador, and the Biden family that President Trump espoused in his July 25, 2019 call with Ukrainian President Volodymr Zelensky. Working closely with the president’s personal attorney, Giuliani, their efforts touched two branches of U.S. government, two presidential administrations in Ukraine, at least five countries, numerous individuals in and out of government, and, now, an impeachment inquiry into the U.S. president himself. 

Last month, the House Intelligence Committee demanded that Parnas and Fruman sit for depositions as part of the impeachment inquiry triggered by the July call, and also requested documents about the source of the funds used in the contribution that CLC first flagged over a year ago.

Parnas and Fruman refused those requests. They have now been indicted and arrested by federal prosecutors, and subpoenaed anew in the House investigation. 

Straw Donors Making Hay of Ukraine

In May 2018, President Trump’s “approved” super PAC, America First Action, reported receiving $325,000 from a company called Global Energy Producers LLC (GEP).

GEP formed just weeks prior to the donation, and there was no evidence that it generated the business revenue to cover that six-figure contribution during its short existence. The company did not even have a website. But after the Daily Beast's Lachlan Markay first flagged the contribution, CLC connected this shell corporation to Parnas and Fruman by finding political contribution records in Parnas’ and Fruman’s own names that had listed the same addresses that GEP had used and that had listed GEP as their employer. 

In July 2018, CLC filed a complaint with the FEC calling for an investigation into this contribution and Fruman’s and Parnas’ roles in disguising its source. 

The complaint documented the pair’s ties to the shell company and other facts, including that they had met with President Trump shortly before GEP’s contribution.

At the time, GEP appeared to be yet another example of shell corporations being used to funnel money to super PACs while evading any donor disclosure or accountability. 

The story soon proved even more complicated. 

In the year since the contribution and CLC’s complaint, Parnas and Fruman quickly became major players in Trumpworld, thanks in no small part to the doors that opened following their flurry of political contributions in early 2018. 

As the indictment alleges, “Parnas and Fruman, who had no significant prior history of political donations,” began making substantial contributions in early 2018 “with the purpose of enhancing their influence in political circles and gaining access to politicians.” 

They’ve used that access to promote at least two major issues in U.S.-Ukraine relations.

First, Parnas and Fruman were central to the ultimately successful campaign to remove the U.S. ambassador to Ukraine, Marie Yovanovitch.

Second, the pair connected Giuliani to the Ukrainian political elite—some of whom were pursuing their own political vendettas—in order to advance claims about the Biden family and Ukraine’s alleged role in influencing the 2016 election. These efforts were significant enough to earn Parnas and Fruman an (unnamed) reference in the whistleblower complaint that sounded the alarm bells about the president’s July 25, 2019 call with Zelensky.

The new indictment further underscores the significance of these efforts and spotlights the illegal campaign finance maneuvers that brought them about in the first place.

A Six-Figure Donation and an Anti-Ambassador Push

President Trump ordered the recall of Ambassador Yovanovitch in May 2019. But the groundwork for her removal had been laid at least one year earlier, including, apparently, in a meeting that Parnas and Fruman secured with a member of Congress the same month as their $325,000 super PAC contribution.

In May of 2018, around the same time as GEP’s six-figure America First Action contribution, Parnas and Fruman met personally with Rep. Pete Sessions (R-TX) in his Washington, D.C., office, where they made the case for the removal of Ambassador Yovanovitch, including questioning her loyalty to Trump.

The House is now demanding documents related to the meeting as part of its impeachment inquiry.  

According to the indictment, Parnas’ and Fruman’s “efforts to remove the Ambassador were conducted, at least in part, at the request of one or more Ukrainian government officials.” 

It is not known why the Texas Congressman agreed to meet personally with the two Florida-based Ukrainian-Americans. But it is known that America First Action’s finance chair, Roy Bailey, is close friends with Rep. Sessions and had been Sessions’ campaign chair; later that year, the super PAC would go on to spend millions supporting Sessions’ failed reelection bid.

