Crime in Progress

by Glenn Simpson;Peter Fritsch;

  Family and friends urged Simpson and Fritsch to issue public statements pushing back against the smears. Others urged patience and silence. “Everything you say can—and will—be used against you,” said one adviser. Besides, Grassley really had nothing to work with from a legal standpoint. Best to develop a thick skin.

  On April 7, Grassley’s deadline for a reply, Levy answered with a polite but firm rejection. Fusion’s work was privileged and protected by the First Amendment, he explained. Fusion was contractually obligated to keep its work and communications with clients confidential.

  The anxiety over Fusion’s mounting legal fees was not idle. Simpson and Fritsch, in their years as reporters at The Wall Street Journal, had been in plenty of legal fights. But it’s one thing to be sued for defamation over a story you wrote with a large media corporation standing behind you. It’s quite another to face open-ended congressional inquiry and have to pay for it out of your own pocket. Fusion had business insurance, but that wasn’t going to cover a congressional inquiry. If their corporate clients bolted en masse, the firm would be wiped out in a matter of months.

  Many of Fusion’s longest-standing clients weren’t scared off, but others were wary of catching shrapnel from a politically charged fight with the administration and its congressional proxies. Fritsch and Simpson had to walk a number of clients through the big picture of Project Bangor. Yes, Steele was reliable, and the dossier was his work. No, he didn’t pay people in Russia for information. Grassley would never be able to prove that Fusion was lobbying for Russia, because it wasn’t.

  The more sophisticated clients understood the partisan political cast of the moment and were well aware that Fusion’s own work was grounded in arduous public records research. One client, whom Fusion called “the honey badger” for his aggressive style, urged Fusion to “keep up the good work,” even as his company’s CEO publicly supported Trump.

  Slowly, though, some clients began to drift away. “Bad news,” Fritsch told Simpson one day in March. “Project Aberdeen is dead.” That client’s upper management wanted nothing to do with Fusion. Ditto a major law firm Fusion had worked with for years. “We love you guys, you know that,” said an executive who was one of the first to hire Fusion. For some clients with business before the U.S. government, cutting a check to the president’s enemy #1 was just too risky.

  Fritsch and Simpson wanted to reassure clients with public statements shooting down Grassley’s accusations. Fusion partners drafted responses to media inquiries seeking to address congressional spin or outright misrepresentations. Those felt good to write, but they never saw the light of day. Not only could Fusion not tell its side of the story, it couldn’t really cooperate with others wanting to do so. It turned down all interview offers.

  Steele and Burrows, likewise, were a locked box. They weren’t talking on the record to anybody, period. Steele had emerged from hiding in early March and told the television cameras outside his office that he would have nothing more to say. Orbis had legal problems of its own. Alexsej Gubarev of XBT Holdings—the company Steele’s sources fingered for having a role in the hack of the DNC—had filed defamation cases against Steele in the U.K. and BuzzFeed in federal court in Florida soon after the dossier was published.

  The threat of legal action took a turn for the worse on May 5 when lawyers for Alfa Bank’s owners—three of Russia’s wealthiest oligarchs, collectively worth tens of billions of dollars—wrote to Fusion, threatening to sue the company and Simpson individually for defamation related to “publication” of the dossier.

  A decade earlier, Alfa had spent years pursuing a defamation case against the nonprofit Center for Public Integrity for reporting on allegations that one of its affiliates, Alfa Eko, “had been deeply involved in the early 1990s in laundering of Russian and Colombian drug money and in trafficking drugs from the Far East to Europe.” The story had been extensively reported and was based on Russian and American government documents and interviews with former government officials, but Alfa managed to keep the case going for years, nearly bankrupting the group before a judge finally dismissed the case on the grounds that the CPI hadn’t published the story with actual malice.

  Fusion would now have to square off in court against the same Russian billionaires.

  * * *

  —

  Luckily, a major infusion of donor money to Dan Jones’s nonprofit meant Fusion wouldn’t have to scramble to replace lost clients as desperately as it had feared; in fact, Fusion and Steele would have the budget to double down on their research.

