San­ders’s spin that a Demo­cratic-linked firm was paid by Rus­sia falls flat

The Washington Post Sunday - - POLITICS & THE NATION - Glenn.kessler@wash­

“The Demo­crat-linked firm Fu­sion GPS ac­tu­ally took money from the Rus­sian gov­ern­ment while it cre­ated the phony dossier that’s been the ba­sis for all of the Rus­sia scan­dal fake news.” — White House press sec­re­tary Sarah Huck­abee San­ders, at a news brief­ing, Aug. 1, 2017

There is a lot to un­pack in this state­ment by the White House press sec­re­tary, part of an ad­min­is­tra­tion ef­fort to de­flect at­ten­tion from the Trump cam­paign dur­ing the sprawl­ing in­ves­ti­ga­tion into Rus­sian med­dling in the U.S. elec­tion. Pres­i­dent Trump also tweeted an ar­ti­cle about the mys­te­ri­ous firm Fu­sion GPS as he de­cried a “witch hunt” by Democrats.

What is Fu­sion GPS, and do San­ders’s claim hold wa­ter? This is a com­pli­cated tale, mak­ing it easy for the White House to try to stir up a lit­tle fog.

The Facts

If this were a novel, one might say it was not a cred­i­ble plot twist — that the same firm that helped in­spire a sala­cious Rus­sian dossier on the in­com­ing pres­i­dent was also work­ing on be­half of Rus­sian-linked in­ter­ests at the time. But, hey, this is Wash­ing­ton. While there are many lob­by­ing or re­search firms with a cer­tain ide­o­log­i­cal ori­en­ta­tion, some op­er­ate like law firms, do­ing spe­cific work on be­half of clients who hire them.

Fu­sion GPS was started by a group of for­mer Wall Street Jour­nal re­porters, in­ves­tiga­tive re­porter Glenn R. Simp­son be­ing no­table among them. The firm says it “pro­vides pre­mium re­search, strate­gic in­tel­li­gence, and due dili­gence ser­vices to cor­po­ra­tions, law firms, and in­vestors world­wide.” In other words, the ex-re­porters have lever­aged their re­port­ing skills into a profit-mak­ing en­ter­prise.

Here’s how Fu­sion ended up in the mid­dle of the story. Fu­sion’s many clients in re­cent years in­cluded a law firm and a Repub­li­can donor. The donor, con­cerned about the rise of Don­ald Trump, wanted op­po­si­tion re­search on the busi­ness ex­ec­u­tive. The law firm, Baker Hostetler, needed help on lit­i­ga­tion de­fend­ing a Rus­sia-owned com­pany.

The Repub­li­can donor hired Fu­sion in Septem­ber 2015, ac­cord­ing to an ac­count in the New York Times. Once Trump won the Repub­li­can nom­i­na­tion, the GOP donor lost in­ter­est.

But in spring 2016, Fu­sion was able to per­suade donors to Hil­lary Clin­ton’s cam­paign to keep fund­ing the re­search. Fu­sion in June hired Christo­pher Steele, a for­mer MI6 agent known for his contacts in Rus­sia, and Steele pro­duced a se­ries of sala­cious memos, claim­ing that the Krem­lin had the goods to black­mail Trump. This in­for­ma­tion made its way to re­porters, mem­bers of Congress and the FBI. The FBI con­sid­ered Steele’s work cred­i­ble enough that it reached an agree­ment to pay him to con­tinue his work, al­though the ar­range­ment fell apart af­ter the dossier be­came pub­lic.

Mean­while, Fu­sion had been hired by Baker Hot­stetler in early 2014 to as­sist in the de­fense against a civil ac­tion filed by the U.S. gov­ern­ment al­leg­ing fraud by Preve­zon Hold­ings. In 2013, au­thor­i­ties ac­cused Preve­zon of re­ceiv­ing pro­ceeds of a scheme to de­fraud the Rus­sian trea­sury of $230 mil­lion and laun­der­ing the ill-got­ten funds by buy­ing real es­tate in Man­hat­tan. Preve­zon is owned by De­nis Kat­syv, the son of a se­nior Rus­sian gov­ern­ment of­fi­cial.

Her­mitage Cap­i­tal Man­age­ment, the al­leged vic­tim of the fraud, is headed by Wil­liam Brow­der, once a top in­vestor in Rus­sia who had a falling-out with the Rus­sian gov­ern­ment. Brow­der had hired Sergei Mag­nit­sky, a Rus­sian tax ac­coun­tant, to in­ves­ti­gate an al­leged theft from his Rus­sian com­pa­nies, but Mag­nit­sky was ar­rested and died in pri­son in 2009 un­der sus­pi­cious cir­cum­stances. Brow­der’s ad­vo­cacy of Mag­nit­sky’s case led Congress to pass the 2012 Mag­nit­sky Act, which bars Rus­sian of­fi­cials be­lieved to be in­volved in the lawyer’s death from en­ter­ing the United States or us­ing its bank­ing sys­tem. In re­sponse, Rus­sia blocked Amer­i­cans from adopt­ing Rus­sian chil­dren.

So, two dif­fer­ent clients, two dif­fer­ent deals for Fu­sion. But then the story lines merged.

