A federal grand jury investigating activities surrounding Rudy Giuliani’s back-channel campaign in Ukraine has demanded legal documents that include records of extravagant spending at Trump hotels and millions of dollars in financial transfers by Lev Parnas and Igor Fruman, two key operatives who carried out the plan, according to a source familiar with the demand.
The documents requested by a subpoena that was issued in Florida last week could shed light on whether other people, including foreign nationals, were trying to influence the top levels of government and impact the 2020 presidential campaign.
The subpoena also shows the investigation has extended beyond campaign finance violations — the current charges against two of the defendants in the shadow campaign — and may examine more serious financial crimes.
The documents in question, some of which were previously obtained by BuzzFeed News, show dozens of transfers totaling more than $3 million into accounts belonging to Parnas last year as he and his business partner Fruman jetted into Ukraine and other countries in search of damaging information on Joe Biden.
The demand for the documents comes after at least one US bank raised concerns about a series of suspicious transactions in Parnas’s accounts, which had hallmark signs of money laundering and fraud, according to two senior law enforcement officers.
Among the suspicious transactions is one for more than $250,000 — money that arrived, late last year, as the two business partners were setting the groundwork for the plan in Ukraine and launching a marijuana venture, according to court records and the law enforcement officers.
Ken McCallion, a former New York federal prosecutor who spoke earlier this year with FBI agents working on the case, said investigators are steeped in a financial probe that will require an examination of money wires from multiple banks. "You follow the money to find the people financing the campaign," said McCallion, who once represented the former Ukrainian prime minister Yulia Tymoshenko in a civil lawsuit against Donald Trump’s campaign chair Paul Manafort.
Officials from the FBI, as well as the Southern District of New York, which brought the campaign finance charges, declined to comment. Rudy Giuliani, the lawyer who works for the president and directed the Ukraine campaign, did not respond to interview requests. A lawyer for Parnas and Fruman did not respond to a request for comment.
The subpoena, which was served on a source who requested anonymity, led to the release of information that included records detailing bank statements for several corporations controlled by Parnas, his wife, and Fruman, dating back at least three years.
It's not clear whether any of the financial transactions documented in these statements sparked the probe into the men at the center of the effort to help President Trump, but the structure of numerous transfers concealed the source of the money and where it was being spent, say two money laundering experts.
Hundreds of thousands of dollars were transferred among the partners last year — in some cases back and forth — while some of the funds were sent to family members in patterns not consistent with normal business transactions, the experts said.
For instance, a company controlled by Parnas and his wife, Svetlana, moved $490,000 into a business owned by Fruman on May 16. The next day, Parnas’s wife moved $12,650 to Fruman’s company.
The following day, the company controlled by Parnas and his wife sent $205,000 to another account they control. Minutes later, Svetlana Parnas wired $5,000 to Katie Correia, the wife of David Correia, a longtime partner of Parnas’s who was also indicted by the grand jury. That transaction is one of several wires in neat, thousand-dollar multiples sent to Correia’s wife last year. He was arrested at JFK airport last Wednesday. A lawyer for David Correia did not return a request for comment.
Ivan Garces, a longtime Miami consultant who spent years conducting money laundering investigations for financial institutions, said the sequence of the transfers would alarm the bank.
“The back and forth and the round dollars — those are going to set off alerts,” said Garces, a former director of forensic services for KPMG, an auditing firm.
Month after month, the partners’ business accounts took in money — dozens of transfers ranging from a few thousand dollars to $1.26 million — mostly in large, round numbers.
In the indictment issued two weeks ago, the partners are accused in one transaction of trying to hide the source of a major contribution they made to a pro-Trump super PAC: $325,000 that came from the refinancing of a condo owned by Fruman in South Florida.
The bank records obtained by BuzzFeed News show that six months later, Fruman and Parnas continued to move money into three different company accounts — two of which were incorporated in Delaware without any offices, phones, or known business activities.
While dollars were flowing into the accounts, the men were spending tens of thousands on travel and entertainment as they carried out their campaign and set up their marijuana enterprise, according to the records turned over to federal prosecutors last week.