  The timing was good. Major news organizations were also expanding their coverage, launching major investigations into Russia and Trump’s business record and global trail of failed partnerships. They, like Fusion, now had the budget and green light to go as deep as the story took them. The first stop, for some, would be Fusion’s offices in Dupont Circle.

  Fusion’s researchers—particularly Berkowitz—were in demand among reporters who were new to the story and trying to get caught up. Did Fusion have the documents on Trump’s golf courses in Scotland and Ireland? What about that ill-fated Trump project in Panama? Berkowitz had many of the answers already in his head; those he didn’t he could pull out of the tens of thousands of pages of public records Fusion had collected over the past year and a half.

  One of Fusion’s research priorities in this period was following up on leads about what looked a lot like a Russian campaign to infiltrate the Republican establishment via the National Rifle Association. Many months earlier, Fusion researchers had identified the strange relationship between a Russian student at American University named Maria Butina and a former Russian central bank official close to Putin named Alexander Torshin, who was also a lifetime NRA member. Butina, too, was a big NRA fan and kept turning up in unexpected places on the American political scene. At the 2014 NRA convention in Indianapolis, she managed to get one-on-one photos with NRA chief Wayne LaPierre and then Louisiana governor Bobby Jindal. In April 2015, Butina and Torshin took a photo with presidential candidate and Wisconsin governor Scott Walker. Butina had even turned up at a Trump appearance in Las Vegas in July 2015, where she identified herself as Russian and asked Trump whether as president he would “continue the politics of sanctions that are damaging of both economy,” prompting Trump to reply, “I believe I would get along very nicely with Putin.”

  Fusion had suspected since 2016 that Butina was acting as some sort of covert agent of the Russian government and eventually set out to expose her.

  * * *

  —

  Born in 1988, Butina grew up in Barnaul, in the far-flung Altai territory, on Russia’s border with Kazakhstan. She was a minor athlete, according to news reports, and her father appeared to be a modest furniture entrepreneur and her mother an engineer. That’s about all you could find about her—until, that is, she joined forces with Putin friend Torshin to advocate for gun rights in Russia. That made no sense. Russia is a police state that brutally represses dissent; Putin is not in favor of a well-armed populace, and per capita gun ownership there is roughly a tenth of what it is in the United States.

  On February 23, Simpson forwarded Bruce Ohr a new article about Butina from The Daily Beast, “The Kremlin and GOP Have a New Friend—And Boy, Does She Love Guns.”

  “Thank you!” Ohr responded.

  In late March, Fusion—which had been investigating the NRA for private clients since shortly after the 2012 Sandy Hook Elementary School massacre in Newtown, Connecticut—began to look more closely at Butina’s footprint in the United States. Research analyst Berkowitz noticed an odd connection between her and the Center for the National Interest, a Washington think tank known for being sympathetic to Putin’s Russia. In June 2015, just as the 2016 presidential election cycle was getting under way, Butina had authored an article for the group’s magazine, The National Interest, that waded directly into American presidential po
litics. “It may take the election of a Republican to the White House in 2016 to improve relations between the Russian Federation and the United States,” Butina wrote. “As improbable as it may sound, the Russian bear shares more interests with the Republican elephant than the Democratic donkey.”

  “This is a small detail, but pretty crazy that Butina is getting stuff published in The National Interest as some unheard of 26-year-old,” Berkowitz said in a note to his Fusion research colleagues. “The content is also insane. Again just one little suggestive thing, but how did that happen? Someone in conservative intellectual circles must have been pulling strings for her.”

  The CNI’s board members included conservative grandee David Keene, a former NRA president, who also knew Butina’s mentor, Torshin. Keene and Torshin had met in Moscow in 2015 on an NRA trip organized by Butina. The CNI, headed by a Russian émigré who frequently boasted of his close ties to Putin, also played a central role in the rollout of Trump’s original foreign policy team in the spring of 2016, hosting a speech by Trump at the Mayflower Hotel in Washington at which Trump struck an unusually conciliatory tone with Russia. “Common sense says this cycle, this horrible cycle of hostility [between the United States and Russia], must end and ideally will end soon,” Trump said. “Good for both countries.”

