Mueller’s Russia Indictment: Just One Piece of the Puzzle

Last Friday Special Counsel Robert Mueller announced the indictment of thirteen Russian individuals and three Russian companies. The indictment charges the defendants with engaging in an extensive effort to influence the 2016 presidential election and generally to disrupt U.S. politics. They acted primarily through social media but also staged and supported political rallies and events in the United States, all while posing as U.S. citizens.

This latest salvo from Mueller goes to the heart of his assignment to investigate possible Russian interference with the election. It provides the most detailed public accounting to date of just how extensive those Russian efforts were. It’s a startling look at the Russian attack on our democracy that has long been acknowledged by the intelligence community while being denied by the president himself.

No members of the Trump campaign or other Americans were charged in this indictment, but Mueller continues to investigate a number of different areas. There’s no reason to believe this is the last we will hear from him.

Breaking Down the Charges in the Indictment

Count One: Conspiracy to Defraud the U.S.

Count One charges all of the defendants with taking part in a conspiracy to defraud the United States by impairing, obstructing, and impeding its lawful government functions. In particular, it charges that the scheme obstructed the ability of the Federal Election Commission to administer federal election laws (including those barring political contributions from foreign nationals), the ability of the State Department to issue lawful visas for travel to the U.S., and the ability of the Department of Justice to monitor agents of foreign entities engaging in lobbying work in the U.S.

The conspiracy count is the most wide-ranging charge and encompasses all of the defendants’ alleged efforts to interfere with the U.S. political system. Those activities were carried out through an entity based in St. Petersburg called the Internet Research Agency, LLC, which is also a defendant. It allegedly employed hundreds of people with a budget in the millions of dollars. By the summer of 2016, a group with more than eighty employees was specifically targeting the U.S. population through social media platforms such as Facebook, Twitter and YouTube.

The defendants allegedly posed as U.S. persons to operate numerous social media accounts and pages devoted to the election and divisive social issues. In 2016 they actively worked to promote the Trump campaign and to denigrate Hillary Clinton. They also engaged in other political activities such as efforts to suppress black voter turnout, stir up anti-Muslim sentiments, and promote allegations of voter fraud. Postings from their phony social media accounts were shared by hundreds of thousands within the U.S.

In addition to their extensive social media activities, the defendants allegedly organized, promoted and funded political rallies and events in certain crucial “purple” states. They interacted with U.S. campaign volunteers and activists, including members of the Trump campaign, who apparently were unaware they were dealing with Russians. The efforts including such things as paying a U.S. person to attend a Trump rally dressed as Hillary Clinton in a prison uniform.

The conspirators allegedly used U.S. computer servers and resources to hide the Russian origin of their communications. Several of the defendants allegedly traveled to the U.S. under false pretenses to gather intelligence for the operation. The defendants opened phony PayPal and bank accounts, using stolen identify information from U.S. persons, to help fund their operations. They also allegedly destroyed evidence of their activities once they got wind of the investigation.

Count Two: Conspiracy to Commit Bank and Wire Fraud

Count Two charges three of the defendants with a separate conspiracy to commit bank fraud and wire fraud. This charge relates to stealing identity information from U.S. persons and using that information to open accounts at a U.S. bank and on PayPal. Those accounts were then allegedly used to fund the defendants’ political operations in the U.S. and conceal the fact that the money was coming from Russians.

Counts Three through Eight: Aggravated Identity Theft

Counts Three through Eight charge five of the defendants with Aggravated Identity Theft. These charges also relate to the use of stolen information from U.S. persons to open bank accounts and PayPal accounts.

Special Counsel Robert Mueller

Special Counsel Robert S. Mueller III

How the Charges Fit In with Mueller’s Investigation

Given what we know about Mueller’s investigation, there appear to be three different main areas of inquiry:

  1. Russian efforts to interfere with the U.S. presidential election, whether through social media, computer hacking, or through other means, and possible involvement by members of the Trump campaign in those efforts. (Friday’s indictment).
  2. Any efforts to obstruct justice, lie about contacts with Russian officials, or otherwise thwart the Russia investigation (the charges against Michael Flynn and George Papadopolous).
  3. Any collateral crimes uncovered during the course of the investigation, such as money laundering or acting as an unregistered foreign agent (the charges against Paul Manafort and Richard Gates).

The indictment last Friday relates to only a subset of #1 above. I’ll call it the “social media conspiracy,” because it deals primarily with Russian efforts to influence the election through Facebook, Instagram, Twitter, and other on-line platforms. But there are many issues related to potential Russian influence in the campaign that we have heard about during the investigation but are not included in this indictment.

For example, this indictment says nothing about the hacking of Democratic emails and the leaking of those emails to influence the election. There is no reference to the infamous June 2016 meeting at Trump Tower between senior Trump campaign officials and Russians offering “dirt” on Hillary Clinton, or meetings between campaign advisor George Papadopolous and Russians allegedly offering assistance with the campaign.

In short, this indictment provides an exhaustive outline of charges related to only one aspect of one area of Mueller’s inquiry. Even if this is the full universe of charges involving the social media conspiracy, that says nothing about whether additional charges in any of the other areas will be forthcoming.

As professor Orin Kerr noted on Twitter, concluding from this indictment that no one in the Trump campaign was involved in any criminal misconduct is like going to the opera, leaving after Act 1, and saying, “See – no one dies!” This is still only Act 1.

What We Know From This Indictment

Legal theory for collusion: Ever since Mueller’s inquiry first began, a common talking point among his supporters has been that collusion is not a crime. Even if there were collusion between members of the Trump campaign and Russian nationals, they argued, that might be unwise or even disgraceful but would not be criminal – so why should Mueller be conducting a criminal investigation?

This indictment makes it clear that, yes, collusion can be a crime. To collude generally means to work together towards some improper goal. In the criminal law world, that describes the crime of conspiracy. In this post last summer, I described how the general federal conspiracy statute, 18 U.S.C. 371, criminalizes conspiracies to defraud the United States, which includes conspiracies to impair, obstruct, or impede lawful functions and operations of the federal government. Conspiring to interfere with a federal election, I argued, could potentially be charged as a conspiracy to defraud the United States.

That is the theory Mueller has used in Count One of this indictment. It charges the defendants with impairing, obstructing and impeding the lawful functions of three different components of the government: the Federal Election Commission, the State Department, and the Justice Department. The functions of all three were allegedly obstructed by the defendants’ conduct when they made illegal campaign contributions, obtained visas to travel to the U.S. under false pretenses, and failed to register as foreign agents engaged in political activity.

This indictment charges only Russian nationals. But the same legal theory would apply to Americans who conspired to influence the election unlawfully, whether by working with these defendants or as part of a separate conspiracy. To the extent there were any lingering doubts about whether “collusion” might be criminal, this indictment should erase those doubts. Colluding for an unlawful purpose is conspiracy, and arguing that “collusion is not a crime” is simply a smokescreen.

Russian interference: The U.S. intelligence services have long been convinced that Russians actively sought to interfere with the 2016 election. The president himself has repeatedly undercut his own intelligence community by expressing doubts and by saying he believed Vladimir Putin when he denied any involvement. But in the face of these detailed allegations, even the president had to admit the Russian attacks took place. Now on Twitter he has shifted to claiming  (falsely) that he never denied there was Russian interference, only that there was any collusion with members of his campaign, and to blaming president Obama. But he has yet to express any outrage about the Russian attack, or to outline any steps he will take to punish it or prevent it from happening again.

What We Still Don’t Know

Were there other co-conspirators? – Return of an indictment like this does not necessarily mean the Special Counsel is finished investigating this particular conspiracy. It is not uncommon to bring an indictment, continue the investigation, and return a superseding indictment at a later date adding additional charges and/or defendants. To cite just one example: in the FIFA corruption case involving international soccer, prosecutors originally brought a sprawling RICO conspiracy indictment against fourteen defendants.  Months later, they returned a superseding indictment adding sixteen more defendants and nearly doubling the number of charges.

Additional co-conspirators — whether Russian or American — may still be under investigation and could be added later. The indictment does include the typical charging language that the defendants conspired with each other and with others “known and unknown to the grand jury.” Over time we will learn whether in this case that is just boilerplate or whether there are other as yet unnamed individuals still to be charged.

But there is at least one reason to suspect that this indictment may be it for the social media conspiracy. Typically, one reason to bring a preliminary indictment would be to pressure some of the defendants to plead guilty and cooperate in order to build cases against other co-conspirators. In this case, it appears all the defendants are in Russia and beyond reach of the Special Counsel. There is no real opportunity to flip any of them to build the case further. That may suggest Mueller has simply brought the indictment to close out this aspect of his investigation and move on to other areas.

Are there other conspiracies to influence the election? – Even if this indictment represents the full story on the social media conspiracy, there could be other, different conspiracies still to be investigated and potentially charged. For example, this could include a conspiracy between Russians and individuals involved in the Trump campaign concerning efforts to influence the election involving the hacked emails or other unlawful activities.

Will there be more cases? – Areas two and three mentioned above, which involve potential obstruction of justice and activities such as Russian money laundering, are not implicated by this indictment. They too will proceed on a separate track  and could result in additional prosecutions.

