Florida businessman pleads guilty in fraud case involving Giuliani associates

A Florida entrepreneur is the first defendant to plead guilty in a campaign finance and business fraud case involving associates of Rudy Giuliani, the former New York City mayor and attorney for President Donald Trump.

David Correia, 45, pleaded guilty Thursday to two felony counts: one of making false statements to the Federal Election Commission and one of conspiracy to commit wire fraud.

Manhattan-based U.S. District Court Judge Paul Oetken accepted the plea during a proceeding held via videoconference due to the coronavirus pandemic. Correia's sentencing is set for Feb. 8.

The case against Correia and three other men — Lev Parnas, Igor Fruman and David Kukushkin — has drawn widespread attention because Parnas and Fruman worked closely with Giuliani on various issues related to Ukraine, including an attempt to oust then-U.S. Ambassador to Ukraine Marie Yovanovitch. She was recalled from her post in May 2019, amid complaints from Trump allies that she was refusing to advance efforts to pressure the Ukrainians to announce an investigation into a Trump rival who is now the Democratic nominee for president, former Vice President Joe Biden.

Yovanovitch’s ouster became a key part of the factual charges that led to Trump’s impeachment last year, which ended with his acquittal in February.

The indictment in the criminal case says the men used foreign money to influence U.S. political campaigns to benefit their business ventures and to encourage Yovanovitch’s ouster. The charges make no reference to Giuliani, who has not been named as a defendant in the case and has denied any wrongdoing.

Witnesses and sources close to the case have confirmed that investigators explored Giuliani’s dealings with the men who were charged, but the status of that probe is unclear.

The guilty plea is a tantalizing development for those expecting the case to wreak further havoc in Trump’s inner circle, although there was little of substance Thursday to indicate that Correia’s decision to plead guilty is a major breakthrough for prosecutors.

Towards the end of the 35-minute hearing, Oetken said the agreement Correia struck with the U.S. Attorney’s Office in Manhattan does not call for him to work with them to convict the other defendants or further the government’s investigation. “This is not a cooperation agreement,” the judge said.

Typically, if prosecutors were seeking to build a case against others, they would seek a defendant’s cooperation. However, it is also possible that they interviewed Correia as part of plea negotiations and concluded he had nothing of significance to offer.

Correia faces a maximum possible sentence of ten years in prison on the two charges he admitted to, but the defense and prosecution agreed that non-binding sentencing guidelines call for him to serve between 33 and 41 months in prison. The defense reserved the right to argue for a lesser sentence and Oetken will make a final decision on the guidelines and the ultimate prison term.

The three other defendants in the case are set for trial on March 1, but the judge has said that date could slip further due to pandemic related delays, including difficulties accommodating a multi-defendant trial while maintaining social distancing.

The first charge Correia admitted to stems from false statements made to the Federal Election Commission about a $325,000 donation sent to the America First Action super PAC in May 2018 from a company called Global Energy Producers. After a complaint was filed, Correia submitted an affidavit to the commission that contended the company was a bona fide player in the energy sector and made other claims about the firm that he now concedes were false.

“At the time of the payment, GEP had no operations or even a bank account,” prosecutor David Zolkind said. The funds were obtained through proceeds from a new mortgage on an apartment owned by Fruman, the prosecutor added.

The indictment does not allege that the $325,000 donation came from money abroad, but suggests the defendants were trying to burnish the reputation of their fledgling firm by putting the gift in its name.

“I knew the declaration said things that were probably false, but I did not ask about them,” Correia told the judge. “I just wanted to the FEC to end its investigation. I believed it was unwarranted.”

The second charge Correia pleaded guilty to involves a company called Fraud Guarantee, which sought to offer insurance to protect investments. Prosecutors said Correia and Parnas deceived investors about the prospects for the firm and wasted the money on personal expenses. “The majority of investor funds were withdrawn as cash,” Zolkind said.

Correia’s attorney, Bill Harrington, chimed in with the judge in what appeared to be a bid to shift blame for most of that spending to Parnas.

“Mr. Correia got very little of that money,” Harrrington said. He noted that Correia has agreed to forfeit only $43,650 to the government, which represents an estimate of his ill-gotten gains from the scheme. He has also agreed to a restitution figure of $2.3 million, although it’s unclear if Correia will pay any of that.
Correia acknowledged that he misstated aspects of the company’s finances in a bid to win money from investors. “I knew this was wrong at the time,” he said.

While the indictment also charges Correia with involvement in a scheme to transfer about $1 million from a Russian businessman to the U.S. for use in political contributions to back a legal cannabis venture, that was not among the charges Correia pleaded guilty to Thursday. That charges and others he faced in the case are likely to be dismissed under the plea agreement, although that was not discussed at the hearing.

An attorney for Giuliani, Robert Costello, told POLITICO he believes the developments Thursday signal that the government’s investigation has just about wrapped up and there’s little interest in his client.

“Rudy Giuliani didn’t do anything wrong. It’s a big nothingburger. Hopefully, this will end endless speculation in the newspaper that Rudy Giuliani is under investigation,” Costello said. “It sounds like this is going to come to a finish rather quickly.”

Costello said it was routine for investigators to ask questions about Giuliani’s connection to the men, including a $500,000 contract he had to do work for Fraud Guarantee, but he doesn’t believe there was ever a concerted probe of the former mayor.

“I can’t honestly say there was ever really an investigation, as most people would understand that term, involving Rudy Giuliani,” the attorney said. “Theoretically, when you investigate something like this and Rudy Giuliani has anything to do with these people — and he did at least with the Fraud Guarantee part — you would want to investigate and ask questions about that but it’s clear they don’t have anything.”