Skadden Settlement with DOJ Over Foreign Agents Registration Act Violation

3 Min Read By: Keith R. Fisher

In a 64-page settlement agreement with the Department of Justice (DOJ), Skadden, Arps, Slate, Meagher & Flom has agreed to pay more than $4.6 million to the U.S. Treasury and register retroactively as a foreign agent of the Ukrainian government in a case tied to Paul Manafort. Under the Foreign Agents Registration Act (FARA), a U.S. person engaging in political activities on behalf of a foreign principal, which includes a foreign government, is required to register and make a variety of written public disclosures to the DOJ.

DOJ’s January 15 press release asserts that Skadden made false and misleading statements to DOJ’s FARA Registration Unit about the scope of the firm’s work for Ukraine, which began back in 2012. The statements were made to persuade the Registration Unit that Skadden was not required to register as a foreign agent under the statute. Skadden reportedly spent more than a year negotiating with the Registration Unit over whether it had to register as an agent of Ukraine in the matter. As such registration determinations are based on the evidence DOJ receives about whether registration as a foreign agent is required, either DOJ or the FARA Registration Unit may qualify as a “tribunal” under Model Rule 1.0(m). Lawyers are prohibited under Model Rule 3.3 from knowingly making false statements to a tribunal and, more generally under Model Rule 4.1, from knowingly making a false statement of material fact to any third party.

Questions leading to the firm’s settlement with DOJ came to light tangentially out of the Mueller probe. Suspicions apparently arose because the engagement letter provided that Skadden was going to charge the Ukrainian government 100 Ukrainian hryvnia per hour—equivalent to only $12,000. The press release reads that the law firm initially took a $4 million advance from a third party—an unnamed “business person”—before beginning work on the project. By the end of the engagement, Skadden had been paid $5.2 million by the “business person,” largely through Cyprus-based offshore firms controlled by Manafort.

According to the settlement agreement, “Registration under FARA would have required [Skadden] to disclose, among other things, accurate and complete information related to the compensation that it received for preparing the Report on behalf of the [Ukrainian government], and the identity of” the business person who paid for it. The settlement agreement also reads, “Skadden has already taken substantial steps to comply with its terms, and so long as the firm continues to comply with it, the Department will not undertake any action against the firm” related to its conduct in the matter.

Separately, however, the lead partner in the matter, a former Obama White House counsel who left Skadden last April, has reportedly been under investigation by prosecutors for his work on the matter. Another former Skadden lawyer, a Dutch national, pleaded guilty to lying repeatedly to Mueller’s team about the work done for the Ukrainian regime and was deported after serving 30 days in prison.

These facts if admitted or otherwise proved would constitute misconduct under various provisions of Model Rule 8.4 and can result in suspension or disbarment for the lawyers involved. Possible grounds include violating the Rules of Professional Conduct (R. 8.4(a)); committing a criminal act that reflects negatively on a lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects (R. 8.4(b)); engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation (R. 8.4(c)); and engaging in conduct that is prejudicial to the administration of justice (R. 8.4(d)).

By: Keith R. Fisher


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