Why This Indictment At This Time?

As others have noted, it’s unlikely any of these defendants will see the inside of a U.S. courtroom. Apparently they are all in Russia, and Putin will not be rushing to help extradite them. So if the case can’t be prosecuted, why bring it at all?

Mueller’s central task is to investigate possible Russian interference with the election. This indictment represents the findings of that investigation. It’s his job to bring the charges, whether or not they can ever be pursued. It represents the response of the American criminal justice system to these attacks, and lets the public know what Mueller has found. Ideally, it also would alert our political leaders to the dangers of future attacks and spur them to take some steps to prevent them.

Bringing this indictment at this time is also tactically shrewd on Mueller’s part. By not including any Americans or allegations of participation by members of the Trump campaign, he has shielded the indictment and his investigation from political attacks. The charges demonstrate that Mueller is not some political hack out to get the president but is serious about getting to the bottom of the Russian actions. That gives some political cover to the investigation. The anger over these allegations and support for the indictment should be largely bipartisan. If Trump were still thinking about firing Mueller, it just became exponentially more difficult to do so.

What’s Next?

No one knows but Mueller and his team – and they’re not talking. This investigation has no leaks. There apparently was not even a hint of last Friday’s indictment before it happened.

There’s certainly no sign that Mueller is nearing the end of his investigation. This indictment is simply one piece of the overall puzzle that he is examining. There are many potential areas of inquiry still outstanding. As to whether any of these areas result in more criminal charges – we can only wait and see.

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The NCAA Corruption Case and the Limits of Fraud

There’s an unusual criminal case pending in the Southern District of New York. The defendants are charged with a single count of conspiracy to commit wire fraud. Here are the characteristics of their alleged scheme:

  • The underlying conduct was not illegal
  • The defendants did not intend to harm the “victims” but actually wanted to help them
  • If the scheme had succeeded, the victims would have benefited
  • The defendants did not obtain any money or property from the victims and did not intend to
  • The defendants did not personally lie to or deceive the victims
  • Top-level employees of the victim organizations were encouraging the scheme and working with the defendants to help it succeed

The case is part of the NCAA basketball corruption scandal. The defendants, former Adidas executive James Gatto and two others, were indicted for taking part in a scheme to pay star high school players and their families to induce them to attend Division I universities with basketball programs sponsored by Adidas. The alleged victims of their scheme are the universities themselves — whose coaches actively worked with the defendants to help the scheme succeed.

The defendants have moved to dismiss the indictment. They claim the case improperly seeks to criminalize NCAA rules and that their conduct did not amount to a scheme to defraud. The judge will hear arguments on February 15, but the motion is unlikely to be granted. It would be extraordinary to get the case thrown out at this early stage. The allegations of the indictment are likely sufficient to get to trial.

But this case definitely stretches the limits of criminal fraud. If it goes to trial, I think the government will have a tough time persuading a jury (or a court of appeals) that the defendants had the requisite intent to defraud. And even if the case holds up legally, it raises serious questions about the exercise of prosecutorial discretion and the appropriate use of federal criminal sanctions.

The Defendants and the Schemes

The three defendants – James Gatto, Merl Code, and Christian Dawkins – were part of a group of ten individuals arrested in the NCAA investigation back in September. Gatto is the former global marketing director for basketball at Adidas. Code is a former consultant to Adidas, and Dawkins is a business manager who represents athletes. (I wrote about the charges against all ten after they were arrested, you can find that post here.)

The defendants were originally charged along with two other men, Brad Augustine and Munish Sood, in a criminal complaint containing four felony counts: wire fraud conspiracy, money laundering conspiracy, and two counts of wire fraud. By the time the indictment was handed down in November, the government had dropped two of the defendants and three of the charges. (It’s possible that Sood and Augustine have agreed to plead guilty and cooperate; in the indictment they are now referenced as unindicted co-conspirators CC-1 and CC-2.) The indictment now charges only Gatto, Code and Dawkins with a single count of conspiracy to commit wire fraud against two different universities: the University of Louisville and the University of Miami.

In the Louisville scheme, the defendants allegedly arranged to pay the family of a star high school basketball player $100,000 in exchange for his agreement to attend Louisville and later to sign with Dawkins and Adidas for sponsorships and professional representation. The indictment alleges that one or more coaches at Louisville knew about and encouraged the scheme. The plan was to cause Adidas to make the payment in $25,000 installments by creating phony invoices from a company controlled by Code. Code would then transfer the money to Dawkins, who would give cash to the student’s father. Adidas made two such payments of $25,000 before the scheme was halted by the arrests.

The indictment alleges the defendants were plotting to pay a second student to attend Louisville as well. In a meeting that included one of the Louisville coaches, Code was allegedly given cash to be funneled to that player’s family. That payment apparently had not yet been made when the defendants were arrested.

The Miami scheme involved a similar plot concerning a high school player who would graduate in 2018. The plan was to pay that student’s family $150,000 in exchange for his agreement to attend Miami and to sign up with Adidas and Dawkins. Once again, this plan was carried out with the knowledge and participation of one or more of the basketball coaches at Miami. Preliminary discussions and planning took place but no money actually changed hands before the defendants were arrested.

The planned payments to the students and their families were not illegal. But they would make the students ineligible athletes under the NCAA rules. Those rules require student athletes to be amateurs who do not receive any payments or other benefits for their participation in college sports. A university found to have ineligible players on its team is subject to sanctions including financial penalties, limitations on post-season play, and limitations on financial aid that may be awarded to other athletes. The potential harm that could result from such rules violations is what forms the basis of the government’s fraud allegations.

The Defense Motion to Dismiss

In their motion to dismiss, the defendants claim the indictment does not make out a conspiracy to defraud. Although they rely upon different legal theories, the argument boils down to this: there was no scheme to defraud because the defendants were trying to help the universities, not harm them. The defendants never sought to obtain anything from the universities for themselves, or to deprive the universities of any money or property. Far from deceiving the universities, they were working with the heads of their basketball programs toward a common goal. That work may have violated NCAA rules, but it was not criminal.

The government’s first response is that the defense claims are premature. Prosecutors argue that the indictment makes out a facial case of conspiracy to defraud, and at this stage that is all that is required. Many of the defense arguments, they claim, rely on disputed facts. Those arguments may be considered only after trial, when the evidence is in and all the facts are known.

On the legal merits, the prosecutors argue the indictment properly charges two fraud theories: 1) the defendants conspired to defraud the universities of property by causing them to pay scholarship money to athletes who would be ineligible under NCAA rules; and 2) the defendants conspired to defraud the universities of their right to control their assets by depriving them of information relevant to their decisions about where to spend their limited scholarship funds.

Was it a Fraud?

This is a strange fraud case. The universities arguably would have been deceived had the scheme been successful – although since the heads of their basketball programs were involved in the scheme, even that is debatable. But the law draws a distinction between being deceived and being defrauded.

To defraud typically means to obtain something of value from the victim, to profit at the victim’s expense. In this case the defendants were working with representatives of the victims towards a shared goal. They were not trying to obtain anything from the universities. In fact, the defendants would benefit from the scheme only if the universities also benefited.

The government argues the universities would have been deprived of money in the form of scholarships awarded to ineligible athletes. But in exchange for that money the universities would have received the services of the athlete in question. Usually if you get what you expected to get at the price you expected to pay, you have not been defrauded.

To avoid this problem the government basically analogizes the student athletes to a defective product. The universities didn’t get what they bargained for because they expected to get a NCAA eligible amateur athlete, not one who would potentially subject them to sanctions. In this case, though, the “product” was not inherently defective and would perform exactly as expected. There would only be a problem if the scheme was discovered by a third party – the NCAA. That risk may have been a by-product of the scheme, but inflicting that harm was certainly not the scheme’s goal.

Fraud also usually requires some deceit or deception by the defendant. The defendants point out there is no allegation they personally deceived the universities at all. Indeed, how could they be deceiving the universities when representatives of the universities were actively involved in the scheme?

The prosecutors respond that the defendants knew their scheme would eventually cause the students, parents and coaches to falsely represent to the universities that they were not aware of any NCAA rule violations. They also characterize the coaches as distinct from the universities, arguing they were not acting on behalf of the universities but as part of the plot to deceive them.

Separating the coaches from the universities in this way feels artificial. In this case, unlike in some of the other NCAA prosecutions, the coaches are not named as defendants, or even as unindicted co-conspirators. There is no allegation they were taking bribes or otherwise personally profiting from the scheme. Like the defendants, their only apparent purpose was to help the university’s basketball program obtain top players.

If the coaches had committed another crime in the course of working with the defendants, principles of corporate criminal liability would allow the government to prosecute the universities because the coaches were acting on their behalf. Although the universities would no doubt prefer to be portrayed as innocent victims, it’s more accurate to characterize them as willing participants in the scheme.

Prosecutors also allege that the defendants took steps to conceal the scheme by creating phony invoices and routing the payments to the families through a company owned by defendant Code. However, those steps were designed to conceal what was going on from Adidas, so that the defendants could induce Adidas to pay the money. They don’t demonstrate any effort to deceive the universities.

