Prosecutors could file more charges in campaign finance case against Rudy Giuliani associates

NEW YORK — Federal prosecutors are likely to file updated criminal allegations in a case against two associates of Rudy Giuliani and two codefendants, a government lawyer said in court Monday.

An updated indictment, hinted at by Assistant U.S. Attorney Douglas Zolkind, could add to the charges that Lev Parnas and Igor Fruman, Soviet-born U.S. citizens, already face: conspiring to funnel foreign money into the U.S. election system.

Saying prosecutors are "continuing to evaluate" a possible superseding indictment, Zolkind provided no details about what additional charges could be filed and whether additional defendants might be added to the case.

Parnas and Fruman worked with Giuliani, President Donald Trump's personal lawyer, who pressed the Ukrainian government to open an investigation involving Trump's 2020 presidential campaign rival, former Vice President Joe Biden. That's not part of the criminal charges.

Giuiliani has not been charged. However, the prosecutors who are investigating Parnas and Fruman are seeking information about Giuliani Partners, the former New York City mayor's consulting business, a person with knowledge of the matter said last week.

Among the offenses investigators are examining are obstruction, fraud and failure to register as a foreign agent, the person said.

Congressional Democrats have pressed for an investigation into whether Giuliani's overseas activities violated a law that requires Americans who work on behalf of foreign governments to disclose those efforts to the U.S. Department of Justice.

Giuliani has said he worked for Trump, not a foreign government. He has said he did nothing improper and was unaware of any federal investigation of his business activities.

During Monday's Manhattan federal court hearing, Zolkind sparred with defense attorneys over how long they've been waiting to get access to voluminous evidence the government has seized from smartphones, iPads and other electronic devices, including a satellite phone seized from Fruman.

Parnas plans to cooperate with a subpoena from House impeachment investigators seeking information that partly overlaps with the criminal case, said Joseph Bondy, an attorney for Parnas. But he's been held up because he doesn't have access to the evidence, Bondy said.

The information sought by the House includes any efforts by Parnas, Fruman, Giuliani and others to press for a Ukraine investigation of Biden's son, Hunter Biden, and his involvement with Burisma Holdings, a Kyiv-based energy company, according to a document from the House Intelligence Committee.

Explaining that FBI experts were working to extract electronic material from the defendants' devices, Zolkind said the process could be speeded up if they handed over their passwords.

Bondy also asked U.S. District Court Judge Paul Oetken to ease the conditions of Parnas' pretrial release. The Ukraine-born defendant and naturalized U.S. citizen is subject to 24-hour GPS monitoring and can't leave his Florida home except for religious services, medical reasons, and meetings with his attorneys.

Zolkind said the government opposes loosening the restrictions because Parnas has close ties to influential people in Ukraine and could leave the U.S. before federal authorities could stop him.

Oetken did not rule immediately on that request. Instead, he instructed Parnas' attorneys to get input from the U.S. Probation and Pretrial Services System, which oversees federal defendants who have been released pending criminal trials.

Defense lawyers also pressed for information about any government evidence that might be linked to illegal foreign surveillance or electronic interceptions in foreign countries. That material would be tainted and should not be admissible in the case, they argued.

Zolkind said prosecutors had not obtained any such evidence.

Parnas and Fruman are charged in a scheme to funnel foreign money to U.S. election candidates and campaign committees, funding that is illegal under campaign finance laws. Two codefendants, David Correia and Andrew Kukushin, are charged along with Parnas and Fruman in a scheme to use foreign funds to buy U.S. political influence for a planned cannabis business

They have pleaded not guilty to the charges. Parnas was the only defendant who appeared in court Monday. His codefendants authorized their lawyers to appear on their behalf.

The foreign funding, some of it disguised through so-called straw donors, was aimed at boosting the campaigns of Trump-supporting candidates and political action committees, advancing the political interests of an unidentified Ukrainian government official, and bankrolling a planned cannabis retail business.

Some of the funds secretly came from an unidentified Russian businessman who is neither a U.S. citizen nor a legal permanent resident, the indictment alleged.

A Parnas-Fruman company, Global Energy Producers, was credited with giving $325,000 to a pro-Trump political action committee in May 2018. The indictment said financial records showed the money actually came via a circuitous route through a loan linked to Fruman.

Parnas and Fruman were arrested in October when they tried to board a one-way flight to Europe. After photos surfaced of the two men with Trump, the president said he poses for photos with many people and didn't know them.

However, Trump also suggested that they might have been clients of Giuliani. In a tweet, Giuliani has referred to the men as his clients.

Reportedly angered by Trump's disavowals, Parnas has signaled a willingness to provide some information to House impeachment investigators, provided it doesn't affect his defense in his criminal case.

According to the indictment, David Correia and Andrey Kukushkin joined Parnas and Fruman in July 2018 to make plans for a "recreational marijuana business" that would be funded by an unidentified Russian foreign national.

Correia drafted a table of prospective political donations. The table allegedly described a multistate licensing strategy that would funnel $1 million to $2 million in contributions to federal and state political committees.

Fruman contributed $10,000 of the foreign national's funds on Nov. 1, 2018, to a candidate for a Nevada office, the indictment alleged. State campaign finance filings show Fruman contributed to the campaigns of two Republican candidates: Adam Laxalt, former state attorney general, and Wesley Duncan, former state assembly member.

Contributing: Kristine Phillips

This article originally appeared on USA TODAY: Rudy Giuliani associates could face more criminal charges