Signs Point to Biden Administration Continuing Trend Towards Increased Enforcement of Foreign Agents Registration Act

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Key Takeaways

  • One of President Biden’s first executive orders required appointees to make an ethics pledge that included commitments related to the Foreign Agents Registration Act (FARA).
  • FARA, which requires agents of foreign governments to file registration statements with the Attorney General, has been the subject of increased enforcement activity since 2017.
  • President Biden’s executive order, along with his campaign promises of a ban on foreign lobbying, suggest that increased FARA enforcement will continue in his administration.
  • FARA applies to a wide variety of activities, is subject to a number of exemptions, and carries penalties of up to five years of imprisonment.

President Joseph Biden on January 20, 2021, made news with his Inauguration Day flurry of executive orders. Potentially lost in the shuffle, however, was the Executive Order on Ethics Commitments, which required “every appointee in every executive agency” to commit to following certain ethical standards, including with regard to the Foreign Agents Registration Act (FARA). When viewed in connection with President Biden’s promises on the campaign trail, this Executive Order suggests that the trend towards increased FARA enforcement that began in October 2017 with the indictment of Paul Manafort1 will continue into the Biden administration.

The Statute

FARA requires all agents of foreign principals in the United States to file a detailed registration statement with the Attorney General within 10 days of becoming an agent and before acting on behalf of the principal.2 “Foreign principals” is defined to include all foreign governments, political parties, people, and organizations.3 “Agents,” meanwhile, includes those who: (1) engage in political activities in the United States; (2) act as public relations representatives; (3) solicit or dispense contributions or other things of value; or (4) interact with a U.S. government agency on behalf of a foreign principal.4 Following the initial registration, agents must file supplements every six months and amendments whenever the initial statement becomes inaccurate.5 In addition, agents must file any informational materials they disseminate on behalf of the foreign principal with the Attorney General within 48 hours.6

There are a variety of exemptions from FARA. First, diplomatic or consular officers and their staff members need not register under FARA, nor must officials of foreign governments.7 In addition, certain activities can be undertaken without requiring registration, such as “private and nonpolitical activities”; the solicitation of contributions for medical aid, food, or clothing; activities in furtherance of bona fine religious, scholastic, academic, or scientific pursuit or the fine arts; the practice of law within ordinary judicial or investigatory proceedings; and lobbying by registered lobbyists.8

FARA violations are punishable as criminal felonies.9 Specifically, anyone who willfully violates any provision of FARA may be punished by a fine of not more than $10,000 or by imprisonment for not more than five years, or both.10

Recent Prosecutions & Settlements

The DOJ has been aggressively prosecuting FARA since the 2017 Manafort indictment. For example, a February 2018 indictment charged several companies and Russian nationals with conspiracy to, among other things, avoid FARA requirements.11 In May 2018, a Pakistani national pleaded guilty to failing to file a FARA registration statement; he was ultimately sentenced to three years of probation.12 Another individual pleaded guilty in 2018 to violating FARA by failing to register despite helping to set up meetings on Capitol Hill for two foreign individuals and advocating in the media for Ukrainian interests.13 The sentence in that case was three years of probation. Similarly, a Russian national was charged with conspiracy to defraud the U.S. government by, among other things, obstructing the administration of FARA in September 2018.14

FARA has been used against prominent targets other than Paul Manafort. In January 2019, a prominent law firm reached a civil settlement of a FARA investigation with the DOJ.15 According to the agreement, that firm acted as an agent of the Government of Ukraine by contributing to a public relations campaign directed at select members of the U.S. news media in 2012, and made misleading statements in response to the FARA Unit’s investigation.16 And on October 20, 2020, Elliott Broidy, the founder of a prominent private equity firm and a successful political fundraiser, pleaded guilty to FARA charges and agreed to forfeit the proceeds he derived from his lobbying efforts.17 Broidy was alleged to have lobbied the U.S. President and the DOJ to “drop or otherwise favorably resolve” matters against a foreign national involving embezzlement from a Malaysian development company and to get a Chinese citizen living in the United States removed and returned to China.18 As part of these efforts, Broidy allegedly attempted to arrange a meeting between the U.S. President and the Malaysian Prime Minister, and was paid millions of dollars for his efforts.19 Broidy received a presidential pardon before sentencing, but faced up to five years of imprisonment.20

Of course, not every FARA-related prosecution has been a victory for the government. In September 2019, a jury acquitted former White House Counsel Gregory B. Craig of charges that he lied to federal authorities about work he did for the Ukrainian government.21 The indictment in that case had alleged that Ukraine retained Craig to conduct an inquiry into, and issue a report on, whether its former prime minister had obtained a fair trial on charges of abusing her powers.22 As part of the engagement, Craig allegedly “coordinated closely” with a lobbying firm Ukraine had hired to use Craig’s report to improve Ukraine’s international public image.23 He also spoke with reporters about the report as requested by a public relations firm retained by Ukraine, and was ultimately paid more than $4 million.24 But in correspondence with the FARA Unit about the engagement, Craig allegedly claimed that he had not advised Ukraine on the public release of the report or made statements to the media about the report.25 Based on this, the indictment charged Craig with making false statements under FARA as well as 18 U.S.C. § 1001.