Steele’s work for Fu­sion cen­tered on Trump’s busi­ness deal­ings in Rus­sia. And peo­ple work­ing for Preve­zon — and op­posed to the Mag­nit­sky Act — met at Trump Tower in June 2016 with Trump cam­paign of­fi­cials, in­clud­ing Don­ald Trump Jr., cam­paign man­ager Paul Manafort and Jared Kush­ner, the hus­band of Ivanka Trump. Trump Jr. agreed to meet with Natalia Ve­sel­nit­skaya af­ter an in­ter­me­di­ary promised dirt on Clin­ton. (The par­tic­i­pants claim that most of the dis­cus­sions cen­tered on the adop­tion ban im­posed in re­sponse to the Mag­nit­sky Act.)

Ve­sel­nit­skaya was also work­ing for Baker Hostetler on the Preve­zon case, ac­cord­ing to a dec­la­ra­tion she filed in fed­eral court in 2016. In ad­di­tion, she sought to help Preve­zon fan op­po­si­tion against the Mag­nit­sky sanc­tions. Shortly af­ter her meet­ing at Trump Tower, she at­tended a House For­eign Af­fairs Com­mit­tee hear­ing on Rus­sian sanc­tions and a screen­ing at the New­seum of a film at­tack­ing the Mag­nit­sky Act.

An­other per­son at the Trump Tower meet­ing was Ri­nat Akhmetshin, who was once reg­is­tered as the lead lob­by­ist for a group called the Hu­man Rights Ac­count­abil­ity Global Ini­tia­tive, which claimed it wanted “to help restart Amer­i­can adop­tion of Rus­sian chil­dren.” It was housed in the same of­fice build­ing as Baker Hostetler. Kat­syv, the owner of Preve­zon, was listed as one of the Rus­sians who con­trolled the or­ga­ni­za­tion, which no longer seems to ex­ist.

So what was Fu­sion’s work on the Preve­zon case? Preve­zon sought to turn the ta­bles on Brow­der, the gov­ern­ment’s main wit­ness, by ar­gu­ing that Mag­nit­sky aided him in fraud, rather than in ex­pos­ing crimes. So Fu­sion was tasked to find in­for­ma­tion to un­der­mine the story that Brow­der had told law­mak­ers and U.S. gov­ern­ment of­fi­cials about the Mag­nit­sky case, ac­cord­ing to state­ments the firm has made.

“Simp­son and his firm found records on Brow­der’s prop­erty and fi­nances and tracked down po­ten­tial wit­nesses,” Fu­sion told Politico in De­cem­ber 2016. “Fu­sion GPS also dis­cussed the case record with sev­eral re­porters, ac­cord­ing to the state­ment.”

In­for­ma­tion un­cov­ered by Fu­sion as part of the lit­i­ga­tion also be­came part of the anti-Mag­nit­sky cam­paign. In 2016, Brow­der filed a com­plaint with the Jus­tice De­part­ment ac­cus­ing Fu­sion of fail­ing to reg­is­ter as a lob­by­ist for a for­eign in­ter­est un­der the For­eign Agents Regis­tra­tion Act.

Fu­sion said in a July state­ment that “it com­plied with the law” and “worked for and un­der the su­per­vi­sion of an Amer­i­can law firm to pro­vide sup­port for civil lit­i­ga­tion in New York” and thus was not re­quired to reg­is­ter un­der FARA. In other words, the work prod­uct was for the lit­i­ga­tion, not any lob­by­ing. As far as we can de­ter­mine, there is lit­tle ev­i­dence Fu­sion it­self was in­volved in the anti-Mag­nit­sky ad­vo­cacy, even if the fruits of its re­search may have aided foes of the Mag­nit­sky law.

Brow­der sug­gests the tim­ing of Fu­sion’s ac­tiv­i­ties is ques­tion­able. He said Fu­sion con­tacted re­porters be­tween April and June 2016, when lob­by­ing ac­tiv­ity against the ex­pan­sion of the Mag­nit­sky law was in full swing. The court case, how­ever, was still pend­ing.

Whether Fu­sion should have reg­is­tered for FARA is now the sub­ject of a Se­nate Ju­di­ciary Com­mit­tee in­ves­ti­ga­tion.

In the end, a fed­eral ap­peals court in late 2016 or­dered Baker Hot­stetler to end its rep­re­sen­ta­tion be­cause of a con­flict of in­ter­est (a lawyer at the firm had pre­vi­ously rep­re­sented Her­mitage). That ap­par­ently also ended Fu­sion’s in­volve­ment. Preve­zon set­tled the case in May for $6 mil­lion, with no ad­mis­sion of wrong­do­ing, in what both sides claimed as a vic­tory.

Whew! We told you it was com­plex.

The Pinoc­chio Test

Among its many clients, Fu­sion had two with starkly dif­fer­ent goals.

One client wanted dirt on Don­ald Trump’s busi­ness deal­ings, es­pe­cially in Rus­sia, which would be po­ten­tially dam­ag­ing to Rus­sia’s in­ter­ests be­cause U.S. in­tel­li­gence agen­cies con­cluded that Rus­sia wanted to give Trump an edge in the elec­tion.

An­other client wanted help in de­fend­ing against a law­suit — and Fu­sion’s re­search ended up align­ing with Rus­sia’s ef­forts to re­verse U.S. sanc­tions.

It may not look very pretty, but this is Wash­ing­ton. Hired guns work for whomever pays the bills.

In any case, San­ders’s spin falls flat. There were Rus­sian en­ti­ties in­volved, but there is cur­rently no ev­i­dence that the Rus­sian gov­ern­ment paid for Fu­sion’s work on the Preve­zon de­fense at the same time Fu­sion in­ves­ti­gated Trump’s busi­ness deal­ings in Rus­sia. San­ders earns Three Pinoc­chios.

The Fact Checker GLENN KESSLER

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