US Seeks Foreign Lobbying Enforcement Lifeline After Wynn Case

A valuable US enforcement tool for exposing international influence campaigns was recently neutered, leaving the Justice Department in search of a lifeline from Congress or an appellate court.

For nearly a decade, prosecutors expanded their application of the Foreign Agents Registration Act to mandate transparency in lobbying for overseas interests. But they stand to lose investigative clout from a judge’s dismissal of DOJ’s suit against hotel magnate and Republican megadonor Stephen Wynn on grounds his advocacy ended years earlier.

Without intervention from Congress or a reversal by the US Court of Appeals for the DC Circuit, former DOJ officials and current FARA defense lawyers agree that subjects of future investigations have new leverage. They could simply terminate their lobbying upon learning DOJ believes they’re a “foreign agent” and no longer be responsible for complying with the statute’s detailed public filing demands.

“A lot is riding on this for the department because they want to bring about disclosure and transparency of operations on behalf of foreign interests—even belatedly,” said David Laufman, a partner at Wiggin and Dana who previously oversaw FARA enforcement at the department.

The 1938 law aims to counter national security threats by requiring lawyers, nonprofits, companies, and others to periodically disclose their advocacy to the US government and other work on behalf of foreign governments or other global entities.

FARA’s prioritization has exploded since Special Counsel Robert Mueller charged Trump campaign chairman Paul Manafort with violating it, eventually convicting him with a statutory maximum five-year prison sentence.

‘Gun-Shy’

The department filed its final brief Wednesday asking the DC Circuit to overturn Wynn’s victory.

DOJ attorneys expressed concerns of “gamesmanship and gaping loopholes” arising from the decision by US District Judge James Boasberg of the DC District Court last year that Wynn needn’t publicly register because his attempts at China’s behest to sway then-President Donald Trump had since concluded.

“If the statute only applied to current agents, it would be entirely irrelevant to agents who act only for a short period of time,” the department’s latest filing said. “Agents could also easily neuter the government’s civil enforcement power by conducting their activities clandestinely or merely ceasing their activities once a government investigation begins.”

Wynn’s matter may not significantly frame enforcement until the appellate court rules, but it’s already poised to complicate a vast array of FARA investigations.

“The department likely has been gun-shy about bringing civil enforcement actions to compel a retroactive registration,” Laufman said.

Congressional Response

As DOJ advances its arguments to the DC Circuit, a bipartisan coalition including Sens. Chuck Grassley (R-Iowa) and Elizabeth Warren (D-Mass.) is taking aim at Wynn’s victory by trying to attach language to defense legislation that would clarify FARA obligations apply retroactively.

The fix through a traditionally must-pass defense authorization package has FARA champions cautiously optimistic of passage in the defense bill or subsequent legislation after decades of failed attempts to update the statute.

It’s unclear if the amendment has enough support or if it would require the court to reverse Wynn’s dismissal, if enacted.

DOJ has yet to publicly endorse the legislative fix, which is also backed by polar opposites in the House, such as vocal progressive Rep. Jamie Raskin (D-Md.) and conservative Freedom Caucus member Rep. Chip Roy (R-Texas).

In Limbo

Boasberg’s decision last October to toss the suit creates a potentially pervasive problem for enforcers, FARA practitioners say.

Wynn’s scenario may sound extraordinary. It involves a developer who, while serving as Republican National Committee finance chairman, tried to persuade Trump to extradite a Chinese exile who’d criticized the communist government. But his legal fate implicates many of DOJ FARA enforcement matters that are civil, and therefore rarely come to public light.

High-profile criminal indictments of senior political figures from both parties have dominated the FARA headlines since the department began upping investigations in 2016. Yet more routinely, DOJ’s cases have culminated in administrative requests for individuals or organizations to register as foreign agents, said Josh Rosenstein, a veteran FARA attorney with Sandler Reiff.

Investigation subjects can contest this initial determination, but commonly comply by registering to avoid DOJ from publicizing that they’re under investigation, Rosenstein said.

But Wynn’s dismissal has already led some to end their relationship with their foreign principal to escape DOJ’s crosshairs, Rosenstein said in citing anecdotal accounts from non-clients.

“At least if they’re entirely located in DC and there’s no activity elsewhere, that—in this current limbo—may end the process,” he added.

1987 Precedent

The DC Circuit is expected to schedule oral arguments this year now that the appeal is fully briefed. As DOJ lawyers prep their case, they’re up against Wynn’s defense team composed of prominent trial lawyers Reid Weingarten and Brian Heberlig of Steptoe & Johnson, and Robert Luskin of Paul Hastings.

In their brief last month, Wynn’s attorneys contended that just like Boasberg, the panel is bound by a 1987 DC Circuit precedent in United States v. McGoff, which held that a FARA filing obligation “expires when the agent ceases activities on behalf of the foreign principal.”

That opinion doesn’t just exempt Wynn from filing, since his relationship with the Chinese government ceased in October 2017, the defense lawyers said. It was also properly decided, they wrote in their brief, because it’s consistent with “FARA’s purpose to require prompt disclosures.”

‘Guts the Statute’

Adam Hickey, who in February left DOJ’s National Security Division overseeing the section enforcing FARA, strongly disagrees.

The Boasberg decision “really guts the statute,” said Hickey, now a partner at Mayer Brown. “Under that theory, it is pointless to expose foreign influence from the past, but the legislative history of the statute says just the opposite.”

When reached by email, Wynn’s lawyers declined to address the notion that a ruling for their client would gut FARA.

However, in asking for a dismissal last year, they wrote: “The government’s concern about a ‘collapse’ in enforcement authority is belied by the fact that it has not brought a single civil injunctive action related to historical conduct in the 35 years since McGoff.”

Other attorneys still predict diminished civil enforcement from the ruling, but aren’t advising clients they’re off the hook.

Prosecutors could still bring criminal charges retroactively for lobbying within the five-year statute of limitations, provided they have evidence someone knowingly and willfully avoided registering, said Tessa Capeloto, a Wiley Rein partner who counsels clients on FARA compliance.

Failure to submit FARA filings also exposes clients to reputational risks, such as from media leaks or congressional letters calling attention to an individual’s prior controversial work—like lobbying for Saudi Arabia—Capeloto said.

Some lawyers recall past predictions of FARA’s demise following DOJ trial losses not panning out. They’re closely monitoring the Wynn appeal and Capitol Hill to determine next steps for clients.

“As it currently stands it does limit DOJ’s enforcement tools quite a bit,” Capeloto said, “but I still think there’s a lot of reason to want to be in compliance.”