As a private attorney in 2016, FBI Director Chris Wray supervised a team of lawyers that informed the Justice Department that Blackwater founder Erik Prince had likely violated U.S. law while trying to sell secretly modified paramilitary attack aircraft to Azerbaijan’s military. Wray and Robert Hur, now a senior Justice Department official, were both partners at the powerhouse law firm King & Spalding in 2015 when officials at Prince’s Hong Kong-based logistics company, Frontier Services Group, discovered suspicious activity by Prince over the proposed sale of the planes. Hur is currently the top lieutenant to Rod Rosenstein, the U.S. deputy attorney general. At King & Spalding, he was one of the lead lawyers on the Prince investigation. FSG retained King & Spalding to conduct a review of the company’s legal exposure to violations of U.S. law on weapons sales and the export of defense services to foreign governments and militaries. The attorneys concluded that Prince could potentially be charged with brokering defense articles without a license, according to a copy of the review obtained by The Intercept. The FSG-hired lawyers briefed the Obama Justice Department’s National Security Division in February 2016 on Prince’s activities and, a month later, FSG’s CEO notified the State Department that FSG intended to voluntarily report its possible violations of U.S. defense export laws. “The potential violations stem principally from conduct of Mr. Prince, a U.S. person,” CEO Gregg Smith wrote to the director of the State Department’s Directorate of Defense Trade Controls, which regulates the export of defense articles and services, in a letter obtained by The Intercept. In the letter, Smith promised to provide the State Department with a copy of the findings of FSG’s internal investigation. In April 2016, The Intercept published two reports detailing Prince’s attempts to modify small aircraft for sale to militaries in Africa and the Middle East, and a federal investigation into his alleged business ties to Chinese intelligence. According to a second letter dated April 13, 2016 and seen by The Intercept, Smith asked the State Department for an extension so FSG could review the report for more potential violations of U.S. defense export laws. When contacted by The Intercept for this story, Smith declined to comment. “Please be advised that I resigned from FSG and all of its affiliates effective May 1, 2016,” he wrote in an email. “By prior agreement I am precluded from making any comment whatsoever on FSG, its affiliates or officers.” Violations of International Traffic in Arms Regulations can trigger civil penalties of up to half a million dollars or criminal penalties of up to 20 years in prison, depending on the specific nature of the violations. A current FSG spokesperson, responding on behalf of the company and Prince, said, “Any assertion that FSG or Mr. Prince violated any laws in this matter is categorically false.” FSG’s apparently good-faith attempt to uncover potential wrongdoing by Prince represented the culmination of a power struggle between Smith and Prince for control of the company. “Erik was not cooperating or supportive” of the internal review, according to a former senior FSG official.

Photo: Alex Wong/Getty Images

A close associate of Prince previously told The Intercept that, at the time of the Wray-led investigation, Prince was operating a “secret skunkworks program” using his role as FSG’s founder and chair to cover his shadowy activities. “Erik wants to be a real, no-shit mercenary,” said the associate. “Erik hides in the shadows … and uses [FSG] for legitimacy.” Soon after Smith reported Prince’s potential violations to the State Department, Smith was forced out of the company, and Prince and his Chinese business partners consolidated power. What action, if any, the Justice Department took after Wray’s team shared their initial findings has not been made public. “We were perplexed by the lack of immediate action” by the State and Justice departments, the former senior FSG official told The Intercept, adding that he and others at the company got the impression that “nobody wanted to dig into this until after the [2016] election.” At King & Spalding, Wray chaired the special matters and government investigations team, though it is unclear how involved he was in its day-to-day work or the FSG investigation. “Chris led the group that our attorneys reported to,” said the former senior FSG official. The team Wray led reads like a who’s who of former Justice Department officials. Hur, who worked with Rosenstein in the George W. Bush Justice Department before his most recent stint at King & Spalding, and Gary Grindler, former chief of staff to former Attorney General Eric Holder, took the lead in briefing the government on the Prince situation in 2016. “The evidence strongly suggests that Mr. Prince was offering a foreign defense article (i.e., an attack aircraft) for sale to the Azerbaijan MOD,” according to the internal investigation.

