Washington • Spinning off from the special counsel’s Russia probe, prosecutors are ramping up their investigation into foreign lobbying by two major Washington firms that did work for former Trump campaign chairman Paul Manafort, according to people familiar with the matter.
The investigation had been quiet for months since special counsel Robert Mueller referred it to authorities in Manhattan because it fell outside his mandate of determining whether the Trump campaign coordinated with Russia.
But in a flurry of new activity, Justice Department prosecutors in the last several weeks have begun interviewing witnesses and contacting lawyers to schedule additional questioning related to the Podesta Group and Mercury Public Affairs, the people familiar with the inquiry said. They spoke to The Associated Press on condition of anonymity because they were not authorized to discuss the ongoing work.
The New York work underscores the broad effects of Mueller's investigation, extending well beyond the central question of President Donald Trump and collusion. Mueller has made clear he will not turn away if he discovers alleged crimes outside the scope of his inquiry; instead, he refers them out in investigations that may linger on even after the special counsel's work concludes. Other Justice Department referrals from Mueller have ended in guilty pleas, including the hush money payment case of Trump's former lawyer Michael Cohen.
The investigation reflects how Mueller, in latching onto an obscure law, has shined a light on high-dollar lobbying practices that have helped foreign governments find powerful allies and advocates in Washington. It's a practice that has spanned both parties and enriched countless former government officials, who have leveraged their connections to influence American politics.
In New York, Mueller's referral prompted a fresh look at the lobbying firms of Washington insiders Tony Podesta and Vin Weber, who have faced scrutiny for their decisions not to register as foreign agents for Ukrainian lobbying work directed by Manafort.
Podesta is a longtime Democratic operative whose brother, John Podesta, ran Hillary Clinton's 2016 presidential campaign; Weber is a former Republican congressman from Minnesota. Neither man has been charged with any crimes. Their firms have defended the decisions by saying they relied on the advice of outside attorneys.
Mueller's referral also involved Greg Craig, a former White House counsel for President Barack Obama. Craig supervised a report authored on behalf of the Ukrainian government, and Mueller's team has said Manafort helped Ukraine hide that it paid more than $4 million for the work. CNN reported in September that prosecutors were weighing charges against Craig.
It's unclear if the renewed interest will produce charges or if prosecutors are merely following up on Mueller's referral.
Lawyers for Weber and Craig and a spokeswoman for Podesta declined to comment. The U.S. attorney's office in Manhattan didn't return an email seeking comment.
Mercury spokesman Michael McKeon said the firm has "always welcomed any inquiry since we acted appropriately at every step of the process, including hiring a top lawyer in Washington and following his advice. We'll continue to cooperate as we have previously."
Foreign lobbying work was central to Mueller's case against Manafort and his longtime associate Rick Gates, two high-profile Trump campaign officials who pleaded guilty earlier this year and have been interviewed extensively by prosecutors.
The Podestas have been frequent targets of Trump and his associates, who have repeatedly demanded to know why Tony Podesta has not been arrested and charged. Trump confidant Roger Stone, for instance, has insisted a 2016 tweet of his that appeared to presage the release by WikiLeaks of John Podesta's emails — "Trust me, it will soon the Podesta's time in the barrel" — was instead a reference to the brothers' foreign connections getting them into the hot seat.
In September, Manafort admitted to directing Mercury and the Podesta Group to lobby in the U.S. on behalf of a Ukrainian political party and Ukraine's government, then led by President Viktor Yanukovych, Manafort's longtime political patron.
While doing the lobbying, neither the Podesta Group nor Mercury registered as foreign agents under a U.S. law known as the Foreign Agents Registration Act, or FARA, which requires lobbyists to declare publicly if they represent foreign leaders, governments or their political parties.
The Justice Department has rarely prosecuted such cases, which carry up to five years in prison, but has taken a more aggressive tack lately.
To secretly fund the lobbying and to avoid registration with the Justice Department, Manafort said he along with unidentified "others" arranged for the firms to be hired by a Brussels-based nonprofit, the European Centre for a Modern Ukraine, rather than the Ukrainian political interests directly.
Mercury and Podesta, which were paid a combined $2 million on the project, then registered under a less stringent lobbying law that doesn't require as much public disclosure as FARA.
Both firms have said they registered under the Lobbying Disclosure Act, rather than FARA, on the advice of lawyers at Skadden, Arps, Slate, Meagher & Flom, Craig's former firm.
Gates admitted in his plea deal that he lied to Mercury's attorneys about the project, a fact the lobbying firm has publicly highlighted. The Podesta Group has said it was misled by the European Centre for a Modern Ukraine, citing a written certification from the nonprofit stating it wasn't directed or controlled by the Ukrainian Party of Regions, one of Manafort's clients.
Both firms have since registered under FARA. But in court papers filed alongside Manafort's plea agreement, Mueller's prosecutors suggested the firms were aware they were working on Ukraine's behalf.
Prosecutors say employees of both companies "referred to the client in ways that made clear they knew it was Ukraine." One Mercury employee said the nonprofit was the client "in name only," likening the situation to "Alice in Wonderland." A Podesta employee referred to the nonprofit's certification that it wasn't related to the Ukrainian political party as a "fig leaf on a fig leaf."
Mueller’s team also noted that “the head of” the Podesta Group, an apparent reference to Tony Podesta, told his team to think the president of Ukraine is the client.
