After a federal jury found him guilty last year of funneling foreign money into U.S. elections, former Rudy Giuliani associate Lev Parnas admitted to a different scheme on Friday involving a company named Fraud Guarantee. Giuliani, who is under investigation by the Southern District of New York for other suspected offenses, told Reuters that he made $500,000 for work with that company.
Parnas’s guilty plea to conspiracy to commit wire fraud does not include any agreement with the government.
“There’s no plea agreement of any sort here,” U.S. District Judge J. Paul Oetken noted during the hearing.
Parnas, a 50-year-old who was a central figure in former President Donald Trump’s Ukraine scandal, agreed that was true.
At least seven alleged victims invested in Fraud Guarantee, putting in hundreds of thousands of dollars for a total of more than $2 million. Prosecutors say that Parnas and his co-conspirator David Correia, who pleaded guilty to related charges late last year, misled them about how much they had contributed to the company and how much money the company had raised overall.
“We couldn’t say it better ourselves — the behavior alleged today is indeed fraudulent — guaranteed,” FBI Assistant Director William Sweeney punned when prosecutors released a superseding indictment in September.
According to the superseding indictment, Parnas and Correia established Fraud Guarantee in late 2012, pitching investors on the company as providing services to protect investors from fraud. They claimed that the company would offer an insurance product that would allow policyholders to recoup money for fraudulent conduct.
“Thus, for example, if an investor invested in ‘Company XYZ’ and purchased a Fraud Guarantee policy, then in the event that the investor lost the value of the investment due to a criminal fraud at Company XYZ, Fraud Guarantee would enable the investor to recoup the investor’s losses,” the indictment states. “Although Parnas and Correia undertook certain efforts to launch Fraud Guarantee and bring its products to market, the company never became operational.”
Prosecutors say that Parnas, 50, and Correia insisted that they were not taking salaries and that all investor money would be
used for the company’s business expenses.
According to prosecutors, Parnas and Correia pocketed the money instead.
“During this time period, from [the company account], more than $230,000 was withdrawn as cash, more than $130,000 was used to pay rent for Parnas’s personal residence, more than $40,000 was transferred to accounts in the name of Parnas and his wife, and at least tens of thousands of dollars were spent on various apparently personal expenditures, including more than $30,000 at luxury car leasing companies,” the indictment states.
In separate company account, more than $3,000 was transferred to another account in the name of Correia’s wife, according to the indictment.
“I am extremely sorry for my actions, your honor,” Parnas said during the hearing.
Giuliani has not been accused of wrongdoing with respect to Fraud Guarantee, and the investigation that led to the search of Giuliani’s Manhattan apartment circled mostly around his dealings in Ukraine. A court filing from last September revealed more about the scope of the investigation.
“The investigation being conducted by the Government is alleged by them, to be in search of a possible [Foreign Agents Registration Act] violation involving Ukrainian individuals, Ambassador Marie Yovanovitch and the office of the U.S. Ambassador to the Ukraine; a trip by Giuliani to Poland in 2019 and issues involving Franklin Templeton and funds misappropriated from the [sic] Ukraine,” the memo stated.
Parnas told the judge that he was “beyond” satisfied with his legal representation by Joseph Bondy, who did not immediately respond to a request for comment.
Judge Oetken said that Parnas would be sentenced on June 29 at 11 a.m..
(Photo via Justice Department)
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