Top/Left: Principal Associate Deputy Attorney General Robert K Hur speaks during a press briefing at the White House in Washington, Thursday, July 27, 2017. Bottom/Right: Deputy Attorney General Gary Grindler speaks during the unveiling of the Justice Department's National Strategy for Child Exploitation Prevention and Interdiction, Monday, Aug. 2, 2010.Photos: Alex Brandon/AP, Drew Angerer/AP

Asked about the status of any investigations into Prince stemming from King & Spalding’s work, Justice Department spokesperson Sarah Isgur Flores told The Intercept: “We don’t comment, confirm, or deny the existence of investigations.” Grindler, who is still a partner at King & Spalding, said he is “unable to comment because all of the information I have is covered by the attorney client privilege.” For his part, Erik Prince appears emboldened by the Donald Trump presidency. He gave heartily to a pro-Trump super PAC and his sister, Betsy DeVos, is the education secretary. Prince continues to very publicly push for the Trump administration to utilize his private spy and security services with no apparent concern that the FBI or Justice Department may be pursuing him. On Sunday, Prince and Oliver North, of Iran-Contra fame, hosted a fundraiser at Prince’s home in Virginia for his longtime friend California Republican Rep. Dana Rohrabacher. Prince, the founder of the notorious private security firm Blackwater, has also emerged as a central figure in the investigation of possible collusion between Trump and his associates and Russia. He testified before the House Intelligence Committee in November on his alleged efforts to establish a secret back channel between Trump and Russia during a meeting in the Seychelles in January 2017. Prince told the panel he had not played any such role, but some top Democrats on the committee say they are examining whether he misled them under oath. While many details about Prince’s effort to create a private air force have been previously reported by The Intercept, Wray and Hur’s involvement and their interaction with the Obama Justice Department have not. Their role raises new questions about why the government’s investigation into Prince appears to have languished and what role the two senior officials may play in any continuation of the probe. Given that Wray and Hur could potentially be involved with investigations or a prosecution of Prince, there could be ethical issues stemming from their past work for FSG. “Whenever a move like this happens, it’s legitimate to ask whether that creates a risk of disclosing confidential information,” said Len Niehoff, a law professor who teaches ethics at the University of Michigan. “It’s certainly fair to ask questions to ensure there’s no conflict of interest or improper disclosure.” Justice Department spokesperson Flores said, “We don’t comment, confirm, or deny recusals because to do so could confirm or deny the existence or details of an underlying investigation.” The 2015 internal report by FSG’s lawyers from King & Spalding concluded that “based on the information available, it appears likely that Mr. Prince engaged in ‘brokering activities,’” without the necessary approval from the U.S. government in connection with the attempted sale of the secretly modified paramilitary aircraft to Azerbaijan’s Ministry of Defense. Under federal law, U.S. citizens seeking to offer military services or technologies to foreign governments must have a license certifying that the services or articles are approved under the International Traffic in Arms Regulations, or ITAR. In their February 22, 2016 meeting with officials from the Justice Department’s National Security Division, FSG’s lawyers from King & Spalding “raised the possibility” that Prince may have been illicitly brokering defense services to a foreign government without the necessary approvals from the U.S. government, according to the March 2016 letter from Smith, FSG’s then-CEO. In the letter, Smith alleged that Prince modified the aircraft with weapons systems “without FSG management knowledge” to “prevent management oversight.” Smith alleged that Prince “for his own interests directed the aircraft modification and then promoted the sale of the modified aircraft to private buyers and governments.” Smith noted that FSG had no evidence that Prince had the necessary license from the U.S. government. Prince’s offer to sell the aircraft was part of a broader proposal to Azerbaijan for security and logistical services. That effort was known internally at FSG as “Project Zulu.” The King & Spalding findings centered around a deal Prince tried to make with Azerbaijan’s Ministry of Defense for several American crop dusters that Prince had secretly modified into attack and surveillance aircraft. The deal was Prince’s last-ditch effort to realize a long-held desire to sell small offensive aircraft to governments around the world for small and low-intensity conflicts. Prince used FSG’s legitimacy to privately pitch an array of services to Azerbaijan. The King & Spalding investigation determined that nearly everything Prince offered to the Azerbaijani government was a service FSG couldn’t provide and was not for the company’s benefit. The deal ultimately fell apart.

Top/Left: A Thrush aircraft originally purchased by FSG. Bottom/Right: Slides from Prince’s original plan to weaponize the Thrush 510G.Photo/Slide: Obtained by The Intercept