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Editor’s note: Martin J. Sheil is a retired branch chief of the IRS Criminal Investigation division.

When media pundits discuss the potential legal problems arising from Jared Kushner meeting with Russian officials, they often cite the Logan Act, an ancient law that has never been successfully applied. There is, however, an entirely different — and potentially more realistic — approach to investigating and possibly prosecuting President Donald Trump’s son-in-law and adviser-for-everything.

The key question is this: Was the point of the December 2016 meeting between Kushner, then a private citizen, Sergey Gorkov, Chairman of Vnesheconombank (VEB) and Sergei Kislyak, Russian ambassador and reputed spymaster, to discuss evading sanctions imposed against Russia for its annexation of Crimea?

If so, did Kushner violate any laws, and could he be prosecuted at this time?

The short answer is maybe, and it depends on all the facts and circumstances, much of which are unknown at this time.

Let’s take a somewhat different approach here as to how a prosecutor might look at some of Kushner’s actions and project how an investigation, and potential prosecution of Kushner, for attempting to circumvent the economic sanctions under which VEB was operating, might result.

History Lesson

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The talking heads on cable news periodically posit the potential of prosecuting folks like Michael Flynn and Kushner for violating the Logan Act, which was passed around 1799. It essentially bars private citizens from negotiating with foreign powers in disputes with the US. This antique law has not been dusted off in a long time and was likely flawed from its onset.

The Logan Act was passed by a Federalist Party-dominated Congress in a snit after Dr. George Logan, who belonged to the aptly named Democrat-Republican party, traveled to Europe on his own to give European leaders a piece of his mind in opposition to pending Federalist legislation with which he disagreed. Congress decided to teach Logan a lesson and passed the Logan Act barring private citizens from negotiating with foreign powers on their own. Unfortunately for the Federalists, it was found that you can’t retroactively prosecute a violator since there was no law in place at the time of Logan’s activity.

The Logan Act simply does not work as a potential prosecutive instrument with regard to addressing Kushner’s surreptitious and highly suspect communications and meetings with Kislyak, and Gorkov. Only one prosecution has been brought in the 218-year existence of this statute. Prosecutors don’t think it works.

So if prosecuting Kushner in 2017 under the Logan Act is not any more viable than prosecuting Logan was in 1799, what statute should DOJ and the special prosecutor be looking at?

The answer is the International Emergency Economic Powers Act (IEEPA), which is the primary law under which the US sanctions programs are issued. This federal law was signed by President Jimmy Carter on December 28, 1977.

IEEPA authorizes the president to regulate commerce after declaring a national emergency in response to any unusual and extraordinary threat to the US which has a foreign source. In this case, the relevant parts are as follows:

“It shall be unlawful for a person to violate, attempt to violate, conspire to violate or cause a violation of any license, order, regulation, or prohibition issued under this chapter.” (emphasis added)

Criminal Penalty:

“A person who willfully commits, willfully attempts to commit, or willfully conspires to commit, or aids or abets in the commission of, an unlawful act described in subsection (a) shall, upon conviction, be fined not more than $1,000,000 or if a natural person, may be imprisoned for not more than 20 years, or both.” (emphasis added)

The US has successfully levied huge fines on banks and corporations that tried to evade federal sanctions on foreign countries.

A list of recent IEEPA offenders and their penalties is as impressive as it is informative:

1. In 2014, BNP Paribas & Commerzbank AG were required to pay almost $9 billion & $285 million respectively to resolve investigations into concealed transactions involving sanctioned entities.

2. In 2015, Schlumberger Oilfield Holdings Ltd., the world’s largest oilfield services company, paid a $237 million settlement and negotiated a criminal plea wherein DOJ charged a unit of Schlumberger with conspiracy to violate sanctions imposed against Iran & Sudan.

3. On 3/18/17, ZTE, a giant Chinese Telecommunications company, plead guilty to criminal charges of violating US sanctions on North Korea & Iran and was required to pay $1.2 billion

What got banks into trouble was so-called wire transfer “stripping.” This means that before performing a wire transfer, the bank removes pertinent information such as customer names and/or addresses to avoid economic sanctions violation detection.