In sum – the defendants have a point. This case lacks the typical indicia of a criminal fraud case.

A Sound Exercise of Prosecutorial Discretion?

This has the feel of a case where prosecutors stretched to find a criminal theory to cover conduct that really shouldn’t be criminal. Given the breadth of the concept of fraud prosecutors may able to make a legal case, particularly on the “right to control” theory. They may be able to persuade a jury and even convince a court of appeals, although I have my doubts. But that doesn’t mean the case should have been brought.

It’s noteworthy that when the defendants were first arrested prosecutors charged them with four felonies and trumpeted the fact that each defendant faced up to eighty years in prison. Six weeks later when the case was indicted, prosecutors had dropped three of the four charges (including money laundering charges that, as I noted at the time of the arrests, were pretty clearly flawed). Usually it’s the other way around: you file a complaint on a single charge or handful of charges and then add additional charges during the grand jury process. This scaling back of the case suggests prosecutors may have realized that, in their desire to make a splash with the arrests, they overplayed their hand.

Particularly in white collar cases, the sound exercise of prosecutorial discretion requires using good judgment about what kinds of cases deserve criminal sanctions. In recent years there have been signs the Supreme Court is questioning whether it can still rely on prosecutors to exercise their discretion wisely. I fear that cases like this are only going to contribute to that trend.

White collar investigations often involves conduct where remedies other than criminal sanctions may be appropriate. This seems like one of those cases. These defendants deserved to suffer some consequences. They should lose their jobs and face professional disgrace. There’s no question the NCAA needs to clean house. But these defendants shouldn’t be facing a twenty-year felony for conspiring to “defraud” universities whose own coaches were actively working with them towards the same goal.

Update: On February 15, 2018 the judge, as expected, denied the defendants’ motion to dismiss. Trial is currently set for October 1.

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RICO and the Mueller Investigation

Special Counsel Robert Mueller’s investigation has produced guilty pleas from two individuals and the indictment of two more. It remains to be seen what additional charges, if any, will follow. Some have floated the idea that Mueller might consider charging violations of the Racketeer Influenced and Corrupt Organizations Act, or RICO, 18 U.S.C. §§ 1961-1968. Although originally aimed at organized crime, RICO can be a powerful tool in complex white collar cases as well.

So could Mueller be mulling RICO charges? RICO could potentially apply – depending on what Mueller finds, of course. But in the end I think he’s unlikely to play the RICO card.

Special Counsel Robert S. Mueller, III

The Different Areas of Mueller’s Investigation

The potential charges in Mueller’s investigation vary depending on which of several possible tracks the investigation follows. The first such track involves the heart of Mueller’s inquiry: any crimes directly related to Russian interference with the election and possible collaboration by Trump campaign officials. If prosecutors find evidence of those crimes, charges could include conspiracy to defraud the United States or conspiracy to violate federal election laws or computer hacking laws.

A second investigative track includes cover-up crimes: false statements, perjury or obstruction of justice in connection with the Russia probe. This could include lying to the FBI during interviews, lying on security clearance forms, false testimony before Congress or in the grand jury, or efforts to obstruct the investigation. Two cooperating witnesses, Michael Flynn and George Papadopoulos, have already pleaded guilty to false statements for lying to the FBI. There have been allegations that Jared Kushner and Attorney General Jeff Sessions may have unlawfully concealed contacts they had with Russians during the campaign. And claims that the president himself may have obstructed justice through such actions as firing James Comey have been a key part of the investigation.

There is a potential third track as well: the possibility that while investigating connections between Trump and Russia Mueller will uncover other crimes not directly related to the campaign. The charges filed against former Trump campaign manager Paul Manafort, for example, include allegations of years of money laundering involving Ukrainian connections that predated the campaign. The infamous Russia “dossier” includes claims about ties between Russian individuals and the Trump organization that could involve crimes such as international money laundering. In Michael Wolff’s controversial new book Fire and Fury, former Trump advisor Steve Bannon also predicts that money laundering involving Russia will end up a centerpiece of Mueller’s probe.

Mueller’s investigation could result in charges in any one of these areas. RICO is potentially a better fit for some than for others.

A Quick Primer on RICO

Congress passed the Racketeer Influenced and Corrupt Organizations act in 1970. As its name suggests, RICO’s primary purpose was to give the federal government new tools to prosecute criminal groups, such as organized crime families, seeking to infiltrate and control legitimate organizations. But the breadth of RICO’s language has made it possible for prosecutors to apply it in more routine white collar business and corruption cases as well.

RICO doesn’t really define a new crime. Instead, it prohibits engaging in a sustained pattern of already criminal activity in connection with a business or other “enterprise.” This has led one prominent commentator to characterize RICO as “the crime of being a criminal.” RICO provides hefty penalties of up to twenty years in prison, as well as forfeiture of any assets related to or derived from the criminal activity.

Every RICO case shares two requirements: proof of an “enterprise,” and proof of a “pattern of racketeering activity.”

Enterprise: In some RICO cases the enterprise is the organization through which the defendants commit their criminal acts, such as an organized crime family. In other cases the enterprise is more like a victim, such as a legitimate corporation or labor union that is infiltrated by the RICO defendants through their criminal activity.

Enterprise is defined in the statute to include any legal entity such as a corporation or partnership. An enterprise may also consist of a group of individuals associated together but not a legal entity, called an “association in fact” enterprise. Rejecting arguments that RICO should be limited to cases involving formal business organizations, the Supreme Court has made it clear that an association in fact enterprise need not have any legitimate purpose or formal structure. Any group of individuals who come together to commit a series of crimes may potentially be characterized as an association in fact enterprise. Another name for such a criminal group, of course, is a conspiracy – and the breadth of the enterprise definition has led some to suggest that RICO is simply a conspiracy statute on steroids.

Pattern of Racketeering Activity: Every RICO case also requires the government to prove a “pattern of racketeering activity.”  This requirement has two components: there must be acts of racketeering activity, and those acts must form a “pattern.”

Racketeering activity is defined in the statute to include a lengthy list of federal crimes. It includes many offenses traditionally associated with organized crime such as narcotics, illegal gambling, extortion, and trafficking in stolen goods. It also includes a number of white collar offenses such as bribery, mail and wire fraud, obstruction of justice, and money laundering. The inclusion of these crimes as “racketeering activity” is what makes RICO potentially applicable to many white collar cases.

Racketeering activity also includes crimes such as murder, kidnapping, extortion and arson that are punishable under state criminal laws. This was one of RICO’s more powerful innovations: federal prosecutors could now take a widespread group committing different crimes previously punishable only at the state level, package the crimes as a RICO case, and bring a single prosecution in federal court. In organized crime cases where local prosecutors were either unable or unwilling to bring charges, RICO allowed the federal government to step in and take those organizations down.

A “pattern” of racketeering activity requires at least two different instances of racketeering activity no more than ten years apart. In reality, a pattern usually involves far more than two acts. The Supreme Court held in H.J. Inc. v. Northwestern Bell Telephone Co. that a pattern requires proof of “continuity plus relationship” among the acts of racketeering. The acts must have the same or similar purpose, results, participants, victims or methods of commission or be otherwise interrelated, and must take place over some substantial period of time.

RICO contains four different prohibitions:

Section 1962(a) prohibits using the income generated by a pattern of racketeering activity to acquire an interest in, or to establish or operate, any enterprise. A violation of 1962(a) is a two-step process: the defendant earns money from a pattern of racketeering activity, and then uses that money to invest in or operate the enterprise. This is the type of offense at which RICO was primarily aimed: the infiltration of businesses and other organizations by those who earned their money through criminal operations.

Section 1962(b) is similar to 1962(a) but involves only a one-step process. It prohibits using the racketeering activity directly to acquire an interest in or control over an enterprise. This would apply, for example, to a criminal organization using extortion or bribery to control the behavior of those operating a business or government organization.

Section 1962(c) is by far the most commonly-used RICO provision. It prohibits any individual employed by or associated with an enterprise from conducting or participating in the conduct of the enterprise’s affairs through a pattern of racketeering activity. In Reves v. Ernst & Young the Supreme Court adopted the “operation or management” test for determining who is covered by this section. To participate in the conduct of an enterprise’s affairs a defendant must have some role in the operation or management of the enterprise and not just be a low-level employee following orders.

Finally, Section 1962(d) is a conspiracy provision, making it a crime to conspire to violate sections (a), (b), or (c).

RICO Charges and the Mueller Investigation

Due to RICO’s breadth, there is little doubt it could theoretically apply to a number of the allegations surrounding the Russia investigation. Whether RICO would make sense and exactly how it could apply would depend on the nature of the crimes Mueller ended up pursuing.

First, there are several different enterprises that would satisfy RICO. One would be the Trump campaign, Donald J. Trump for President, Inc.  As a corporation, the campaign itself qualifies as an enterprise. If Mueller determined that individuals conducted the campaign’s affairs through a pattern of racketeering activity, RICO section 1962(c) could apply.