Trouble started for the government, however, when the district court granted a motion to dismiss the FARA charge in August 2019.26 The court concluded that misrepresentations contained in an informal letter to the FARA Unit, as opposed to a formal FARA filing, could not be the basis for a FARA false statements charge.27 Although it determined the statute could be amenable to a reading that would include this behavior within its scope, the court found “the legislature’s clear intent cannot be discerned” and therefore applied the rule of lenity to dismiss the count.28 Then, less than a month later, the jury acquitted Craig on the remaining count after fewer than five hours of deliberation.29 So the government has at times struggled to convince courts and jurors alike to penalize alleged FARA violators, but this does not seem to have diminished the government’s efforts at FARA enforcement.

The Executive Order

President Biden’s Executive Order on Ethics Commitments by Executive Branch Personnel included statements specific to FARA within the ethics pledge it requires of all executive appointees. To begin with, appointees who were registered under FARA within the two years prior to their appointment must agree not to “(a) participate in any particular matter on which [they] lobbied, or engaged in registrable activity under FARA, within the 2 years before the date of [their] appointment; (b) participate in the specific issue area in which that particular matter falls; or (c) seek or accept employment with any executive agency with respect to which [they] lobbied, or engaged in registrable activity under FARA, within the 2 years before the date of [their] appointment.”30 In essence, executive appointees must agree to be screened from any matters, issues, or agencies with regard to which they were involved in FARA lobbying.

Under this same Executive Order, President Biden appointees must commit “upon leaving Government service, not to lobby any covered executive branch official or non-career Senior Executive Service appointee, or engage in any activity on behalf of any foreign government or foreign political party which, were it undertaken on January 20, 2021, would require that [they] register under FARA, for the remainder of the Administration or 2 years following the end of [their] appointment, whichever is later.”31

Of course, these provisions are not without exceptions. They do not apply to career appointees, those appointed as members of the Senior Foreign Service or solely as a uniformed service commissioned officer.32 And the Director of the Office of Management and Budget may grant a waiver of these restrictions if their literal application would be inconsistent with their purpose or a waiver would be in the public interest.33 But the inclusion of FARA within this ethics pledge as a day one priority suggests that the Biden Administration will continue to take FARA enforcement seriously.

Other Signs of Bipartisan Focus on FARA

President Biden’s early invocation of FARA should perhaps not be surprising in light of the hard stance he took on foreign lobbying during his campaign. As part of his campaign promises addressing “government reform,” he proposed a ban on some foreign lobbying:

There is no reason why a foreign government should be permitted to lobby Congress or the Executive Branch, let alone interfere in our elections. If a foreign government wants to share its views with the United States or to influence its decision-making, it should do so through regular diplomatic channels. The Biden Administration will bar lobbying by foreign governments; and it will require that any foreign business seeking to lobby must verify that no foreign government materially owns or controls any part of it.34

This opposition to foreign lobbying is consistent with President Biden’s view of lobbying in general; the same campaign materials promised to “prohibit lobbyist contributions to those who they lobby” and provide the public with full disclosure about “when lobbyists meet Members of Congress and Executive Branch officials.”35 Of course, it is not yet clear if President Biden intends to turn this campaign position into concrete legislation or if such legislation would receive the support it would need to become law.36

It is clear, however, that there is bipartisan support for increased FARA enforcement. On June 10, 2019, Senator Chuck Grassley (R-Iowa) and co-sponsors from both parties introduced the Foreign Agents Disclosure & Registration Enforcement Act of 2019, which seeks to strengthen FARA.37 Among other things, the bill would have given the Justice Department’s FARA Unit the power to issue civil investigative demands, including interrogatories, demands for document production, and demands for oral testimony.38 It would have directed the Attorney General to “develop and implement a comprehensive strategy to improve the enforcement and administration of” FARA, to be reviewed by the Inspector General and reported to Congress.39 Perhaps most significantly, the bill would have required an audit of one of FARA’s most significant exemptions, which allows agents for foreign entities to avoid the requirement to complete detailed FARA filings by instead filing an abbreviated form under the Lobbying Disclosure Act. The goal of the audit would have been to detect “opportunities for the knowing misuse or abuse” of the exemption.40