If Kushner wanted to further US collusion with Russia in circumventing economic sanctions, either in Russia or Syria, concealment of any American involvement would certainly be required. VEB, which is the favorite bank of Russian President Vladimir Putin as well as that of Russia’s oligarchs, would be more than capable of stripping the identity of any American individuals involved.

In the case of the Trump campaign’s off-the-books meetings with Russians, we know that Flynn had at least 18 undisclosed communications with Sergey Kislyak prior to Trump’s inauguration. At least one of those discussions with the Russian ambassador reportedly concerned economic sanctions on Russia. Flynn lied to Vice President Mike Pence, saying that his conversation with Kislyak did not address economic sanctions, and was eventually fired as a result. Later it was discovered that Flynn did not disclose his travels and contacts in Moscow, nor his receipt of approximately $45k from the Kremlin-backed RT television network in Russia in December of 2015. Furthermore, it was found that he lied to the DOD about his contacts and the foreign payments.

As part of Russia’s punishment for its annexation of Crimea, VEB was placed under sanctions in July 2014. The bank suffered extensive economic losses from the sanctions and Putin was compelled to bail out VEB with over $20 billion in government subsidies.

According to multiple media reports, it has recently come to light that Flynn arranged a meeting at Trump Tower in December of 2016 (prior to inauguration) with Kislyak and Kushner. Shortly after this meeting another meeting was arranged by Kislyak with Kushner and Gorkov. In January the secret Ukraine peace plan was delivered to Flynn’s desk by Trump attorney Michael Cohen and, according to recent media reports, the State Department began plans to revoke economic sanctions against Russia.

The VEB

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VEB translated closely, means “Bank of Foreign Economic Activity.” Putin overhauled VEB in 2007 and took over as Chairman of the Board in 2008. According to DOJ, VEB was used as a cover for Russian spy Evgeny Buryakov, who attempted to recruit NYC residents as intelligence sources for Moscow. Gorkov graduated from the training course at FSB (the Russian intelligence service that used to be the KGB) in the 90s and was the VP of the government-controlled Sberbank before joining VEB. Gorkov’s boss at Sberbank was Herman Gref, who was close to Putin. Gref recommended to Putin that Gorkov be put in charge of VEB. Putin promoted Gorkov in January 2016. Gref introduced Trump to numerous oligarchs in 2013 at the Miss Universe contest that Trump sponsored.

Putin viewed VEB as a primary economic development vehicle for Russia. Large volumes of oil monies were deposited into VEB and profits soared early on in the second decade of the 21st century according to available media reports. Russian oligarchs were encouraged to deposit their plunder into VEB. But the bottom fell out of oil and gas prices in 2014. All the financial institutions in Russia were hit hard and VEB came close to a full crash.

Secondarily, 2014 saw the Russian invasion of Ukraine and Crimea which created an international economic backlash, with the US and other countries imposing economic sanctions on Russia.

Sanctions hurt much of the Russian finance sector by barring individual Americans and US companies from buying the debt of Russia’s financial institutions which really limited them from raising money. So to finish painting the Russian financial picture in 2014 — the price of their main export oil had dropped precipitously; deposits in their financial institutions were evaporating; loan repayments were dropping and their economy was hanging in the balance.

The Russians had ample motive to talk to Kushner. Kislyak, the veteran diplomat/spymaster knew that he might be able to compromise Trump’s inexperienced son-in-law. Gorkov, on the other hand, is desperate to resuscitate VEB economically while maintaining VEB’s historical intelligence function.

But what’s in it for Kushner? Before we examine his motives, let’s review what has been revealed in the media in recent days with regard to Kushner’s contacts with Kislyak and Gorkov:

1. Kushner met with VEB while he was still trying to find investors for a large 5th Ave. office building owned by Kushner companies.