  The speech was written by Richard Burt, a Washington lobbyist representing Russia’s Alfa Bank and a pipeline company owned by Russia’s state-owned gas company, Gazprom. The event featured the Russian ambassador, Kislyak, in the front row; afterwards, the diplomat also attended a VIP event with Trump and several advisers.

  It would later turn out that Berkowitz’s suspicions were correct. Butina did indeed have a good friend helping her gain entrée to conservative circles. She was romantically involved with longtime Republican operative Paul Erickson, according to her 2018 guilty plea for having acted as an unregistered foreign agent. Erickson was a big GOP supporter and NRA booster from South Dakota who ran Pat Buchanan’s 1992 presidential campaign. In 2019, federal prosecutors would charge him with fraud in an unrelated investment scam. He pleaded not guilty.

  If Russian money did somehow enter the 2016 election, as some suspect, how exactly that happened has not been determined. But the accumulation of connections between the Russians, the NRA, and Trump raised increasingly pointed questions in Fusion’s mind about whether this political alliance may have served as an easy conduit. Those suspicions were fueled, in part, by the NRA’s record-setting $30 million outlay in 2016 in support of Trump, triple what it spent on Mitt Romney in 2012. The NRA has denied accepting donations from Russia for Trump.

  * * *

  —

  Fusion had many other things on its plate by then. There were Trump deals, from Panama to the Dominican Republic to India, still to unravel. Fusion was working with Steele and a group of contractors in Europe to map Russian influence operations in European elections that mirrored Russian meddling in the 2016 U.S. election. Another priority was returning to some of the key characters from the 2016 research to see what Fusion might have missed.

  Paul Manafort was at the top of that list.

  Steele had said in many conversations that he suspected Manafort was channeling money through offshore companies that he and his agents had registered in the Mediterranean island of Cyprus.

  Cyprus is a favorite bolt-hole for Russian money, and Fusion had some experience chasing down corporate records there. While authorities often coughed up little in response to document requests, a persistent Fusion staff member, Taylor Sears, kept at it. She compiled a detailed list of offshore companies possibly linked to Manafort and sent them to a Fusion source in Cyprus who, in turn, ran those names through the Cyprus company registry.

  After a long string of strikeouts, Sears finally scored. Fusion’s Cyprus source came back in the summer with documents that turned out to constitute the most damning evidence to date that Manafort was more than just a sleazy political consultant. A series of accounting reports filed with Cyprus corporate regulators showed that a Delaware entity belonging to Manafort, Jesand LLC, had received more than $10 million in funds from Cypriot entities whose sources of funding included the Russian oligarch Oleg Deripaska and a Ukrainian politician. That raised more questions about the kinds of people Manafort had been doing business with: Fusion had an old Austrian police report that described the Ukrainian as an associate of one of Russia’s most notorious crime lords.

  But the records also raised a new set of Manafort questions that were a lot closer to home. It now appeared that Manafort could be violating U.S. tax and money-laundering laws. The payments were described in the records as “loans,” but Jesand didn’t appear to have repaid any of them. Jesand also appeared in New York City real estate records as the buyer of a $2.5 million condo, along with Manafort’s daughter Andrea and his wife, Kathleen.

  “They moved more money to Jesand than what that New York City apartment cost,” Sears noted to Simpson in mid-June. “Supposedly as ‘loans.’ ”

  “That Jesand stuff is a major find,” Simpson said.

  The Jesand loans and the New York condo deal were red flags for possible tax fraud, at a minimum. Many tax evasion schemes involve mischaracterizing profits and other types of income as loans, which allows the recipient to pocket the funds without paying any income tax.

