Crime in Progress

by Glenn Simpson;Peter Fritsch;

  From the outset, Steele and Burrows agreed that they would strictly adhere to the legal obligations they had accepted when they left government service: If they ever came across information they believed threatened national security, they were duty-bound to report it, whether their clients liked it or not.

  That credo would be put to the test on one of Orbis’s very first assignments, investigating corruption in soccer’s global governing body, FIFA, on behalf of England’s Football Association. After a months-long investigation, tapping his sources in Russia and elsewhere, Steele determined that Russia had won the right to host the 2018 World Cup through bribery of FIFA officials. Igor Sechin, the head of Putin’s kitchen cabinet and the state oil company Rosneft, appeared to be involved. Steele also learned from his source network that Russia’s bribery program had spread money across the globe.

  His contract with the English association was over, but Steele thought Russia should be exposed. He was offended by the idea that the Russians might get away with it. He just couldn’t let it go. In 2011, he contacted Michael Gaeta, an FBI agent he met at a conference in Oxford in 2009, who headed the Bureau’s Eurasian Joint Organized Crime Squad. Later, he would work with Gaeta on one of the FBI’s longest-running and highest-priority cases: the hunt for fugitive Russian Mafia don Semion Mogilevich, whom Orbis eventually established was hiding out in a small village north of Moscow under Russian government protection.

  He briefed Gaeta on what Orbis had learned. The result was one of the Obama administration’s most successful organized crime prosecutions: the 2015 federal indictment in Brooklyn of fourteen people, mainly from Latin America, in a massive FIFA bribery scheme. Ironically, Steele’s contributions to the FIFA case have remained under wraps, because the Russians suspected of orchestrating and executing the worst acts of bribery have all remained inside Russia, beyond the reach of international law enforcement. Until one is apprehended and extradited to the United States for trial, the Russian element of the FIFA case—presumed to be the centerpiece of the entire investigation—will remain outside the public view.

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  Fusion and Orbis found it easy to work together because they occupied two very different spaces in the private research world. Steele specialized in the collection of human intelligence developed from a confidential source network, an approach that’s a must in countries like Russia, where information is severely restricted. Fusion generally operated in places with good access to public records, working on the premise that documents properly collected could tell a tale as reliable as even the best human source, and were much easier to use for law firms, which made up a large portion of Fusion’s client base.

  These different approaches also mirror the different intelligence-gathering strengths of the United States and the U.K. The U.S. government has by far the best capabilities in data collection, while the British have always excelled in “humint”—human intelligence. Britain’s aptitude for humint owes much to its historical administration of a far-flung empire. From India to South Africa, boots on the ground were an essential tool for governing often huge, unruly colonies. The United States, meanwhile, excels at technological innovation and the creation of electronic surveillance systems.

  Bound by language and a shared history confronting aggression in two world wars, the United States and the U.K. form the core of the “Five Eyes” intelligence alliance with Canada, New Zealand, and Australia. The common trust in that group is so high that many secrets, sources, and methods are shared freely.

  Orbis’s cultural roots in the national security space made them averse to working on assignments they considered contrary to the interests of the U.K. or its allies. Steele and Burrows tended to work at the direction of large international law firms, as Fusion did—oversight that helps ensure that projects are carried out legally and professionally.

  The quality of Orbis’s clientele reflected that, tending toward big European multinational companies and the global law firms. Some were sophisticated businessmen and women with experience operating in Russia and other ex-Communist countries with weak or nonexistent legal systems. Steele’s flat affect and neutral gaze, which could sometimes come across as lacking in charm, enhanced his credibility in professional settings.

  Steele spoke of his children often and was fastidious in his diet and attire. He was very much the opposite of his London competitors, a cynical crew who worked for the scariest of Russian oligarchs without qualm. One competitor who had long ago sold out to the Putin kleptocracy once told the Fusion partners that he “absolutely loved being caught in honey traps”—Russian intelligence operations seeking to ensnare Westerners in compromising sexual situations. “They already own me so why not have a bit of fun?”

  None of this was of concern to Steele, because he couldn’t go to Russia anymore. In 1999, a disgruntled former MI6 colleague posted on the Internet a list of 116 supposed MI6 agents. Most of the names were indeed spies operating under “light cover” in British embassies overseas, as Steele had in Moscow in the early nineties. Steele’s name was on the list, along with those of Burrows and their mentor and former MI6 chief Sir Richard Dearlove.

  The upshot of this twist of fate was that Steele, a Russia specialist who preferred fieldwork, was forced to become a desk officer. In the following years, he rose to oversee all of MI6’s covert operations in Russia. He oversaw its inquiry into one of the most sensitive matters involving Putin’s Russia, the 2006–2008 investigation of Litvinenko’s murder. This was an assassination on British soil carried out by Russia’s Federal Security Service (FSB), Steele believed, at Putin’s behest.

  By 2012, Orbis was firmly established, and Steele’s personal life took a happy turn. He’d gotten married to a British diplomat named Katherine, and their combined brood included four children, three cats, and a comfortable home in the village of Farnham, Surrey. They settled into a routine: He would take the train to Orbis’s offices in London and return to the quiet of the countryside each evening.