Bailey is also a partner at Giuliani’s consulting firm, Giuliani LLC. Giuliani himself would headline a fundraiser for Sessions later in 2018. The indictment also states that the pair had met Sessions at a super PAC fundraiser. 

On May 9, 2018, the same day that Parnas posted a photo from the Rep. Sessions meeting to Facebook, the Congressman sent a letter to Secretary of State Mike Pompeo calling for the ambassador’s removal, citing “concrete evidence from close companions that Ambassador Yovanovitch has spoken privately and repeatedly about her disdain for the current Administration.”

Facebook post with pictures of Lev Parnas and David Correia at the United States Capitol on May 9

A month later, Fruman and Parnas personally gave $2,700 each to Sessions’ campaign. According to the indictment, the contribution made in Parnas’ name actually came from Fruman, which constituted another violation of the straw donor ban and means that Fruman illegally exceeded contribution limits. 

Rep. Sessions’ May 9, 2018 letter did not immediately lead to Yovanovitch’s removal, but starting in March 2019, shortly after Yovanovitch called for the ouster of the country’s ineffective anti-corruption prosecutor, the campaign to unseat Yovanovitch gained traction.

Beginning in March 2019, The Hill opinion writer John Solomon published a series of articles critiquing Yovanovitch. They referenced the Sessions letter from the year before, and Solomon’s source for the anti-Yovanovitch claims was Ukraine’s top prosecutor, Yuri Lutsenko, whom Parnas and Fruman had connected with Giuliani two months earlier. 

Parnas also appears to have played a direct role in Solomon’s articles: according to documents made public by the House, Solomon shared an advance copy of at least one of his anti-Yovanovitch articles with Parnas before publication. 

Meanwhile, during this same period, Parnas and Fruman were working to gain a foothold in the lucrative market of exporting U.S. natural gas to Ukraine—a plan which included replacing Yovanovitch “with someone more open to aiding their business interests,” according to the Associated Press, and replacing the leadership at Ukraine’s state gas company, Naftogaz, with presumptive allies who would steer natural gas contracts to them. 

Neither Parnas nor Fruman has any background in the energy industry, but in March 2019 they sought to recruit a Naftogaz executive as a business partner, in part by highlighting connections to Trump.

The executive perceived the outreach as a shakedown. Parnas also boasted at the meeting about his inside knowledge of Trump’s plans to fire Yovanovitch—months before she was actually removed. These interactions led the executive’s business partner to report Parnas and Fruman to the U.S. Embassy in Ukraine. 

The Anti-Biden Narrative

Parnas and Fruman’s push to remove Yovanovitch was operating in parallel with their efforts to promote a narrative about, and an investigation into, the Biden family in Ukraine. Many of these efforts were documented by BuzzFeed and the Organized Crime and Corruption Reporting Project earlier this year—reporting that the whistleblower complaint itself cited.

These extensive efforts, which included Parnas and Fruman making introductions, setting up meetings, and otherwise liaising between Giuliani and their contacts in Ukraine, appear at a minimum to have laid key groundwork for Trump’s own intervention on his call with Zelensky this summer. 

Starting in late 2018, following their super PAC contribution, the pair began working more closely with Giuliani, and introduced him to top Ukrainian prosecutors—some of whom were facing their own corruption allegations.

Parnas set up a video call between Giuliani and Ukraine’s former prosecutor, and the pair connected Giuliani with Lutsenko, Ukraine’s “political animal” prosecutor (and source for The Hill’s John Solomon) who had a grudge with Yovanovitch and was seeking to build favor with the Trump administration in order to keep his job. Parnas, Fruman, and Giulani met with Lutsenko and other top Ukrainian prosecutors at least four times.

Lutsenko gave Trump’s allies what they wanted: he agreed to reopen the investigation into the gas company that had added Hunter Biden to its board. Indeed, President Trump himself praised Lutsenko’s claims on Fox News in April 2019, as the whistleblower complaint noted. 

