Enforcement Edge
October 23, 2020

Another FARA Guilty Plea for DOJ's Enforcement Push

Enforcement Edge: Shining Light on Government Enforcement

The once-obscure Foreign Agents Registration Act (FARA) is back in the spotlight this week. On Tuesday, Elliott Broidy, a former deputy finance chairman for the Republican National Committee and former fundraiser for President Trump, pleaded guilty to one count of conspiracy to violate FARA by failing to register as a foreign lobbyist. Coming on the heels of the Justice Department's latest FARA enforcement push, the case reminds anyone whose business touches on foreign interests how important it is to develop a working understanding of this notoriously convoluted statute.

Broidy's guilty plea relates to his work on behalf of Malaysian and Chinese interests. According to Broidy's admissions of fact, in 2017 and 2018, Broidy agreed to lobby Trump, the Attorney General, and other high-level US government officials to drop civil forfeiture proceedings and related matters concerning the embezzlement of billions of dollars from 1Malaysia Development Berhad (1MDB), the Malaysian sovereign wealth fund. Broidy received $9 million for this work, from an unnamed foreign national who was the alleged architect of the 1MDB scheme. Separately, Broidy also agreed to lobby high-level US government officials on behalf of the People's Republic of China (PRC) for the removal and return of a PRC national.

According to DOJ, Broidy's lobbying included trying to arrange meetings for a PRC minister with Attorney General Sessions, the Secretary of Homeland Security and other federal officials. Broidy also provided talking points to the Secretary of State referencing the 1MDB investigation in advance of an August 2017 meeting between the Secretary and the Malaysian Prime Minister. Broidy even went so far as to push the White House Chief of Staff for a golf game between the President and the Malaysian Prime Minister. Ultimately, Broidy was not able to convince government officials to drop the 1MDB proceedings, nor did he secure the return of the PRC national. Indeed, the 1MDB scandal's fallout includes Goldman Sachs Group's recent admission that it conspired to violate the Foreign Corrupt Practices Act (FCPA).

The Justice Department's decision to charge Broidy is noteworthy because DOJ has historically brought very few FARA prosecutions, let alone a FARA conspiracy prosecution. For example, a 2016 report by DOJ's Office of the Inspector General found that, between 1966 and 2015, there were only seven criminal prosecutions under FARA. Of those seven cases, only three resulted in FARA-related convictions or guilty pleas—two others resulted in guilty pleas to non-FARA charges, and the remaining two cases were dismissed. Charges of conspiracy to violate FARA (the single count underlying Broidy's plea) are even rarer: Only one of the seven pre-2016 cases was charged as a FARA conspiracy.

But this trend is changing in the wake of recent high-profile prosecutions and the restructuring of DOJ's National Security Division. The prosecutions of Paul Manafort and Michael Flynn brought FARA onto the national stage. Manafort pleaded guilty to multiple charges, including conspiracy to violate FARA, while Flynn pleaded guilty to making false statements in multiple documents filed in conjunction with a FARA registration. Following these prosecutions, in 2019, Assistant Attorney General John Demers announced that DOJ intended to shift its approach from treating FARA as an administrative obligation to make it an enforcement priority. As part of this change, DOJ expanded its FARA unit and appointed former Mueller-team prosecutor Brandon Van Grack to lead the unit.

These shifts kicked off an enforcement push that continues today. Broidy's case promises to be no different: Two additional defendants, George Higginbotham and Nickie Mali Lum Davis, have already pleaded guilty for their roles in the scheme, and DOJ has hinted that there may be more charges to come. As reported by The New York Times, during the plea agreement hearing, prosecutors said that the investigation continues as to other co-conspirators and additional charges may be filed.

The Justice Department's increased focus on FARA enforcement highlights the importance of compliance for any company that interfaces with foreign clients. Any firm with foreign clients should seek capable counsel to review these engagements. Over the years, we've advised numerous individuals, consulting firms, law firms, and companies on FARA investigations and compliance matters. This practice includes working with our own Arnold & Porter colleagues, such as those in the firm's Sovereign Finance practice group, to help our clients navigate this notoriously convoluted statute that understandably remains a source of confusion for many.

For questions about FARA issues, please reach out to the authors or any of their colleagues in Arnold & Porter's White Collar Defense & Investigations practice group.

*Nora Ellingsen contributed to this blog post. Ms. Ellingsen is a graduate of Harvard Law School and is employed at Arnold & Porter's Washington, DC office. Ms. Ellingsen is admitted only in California. She is not admitted to the practice of law in Washington, DC.

© Arnold & Porter Kaye Scholer LLP 2020 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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