A premier U.S. law firm, which briefly drew the attention of special counsel Robert S. Mueller III, agreed to pay a $4.6 million settlement and register as an agent of a foreign government for the work it performed for Ukraine but did not appropriately report, the Justice Department announced Thursday.
The firm — Skadden, Arps, Slate, Meagher & Flom — conceded it should have registered as a foreign agent in 2012, when it was hired in a deal facilitated by Paul Manafort to prepare a report about the prosecution of former Ukrainian prime minister Yulia Tymoshenko.
The report was controversial because it seemed to contradict assertions from the human rights community that Tymoshenko had been unjustly jailed, after her Russia-friendly political rival rose to power. Manafort — who made millions for his work on behalf of the Ukrainian government — would go on to become Donald Trump’s campaign chairman.
The case is emblematic of the Justice Department’s recent efforts to crack down on those who do work on behalf of foreign governments and fail to register appropriately. Though Skadden as an institution has worked its way out of the crosshairs, prosecutors are still investigating several former titans of the legal and lobbying industries who did work for Ukraine, including Gregory Craig, a former Skadden partner and former White House counsel under President Barack Obama, and K Street veterans Tony Podesta and Vin Weber.
“This resolution represents a considerable new benchmark in the Justice Department’s recent escalation of FARA enforcement,” said David Laufman, the former head of the Justice Department’s Counterintelligence and Export Control Section, using an acronym to refer to the Foreign Agents Registration Act. “Law firms are now on specific notice that they, too, will be held accountable for the failure to register and that violations can come with a high price.”
Skadden said in a statement that the settlement “brings the firm closure with the U.S. government regarding issues relating to a report we produced for the Government of Ukraine in 2012.”
“We have learned much from this incident and are taking steps to prevent anything similar from happening again,” the firm said.
Representatives for Craig and Podesta declined to comment.
A senior partner from Weber’s firm, Mercury LLC, said late Thursday that he was surprised by details of the settlement because Skadden had been advising Mercury on how to report its work for the Ukrainian interests.
“Skadden represented us during the time period at issue in their settlement and we followed their advice,” said Michael McKeon, a Mercury senior partner. “We were surprised to learn about their separate communications with the FARA unit and the facts surrounding those discussions.”
The $4.6 million is the money Skadden received for its work on the report, which was meant “as part of a public-relations campaign to influence U.S. policy and public opinion toward Ukraine,” the Justice Department said.
The department said Skadden’s lead partner — who officials have previously said was Craig — helped advance the campaign. Those who seek to influence U.S. actions for a foreign government or political party are supposed to register with the Justice Department.
In 2013, the Justice Department’sFARA Unit inquired about the firm’s activities for Ukraine. The firm “in reliance on the lead partner, made false and misleading statements” — including by claiming it had released a copy of the report only in response to media requests, when in fact it had leaked the document ahead of the official release, the Justice Department said. The department did not name the organization to which the document was given, but described what appeared to be an article in the New York Times. A Times spokeswoman confirmed it was the organization referenced.
Based on that, the FARA Unit decided Skadden need not register. But Mueller’s appointment renewed investigators’ interest.
The special counsel dove into Manafort’s work in Ukraine for Tymoshenko’s rival, Viktor Yanukovych, and ultimately charged Manafort with violating the Foreign Agents Registration Act, along with bank and tax fraud counts.
Manafort was convicted last year in connection with the fraud after a trial in Virginia, and he pleaded guilty in Washington to conspiring to defraud the United States and witness tampering.
Mueller’s team also negotiated a plea agreement with London-based Skadden lawyer Alex van der Zwaan, whom investigators had interviewed about the Tymoshenko report. He pleaded guilty to lying to the FBI about his contacts with Manafort business partner Rick Gates and admitted he deleted emails when Skadden was gathering documents to give to the special counsel.
Mueller ultimately referred the investigation into Craig — and those into Weber and Podesta, who worked separately with Manafort on behalf of Ukrainian interests — to federal prosecutors in New York. People familiar with the ongoing inquiry, who spoke on the condition of anonymity to discuss an open matter, say prosecutors appeared to have been focused on whether the three failed to register as foreign agents while working with Manafort’s Ukrainian clients.
No charges have been filed, and representatives for the three men have expressed confidence that their clients did not violate the law. However, last fall, prosecutors stepped up their investigation of Craig, asking questions of him and his attorneys.
A Justice Department official said Skadden’s agreement to pay back the money it made from its Ukraine work “only deals with the liability of the law firm,” not the people who did work for it.
“Law firms should handle inquiries from the federal government the same way they would counsel their clients to: with appropriate due diligence to ensure the honesty of their response,” said John Demers, who heads the Justice Department’s National Security Division. “Skadden’s failure to do so, and reliance on only the representations of the lead partner on the matter, hid from the public that its report was part of a Ukrainian foreign influence campaign.”