In May 2019, however, the pressure campaign by Parnas, Fruman, and Giuliani hit a stumble when Lutsenko’s top ally, Ukrainian president Petro Poroshenko, lost his election to Zelensky.

Lutsenko was a Poroshenko ally, and was likely to be replaced, leaving the future of the Biden probe in doubt. After that, the trio sought connections to the incoming president by, for example, seeking introductions from an exiled billionaire who had backed Zelensky’s election. 

In the following months, Parnas, Fruman, and Giulani continued their efforts to reach Zelensky and encourage a Ukrainian investigation into Biden—eventually with the support of the State Department.

In mid-2019 the Trump administration and its agents elevated it to a critical issue in U.S.-Ukraine relations. Even before President Trump’s call with Ukraine’s President Zelensky, top U.S. diplomats were liaising with Giuliani and with Zelensky’s office to make clear that a positive relationship with President Trump would depend on Ukraine publicly opening a probe into Biden. 

On the July 25, 2019 phone call with Zelensky, Trump inappropriately used the power of his office to pressure Ukraine to open an investigation into his potential 2020 political rival (which itself violated campaign finance law).

That call led a whistleblower to file a complaint with the intelligence community’s Inspector General alleging wrongdoing, which then led the House to open an impeachment inquiry.

Shining a Spotlight on Dark Money

Many unanswered questions remain in this saga. But more details have become public about the $325,000 contribution from GEP to America First Action.

Documents made public in an unrelated civil action against Parnas in Florida show that GEP never made a contribution to America First Action at all: instead, the contribution was made from an entirely different LLC managed by Parnas, called Aaron Investments I LLC, using funds transferred to it from a real estate attorney’s client trust account.

More recent reports indicate that the funds in the client trust account were apparently a portion of the proceeds from a $3 million private mortgage on a Miami condo owned by Fruman—which prove that Fruman and Parnas violated campaign finance law by falsely reporting GEP as the source of the contribution, when in fact the funds came from another source. 

This week’s indictment additionally revealed that Fruman and Parnas lied about the GEP contribution to the FEC in the wake of CLC’s complaint.

According to the indictment, they falsely told the FEC that the six-figure contribution “was made with GEP funds for GEP purposes,” when it was not.

They claimed that “‘GEP is a real business enterprise funded with substantial bona fide capital investment; its major purpose is energy trading, not political activity,’ when in truth and in fact, GEP had no existing business, was not funded with bona fide capital investment, and was not engaged in energy trading.” 

While it has so far escaped an indictment of its own, America First Action likely faces liability, too, because it knew that the contribution came from Aaron Investments I LLC—but falsely attributed the funds to GEP.

It is not clear why Parnas or Fruman asked America First Action to misattribute the contribution, nor is it clear why the super PAC went along with this scheme. But in doing so, America First Action violated the straw donor ban: it accepted a contribution from one entity, and knowingly reported it as having come from another entity.

Campaign finance violations are likely only the tip of the iceberg. 

Giuliani says he is not paid by Trump, and won’t say whether he is paid by Fruman or Parnas, but he has acknowledged that he has foreign clients.

Parnas is reportedly strapped for cash and deeply in debt—yet both he and Fruman have dedicated substantial resources to this influence effort.

It is not known which foreign or domestic interests might be funding the pressure campaign pushed by Giuliani, Parnas, and Fruman, nor is it known how those wealthy interests might stand to benefit. 

While those and many other questions remain unanswered, the impeachment inquiry proceeds—an inquiry into maneuvers set into motion by two still-mysterious businessmen who made a six-figure contribution to a Trump super PAC last year and have been capitalizing on the access it provided ever since.

Brendan directs CLC’s work before federal regulatory agencies, such as the Federal Election Commission (FEC).
Maggie is a researcher and investigator, following leads on campaign finance issues.