Another potential enterprise would be the Trump Organization itself, or any one of its subsidiary corporations. If the investigation were focused more on the Trump Organization’s financial ties with Russian individuals, that could lead to charges that Trump and others participated in the conduct of the Trump Organization’s affairs through a pattern of racketeering activity under 1962(c), or used funds generated by a pattern of racketeering activity to operate the Trump Organization under 1962(a).

There also could be an association-in-fact enterprise made up of various individuals involved In the campaign. Again, this requirement is essentially equivalent to a conspiracy, so if individuals in the campaign were engaged in a pattern of criminal acts prosecutors could potentially name that group as an enterprise and charge their activity under RICO.

For the pattern of racketeering activity, the most obvious candidate is money laundering. If there are charges similar to those against Manafort involving ties between Russian individuals and the Trump Organization, long-term money laundering schemes could easily be charged as a pattern of racketeering activity used to fund and operate the Trump Organization.

If the criminal focus is on the campaign itself and a possible conspiracy with Russian individuals, a potential pattern of racketeering activity is less obvious. The most likely criminal violations, including election crimes and computer crimes, do not qualify as “racketeering activity.” Any crimes involving Russian interference with the election probably also took place over a relatively limited and discrete period of time and might lack the continuity necessary to form a pattern.

As far as cover-up crimes are concerned, obstruction of justice does qualify as racketeering activity, although false statements and perjury do not. If prosecutors found a long-running pattern of obstruction of justice related to the campaign and its aftermath, that might qualify as a pattern of racketeering activity. The enterprise could be the campaign itself or an association in fact of individuals involved in the campaign. The charge would be that the defendants conducted the affairs of that enterprise through a pattern of obstruction of justice designed to thwart investigations by the FBI or Congress.

Why RICO Charges Are Unlikely

RICO’s breadth makes it a potential charge in Mueller’s investigation, particularly if the investigation ends up focusing on international money laundering involving the Trump Organization. On the other hand, if all Mueller finds is a pattern of obstructive conduct, using RICO would seem like an unnecessary stretch. But in the end, regardless of what Mueller uncovers, RICO charges are probably unlikely.

One reason they’re unlikely is that Mueller simply doesn’t need RICO. If you’re prosecuting a gang for a series of state law crimes, or a massive global conspiracy like the FIFA corruption case, RICO can be a useful tool. But in most federal white collar cases, RICO really doesn’t get prosecutors much that they can’t already get through charges such as conspiracy, fraud, and money laundering. RICO’s twenty-year penalty used to be unusual, but now is the norm for more routine federal crimes including mail and wire fraud and obstruction. Other statutes, including money laundering, also allow prosecutors to seek forfeiture. It’s hard to see what RICO would add to Mueller’s already substantial arsenal. Why spend time and effort proving complicated concepts like a pattern of racketeering activity to a jury when you can just focus on the underlying crimes themselves?

A second reason is that all criminal RICO charges must be approved by the Organized Crime and Gang section in the Criminal Division at the Department of Justice. Main Justice requires all federal prosecutors to obtain this approval in order to ensure RICO is used only in cases where it is truly appropriate and necessary. The DOJ guidelines provide that RICO charges will not be approved in cases where other federal statutes can adequately address the misconduct.

The special counsel regulations provide that Mueller is subject to all DOJ rules, regulations, and procedures. That means he would have to seek review and approval of any RICO charges by Main Justice – something Mueller is probably (and understandably) reluctant to do. Mueller does not want the Sessions Justice Department second-guessing his prosecutorial decisions. He also would need to be concerned about leaks that might come out of DOJ if he submitted charges for their review. (This also may be the reason tax crimes were not included in the Manafort indictment, even though they seemed like fairly obvious charges. Charging tax crimes would have required Mueller to seek review and approval from the DOJ Tax Division.)

We have some hints from the Manafort indictment about how Mueller may view these questions. Given the nature of those charges, RICO would have been an easy fit. Prosecutors could readily have charged that Manafort and his co-defendant Richard Gates funded and operated Manafort’s consulting firms (the enterprises) through a pattern of racketeering activity (money laundering) over a number of years. But Mueller chose not to include RICO charges.

In the nearly half-century since RICO was passed, its significance for white collar cases has diminished. Federal prosecutors have more — and usually better — options now. RICO still carries a certain mystique, and Trump’s critics may find the idea of RICO allegations of a grand conspiracy appealing. But no matter what else the special counsel’s investigation turns up, we are unlikely to see a RICO indictment.

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Why White Collar Investigations Take So Long

Why do white collar investigations take so long? President Trump’s lawyer Ty Cobb has been telling the president — and the public — that he expects Special Counsel Robert Mueller’s investigation to be wrapping up in the near future.  There were reports this week that the president’s lawyers planned to meet with the Special Counsel, seeking assurances that the probe was almost over and that the president will be cleared.

But this investigation shows no sign of being almost over. The trial of Paul Manafort and Rick Gates, who were indicted by the Special Counsel last October, is not scheduled to take place until May. Mueller has recently announced plea and cooperation agreements with Michael Flynn and George Papadopolous, and that cooperation and the resulting additional investigation could take many more months. And it seems unlikely that these will be the last criminal charges to result from Mueller’s probe.

Bob Mueller appears to be pursuing a classic white collar investigation strategy.

Special Counsel Robert S. Mueller, III

This has all the hallmarks of an investigation that could easily last another year or more. As these cases go, Mueller is actually proceeding quite quickly. But such investigations take time, and due to grand jury secrecy we don’t learn a great deal about what is happening. That leaves an impatient public wondering when and where the next shoe will drop. It also leads to widespread media speculation, with pundits on both the left and the right confidently proclaiming what the latest development means and what “must” be about to happen next.

The truth is that no one outside of Mueller’s team knows what all the evidence has shown or what will happen next, and even they probably don’t know exactly how long it will take. But given what we have seen so far and what we know about the nature of these types of investigations, there is no reason to believe that Mueller will be packing up and going home any time soon (unless he gets fired, of course). In light of all the impatience and speculation surrounding Mueller’s investigation, it seemed like a good time to dust off and update this post I wrote almost three years ago about why white collar investigations can take so much time.

The Nature of White Collar Investigations

white collar investigation is an organic, developing thing. If prosecutors had all the information about the potential offenses and defendants at the outset, it would be relatively straightforward to put all the witnesses in the grand jury, ask the relevant questions, and proceed expeditiously. But white collar prosecutors seldom have that luxury.

This is one of the principal ways white collar investigations differ from, say, an investigation of a bank robbery or a homicide. “Street crime” investigations generally begin when it’s clear that a crime has been committed and the universe of potential charges is relatively well defined. When you have a body on the street with twelve bullet holes in it, it’s pretty clear a crime has occurred. The job usually is to assemble sufficient evidence to prove who did it. That is a relatively discrete task with clearly defined parameters.

In a white collar case, by contrast, the task frequently is to determine whether a crime has been committed at all. The array of possible charges and potential defendants may be much less clear at the outset, and likely will evolve as the investigation proceeds. There are often many shades of gray when investigating more nebulous criminal concepts such as fraud and corruption (or collusion). This can result in a more wide-ranging and prolonged investigation. As prosecutors dig more deeply, they frequently uncover new leads that have to be chased down. If you’re trying to clean house, it’s tough to finish the job when you keep finding new, unopened doors around every corner.

Consider the Mueller investigation. The order appointing him as Special Counsel charges him with investigating “any links and/or coordination between the Russian government and individuals associated with the campaign of President Donald Trump” and any related matters arising out of that investigation. This is a sweeping mandate. Mueller is investigating not one isolated event like a bank robbery, but a complex course of conduct involving multiple actors, here and abroad, over a long period of time. Even with a large investigative team, it is necessarily going to take considerable time.

Because the investigation evolves over time, other types of delay also arise. For example, suppose an important witness is called into the grand jury and testifies relatively early in the investigation. As more documents are reviewed or additional witnesses testify, prosecutors may discover new information about which they now need to question that early witness. That may require a return appearance before the grand jury.

This can happen repeatedly during a lengthy investigation. I recall one large public corruption investigation where we had to recall a particular key witness to the grand jury at least half a dozen times over a more than two year period as we continued to discover additional critical information about which we had to question her. Each such appearance, of course, takes time to prepare for and to coordinate with defense counsel, in addition to consuming more time in the grand jury itself.

Why do white collar investigations take so long? One reason is the grand jury.

The Nature of the Grand Jury

Federal white collar cases frequently involve extensive use of the grand jury. In a street crime investigation, law enforcement officers may interview willing witnesses, and victims generally will gladly provide any records and other evidence they have to assist the prosecution. Frequently, much of the investigation can be completed outside of the grand jury room, a much faster and more efficient process. A grand jury is still required for an indictment, but the grand jury process itself can be fairly streamlined.

In a white collar case, by contrast, evidence may be buried in the records of corporations and other institutions that will only yield those records if compelled by a subpoena. Fellow employees in a company, fellow officers in a police corruption case, or a politician’s staff in a political corruption case, all may be reluctant witnesses who cannot simply be interviewed by case agents but must be compelled to appear and testify under oath in the grand jury.