In September 2018, Parnas and Fruman jetted to Las Vegas for a meeting to discuss the marijuana operation they wanted to open, according to the indictment. There, Parnas charged $2,021 at the luxury Palazzo resort and nearly $500 at a Barneys New York store inside the hotel, records show.
The next month, they returned to Las Vegas to attend a campaign rally for a state candidate, the indictment says, and Parnas charged $6,240 at the Wynn Las Vegas. That same month, Parnas charged nearly $7,200 at the Trump International Hotel in Washington, DC.
The trips followed excursions in at least a half dozen other cities, where they stayed at five-star hotels and dined at expensive restaurants.
McCallion said he learned from his contacts in Ukraine that "Parnas and Fruman were throwing around a lot of money. It's very conspicuous spending." He said the agents he spoke with earlier this year were conducting a counterintelligence investigation into whether foreign money was paying for their activities. They "want to know who is bidding for the services of Parnas and Fruman and Giuliani,” he said.
Already, investigators have connected Parnas and Fruman to at least one foreign national — an unnamed Russian businessperson mentioned in the indictment who allegedly gave the men money to fund political campaigns in Nevada, where they wanted to launch the marijuana business.
One of those payments — $500,000 — was wired into a business account owned by Fruman in October, the indictment states. On that same day, Fruman moved $263,000 into an account shared with Parnas, the bank documents show — the transfer that drew the attention of the bank, the law enforcement sources told BuzzFeed News.
The bank records obtained by BuzzFeed News do not indicate the sources of all the money flowing into their accounts. But Ed Martin, a former IRS special agent who conducted financial crimes investigations, said the records provide data that can be critical in connecting the movement of the money. "You don’t just look at one pocket,” he said. “It’s another puzzle part. These are the things that build a timeline. It’s important.”
As agents bear down on the financial records, investigators are expected to look into other businesses run by the partners in prior years, including a company founded by Parnas that drew the attention of the FBI a decade ago.
Located in a small office near Fort Lauderdale, Edgetech International gained the distribution rights to a handheld device known as the Edge, which was a precursor to the smartphone.
For nearly three years, Parnas beckoned investors to buy shares in the company through press releases and other promotions that a federal court receiver would later deem to be fraudulent.
Parnas announced sponsorships with all-pro Baltimore Ravens linebacker Ray Lewis, NBA star Shawn Marion, and music mogul Lou Pearlman, the legendary manager behind the Backstreet Boys and NSYNC who fled the country months later after being accused of running one of the largest Ponzi schemes in history.
While Parnas touted the success of his company, Edgetech’s stock plunged from $3.20 a share to just 2 cents in less than two years.
By 2007, he had failed to pay Edgetech employees. He told an investor the IRS had frozen his assets in his divorce proceedings — a line he would later use with an investor who is still owed a $500,000 court judgment — said a former vice president of the company.
Parnas and his company were also sued by Lake City Bank in Indiana for financial fraud after a $100,000 check bounced. The bank’s lawyer wrote in 2008 that Parnas and another executive “may have committed a criminal act reportable to federal authorities.”
That year, the FBI in Orlando began looking into the Edgetech case and meeting with Parnas's lawyer to talk about what they suspected was stock market manipulation, according to Parnas’s attorney at the time, who asked not to be identified.
The government did not pursue charges, but in 2009, a federal judge in Detroit found that Parnas’s company and other defendants had committed fraud in the sale of the stock and ordered them to pay $336,879 for losses to a Michigan investor.
Charles Murphy, a lawyer for the receiver in the case, said a private investigator tried to track down Parnas and serve the notice, but could never find him. “By the time we started chasing them, the company had shut down,” he said.
Scott Chapman, a Florida lawyer who is still pursuing Parnas in an unrelated court case, said Parnas entered his office years ago, waving an Edge in his hand.
At the time, he owed tens of thousands for failing to pay the lease payments on a 1995 Ferrari 456 GT.
He said Parnas told him, “When this hits, I’ll pay you the whole 60 grand.’’ But he never paid, said Chapman, and the debt has since grown to $122,000.
Chapman said he doesn’t know how Parnas has paid for the five-star hotels and restaurants over the past year. “Whether he is just a front man for another powerful person, I just don’t know. Someone is paying for it.”