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