The grand jury is an incredibly powerful body, but the process is inherently cumbersome. It takes time to subpoena witnesses, deal with their defense counsel, and arrange for them to appear in the grand jury. Institutions subpoenaed for large numbers of documents likewise will require time to assemble the documents and for their counsel to review them to screen for privileged materials.

And speaking of documents — white collar investigations often are very document intensive. There may be hundreds of thousand or even millions of pages of corporate documents, bank records, telephone records, e-mails, and more that need to be examined. The sheer volume of paper that has to be reviewed and analyzed can slow an investigation down. Imagine the time it would take to assemble and sort through the bank records of Trump’s extensive financial empire – or even just one of his tax returns. In the Mueller investigation this difficulty is compounded by the fact that many records may be located in other countries.

                                          Defense Delays

Many white collar investigations involve individuals or companies represented by skilled defense counsel who will vigorously represent their clients. That may include throwing up roadblocks to the government’s progress. Witnesses subpoenaed to the grand jury may assert various privileges not to testify, and litigating those claims — even those without merit — may take months or even years. If documents are subpoenaed or seized during an investigation, the defense may go to court arguing that the documents are privileged or were obtained improperly and must be returned, preventing investigators from examining them until those claims are resolved.

In the Mueller investigation, witnesses such as Donald Trump, Jr. and Attorney General Jeff Sessions have made controversial assertions of attorney-client privilege or executive privilege when testifying before Congress.  As long as a Republican Congress is not willing to press the issue, they can get away with that. But if they try to assert such privileges before the grand jury, Mueller’s prosecutors may go to court to seek to compel them to answer the questions. Litigating such claims could easily take months.

Depending on the nature of the documents or testimony involved, it may be reckless, irresponsible, or even impossible for prosecutors to go forward until such issues are resolved – but resolving those legal battles may result in substantial delays.  And time spent fighting over such legal issues is time not spent examining additional witnesses or otherwise advancing the investigative ball.

                      The Nature of White Collar Crimes

White collar crimes frequently boil down to questions of intent. It may be clear that a contractor overbilled the government, but was it fraud or simply an accounting mistake? It may be undisputed that a supporter has given gifts to a politician, but was it corrupt or was it simply unseemly or “politics as usual?” Jeff Sessions may have made statements under oath before Congress that turn out not to be true, but was it a deliberate lie and therefore perjury, or simply a misunderstanding or failure of recollection? The president fired former FBI director James Comey, but that otherwise lawful act is potentially obstruction of justice only if he acted with corrupt intent.

This makes white collar cases particularly challenging. Frequently prosecutors are not trying to prove observable events that took place (as in “who pulled the trigger” or “who had the drugs”) but are trying to prove what was going on in someone’s mind. Absent a confession or taped conversations, that may require an exhaustive and time-consuming examination of both witnesses and documents to build a circumstantial case piece by piece, while ruling out any ambiguities, uncertainties, or alternative explanations.

This can be especially difficult in public corruption cases. If a defendant is engaged in a fraudulent Ponzi scheme, for example, once that scheme comes to light there are usually victims willing to come forward to help the prosecution. They can provide information about their dealings with the defendant, turn over copies of their e-mails and other documents, testify about their conversations, and otherwise help the government prove the misconduct in question.

In a public corruption case, however, the crime usually involves a secret deal or transaction that neither party wants to be discovered. There frequently are no other witnesses. The “victims” – the general public or the politician’s constituents – don’t know that a crime has occurred and can offer no assistance. Such crimes take place in secret, behind closed doors, often through nods and winks. For example, if Trump campaign officials secretly conspired with Russians to influence the election, none of the parties to that conspiracy are likely to provide information about it willingly.

The most common way to investigate such a case involves painstakingly building successful cases against lower-level players and enlisting their cooperation against other, higher-level defendants – known as moving up the ladder, or using the little fish to catch the big fish. This can be very successful, but it too takes considerable time. Sufficient evidence has to be gathered against one defendant to persuade him or her that it is time to cut a deal. The terms of their plea agreement have to be negotiated and the case has to be brought before a judge for the plea. Following the plea, the cooperator now needs to be further debriefed and possibly put into the grand jury. The process continues, hopefully moving up the ladder towards the ultimate targets, but climbing each successive rung may take months.

This appears to be the way the Mueller investigation is proceeding. So far he has secured guilty pleas and cooperation from two individuals (that we know of) and has the ability to exert considerable pressure on Manafort and Gates to cooperate as a result of their indictments. That’s one reason his investigation gives no sign of being nearly concluded. Cooperation agreements like these suggest there are still some bigger fish out there to be investigated.

My crystal ball is no better than anyone else’s. As I mentioned at the outset, no one outside of Mueller’s team really knows what is coming next. But given what we know about the nature of white collar investigations and the developments we have seen so far, we can at least say with confidence that it would be very surprising if this investigation ended any time soon.

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The Criminalization of Politics, Obstruction, and Trump: A Reply to Professor Dershowitz

If you’ve been reading this blog for a while or have been following me on Twitter, you know I’ve been engaged in a bit of a back-and-forth with Harvard Law professor Alan Dershowitz. Dershowitz has emerged as one of the leading critics of the Robert Mueller investigation into the Trump campaign and possible Russian meddling. Professor Dershowitz argues there is no evidence of a crime and no basis for a criminal investigation. More broadly, he believes Mueller’s investigation is the latest example of the criminalization of politics: what he sees as a troubling tendency by both political parties to use criminal law to attack political opponents.

Last week Dershowitz published an op-ed in the New York Times about this issue, and I published a reply in the Washington Post. But the argument about politicization is just the latest in a series of claims Dershowitz has made arguing there is no basis for Mueller’s investigation. In this blog post I’ll review the arguments Dershowitz has been making over the past few months and my responses to those arguments.

The Argument about Collusion

Dershowitz has repeatedly argued that collusion is not a crime.  He claims that if Trump campaign officials colluded with Russians to influence the campaign that might be deplorable but would not be criminal. The remedy for any such misconduct, he says, should be at the ballot box, not in criminal court. Therefore, he concludes, there is no basis for the Special Counsel’s investigation.

This argument is really a smokescreen. It’s true there is no crime called “collusion” — but that’s not what Robert Mueller is investigating. The criminal counterpart to collusion is conspiracy – an agreement to commit some other criminal offense. The Special Counsel likely is investigating a number of potential conspiracies, which could include conspiracy to defraud the United States, conspiracy to violate federal election laws, or conspiracy to engage in computer hacking. He is also investigating a number of potential related cover-up crimes, which could include false statements or perjury by various campaign officials who may have lied about or failed to disclose contacts with Russian individuals. Those already convicted of cover-up crimes include former campaign aide George Papadopoulos, whose guilty plea was unsealed in October, and former National Security Advisor Michael Flynn, who pleaded guilty last Friday.

In this post, Yes, Colluding with Russians to Interfere with the Election is a Crime, I discussed the various conspiracy charges that might be implicated by the allegations in the Russia investigation. In Lying on a Security Clearance Form: The Crime of False Statements, I discussed the criminal implications for individuals such as Jared Kushner or Jeff Sessions if they willfully failed to disclose contacts with Russian nationals when they completed their security clearance applications.

The Obstruction of Justice Argument

Back in June I wrote a post called Trump and Obstruction: What Alan Dershowitz gets wrong. Dershowitz has argued (and continues to argue, including in the most recent New York Times piece) that president Trump could not be charged with obstruction of justice for firing James Comey or trying to interfere with the investigation of Michael Flynn. He points out that the president, as head of the Executive Branch, has the unquestioned power to fire the FBI director and to oversee investigations by the Justice Department. To charge the president with obstruction for these actions, he argues, would be an unconstitutional infringement of the president’s powers. President Trump’s attorney John Dowd has recently adopted this argument, claiming that as head of the Executive Branch the President cannot be charged with obstruction.

Dershowitz believes the president could not be prosecuted for obstruction based on these actions no matter how corrupt his motive. Even if the government could prove beyond a shadow of a doubt that Trump fired Comey because he knew Comey was closing in on him and he wanted to try to thwart the investigation, Dershowitz claims that would not be obstruction. But as I pointed out in that June post, things that one otherwise has a lawful right to do can become criminal obstruction if they are done with corrupt intent. I have a right to destroy my laptop, but if I do it because it’s been subpoenaed by the grand jury and I’m trying to get rid of incriminating evidence, that lawful act becomes obstruction. The same is true of firing the FBI director: the President has the right to do it, but not if he does it with the corrupt intent to obstruct justice.

Dershowitz agrees that if the president took a bribe in exchange for firing Comey, that could be prosecuted. But there is no logical reason for treating obstruction of justice differently. In the bribe scenario, the otherwise lawful act of firing the director becomes a crime due to the corrupt motive that underlies that action. The same is true for obstruction.