As stated above, Senator Grassley’s legislation was co-sponsored by both Republicans and Democrats, including Senators Dianne Feinstein (D-Cal.), John Cornyn (R-Tex.), Jeanne Shaheen (D-N.H.), and Lindsey Graham (R-S.C.). Indeed, Senator Shaheen has previously introduced her own legislation seeking to “preserve the integrity of American elections by providing the Attorney General with the investigative tools to identify and prosecute foreign agents who seek to circumvent Federal registration requirements and unlawfully influence the political process.”41 Given that Senators Grassley, Shaheen, and these other co-sponsors remain in the Senate following the 2020 elections, it is likely that President Biden would find bipartisan support for strengthening FARA in the halls of Congress.

Conclusion

In light of these continued signs of increased FARA enforcement, companies and those who do business internationally should consult with experienced counsel about the statute and related regulations, which are complex and contain broad language that could apply to a wide range of different entities and activities. Given the relative dearth of FARA prosecutions prior to 2017, many compliance-focused companies and individuals may not have paid particularly close attention to whether they may have FARA-filing responsibilities. President Biden and a bipartisan Congressional delegation appear to be poised not to just enforce but actually strengthen FARA, suggesting that corporations should similarly focus their compliance energies on FARA as well.

 

Footnotes

1) Department of Justice, Recent FARA Cases (Feb. 26, 2021), https://www.justice.gov/nsd-fara/recent-cases.

2) 22 U.S.C. § 612.

3) Id. § 611.

4) Id.

5) Id. § 612.

6) Id. § 614.

7) Id. § 613.

8) Id.

9) Id. § 618.

10) Id.

11) United States v. Internet Research Agency LLC, No. 18-cr-32 (D.D.C. Feb. 16, 2018).

12) United States v. Chuadhry, No. 18-cr-226 (D. Md. July 22, 2019).

13) United States v. Patten, No. 18-cr-260 (D.D.C. Aug. 31, 2018).

14) United States v. Khusyaynova, No. 18-MJ-464 (E.D. Va. Sept. 28, 2018).

15) Department of Justice, Prominent Global Law Firm Agrees to Register as an Agent of a Foreign Principal (Jan. 17, 2019), https://www.justice.gov/opa/pr/prominent-global-law-firm-agrees-register-agent-foreign-principal.

16) Id.

17) C. Ryan Barber, GOP Fundraiser Elliott Broidy Pleads Guilty to Foreign Lobbying Violations, NAT’L L.J. (Oct. 20, 2020), https://www.law.com/nationallawjournal/2020/10/20/gop-fundraiser-elliott-broidy-pleads-guilty-to-foreign-lobbying-violations/.

18) United States v. Broidy, No. 1:20-cr-210, Dkt. 1 ¶ 2 (D.D.C. Oct. 6, 2020).

19) Id. ¶¶ 4, 23, 26.

20) https://www.newsweek.com/elliott-broidy-donald-trump-pardon-gop-fundraiser-1562908.

21) Sharon LaFraniere, Gregory Craig Acquitted on Charge of Lying to Justice Department, N.Y. TIMES (Sept. 4, 2019), available at https://www.nytimes.com/2019/09/04/us/politics/gregory-craig-acquitted.html.

22) United States v. Craig, No. 19-cr-0125 (D.D.C.) at Dkt. 1 ¶ 7.

23) Id.

24) Id. ¶¶ 23, 37-41.

25) Id. ¶ 56.

26) John Gerstein & Theodoric Meyer, Judge Dismisses 1 of 2 Charges Against Greg Craig, POLITICO (Aug. 6, 2019), available at https://www.politico.com/story/2019/08/06/greg-craig-judge-dismiss-1449939.

27) United States v. Craig, No. 19-cr-0125 (D.D.C.) at Dkt. 85.

28) Id.

29) LaFraniere, supra note 21.

30) Exec. Order No. 13989, 86 Fed. Reg. 7029, § 1 (Jan. 20, 2021).

31) Id.

32) Id. § 2.

33) Id. § 3.

34) Biden/Harris Campaign, The Biden Plan to Guarantee Government Works for the People (2020), https://joebiden.com/governmentreform/.

35) Id.

36) Casey Michel, Beware, Lobbyists: The Future of FARA Under a Biden Presidency (April 9, 2020), https://www.justsecurity.org/69341/beware-lobbyists-the-future-of-fara-under-a-biden-presidency/.

37) Foreign Agents Disclosure & Registration Enforcement Act of 2019, S. 1762, 116th Cong. (2019).

38) Id. § 2.

39) Id.

40) Id.

41) See Foreign Agents Registration Modernization and Enforcement Act, S. 625, 115th Congress (2017

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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