Dozens race to register as foreign lobbyists since start of Mueller inquiry, fearful of Manafort’s fate

Reporting from Washington —  No one knows how special counsel Robert S. Mueller III’s sprawling investigation into Russian political interference and potential White House obstruction will end, but Mueller is already changing how the nation’s capital does business.

His prosecutors have taken the rare step of pursuing some of President Trump’s former senior aides for failing to register as lobbyists for foreign governments, rattling the rarefied world of highly-paid professionals who advocate in Washington for traditional foreign allies, unsavory strongmen and other overseas clients.

Partly as a result, the number of people registering as “foreign agents” for new clients — meaning they lobby for foreign interests — jumped from 68 in 2016 to 102 in 2017. A total of 422 such lobbyists are currently registered, although some lawmakers believe many more are still in the shadows.

“Any firm that’s worth their salt is going to be doing some due diligence,” said Thomas Spulak, a partner at the King & Spalding law firm who helps clients comply with the Foreign Agents Registration Act, known as FARA. “And if not, they have their head in the sand.”

Scrutiny from the small Justice Department unit that enforces the law has ebbed and flowed over the years, lawyers said, depending on what scandals are making headlines.

“Then it comes out with a vengeance,” said Grayson Yeargin, a partner at the Jones Day law firm. “And right now, it’s probably more active than it has been.”

Lawmakers are considering new steps to beef up the 1938 law and lobbyists are reading the fine print to make sure they aren’t in violation — a crime that could lead to five years in prison.

“There’s just no point in taking a chance on this stuff,” said one lobbyist who requested anonymity because he’s in the middle of updating disclosure forms to ensure compliance.

Lawyers said lobbyists generally had steered clear of brazenly flouting FARA, which was originally passed to flush out Nazi agents before World War II. In recent years, the law wasn’t a major source of concern on K Street, the traditional home of the capital’s top lobbying shops — sort of like driving over the speed limit because no cops are in sight.

Then came the indictment last October of Paul Manafort Jr. and Richard Gates, two high-powered business partners and political consultants who had served as chairman and deputy chairman, respectively, of Donald Trump’s 2016 presidential campaign.

Among the dozen charges they faced was one for failing to properly disclose their extensive — and highly lucrative — work for the Kremlin-backed government in Ukraine. In all, prosecutors said, they moved more than $75 million through offshore accounts.

Gates pleaded guilty to two separate crimes last month in return for cooperating with the Mueller probe, and the other counts were dropped. But Manafort still faces the FARA charge plus nearly two dozen other criminal counts in Washington and Virginia. He has pleaded not guilty and the first trial is scheduled for Sept. 17.

Manafort long was one of Washington’s most well-known foreign lobbyists, with expensive tastes and a high tolerance for shady characters. Among his former clients were a series of U.S.-backed foreign dictators and military leaders, all now dead, including Ferdinand Marcos in the Philippines, Mobutu Sese Seko in Zaire and Jonas Savimbi in Angola.

But Manafort’s work for Ukraine caused collateral casualties in Washington.

Mercury, a prominent public affairs firm, was enlisted by Gates to help with the lobbying. The firm has since said that Gates lied about the client, something he admitted in his plea deal. Mercury said it believed it was working on behalf of a nonprofit, the Brussels-based European Centre for a Modern Ukraine, and not the Russian-backed government in Ukraine.

Mercury subsequently filed disclosure paperwork under FARA and has cooperated with prosecutors.

Democratic power broker Tony Podesta took a bigger hit. He resigned from the lobbying firm that bore his name after he was tied to the work Manafort and Gates did in Ukraine, and his company soon collapsed.

Like Mercury, the Podesta Group’s client was the government in Ukraine, not a nonprofit. The lobbying shop filed an extensive, retroactive disclosure last April revealing dozens of meetings with lawmakers, administration officials and reporters.

“Podesta Group filed public disclosures appropriately and publicly based on the information that the firm had at the time,” a spokesperson for Podesta said.

Kimberley Fritts, a former Republican consultant who previously helped run the Podesta Group, then launched a new firm with some of the same lobbyists and clients. It quickly registered under FARA, disclosing work on behalf of Japan and the Democratic Party of Moldova.

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Mueller also used the foreign lobbying law to pressure Michael T. Flynn, President Trump’s former national security advisor.

In his plea agreement, Flynn admitted to lobbying for Turkey’s increasingly authoritarian government while working for Trump’s campaign, but without registering as a foreign agent. He wasn’t charged with violating FARA, however, and he pleaded guilty to a single count of lying to investigators about his conversations with a Russian diplomat during the presidential transition.

The push for tougher enforcement of foreign lobbying rules began in September 2016, when the Justice Department’s inspector general reported that most lobbyists weren’t filing initial disclosures on time and half were lagging behind deadlines to submit supplemental reports, as the law required.

The government also “lacks a comprehensive FARA enforcement strategy,” the report said.

Sen. Chuck Grassley (R-Iowa), chairman of the Senate Judiciary Committee, questions whether everyone who lobbies for foreign governments has properly registered.

“Does anyone here seriously think that only 400 people take foreign money for PR and lobbying work?” he asked during a committee hearing on the topic last summer.

“Our authorities don’t take the law seriously, and we need to change that,” Sen. Dianne Feinstein (D-Calif.), the Judiciary panel’s top Democrat, said at the same hearing.

Grassley and Rep. Mike Johnson (R-La.) are pushing legislation that would increase the Justice Department’s enforcement powers.

Between 2007 and the Manafort case, only four people were charged with violating the law. One of the cases involved undisclosed lobbying to lift sanctions on Zimbabwe’s dictator, Robert Mugabe, who has since been forced to step down.

Adam Hickey, the deputy assistant attorney general who oversees the National Security Division responsible for foreign agent registrations, said cases against lobbyists can be difficult to pursue because investigators need to show a clear intent to violate the law.

It’s more common for authorities to send a letter urging lobbyists to file necessary paperwork than jumping straight to filing criminal charges.

“The high burden … make[s] criminal prosecutions for FARA violations challenging,” Hickey told the Judiciary Committee hearing.

chris.megerian@latimes.com

Twitter: @chrismegerian