Dershowitz argues that to charge Trump with obstruction for firing Comey or seeking to influence the investigation would be to prosecute him for “constitutionally authorized acts.” This amounts to a claim that the constitution authorizes the president to corruptly shut down any investigation into his own potentially criminal behavior. I think Madison would be surprised. Dershowitz has offered no legal authority for the extraordinary proposition that when it comes to the crime of obstruction of justice, the president of the United States is immune and above the law unless he also engages in some additional criminal act.

Whether a sitting president can actually be indicted and prosecuted is a separate question, and I’m not dealing with that here. It may be that if Trump obstructed justice the only appropriate remedy is impeachment, not prosecution. But as long as we live in a country governed by the rule of law, it can’t be the case that the ordinary rules of obstruction of justice law do not apply to the president.

The False Comparisons to Hillary Clinton

The next post where I took issue with Dershowitz was based on his comparison of the allegations against the Trump campaign and allegations involving the Democrats’ involvement in the preparation of the infamous Trump Russian “dossier.” Dershowitz has been using the two cases as examples of what he claims is the criminalization of politics, arguing that neither case is appropriate for a criminal investigation. In my post, Trump, Clinton, and the Russia Dossier: Fallacies and False Comparisons, I pointed out that the two cases involved very different facts and how, while the allegations about Russia and the Trump campaign fully justify a criminal investigation, the allegations about the dossier do not.

This led to an interesting exchange on Twitter between two Harvard Law School titans (and Twitter titans as well), Dershowitz and professor Larry Tribe. Tribe tweeted out my post:

Which led Dershowitz to respond:

Actually that response itself proved my point: Dershowitz is asserting that the two cases are on equal footing and deserve to be treated equally. And just a week earlier on Twitter, Dershowitz had made exactly the comparison that he later denied:

Facts matter. Opponents of the Trump investigation can’t simply say “Well, what about Hillary?” without discussing the facts and allegations involved. The two cases are not at all the same. Based on what we know so far, a criminal investigation into the dossier would be unjustified. As I explained in the post, the same is definitely not true when it comes to Russia and the Trump campaign.

The “Criminalization of Politics” Claim

The latest round took place last week in the pages of the New York Times and the Washington Post. In a Times op-ed titled “When Politics is Criminalized,” Dershowitz repeated many of the same arguments he has been making about the Mueller investigation, as well as his broader argument about political prosecutions in general. He claimed the Mueller investigation is simply one example of what he sees as an increasing practice of using criminal law to attack political enemies. He also repeats some of the arguments discussed and refuted above, about how the president could not be charged with obstruction and how calls for investigations of Hillary Clinton are essentially on the same footing as calls to investigate the Trump campaign.

The Washington Post published my response,  “No, the Mueller probe isn’t politically motivated“.   As I noted in that piece, Dershowitz’s underlying concern is valid, but the facts in this case and in the other examples that he cites simply don’t back him up. It’s true that criminal law should never be used for political purposes, but there’s no evidence that Mueller’s investigation suffers from that flaw.

The Latest Tweet from the President

The arguments about obstruction of justice were fueled this past weekend by the President’s Tweet in the wake of Michael Flynn’s guilty plea, in which he appeared to admit that he knew Flynn had lied to the FBI at the time when former FBI director James Comey says Trump asked him to back off the Flynn investigation. This led to a flurry of activity over the weekend. Critics claimed the Tweet provided solid evidence that the President obstructed justice when he asked Comey to drop the investigation of Flynn. Trump’s attorney John Dowd responded by claiming that he drafted the Tweet, not the president, and in any event that the president can’t be charged with obstruction of justice. 

Dershowitz was back as well, this time on Fox News, claiming the president is immune from obstruction – which led to this presidential Tweet:

No doubt these debates are going to continue and only become more heated as Mueller appears to close in on the president’s inner circle.

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Trump, Clinton, and the Russia Dossier: Fallacies and False Comparisons

Special Counsel Robert Mueller is investigating Russian interference with the 2016 presidential election and possible collusion with the Russians by members of the Trump campaign. But news that the Clinton campaign and the Democratic National Committee helped fund the infamous “dossier” about President Trump has led to charges that the Clinton campaign also colluded with the Russians. Some, including the President himself, claim the preparation of the dossier is the real scandal and that prosecutors should be examining Clinton, not Trump. Others, including some prominent law professors, claim the dossier demonstrates that both campaigns were equally culpable and so if Trump’s  Russian collusion is fair game, Clinton’s should be as well.

These arguments capitalize on the vagueness of the word “collusion” which, as I wrote here, is not really a criminal law term. It’s easy to claim that if someone working for the Clinton campaign at some point met with someone from Russia, that qualifies as “collusion” and equally deserves to be investigated. But such claims ignore the crucial factual distinctions between the two situations. They also rely on various logical fallacies that only serve to obscure the real issues.

Mueller’s investigation is focused not on “collusion” but on allegations of conspiracy and related criminal offenses. When it comes to potential criminal violations, the preparation of the dossier has almost nothing in common with the allegations surrounding the Trump campaign. Claims to the contrary are simply a smokescreen.

Background: The Trump Dossier 

The dossier consists of information gathered about Trump’s activities and connections in Russia and possible coordination with Russia to influence the presidential campaign. Work on the dossier was initially funded during the GOP primaries by an anonymous Republican who was opposed to Trump. After Trump locked up the nomination, the Democratic National Committee and Clinton campaign agreed to continue funding the research.

The dossier was prepared by a company called Fusion GPS. To do the work, Fusion retained the services of Christopher Steele, a former British intelligence agent with extensive experience in Russia and ties to the U.S. intelligence community.

Steele was so troubled by what he found that he shared the information with the FBI. The intelligence community found the information sufficiently credible that FBI Director James Comey briefed both President Obama and President-elect Trump on the dossier’s contents after the election. U.S. intelligence reportedly has verified some of the allegations in the dossier and has been unable to verify others. There are recent reports that Steele believes the dossier will be proven to be 70-90% accurate.

White House Response: What About Hillary?

The White House has argued that the preparation of the dossier represents the real Russia scandal. President Trump has Tweeted:

White House press secretary Sarah Huckabee Sanders recently said: “The real collusion scandal as we’ve said several times before has everything to do with the Clinton campaign, Fusion GPS and Russia.”  Referring to Democratic funding of the dossier, Fox News commentator Chris Wallace opined that there was more evidence of Democractic collusion with the Russians than of Republican collusion.

This tactic is a rhetorical deflection commonly known as “whataboutism.”  When accused of something, the whataboutist doesn’t respond on the merits but essentially charges the accuser with hypocrisy by pointing to something the accuser has done that is allegedly similar. Ironically, “whataboutism” is thought to have originated as a Soviet propaganda technique.

The “whataboutist” response is a fallacy because it does not address the merits of the underlying charge. Assume for argument’s sake the Clinton campaign did do something wrong by participating in the preparation of the dossier. That would not detract from any culpability that those involved in the Trump campaign may have for working with the Russians. If I robbed the bank it doesn’t affect my guilt if I respond by saying, “Yeah, well, what about you — you robbed the liquor store!”

So even if the Clinton campaign may have something to answer for based on the preparation of the dossier, that doesn’t demonstrate the Trump campaign did nothing wrong or that Mueller’s investigation has no basis. And even if both campaigns were culpable, many would agree that investigation of the candidate who actually won the election and is the sitting President should be a higher priority than the investigation of a private citizen who lost.

But this is all hypothetical. In terms of potential criminal violations, the preparation of the dossier is not at all similar to the alleged activities of the Trump campaign. The “whatabout” arguments simply create confusion and deflect attention, which is, of course, precisely their purpose.

Langdell Library – Harvard Law School

The Law Professor Responses: The Fallacy of False Equivalence

A different logical flaw is displayed by two prominent law professors: Alan Dershowitz of Harvard and Jonathan Turley of George Washington University. Both have repeatedly argued that collusion is not a crime and that there is no basis for a criminal investigation of the Trump campaign. When the dossier allegations emerged, Dershowitz and Turley seized on them to accuse liberals of hypocrisy. If you support a criminal investigation of the Trump campaign, they argued, then you must also support a criminal investigation into the Clinton campaign’s role in the preparation of the dossier.

In a series of Tweets on November 5th and 6th, Dershowitz repeatedly claimed that the Trump and Clinton campaigns were basically on equal footing when it comes to Russia:

“Do you agree that Clinton shouldn’t be prosecuted for a non crime? Why is it irresponsible to make same argument re Trump?”

“Neither side should be making up crimes against the other”

And, in a masterful example of another fallacy, the straw man:

“Should there be one law for Democrats & a different one for Republicans?”

For his part, Turley wrote in an article for The Hill and on Twitter that he was skeptical of criminal allegations concerning either campaign, but that sauce for the Trump gander was sauce for the Clinton goose: “If seeking dirt from the Russians on Clinton is now a federal crime, how about seeking dirt from Russian sources against Trump?”

These arguments suffer from the fallacy known as false equivalence. They assert that the two cases are fundamentally the same and should result in the same outcome. But about the only thing the allegations against Clinton and Trump have in common is that both involve campaigns and Russia. Otherwise the facts and circumstances are not at all equivalent. And when it comes to criminal law and criminal investigations, facts matter.

