WASHINGTON – Two Ukrainian-born business partners, who showered Republican campaign committees with nearly $500,000 and dined with President Donald Trump at the White House, are the latest witnesses House Democrats want to question in their impeachment inquiry.
Lev Parnas and Igor Fruman helped Rudy Giuliani meet a key Ukrainian prosecutor as the president's personal lawyer sought to discredit Trump's political rival, former Vice President Joe Biden.
Parnas and Fruman, who were born in Ukraine when it was part of the Soviet Union but who now live in Florida, have become political players in recent years. In May 2018, Parnas posted pictures on Facebook of himself and Fruman with Trump in the White House and with his son, Donald Trump Jr., in California. That was the same month their company, Global Energy Producers LLC, was credited for giving $325,000 to a campaign committee that supports Trump's re-election.
But in a legal dust-up that appears unrelated to the Ukraine scandal, the campaign contribution sparked a complaint to the Federal Election Commission – and at least two lawsuits – because of questions about the source of the money. Despite the generous political contributions, Parnas faces a $510,000 federal judgment in a case over a debt for a movie that never got made.
Three House committees – Foreign Affairs, Intelligence, and Oversight and Reform – scheduled depositions Thursday with Parnas and Friday with Fruman to ask how they fit in with Trump's dealings with Ukraine. Those panels have also subpoenaed documents from Giuliani and Secretary of State Mike Pompeo.
But Parnas and Fruman are not expected to appear, after their lawyer John Dowd notified the committees that they were given too little notice to prepare.
Why role did Parnas and Fruman play?
The impeachment investigation has focused on a July 25 phone call in which Trump urged Ukraine President Volodymyr Zelensky to investigate Biden. Text messages between top State Department officials suggested the demand was a trade-off for nearly $400 million in military aid.
But Trump has tweeted that as president, he has "an absolute right, perhaps even a duty," to investigate corruption. He has defended his discussion with Zelensky as a "perfect" call and has said there was no quid pro quo between the request to investigate Biden and the military aid.
White House counsel Pat Cipollone notified House Speaker Nancy Pelosi, D-Calif., and the three committee chairmen on Tuesday that Trump would not cooperate with an investigation he considers "partisan" and unfair.
More: A diagram of events in the impeachment inquiry of President Trump
Parnas and Fruman drew the congressional spotlight because they helped arrange a January meeting in New York between Giuliani and Ukraine’s then-prosecutor general, Yuri Lutsenko, according to multiple Ukrainian media reports.
Lutsenko is at the heart of the impeachment inquiry because Trump and Giuliani have pushed an unsubstantiated claim that Biden urged the prosecutor's removal in 2016 to thwart an investigation into a company tied to his son, Hunter Biden. Biden has denied wrongdoing and Lutsenko has told The Washington Post that Hunter Biden "did not violate anything.”
Dowd, the lawyer who represents Parnas and Fruman, told the Intelligence Committee by letter Oct. 3 that they couldn't meet a Monday deadline for documents and communications because the men were also represented by Giuliani and the material might be protected by attorney-client privilege.
"Your request for documents and communications is overly broad and unduly burdensome," Dowd told the panel, calling the request an effort to "harass, intimidate and embarrass my clients." Dowd said the committee should recognize "some semblance of due process, fairness, justice and common decency."
Parnas earlier told The Miami Herald the impeachment inquiry is a "soap opera" and he defended Trump.
"I got certain information and I thought it was my duty to hand it over," Parnas told The Herald.
If Parnas and Fruman refuse to testify, the committees could subpoena them. Gordon Sondland, the U.S. ambassador to the European Union, was subpoenaed Tuesday after refusing to appear to describe his role in dealings with Ukraine.
Parnas, Fruman support Trump
The $325,000 campaign contribution May 17, 2018, took a wayward path to America First Action, a political-action committee that supports Trump’s re-election. The contribution was attributed to the company Global Energy Producers LLC on the committee's report to the Federal Election Commission. Parnas was listed as CEO of the company and Fruman as president, in other campaign documents.
But The Associated Press found the money actually came from a different corporate entity, Aaron Investments I LLC, which was managed by Parnas and his wife. Aaron Investments had received $1.2 million from the proceeds of a private mortgage May 15, 2018, secured by a condo unit in North Miami Beach owned by a separate corporation tied to Fruman, according to AP. Wire-transfer records show $325,000 was then wired from Aaron Investments to America First Action, even though the contribution was credited to Global Energy Producers.
Four days after the contribution, on May 21, 2018, Parnas posted a picture on Facebook of himself with Fruman and Donald Trump Jr. at a breakfast at the Beverly Hills Polo Lounge in California. "Power Breakfast!!!" the caption said. Parnas had previously posted a picture of himself with Trump at the White House on May 1, describing an “incredible dinner and even better conversation.”
The Campaign Legal Center, a non-partisan campaign finance watchdog based in Washington, filed a complaint with the FEC in July 2018 arguing that Global Energy Producers shielded the source of the political contribution. Under federal law, contributions must be attributed to the person or entity providing the money, to avoid straw donations.
Parnas and Fruman were also generous to a variety of Republican campaign groups. Parnas has contributed nearly $125,000 since October 2016 and Fruman more than $44,000, according to FEC records.
A legal case right out of the movies
The large political contributions also prompted at least two lawsuits against Parnas for unpaid debts.
A Florida man named Felix Vulis filed a state lawsuit in March against Fruman, Parnas and Global Energy Producers seeking repayment of a $100,000 loan that was provided to help the business achieve the goal of becoming the country's biggest exported of liquid natural gas. Vulis wrote a check Oct. 1, 2018, that was supposed to be repaid by Dec. 1, 2018, but wasn't, according to the lawsuit. Both sides said the case was settled amicably Aug. 23.
A thornier case lingers from a federal judgment that Parnas owes for a movie that never got made.
The Pues Family Trust IRA filed a federal lawsuit in 2011 in New York City seeking repayment of a $350,000 loan to Parnas. The trust's executor, Michael Pues, described the money in court documents as a bridge loan for a movie with the working title "Anatomy of an Assassin," while Parnas found more investors.
But Parnas denied in a court filing that the money was ever a loan. Parnas said the movie, which he said was going to be called "Memory of a Killer," fell apart because of financing problems, including Pues not contributing $1 million as promised.
In any event, a "final judgment" in the federal case in March 2016 ordered Parnas to pay the Pues Family Trust $510,435 for the loan and 9% annual interest.
After learning of the political contribution, Pues asked a federal court in Florida in January 2019 to enforce the unpaid judgment. Pues is asking the court to undo the political contribution related to Global Energy Producers, Aaron Investments I and America First Action, so the judgment can be partially repaid.
America First Action said in a July filing that it objected to the lawsuit's claim that the $325,000 contribution came from Aaron Investments rather than Global Energy Producers. But the committee said it would provide documents that related to the wire transfer.
Parnas has argued against a subpoena for Global Energy Producers in the case, saying the company wasn't involved in the case that led to the New York judgment.
