FARA’s Big Finish

At the beginning of the year, we predicted that 2022 would be the next big year for the Department of Justice’s (DOJ) enforcement of the Foreign Agents Registration Act (FARA).  And 2022 delivered, though not always in ways that DOJ expected. But in spite of some setbacks, DOJ is capping off its big year with a bang.  In the past month alone, DOJ:

• Arrested former U.S. Representative David Rivera for failing to register under FARA as an agent of the Venezuelan government;
• Called for eliminating the heavily used Lobbying Disclosure Act (LDA) exemption to FARA registration;
• Confirmed it is scrutinizing LDA filings for potential FARA violations;
• Announced its support for legislative amendments to FARA;
• Appealed the D.C. District Court’s dismissal of its civil case against Steve Wynn.

These developments—against the backdrop of ever-rising FARA registrations and anticipated revisions to FARA’s implementing regulations—portend a significant 2023 for FARA.

FARA by the Numbers

At the American Conference Institute’s 4th National Forum on FARA (“ACI Conference”) on December 8 and 9, Jay Bratt, Chief of the DOJ’s Counterintelligence & Export Control Section, recapped the year for FARA. Bratt reported there are 551 active FARA registrants, including 131 new registrants, representing 863 foreign principals—all increases from 2021 and near-record levels. The FARA Unit also conducted 22 inspections of registrants, which is the most in almost 40 years.

Bratt also highlighted the FARA Unit’s growing resources.  The Unit added a new civil litigator, a fulltime analyst, and an intelligence analyst on detail from the Federal Bureau of Investigation’s (FBI) Foreign Influence Task Force (FITF), all of which provide additional resources to review FARA and LDA filings, scour other open-source information, and conduct inspections.

This year DOJ also charged a record number of criminal “foreign agent” cases, involving violations of FARA and 18 U.S.C. § 951 (“Section 951”), in addition to bringing the first civil complaint under FARA in over 30 years against Steve Wynn.

Undeterred by Recent Setbacks

In the past two months, DOJ suffered two high-profile setbacks. First, a federal judge dismissed the FARA Unit’s civil complaint in the District of Columbia seeking an injunction compelling Steve Wynn to retroactively register. Judge James Boasberg’s opinion potentially places limits on DOJ’s ability to require agents to register for completed conduct—a critical enforcement tool for the FARA Unit. Second, just weeks later, a jury acquitted Tom Barrack of violating Section 951. The acquittal reflects the challenges with using Section 951, often referred to as an anti-espionage statute, in foreign influence cases.

Yet senior DOJ officials stressed that neither setback will slow the pace of FARA enforcement going forward. At the ACI Conference, Bratt stressed that DOJ was undeterred from bringing difficult cases.  And the Chief of the FARA Unit, Jennifer Gellie, said she had “no regrets” and stands by the charges against Barrack. Indeed, DOJ recently began the process to appeal the Wynn case. Moreover, Bratt indicated that because the Wynn decision was issued by a federal judge in the District of Columbia, DOJ, where feasible, would file future complaints outside of D.C. if the decision is not overturned by the D.C. Circuit Court of Appeals.

New Enforcement Targets

In word and deed, DOJ appears to have sharpened its FARA focus this year on think tanks and law firms.  In June, an inadvertently disclosed search warrant revealed that John Allen, a retired four-star general and former president of Brookings Institution, is under FBI investigation for allegedly lobbying the U.S. government on behalf of Qatar without registering under FARA.  In October, DOJ required Sidley Austin to register under FARA for its lobbying on behalf of Hikvision, a Chinese surveillance company.

At the ACI Conference, Gellie said that think tanks could draw scrutiny if they are advocating policy positions in line with foreign governments or principals and there is an agency relationship—monetary or otherwise—between the parties.

The Lobbying Disclosure Act Exemption Under Attack

This month, for the first time, DOJ publicly expressed its support for eliminating the LDA exemption from FARA.  In a letter to the Senate Foreign Relations and Judiciary Committees, DOJ articulated its support for S. 1724, the Foreign Agents Disclosure and Registration Enhancement Act of 2021, a bill that would provide DOJ with new FARA enforcement capabilities. Under FARA, a foreign agent who engages in political activities on behalf of a foreign principal and is registered as a lobbyist under the LDA is exempt from FARA’s registration requirements if (1) the foreign principal at issue is not a foreign government or related party, and (2) a foreign government or related party is not the primary beneficiary of the agent’s activities.  In its letter, DOJ characterized the exemption as a tool that parties otherwise subject to FARA have misused to shield themselves from FARA’s registration requirements, which are more onerous than those of the LDA. If Congress eliminates the LDA exemption, lobbyists may have no alternative but to register under FARA, likely leading to a flood of new FARA registrants; in the 1990s, before the LDA was enacted, the numbers of FARA registrants and foreign principals were twice as high as they are today.

At the ACI Conference, both Bratt and Gellie also confirmed that the FARA Unit is scrutinizing LDA filings for information to use as a basis for Letters of Inquiry.  Indeed, such review led to Sidley’s registration for its representation of Hikvision. Gellie said that the Unit has an analyst who reviews LDA filings and flags activity that is noteworthy, and Bratt noted that LDA filings can highlight discrepancies between LDA registrations that involve similar activity for which others have registered under FARA.

With legislative and regulatory changes to FARA in the mix for 2023, we can expect another active year for the FARA Unit—with potentially dramatic changes.

Damian Mencini, a Law Clerk, contributed to the writing of this client alert.