The Trump Campaign vs. the Dossier

Profs. Dershowitz and Turley argue that if a criminal investigation of the Trump campaign is appropriate, then an investigation into the preparation of the dossier would be as well. But based on what we know so far, there are critical factual differences between the two.

Historical research v. proactive interference – The most important distinction is that between gathering historical information and proactively working to influence the campaign. Steele prepared his dossier by gathering intelligence about Trump and Russia. He did research and passed the information along. There is no allegation that he or anyone else in the Clinton campaign collaborated with any Russians to do anything in the future to influence the campaign or undermine Trump.

The Trump campaign, on the other hand, is suspected of possibly working proactively with Russian nationals to influence the outcome of the election. Mueller is investigating whether any members of the Trump campaign may have cooperated with Russians concerning leaks of emails stolen from the Democratic National Committee and Clinton campaign managerJohn Podesta, to create phony Twitter and Facebook accounts, and to flood social media with false stories intended to influence the election. There also are allegations that a data-crunching firm called Cambridge Analytica hired by Jared Kushner for the campaign may have helped the Russians target particular areas and demographic groups with their social media campaigns. Contrary to Prof. Turley’s claim, the investigation is not merely about “seeking dirt” about Clinton — it’s about working proactively to influence the election.

Campaign officials directly involved – The dossier was prepared by Steele, who was retained by Fusion GPS, which was hired by a law firm retained by the Clinton campaign and the DNC. There is no allegation that individuals who were part of the Clinton campaign met with any Russian individuals in connection with the dossier or knew what Steele was doing. In fact, Clinton and the leaders of her campaign apparently did not even know about the dossier until reports about it appeared in the press.

Within the Trump campaign, the allegations are that individuals at the very highest level met directly with Russians offering information on Hillary Clinton and claiming to have stolen emails. The infamous June 2016 meeting in Trump Tower with Russians promising dirt on Clinton included top members of the Trump campaign including the president’s own son and son-in-law and campaign manager Paul Manafort. Campaign officials such as Jared Kushner and now-attorney generalJeff Sessions failed to disclose meetings with Russians on their security clearance forms and only later admitted to such meetings. Foreign policy advisor George Papadopolous, who has pleaded guilty and is cooperating with Mueller,  was actively cultivating contacts with Russian nationals and sharing that information with others in the campaign, including at meetings that Trump himself attended.

Potentially dealing in stolen property – The Trump campaign may have accepted help from Russians on matters involving information illegally hacked from the DNC computer system and stolen emails. Computer hacking is a federal crime.  Mueller is investigating whether Trump campaign officials knowingly accepted the stolen emails and actively worked to exploit the information contained in them.

With the Steele dossier, again, the allegation is that it consisted of gathering historical intelligence information from contacts Steele had cultivated over many years. There is no allegation that any of the information stemmed from an illegal source.

Concealing information and false statements – A final distinction lies in how the information was handled by the respective parties. Steele was so alarmed by the information he uncovered that he shared it with the FBI. Those engaged in possibly unlawful collusion with a foreign power do not ordinarily report their own activities to federal authorities.

The Trump campaign, on the other hand, allegedly received information suggesting that a foreign power had unlawfully hacked the computers of a U.S. political party and campaign official. They did not report this information to the FBI. Instead, at a minimum they explored the idea of meeting with the Russians who did the hacking to obtain access to those emails and possibly use them against Clinton.

Trump campaign officials have repeatedly concealed information about their contacts with Russians, revealing that information only when confronted with new evidence that the contacts took place. The most recent example is Attorney General Jeff Sessions, who just this week in testimony on Capitol Hill revealed new information about potential campaign contacts with Russians that he previously claimed not to recall. In addition to constituting possible independent crimes, false statements and concealment provide evidence of corrupt intent and knowledge of wrongdoing.

Comparing Apples and Oranges

The allegations about the Trump campaign may ultimately prove to be unfounded. That often happens in white collar investigations. But the allegations provide a solid basis for an investigation to determine whether any criminal laws may have been violated. When it comes to the dossier, there are no comparable allegations of potential criminality.

We really need to look no further than how the FBI reacted to the two matters. The allegations in the Steele dossier were found by the FBI to justify a counter-intelligence investigation and later a criminal investigation. The allegations were also considered sufficiently serious by the Trump Department of Justice to warrant the appointment of an independent counsel. When it comes to the preparation of the dossier, the FBI not only did not see a basis for a criminal investigation into its preparation, but expressed interest in continuing to fund Steele’s research itself.

Professors Dershowitz and Turley, without the benefit of access to the confidential grand jury investigation or the FBI files, feel confident in saying there is no basis for criminal charges. They apparently believe that Mueller and the team of professionals he has assembled either are incompetent or are political hacks. But the prosecutors’ actions thus far reveal just the opposite.

Saying “what about Clinton” is a convenient diversion, but it’s a sloppy argument that ignores the facts and doesn’t respond to the serious allegations about the Trump campaign. Fortunately, Mueller and his team are unlikely to be distracted.

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Mueller Monday: Breaking Down the Charges and Looking Ahead

This past Monday Special Counsel Robert Mueller unveiled the first criminal charges in his ongoing probe of potential ties between Russia and the Trump campaign. Word of an impending indictment leaked last Friday, and Washington was buzzing all weekend about who might be the target. On what the Internet quickly dubbed #MuellerMonday, prosecutors unsealed a twelve-count indictment charging former Trump campaign manager Paul Manafort and his associate Richard Gates.

The charges against Manafort were not a great surprise. The FBI had executed a search warrant at his house last July, and there were reports he had been told to expect an indictment. But Mueller’s other announcement was unexpected: he also unsealed a guilty plea by a former foreign policy advisor to the Trump campaign, George Papadopoulos. It turns out Papadopoulos was arrested last July, was charged under seal, and has been cooperating with Mueller’s office.

The charges indicate that Mueller’s team is moving forward aggressively and effectively. There are likely many more shoes to drop before he is done. And with Monday’s moves he’s sent an unmistakable message to others who may have been involved in any criminal conduct. 

Special Counsel Robert S. Mueller, III

Breaking Down the Charges

Manafort and Gates Overview

The indictment encompasses activity from 2006 to 2017. During that time Manafort ran two different political consulting firms. Gates worked for Manafort and the indictment identifies him as Manafort’s “right hand man.” Beginning in 2006, various pro-Russia political parties and individuals in Ukraine hired Manafort’s firms for lobbying and political consulting, and that work continued for a decade. The defendants allegedly concealed this work from the federal government by failing to register as foreign agents as required.

The defendants used an entity called the European Centre for a Modern Ukraine (the Centre) to retain other lobbying firms in the United States. The Centre was in fact controlled by political leaders in Ukraine working with the defendants. Using the Centre as a front allowed the defendants to distance themselves from the Ukrainian work and conceal it from the government.

Manafort and Gates also allegedly concealed the money they were earning from Ukraine by routing that money through a large number of corporations, partnerships, and bank accounts, including foreign corporations and accounts established in Cyprus, Saint Vincent & the Grenadines, and the Seychelles. To hide the existence of these foreign bank accounts they allegedly failed to report their control over those accounts to the federal government as required, both on their income tax returns and by separate required filings.

In addition, the defendants allegedly used nearly three dozen different offshore entities, primarily located in Cyprus, to wire millions of dollars into the United States to pay for goods, services, and real estate for themselves. None of this money was reported as income by the defendants or by Manafort’s companies. The indictment includes a seven-page detailed list of these payments, which included more than $5 million to a home improvement company in the Hamptons, nearly $1 million to an antique rug store, more than $800,000 to landscape companies in the Hamptons, and more than $1.3 million to clothing stores.

Paul Manafort

Criminal Charges Against Paul Manafort and Richard Gates

 Count One: Conspiracy, 18 U.S.C. 371

Count one charges both defendants with conspiracy under 18 U.S.C. 371. This is an overarching charge that encompasses the entire scheme from 2006 to 2017. The federal conspiracy statute prohibits conspiracies to defraud the United States and conspiracies to commit an offense against the United States. The indictment charges both.

A conspiracy to defraud the United States includes an agreement to impair, obstruct, or impede the lawful functions of the U.S. government. The indictment charges that the defendants’ activities impaired and obstructed the lawful functions of the Department of Justice (which is charged with monitoring the activities of foreign agents) and the Department of the Treasury (which includes the Internal Revenue Service).

The indictment also charges the defendants with conspiracy to commit offenses against the United States, which means a conspiracy to commit any federal crime. It alleges that they conspired to commit the federal crimes contained in the subsequent counts of the indictment.

This is a pretty common structure for a white collar crime indictment. The conspiracy charge up front tells the story of the entire criminal scheme, and it is followed by individual counts of the crimes the defendants allegedly conspired to commit. Conspiracy under 18 U.S.C. 371 is punishable by a maximum of five years in prison.

