We Americans do not like foreign governments or their agents meddling in our domestic affairs, whether it is China, Russia, Iran, Syria, or some less reprehensible regime. We do not even like friendly foreign governments meddling in our affairs. I am not talking about traditional CIA/007 spies or agents who operate in the shadows, mainly toward political ends (sometimes by way of economic means). And I am not talking about official representatives of foreign governments operating in the United States as counterparts to our State Department officials. But I am talking about non-governmental (not to be confused with NGO) economic and political agents who operate and exert influence on U.S. soil on behalf of foreign governments and quasi-governmental groups. These agents are considered “foreign agents” under the U.S. Foreign Agents Registration Act (“FARA”), and as foreign agents, they are required to register and update their registrations regarding each foreign client. This is the first of a three-part series on FARA registration requirements to help you ensure you do not end up on the wrong side of the U.S. Department of Justice.
Foreign lobbying and FARA rose again to prominence in the past few years, with prosecutions accelerating starting in 2017, thanks to Russia and Ukraine. You may remember some of these newsworthy prosecutions brought by the U.S. Department of Justice in the past five years:
- 2014 – Prince Asiel Ben Israel pleaded guilty for failing to register under FARA for his lobbying efforts on behalf of Zimbabwe to try to lift sanctions on Robert Mugabe and other top Zimbabwean government officials. Ben Israel was sentenced to seven months in prison.
- 2017 – Michael T. Flynn pleaded guilty to making false statements to the FBI regarding his interactions with the Russian Ambassador to the United States and for making materially false statements on his FARA registration documents regarding work performed by him and his company to principally benefit the Republic of Turkey.
- 2018 – Three Russian Companies and 13 Russian nationals were indicted by a grand jury for violating FARA for their political interference surrounding the Clinton vs. Trump election.
- 2018 – Richard Gates (compadre of Paul Manafort) pleaded guilty to conspiring to violate FARA by failing to register and providing false statements in a FARA registration document in connection with his lobbying work on behalf of the Government of Ukraine, the Ukrainian Party of Regions, and former Ukrainian President Victor Yanukovych. Gates has been cooperating with the government and is awaiting sentencing.
- 2018 – Nisar Ahmed Chaudhry pleaded guilty for failing to register under FARA as an agent for the Government of Pakistan, its military, intelligence, and diplomatic officials.
- 2018 – W. Samuel Patten pleaded guilty to violating FARA on behalf of the Opposition Bloc, a Ukrainian political party, for failing to register under FARA, even though he contacted members of Congress, the executive branch, and news media. He also drafted talking points for a Ukraine oligarch for meetings with members of Congress and congressional staff and news articles targeted at the U.S. press. He cooperated with the government and was sentenced to 36 months of probation.
- 2018 – Paul Manafort pleaded guilty to violating FARA by failing to register and providing false statements in a FARA registration document for his work on behalf of the Government of Ukraine, the Ukrainian Party of Regions, and former Ukrainian President Victor Yanukovych. He was sentenced to the maximum 60 months for his conspiracy to violate FARA.
- 2018 – Elena Alekseevna Khusyaynova, a Russian national, was charged by a criminal complaint for her alleged role in a Russian conspiracy to impair, obstruct, and defeat the U.S. Department of Justice’s administration and enforcement of FARA.
- 2019 – The U.S. law firm Skadden, Arps, Slate, Meagher & Flom LLP entered into a settlement agreement resolving its liability for FARA violations surrounding its work for the Government of Ukraine, including a Skadden partner’s false and misleading statements to the FARA Unit to avoid registration under FARA. Skadden disgorged over $4.6 million in fees.
If at this point you are wondering whether there appears to be an accelerated trend of pushing against foreign influence in the U.S., you are absolutely correct. In addition to increasing FARA scrutiny, CFIUS reviews under FIRRMA, which seek to limit foreign ownership of U.S. businesses, have also been on the rise in recent years (see here and here). You may not consider yourself a traditional lobbyist. Perhaps you only consider yourself an advisor, a consultant, or “just” a lawyer working on behalf of a client. Whatever your role, if you are involved with a foreign government or “any faction or body of insurgents within a country assuming to exercise governmental authority,” then you need to carefully look at the FARA criteria.
You may also be wondering why those working on behalf of China as foreign agents have not been involved in FARA prosecutions at this point, though there have been plenty of criminal economic espionage cases brought against those stealing trade secrets for China (see here) by the DOJ. Based on the current state of affairs, you can believe that foreign agents operating on behalf of China will be in the crosshairs next. It is time to make sure you and your company are complying with FARA. In Part 2, we will look at the criteria for registering as a foreign agent under FARA.