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  Simpson traveled to the U.K. in mid-May of 2016 to broach the Trump work to Steele. They met at a branch of the Italian restaurant chain called Carluccio’s, in Heathrow Airport’s Terminal 5. Steele was already waiting when Simpson arrived, dragging his carry-on bag. Over lasagna, Simpson told Steele that Fusion had been investigating Trump for about eight months on behalf of an unnamed client. That work had ended, but a new client had come along that had deep pockets. Simpson had just come down from Edinburgh, where he had lined up some local help investigating Trump’s money-losing collection of golf courses in Scotland and Ireland. The courses were an inviting target for Fusion’s efforts to document Trump’s dismal business record and the fake valuations of his properties in his official candidate disclosure filings: Unlike in the United States, private companies in the U.K. and Ireland are required to file detailed financial statements for public inspection.

  “He seems to lie about pretty much everything,” Simpson told Steele, describing how the work in Scotland aimed to disprove Trump’s claim that his two courses there were each worth over $50 million. “These figures are beyond exaggerated,” he told Steele. “They’re fictional.”

  Simpson said they had unearthed numerous connections between Trump and various characters from the former Soviet Union, as well as a series of mysterious trips Trump had made over the years to explore building projects in Russia. Now that the primaries were coming to an end, he said, Fusion expected to soon have a new budget to pursue some of its leads in Russia. Would Steele be interested? The project he had in mind was a modest one, he said. Just a month of inquiries with his Russia sources to see if there were any interesting leads on Trump.

  Steele confessed to not knowing very much about Trump. That didn’t really matter. He was interested.

  Fusion thought there might be information in Russia to indicate that Trump had unsav
ory dealings with corrupt politicians or businessmen. Another possibility, Simpson said, was that Trump was merely going to Russia to chase women, and his pursuit of business deals in the country was just a cover story. If that was all it was, he added, “no one will give a shit.”

  To the contrary, said Steele, if Trump was engaged in sexual dalliances in Moscow, he’d probably been taped by the FSB. “Kompromat is a serious issue,” he said. “It still happens all the time.”

  Steele suggested the Russians might have taken a political interest in Trump, and mentioned that he had recently completed a similar project on Russian meddling in the politics of European countries for another client. Project Charlemagne, as Orbis called it, had chronicled signs of extensive Russian electoral interference in support of right-wing parties all across Western Europe.

  The work had been undertaken for a private client, he said, but the findings were so troubling that he had voluntarily provided copies of his Charlemagne reports to the U.S. government. The Kremlin, he claimed, had “a secret black budget of several tens of millions of dollars” earmarked for populist nationalist politicians in Europe who were opposed to the European Union.

  Steele said he was unable to travel to Russia himself and had even received what appeared to be veiled threats from the Russians via intermediaries. However, he added, the vast Russian diaspora in the West made it possible to build and manage productive networks of sources on the ground in Moscow.

  Steele came back quickly with a proposal to conduct a one-month inquiry for about $30,000. He and Fritsch, who normally handled budget matters, hammered out the terms verbally. Simpson gave Steele the simplest of tasking instructions: Find out what you can about what Trump and his circle have been up to in Moscow over the years.

  Fusion didn’t share with Steele any of its reports on Trump, nor did it identify its new client beyond eventually saying that it was a law firm. This was important from an operational standpoint. Contractors, even professionals, have a natural tendency to tailor their finds to what they think clients want to hear. Fusion didn’t want to infect Steele’s inquiry with any preconceived goals or even basic theories of the case, much less the political context of the engagement.*1

  Steele set out to find what he could on Donald Trump and Russia.

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  As Steele went to work on his new assignment, Simpson briefly turned his attention to another of Fusion’s long-standing projects, a lawsuit that was winding down involving an obscure Russian company called Prevezon.

  Fusion didn’t know it then, but its involvement with Prevezon and its lawyer Natalia Veselnitskaya would later collide in dramatic and unforeseeable ways with Fusion’s Trump investigation—a collision that has reverberated for years after.

  Fusion did not engineer that collision, which some still find hard to believe: As with the Deripaska case, the coincidence of two work streams coming together would fuel wild conspiracy theories and color congressional inquiries into the whole of the Trump investigation.

  Understanding how it did happen is important to the broader story.

  Since early 2014, Fusion had been doing research for a team of American lawyers in a complex civil case. Its ultimate client, Prevezon, wanted to stop the U.S. Justice Department from seizing its property in New York. By 2016, the case seemed to be on its last legs: A federal judge had removed Fusion’s client, the law firm BakerHostetler, from the case over a possible conflict of interest. A prestigious firm with deep Republican ties, BakerHostetler was appealing that decision.

  On June 9, Simpson went to New York to attend the hearing with the BakerHostetler lawyers and Veselnitskaya, the Russian lawyer representing Prevezon.

