WASHINGTON — Gregory B. Craig, one of Washington’s most prominent Democratic lawyers, was acquitted on Wednesday of a felony charge that he lied about work he did seven years ago for the Ukrainian government.
The jury returned the verdict after just hours of deliberation. It was a blow to the Justice Department’s effort to more aggressively crack down on foreign influence in Washington and a vindication of Mr. Craig’s high-risk strategy of taking the case to trial.
The trial exposed in detail how a foreign government was able to harness Washington’s industry of lawyers, lobbyist and public relations experts, an unflattering portrait that included at least four million dollars in secret offshore bank transfers from a Ukrainian oligarch to Mr. Craig’s law firm.
The case was viewed as a test of the Justice Department’s new campaign to enforce a once-obscure foreign lobbying law. Until roughly two years ago, violators of the statute, known as the Foreign Agents Registration Act, or FARA, typically received only an administrative slap on the wrist.
While Mr. Craig, 74, who served as White House counsel in the first year of the Obama administration, was not accused of violating FARA, he was accused of deceiving the officials who enforce it in an effort to avoid registering as a foreign agent. His was one of a series of foreign lobbying-related prosecutions that sprang from former special counsel Robert S. Mueller III’s nearly two-year investigation of Russian interference in the 2016 presidential race.
Those cases have contributed to a wave of disclosures by lobbyists and lawyers. The number of people who newly registered as foreign agents so far this year is more than twice the number of new registrants in all of 2010.
Jurors were forced to weigh Mr. Craig’s reputation as an illustrious Washington lawyer who had served two Democratic presidents against a series of electronic communications that suggested he had shaded the truth in two letters and a meeting with Justice Department officials six years ago.
The case hinged in particular on whether Mr. Craig had sought to obscure his role in promoting his law firm’s report by providing a copy to a journalist, David E. Sanger of The New York Times, who, along with a colleague, wrote a story about the report.
William Taylor, one of Mr. Craig’s lawyers, said his client had been “hounded” by overzealous prosecutors.
“The question that you need to ask is not why this jury acquitted Mr. Craig. but why the Department of Justice brought this case against an innocent man in the first place,” he said. “It’s a tragedy, it’s a disgrace, and we are glad it is over.”
Mr. Craig, smiling broadly, thanked the jurors, his friends, his family and his lawyers.
One juror, Michael G. Meyer, said, that while some jurors were “very disturbed” by Mr. Craig’s conduct, “we could not find a basis to convict him.” Mr. Meyer, 60, added that the law “was presented to us in a very narrow fashion.”
Mr. Craig’s defense team insisted that prosecutors had concocted a charge out of a few minor omissions of facts that Mr. Craig was never under any obligation to reveal. “Mr. Craig is not the kind of person who would lie to a U.S. government agency, not after a 50-year career based on character and trust,” one of his lawyers, William Murphy, told the jurors.
Prosecutors said Mr. Craig gave in to hubris and self-interest, hiding the truth of his interactions with Mr. Sanger, not only from the Justice Department, but from his own firm’s general counsel. Fernando Campoamor-Sanchez, one of the prosecutors, described Mr. Craig’s final letter to the Justice Department on the matter as a “masterpiece” of lies and half-truths.
“If you read the letter, you will find contempt for the FARA unit,” coupled with a sense of “entitlement” and self-importance, he argued. He noted Mr. Craig proposed complaining to the attorney general himself if FARA officials did not accept his viewpoint.
The Justice Department’s inquiry concerned a 2012 report that Mr. Craig and his law firm — Skadden, Arps, Slate, Meagher and Flom — performed for the Ukrainian government, then led by Viktor F. Yanukovych.
In hopes of burnishing Mr. Yanukovych’s tattered image in the West, his government hired Skadden to review its prosecution of a political opposition figure. The report, which earned the law firm $4.6 million, concluded that while the political leader’s rights had been violated at trial, her conviction on corruption charges was backed by evidence.
Prosecutors alleged that Mr. Craig concealed his role in Ukraine’s media strategy for the report because registering as a foreign agent would have limited his prospects for further government service and damaged his reputation. The evidence showed that he wrongly claimed that he only responded to inquiries from reporters to correct misconceptions. In fact, he had contacted Mr. Sanger, offering him an advance copy of the report and an interview about its findings before its publication.
The prosecution’s case was hampered by several problems: Justice Department officials who oversee FARA registration kept no notes of the meeting during which Mr. Craig supposedly lied to them in order to convince them to reverse their decision that he had to register as foreign agent. The prosecution never sought to call Mr. Sanger to testify.
Others knowledgeable about Mr. Craig’s involvement in Ukraine’s media plan were either convicted criminals or confessed liars. Paul Manafort, who was working for Ukraine at the time and went to become Mr. Trump’s campaign chairman, is now serving a seven and a half year prison term for fraud and other crimes. The prosecutors ruled out calling Mr. Manafort, who breached a plea agreement and tried to convince witnesses against him to lie, as a witness.
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