Count Two: Conspiracy to Launder Money, 18 U.S.C. 1956(h) 

Count two charges that by moving millions of dollars through their various partnerships, corporations, and foreign accounts, the defendants conspired to commit money laundering. Several different money laundering theories are charged as the objects of the conspiracy. The first is that the defendants transferred funds across international borders in order to promote criminal activity, in violation of 18 U.S.C. 1956(a)(2)(A). The second is that the defendants engaged in financial transactions in criminal proceeds with the intent to evade income taxes, in violation of 18 U.S.C. 1956(a)(1)(A)(ii), and knowing that those transactions were designed to conceal and disguise the source, ownership, and control of the proceeds, in violation of 18 U.S.C. 1956(a)(1)(B)(i).

Put more simply, this charge focuses on the defendants’ use of their extensive network of foreign companies and bank accounts to promote their business, conceal their activities and sources of income from the government, and avoid paying taxes. The money laundering conspiracy is the most serious charge in the indictment, carrying a maximum penalty of twenty years in prison.

Counts Three to Nine: Failure to File Reports of Foreign Bank Accounts, 31 U.S.C. 5314, 5322(b)

The Bank Secrecy Act requires U.S. citizens to file reports with the U.S. Treasury concerning any foreign bank accounts they own or have signatory authority over if the balance exceeds $10,000 at any time during the year. These are called foreign bank account reports, or “FBARs.” Willfully failing to file a required FBAR while engaged in other criminal activity is a ten-year felony.

Counts three to six charge Manafort with failing to file a required FBAR for the years 2011, 2012, 2013 and 2014, thus concealing his interest in multiple foreign bank accounts.  Counts seven to nine charge Gates with the same offense for the years 2011, 2012, and 2013.

Count Ten: Failure to Register as Foreign Agent, 22 U.S.C. 612, 618

The Foreign Agents Registration Act (FARA) requires persons who engage in lobbying or public relations work in the United States on behalf of a foreign principal to file detailed reports, under oath, with the Department of Justice. The reports must include the identity of the principal and the nature of the work being done. Count ten charges that between 2008 and 2014 both defendants failed to register as required by FARA for their work on behalf of the Ukrainian government and Ukrainian officials. The FARA violation is punishable by up to five years in prison.

Count Eleven: False and Misleading FARA statements, 22 U.S.C. 612, 618

FARA also makes it a crime to make false or misleading statements in connection with a FARA report. Count eleven charges that in November 2016 and February 2017, both defendants filed documents with the Department of Justice that contained false and misleading statements about their work on behalf of Ukraine. In particular, it alleges that they lied about their own role in the lobbying and falsely claimed that all such work was actually coordinated by the Centre.

Count Twelve: False Statements, 18 U.S.C. 1001

Count twelve charges essentially the same false and misleading FARA statements alleged in count eleven but charges them under a different statute, 18 U.S.C. 1001, the general false statements statute. That statute criminalizes any material false statement made in a matter within the jurisdiction of one of the branches of the federal government. It is also punishable by up to five years in prison.

Summary:

Manafort: Charged in counts 1-6 and 10-12, maximum statutory exposure 80 years.

Gates: Charged in counts 1-2 and 7-12, maximum statutory exposure 70 years.

George Papadopoulos

Criminal Charges Against George Papadopoulos

Papadopoulos pleaded guilty under seal to one count of lying to the FBI in violation of 18 U.S.C. 1001, false statements. His maximum exposure is five years, although his plea agreement indicates he may be sentenced to as little as 0-6  months.

The plea documents contain a statement of facts, which Papadopoulos has admitted as true. He admits he lied to the FBI during an interview on January 27, 2017 about his contacts with Russian individuals while working on the campaign. (Note that this interview was only a week after President Trump was inaugurated, and took place four months before Mueller was appointed Special Counsel.) During that interview Papadopoulos falsely downplayed his interactions with Russian individuals and claimed those interactions took place prior to his work on the campaign.

The plea documents contain a detailed timeline showing that Papadopoulos in fact had extensive contacts with Russian individuals while working on the campaign. These included Russian operatives with shadowy nicknames such as the “professor” and a “female Russian national” who claimed she was related to Vladimir Putin. Papadopoulos had repeated contacts with these individuals, trying to broker meetings between Russian government officials and members of the Trump campaign. They reportedly told Papadopoulos that Russia could offer “dirt” on Hillary Clinton and that they had “thousands of emails.” At one point the “female Russian national” told him, “We are all very excited by the possibility of a good relationship with Mr. Trump.”

Papadopoulos repeatedly advised other members of the Trump campaign (including an unidentified “senior policy advisor” and “high-ranking campaign official”) of his progress in his contacts with the Russians, and was encouraged to keep pursuing them. These included communications about the Russia ministry of foreign affair’s interest in a possible meeting with Trump in Russia. After repeated communications about a possible “off the record” meeting with Russian officials, a “campaign supervisor” encouraged Papadopoulos to make the trip, if feasible. The proposed trip never actually took place.

Although the Papadopoulos plea contains detailed information about his efforts to work with Russian nationals on behalf of the campaign, he is not actually charged with any crimes related to his Russian contacts. Instead, he pled guilty to lying to the FBI when interviewed about those contacts.

What to Expect Going Forward

The release of both sets of charges on the same day was a shrewd strategic move by Mueller. Manafort, who apparently has refused to cooperate, ends up indicted and potentially facing a decade or more in prison. Papadopoulos, who chose to cooperate and plead guilty, faces a single, relatively minor felony charge and may avoid jail altogether. The message to future witnesses is clear: be like George, not like Paul.

President Trump himself was quick to point out that the charges against Manafort primarily involve conduct that took place before he was involved in the campaign:

It’s true that most — though not all — of the alleged crimes in the indictment predate Manafort’s work on the campaign, but that’s largely beside the point. Mueller’s purpose, in addition to pursuing criminal charges that are fully justified in and of themselves, is to pressure Manafort into cooperating in the broader investigation. The indictment gives him the leverage to do that. As a campaign manager who also had extensive ties to Russia, Manafort may be uniquely situated to provide information central to Mueller’s investigation. He will now be under tremendous pressure to cooperate and share that information to help himself out in his own case.

The nature of the charges is particularly bad news for Manafort and Gates. These financial charges are tough to defend against. They don’t depend on a lot of nuance or witness credibility. The indictment spells out the paper trail in excruciating detail, and the jury needs only to follow the money. There are not many obvious defenses that leap off the pages of the indictment.

Manafort and Gates also need to be aware that this could be just the beginning. The allegations in the indictment suggest other potential charges that have not yet been filed, including tax crimes and bank fraud. Mueller’s team always has the option of bringing a superseding indictment to add more charges. It’s also possible the New York Attorney General could file state charges — and those would be outside the reach of President Trump’s pardon power.

The case against Manafort and Gates will move forward now in the ordinary course, with motions, discovery, and potentially a trial. It will occupy the time of a couple of members of Mueller’s team, but the rest will continue to move the broader investigation forward. Either or both of the defendants could decide to plead guilty at any time. Presumably they will have discussions with the Special Counsel’s office about possible cooperation — a prospect that has to make others involved in the campaign extremely uneasy.

A “Proactive Cooperator”

As for Papadopoulos, there has been a lot of speculation about what his cooperation over the past few months may have entailed. It’s all guesswork for now  – but keep in mind that Mueller had him charged under seal, to keep it a secret. One reason to do that would be if Papadopoulos was covertly assisting in the investigation. Speculation that this might have happened was further fueled by a paragraph in his plea agreement referring to him as a “proactive cooperator.”

Whether Papadopoulos actually worked with the FBI will be revealed in due course. It’s certainly possible that investigators could have had him make recorded phone calls, or arrange meetings with other targets while wearing a wire, to talk about the events under investigation. Or his cooperation may have simply involved providing testimony and documents about past conduct.

The other important aspect of Papadopoulos’s case is the detailed timeline and statement of facts in support of his plea. Although it contains pseudonyms like “senior campaign official,” everyone knows that Bob Mueller’s team knows who those people are. Investigators appear to know in great detail what happened during the campaign. And if future witnesses try to come in and lie to them, they will find themselves in the same boat as Papadopoulos. Once again, the strength of the charges and the amount of detail in the documents sends a clear signal that these investigators aren’t playing around and won’t be easily fooled.

The documents in Papadopoulos’s case don’t prove that collusion with Russia took place — although to steal a phrase from John Dickerson, they certainly establish that the Trump campaign was “collusion curious.” Whether any collusion or attempted collusion that did take place actually amounts to a crime is yet another question. But the guilty plea does make it clear that Mueller’s team is deep into examining the operations of the campaign and potential ties to Russia, and already knows a great deal.

Finally, the release of Papadopoulos’s documents further highlights the jeopardy in which Manafort finds himself. There is widespread agreement that the “senior campaign official” referred to in Papadopoulos’s plea is Manafort, who is now on notice that Mueller has an insider telling him all about the campaign, Russia, and the role played by Manafort and others. If Manafort ends up meeting with Mueller’s team about those issues, he knows he can’t get away with hiding the ball.

Mueller’s team appears to be pursuing a classic investigative strategy of building cases against lower-level players, persuading the to “flip” and cooperate, and moving up the ladder. Whether Manafort flips or not remains to be seen, but regardless, there’s every reason to believe the Special Counsel is just getting started.

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