  “Taylor, can you put together a spreadsheet of every company around the world we have linked to Manafort? Just list company, jurisdiction, and suspected tie to Manafort,” Simpson asked a few days later. She came up with a list of twenty-seven “Manafort Entities.”

  About $6.9 million of the Jesand loans, it turned out, came from another suspected Manafort company in Cyprus called Lucicle Consultants. But Lucicle itself had no assets and precious little cash in its own bank account. It in turn had received a loan of $6.9 million from a mysterious company in the British tax haven of Gibraltar, while another $2.4 million came from a company in the Caribbean tax haven of St. Kitts and Nevis. The memo listed a dizzying array of other convoluted transactions that reeked of money laundering and tax fraud.

  “These are all places the Russians like to use to launder money,” said Sears, an avid student of offshore finance schemes.

  On a balmy day in early July, Simpson hopped an early-morning Acela train to New York to meet with some subcontractors. A former prosecutor for the Manhattan District Attorney’s Office had also arranged for Simpson to have an informal sit-down with some local prosecutors interested in any information he might have relevant to possible wrongdoing by people related to Trump in New York. He brought a memo on Cyprus.

  The meeting took place in a conference room at the state attorney general’s offices in lower Manhattan. Simpson was expecting to meet one or two prosecutors. Instead there were more than half a dozen, including some from the New York Attorney General’s Office.

  Simpson laid out the story about how they’d first come across Felix Sater while investigating Trump for Fusion’s Republican client, and then later Paul Manafort. Both had left a long trail of lawsuits and media coverage alleging that they may have engaged in serious crimes—and that trail crisscrossed New York. The prosecutors took notes but said little.

  They did not let on that they were already working with the special counsel.

  But Simpson spent most of the time talking about Manafort, describing how he’d been researching him on and off for years and was even trying to trace his assets for an anonymous client in London when Manafort suddenly surfaced at the Trump campaign. He sketched out the millions of dollars in suspicious loans to Manafort from shell companies in Cyprus that they’d recently discovered and how some of the money appeared to have been used by Manafort to buy a condo at 123 Baxter Street in Little Italy, a short ways from where they were meeting.

  As things were wrapping up, though, the mood in the room seemed to shift when one of the prosecutors asked Simpson whether Fusion h
ad any other clients who might present a conflict of interest for its Trump-Russia work. Somewhat baffled, Simpson said no.

  “What about Russian clients?” the prosecutor pressed.

  “Um, not that I can think of,” said Simpson. “We don’t currently have any.”

  It didn’t occur to him that the prosecutor might be referring to the Prevezon case, which Fusion hadn’t worked on since the year before. On that note, they thanked Simpson for his time and said they’d follow up.

  Later, Simpson checked in with Mike McIntire, a Times investigative reporter looking at Manafort. They were acquaintances from journalism circles and had been chatting about Trump and Russia since April 2016, when McIntire published a scoop about an aborted criminal investigation by New York prosecutors into Trump’s involvement with Bayrock and Felix Sater.

  Simpson suggested he might want to dig a bit more on Manafort.

  As it happened, by June, McIntire had already gotten onto some of Manafort’s Cyprus companies. Simpson suggested the names of a couple more companies McIntire hadn’t already found. On July 19, the Times published his groundbreaking story, “Manafort Was in Debt to Pro-Russia Interests, Cyprus Records Show.” Never lacking in chutzpah, Manafort had his lawyer’s PR man send an email to the Times demanding a retraction. It didn’t work.

  Months later, those Cypriot companies would become the cornerstone of Mueller’s indictment of Trump’s former campaign manager.

  * * *

  —

  If there was ever any doubt that Grassley was in the tank for Trump, it was erased for good on Tuesday, May 9, the day Trump fired James Comey.

  The FBI director’s abrupt dismissal left little doubt that an aggrieved Trump was getting rid of the one person he thought could cost him his presidency; Trump even alluded to the ongoing Russia probe in his dismissal letter, thanking Comey for supposedly informing him that he was “not under investigation.” The moment was seismic, raising the specter of presidential obstruction of justice and a constitutional crisis.