Written by Kenneth P. Vogel and Katie Benner
In an indictment that seized the attention of the capital’s K Street lobbying corridor, Gregory B. Craig, a White House counsel in the Obama administration, was charged Thursday with lying to the Justice Department and concealing information about work he did in 2012 for the government of Ukraine.
The indictment of Craig, 74, stemmed from an investigation initiated by the office of special counsel Robert Mueller. The charges represented a continuation — and an expansion — of a new focus on a long-neglected law governing foreign influence operations in the United States, which the Justice Department has begun prioritizing in part because of scrutiny related to Mueller’s investigation.
Craig, in a video posted on YouTube on Thursday night, called the charges against him “unprecedented and unjustified,” and expressed confidence “that both the judge and the jury will agree with me.”
The Foreign Agents Registration Act, or FARA, had been the basis for charges brought against several people who had been investigated by the special counsel. The 1938 law requires Americans to register with the Justice Department when they lobby or do public relations in the United States for foreign politicians, parties or governments.
Before Craig’s indictment, the recent charges brought in cases initiated by Mueller had accused people of failing to disclose their lobbying work. The charges against Craig, on the other hand, stem from public relations, rather than lobbying. While Craig was not charged with failing to register under the law, the indictment accuses him of lying to, and withholding information from, the Justice Department officials who oversee FARA in order to avoid registration.
Before the indictment, Craig’s lawyers asserted that the case against their client was flimsy, pointing out that Mueller’s team had referred it to federal prosecutors in Manhattan last year for potential prosecution related to foreign lobbying laws, but that they did not bring charges. Instead, the case was moved in January to Washington.
“Mr. Craig had no interest in misleading the FARA Unit because he had not done anything that required his registration,” Craig’s lawyers, William Taylor and William Murphy, said in a statement Thursday, referring to the part of the Justice Department that oversees the law. “That is what this trial will be all about.”
By Thursday afternoon, the indictment and its implications were a hot topic for Washington’s lucrative lobbying and communications consulting industry.
The charges will prompt even more diligent review of possible compliance obligations by consultants who represent foreign clients, said Thomas J. Spulak, a partner at King & Spalding who advises on lobbying compliance. “It’s pretty significant,” he said. “It’s not just trying to influence the government; it’s trying to influence the American public.”
Craig’s indictment also attracted notice because he is the first person who made his name in Democratic Party politics to be charged in a case linked to the special counsel’s investigation. An Ivy League-educated lawyer, Craig held prominent positions in the administrations of Bill Clinton and Barack Obama.
The charges “undermine the narrative of President Trump and congressional Republicans that the Mueller probe was a Democratic witch hunt meant to bring down Trump and the GOP,” said Carl Tobias, a professor at the University of Richmond School of Law.
The indictment said Craig “did not want to register as an agent for the government of Ukraine” partly because he believed doing so would make it less likely that he and others at his firm at the time, Skadden, Arps, Slate, Meagher & Flom, would be appointed to federal government posts. Obama had rules restricting the work former lobbyists could do in his administration.
The indictment said Craig also wanted to hide the identity of the Ukrainian oligarch who paid $4 million to fund the majority of the fees Skadden Arps received for the Ukraine work. In his YouTube video, Craig identified the oligarch as Viktor Pinchuk, a steel magnate who has donated millions to the Clinton Foundation, as well as $150,000 to Donald Trump’s since-shuttered charitable foundation.
Pinchuk’s representatives have said that “he had no connection to the project either professionally or personally.”
The work was done on behalf of the government of Viktor F. Yanukovych, then the president of Ukraine, and consisted primarily of producing a report on the prosecution and jailing by Yanukovych’s government of one of his rivals. The Skadden Arps team also agreed to train Ukrainian prosecutors handling matters related to the case.
The work was steered to Craig and his firm by Paul Manafort, who at the time was a political consultant earning tens of millions of dollars for his representation of Yanukovych. Manafort intended to use the report to quell Western criticism of Yanukovych.
Manafort, who went on to become Donald Trump’s campaign chairman in 2016, was sentenced last month to 7 1/2 years in prison on charges brought by Mueller’s team related to obstruction of justice and violations of FARA, as well as banking and tax laws stemming from his work in Ukraine. Craig is scheduled to be arraigned Friday.
In his video statement, Craig said his team at Skadden Arps “researched the requirements for registration under FARA and agreed that the law firm did not need to register.” He also said that the report the team produced “was critical of important aspects of the trial, which we found to be flawed.”
After the report was released, and Craig was quoted discussing it in a New York Times article, the Justice Department asked Skadden Arps why the firm and its lawyers had not registered as foreign agents for the Ukrainian government.
The department initially concluded in 2013 that Skadden Arps was required to register. But it reversed itself the next year after Craig made the case that the law did not apply to his work on behalf of Ukraine.
After the initial determination, Craig told the Justice Department that he and Skadden Arps did not proactively reach out to news outlets to disseminate and promote the report. Rather, he claimed he distributed it only “in response to requests from the media,” according to a letter he sent to the department at the time.
In the indictment, prosecutors presented evidence that Craig did reach out to The Times and was involved in the media rollout strategy for the report. A spokeswoman for The Times said, “To date, we have not received a subpoena in the investigation and have not provided information to the government.”
Craig left Skadden Arps last year as scrutiny of his work with Manafort escalated and after a former associate of the firm pleaded guilty to lying to investigators about his work on the effort.
Skadden Arps reached a settlement in January with the Justice Department that allowed the firm to avoid prosecution in the matter in exchange for an agreement to pay $4.6 million, to retroactively register its Ukraine work under FARA, to beef up its compliance processes and to cooperate with government investigations of the work on behalf of Ukraine.
Taken together, the indictment of Craig and the settlement with Skadden Arps suggest the department is trying to “make an example of this prominent lawyer and law firm so that parties receiving DOJ inquiries in the future will take them more seriously,” said Matthew Sanderson, who advises clients on compliance with FARA and other lobbying laws for Caplin & Drysdale.
“In the past, the department would send letters of inquiry to organizations that would receive only a cursory response or be disregarded altogether,” he said. “That, apparently, will no longer be tolerated.”