  After the hearing, Simpson dashed to Penn Station to catch a train home. As he did so, unbeknownst to him, Veselnitskaya was heading uptown for a far more consequential appointment: a meeting in Trump Tower with Donald Trump Jr., Paul Manafort, and Jared Kushner to deliver what the Russians had promised the Trump campaign would be Kremlin dirt on Hillary Clinton.

  This session between the Russian lawyer and the top brass of the Trump campaign would remain unknown to Fusion, the press, and investigators until news of it broke more than a year later, in July 2017. When it did, Trump’s defense team quickly pointed out that the Trump Tower meeting had come about soon after Fusion hired Steele. For the conspiracy minded, the ties between Fusion and Prevezon were even more evidence of a plot to frame Trump.

  It was anything but.

  Simpson had met Veselnitskaya but a handful of times, almost always with her U.S. lawyers present. They talked little, divided as they were by language. Fusion had been working on the Prevezon case sporadically for more than two years, initially trying to help the lawyers decipher a pile of bank records. Veselnitskaya had little to do with that spadework.

  After meeting the Trump campaign brass that Friday, Veselnitskaya traveled to Washington to meet with her American lawyers, who had organized a social dinner at a tapas restaurant called Barcelona Wine Bar, in the neighborhood of Cathedral Heights. Simpson attended. So did an impish, Russian-born, D.C.-based lobbyist named Rinat Akhmetshin, who, it was later revealed, had accompanied Veselnitskaya to the Trump Tower meeting.

  Incredible as it would later seem to Republican investigators, neither Veselnitskaya nor Akhmetshin ever mentioned to Simpson that they had sandwiched an encounter with the brain trust of the Trump campaign between that New York court date and their D.C. dinner.

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  Fusion’s work on the Prevezon case began in late 2013 with a call from Moscow—John Moscow, a legendary former prosecutor who broke open some of the biggest financial scandals of the 1980s and ’90s and had been a journalistic source for both Simpson and Fritsch. After retiring from the Manhattan DA’s office in 2005, he became a partner at BakerHostetler.

  Moscow told Simpson that he was representing a Russian firm in a complex case. Federal prosecutors in New York were trying to seize some $14 million in money and Manhattan real estate controlled by Prevezon, alleging that the assets were the proceeds of a massive tax fraud in Russia. Eventually, the Justice Department alleged, some of the money wound up in New York.

  John Moscow’s reputation outweighed whatever skepticism Simpson harbored about the law firm’s client. To understand the government’s case, Moscow eventually deposed the federal agent who had led the investigation. He revealed that much of his information on Prevezon came from documents supplied by William Browder, a wealthy, American-born hedge fund manager based in London.

  This came as a surprise to Fusion, which had been researching another aspect of the case. Simpson and Fritsch knew a good bit about Browder from their time at the Journal. After working as an investment banker, Browder had moved to Russia in the 1990s and established a hedge fund called Hermitage Capital Management. He amassed a fortune in the Russian stock market during Putin’s rise. Along the way, he gave up his U.S. citizenship and stopped paying American income taxes on his profits from Russia.

  Long an outspoken Putin fan—The Economist called him a “loyal Putinista” in 2006—Browder eventually fell out with the Kremlin in a dispute over unpaid taxes and was later expelled from Russia. Russian authorities had accused Hermitage of tax fraud and arrested the hedge fund’s outside tax accountant, a man named Sergei Magnitsky, as a party to the alleged fraud. The thirty-seven-year-old Magnitsky died in 2009 while in custody awaiting trial—retribution, Browder said, for the accountant’s having blown the whistle on official Russian corruption.

  Magnitsky’s wrongful death and Browder’s expulsion from Russia seemed to flip a switch in Browder, who remade himself as a human rights crusader. Putin did his part, killing and jailing critics and invading Russia’s neighbors.

  None of that had direct bearing on the Prevezon case. But on a political level, it made Browder a more credible Putin critic in the pu
blic eye—especially among lawmakers in Congress. At Browder’s urging, Congress passed a law in 2012 to sanction Russian officials involved in Magnitsky’s death—a law that came to be known as the Magnitsky Act.

  Browder was always eager to testify before Congress or appear on TV, but he did not want to answer questions from BakerHostetler lawyers about his role as a whistleblower in the Prevezon case. So the lawyers asked Fusion to figure out how they could get Browder’s testimony. What ensued was a legal game of cat and mouse in which Fusion developed information that would help BakerHostetler subpoena Browder multiple times, forcing him to testify about his business activities in Russia and earning Fusion his everlasting enmity.

  The U.S. government had staked its case against Prevezon on the credibility of Browder. Yet he was reluctant to explain under oath where he had obtained his evidence. It was an odd position for a human rights crusader to take.

  By 2016, Browder’s long-running battle to avoid testifying was beginning to generate sparks in the media and threatened to undermine his credibility. That apparently didn’t go unnoticed in the sanctions-battered Kremlin, increasingly on the lookout for ways to fight back against its critics in the West.

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  Fusion had always thought of Veselnitskaya, the Prevezon lawyer, as a minor figure on the periphery of Russian power. But she was now on the front lines of a pitched battle with Putin’s archenemy, Browder. That was sure to get her noticed in high places—if she didn’t already have friends there.*2