WASHINGTON (CNN) - The criminal indictment against two associates of President Donald Trump's personal attorney Rudy Giuliani describes an elaborate, months-long scheme to funnel foreign money into federal and state elections around the US to curry favor with politicians on behalf of at least one Ukrainian government official and a Russian businessman.
But it also underscores the vulnerabilities of an election system that allows shadowy limited liability companies to make donations of virtually any size to help elect or defeat candidates, campaign finance experts say.
"The public is now learning just how dangerous dark money can be in US elections, including the potential for illegal foreign funds," said Trevor Potter, a former Federal Election Commission chairman and president of the Campaign Legal Center watchdog group.
Last year, Potter's group raised red flags about a $325,000 contribution from a newly formed company to a pro-Trump super PAC -- a donation now at the center of what federal law enforcement officials say was a complex effort by the two Giuliani associates to undermine the nation's campaign finance laws to help themselves and advance a Ukranian pressure campaign.
And the criminal case against Igor Fruman and Lev Parnas, who have worked with Giuliani to dig up dirt in Ukraine about Democratic presidential candidate Joe Biden, could bring even greater legal scrutiny to Trump's allies as the President contends with an impeachment inquiry in the US House of Representatives over his efforts to encourage Ukraine to investigate unsubstantiated allegations against Biden and his son, Hunter.
The indictment unsealed Thursday against Fruman and Parnas points "to a widespread pattern of trying to evade the law," said Larry Noble, a former general counsel at the Federal Election Commission and a CNN contributor.
Fruman and Parnas were charged with conspiring to make illegal straw donations and lying to federal election regulators.
The 21-page indictment also details what prosecutors allege was a separate scheme involving Parnas, Fruman and two other men, David Correira and Andrey Kukushkin, to donate money to politicians in the hopes of securing licenses to start recreational marijuana businesses in Nevada, New York and other states. Federal prosecutors say an unnamed Russian businessman provided $1 million for the defendants to distribute to politicians in the form of campaign donations.
The marijuana businesses never came to fruition.
Federal law bars foreign donations in US elections. It also is against the law to make campaign contributions in the name of another person or organization.
Neither Trump nor Giuliani has been charged with criminal wrongdoing in connection with the charges. And Trump on Thursday sought to distance himself from the Giuliani associates, even as he acknowledged he appeared in photos with them. "I don't know them," he told reporters. "I don't know about them."
Parnas and Fruman, both foreign-born businessmen, had no real history of donating to political campaigns, until March 2018 when they began "making substantial contributions ... with the purpose of enhancing their influence in political circles and gaining access to politicians," prosecutors allege.
A presidential super PAC and a Texas congressman
The indictment touches on at least one part of the sprawling financial orbit associated with the President and his allies: the super PAC that is his campaign's preferred conduit of outside funds, America First Action.
Prosecutors say Parnas and Fruman donated $325,000 to what they called "Committee-1" last year, but concealed the donation by falsely claiming it came from a shell company they created, Global Energy Producers.
CNN has identified "Committee-1" as America First Action.
Super PACs, a byproduct of the Supreme Court's 2010 Citizens United decision and a related appellate court ruling, can accept donations of any size from corporations, individuals and unions as long as they disclose their funders and don't coordinate their spending decisions with the candidates they support.
The indictment and campaign finance records also point to Parnas and Fruman pushing a GOP congressman to seek the ouster of the US Ambassador to Ukraine at the same time as they were helping to bankroll his campaign.
Prosecutors say Parnas and Fruman committed to raising at least $20,000 for then-Rep. Pete Sessions of Texas, identified in the indictment at "Congressman-1." America First Action spent lavishly on Sessions' behalf last year, pouring more than $3 million into independent expenditures to help in his unsuccessful reelection, federal records show.
Prosecutors say Parnas discussed with Sessions his effort to seek Marie Yovanovitch's ouster as the US' top envoy to Ukraine. According to the indictment, Parnas' effort to remove Yovanovitch came at the behest of "one or more Ukrainian government officials."
Yovanovitch, a career diplomat, was recalled to Washington from Ukraine in May 2019 -- months before she was expected to return. The Wall Street Journal recently reported that Trump ordered her removal, following complaints by Giuliani and others. Giuliani, without evidence, had accused Yovanovitch of trying to undermine Trump and block efforts to investigate Democrats, such as Biden, the paper reported.
Sessions wrote to Secretary of State Mike Pompeo on May 9, 2018, raising questions about Yovanovitch's conduct. Federal records show America First received the $325,000 contribution from Global Energy Producers on May 17, 2018.
The indictment does not allege wrongdoing by Sessions or the pro-Trump super PAC.
And in a statement, Sessions said he "could not have had knowledge of the scheme" and that he took "no official action" after being approached "by these individuals about the strategic need for Ukraine to become energy independent."
"Therefore, if I am 'Congressman One', I could not have had any knowledge of the scheme described in the indictment or have involvement or coordination of it," Sessions said.
In a statement Thursday, America First officials said they placed the money from Global Energy Producers in a "segregated bank account" when allegations of potential wrongdoing surfaced last year and have not used the funds.
On Thursday, an aide to House Minority Leader Kevin McCarthy said the top House Republican would donate money his political committees received from Parnas to charity.
"These contributions were made ahead of events sponsored by Protect the House, a joint fundraising committee that McCarthy helped form last cycle," a spokesman for McCarthy told CNN. "The deception documented in today's indictment has no place in our country and as a result, McCarthy plans to donate amounts received to a local charity.".
According to Federal Election Commission data, Parnas donated $2,700 to Kevin McCarthy for Congress, and $11,000 to Protect the House.
CNN's Manu Raju, Jeremy Herb, Sarah Westwood and Kaitlin Collins contributed to this report.
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- Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
- Copyright 2019 by KOAMNewsNow KOAM. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.