2. Hope Hicks, a White House press person, stated “that the Kushner Tower project was NOT discussed during the meeting” and a WH official said in a statement released to the media, “that Kushner took the meeting with Kislyak and Gorkov, as part of his role as the official primary point of contact with foreign government & officials.”

3. White House press spokesman Sean Spicer said “Kushner was a conduit to leaders until we had a State Department.”

4. CNN reported that VEB announced that the meeting with Kushner “revolved around Kushner’s businesses and not as a representative of Trump.”

5. Reliable sources disclose that Kushner was “trying to establish a backchannel with Moscow” and was attempting to establish secure communication channels within the Russian embassy.

6. Just recently the White House has indicated that the Kushner, Kislyak, Gorkov meeting discussed Syria as a central point of the conversation.

7. Kushner’s attorney Jamie Gorelick has issued a statement that Kushner does not remember any other telephone contacts with Kislyak. Kushner has amended his Security Disclosure forms to include the Kislyak-Gorkov meeting, which he initially left off despite the fact that he had to sign the form under oath.

If Kushner’s business was in such desperate financial straits that he needed to obtain investments/loans from VEB and/or Russian oligarchs then clearly he was compromised and in danger of becoming another Putin puppet. It appears as though Kushner’s surreptitious actions were, at the least, the first steps to violate IEEPA or an attempt to violate IEEPA.

The White House has revised its justification of Kushner’s meetings with the Russians to generically cover discussion of the Syria situation. The White House has not provided any explanation for Kushner’s meeting with VEB. If Kushner discussed financing armaments to Syria through VEB than he willfully violated IEEPA on two fronts, since VEB, as a financial institution centered in Russia, was clearly under sanctions. Any economic transactions between Kushner, a Kushner company and VEB and Syria would be a willful violation of IEEPA.

Now there are those who would say in defense of Kushner, that there is nothing wrong in just meeting with the head of a financial institution from a country under sanctions. But if some overt actions were taken to advance the plan for Kushner’s companies to obtain economic relief from VEB, e.g. securing concealed communication links with Moscow in the Russian embassy, then a good prosecutor has a basis to consider prosecution.

To build a case against Kushner, telephone records are needed documenting his contacts with Kislyak. Recordings would be better.

Furthermore, Flynn’s testimony regarding setting up the initial surreptitious meeting at Trump Tower with Kislyak that immediately led to the meeting at Trump Tower between Kushner, Kislyak and Gorkov.

Telephone records can be subpoenaed. Telephone intercepts can be obtained from NSA, CIA or FBI.

Flynn can be compelled to plea bargain given his filing of a false SF-86 with regard to his contacts and payments from Russia and Turkey in 2015 and 20016, his perjury in lying to DOD personnel regarding his receipt of foreign payments, and his likely filing of false tax returns. If Flynn did not report his foreign income on his SF-86 forms or advise his superiors at DOD then it is highly unlikely that he reported his income on his individual tax returns.

This is important because any plea bargain will likely be to the crime that offers the least criminal exposure. Title 26-7206(1) has a statutory exposure of 3 years while the false statements and perjury charges would yield a 5-year exposure.

Should Kushner be boxed in by Flynn’s testimony and need to plea bargain, we can only guess what that can lead to. It should be noted that statutory exposure for IEEPA violations is 20 years. Kushner is 36 years old. If Mueller were to offer to plea Kushner to filing a false disclosure form that has a statutory exposure of 5 years with a likely sentencing of about a year in exchange for full cooperation, that would beg the following question:

Who could he provide testimony on? One answer is that he could testify against anyone who directed him to set up the meeting with VEB, and anyone who went along with him to the meeting, knowing that the intent of the meeting was to initiate and/or carry on the attempted circumvention of the sanctions and therefore IEEPA.

It is unlikely, however, that such a scenario would unfold in such seamless fashion. It is much more likely that the president, Kushner’s only boss, would offer to resign before allowing his son-in-law to face criminal charges and face the anguish of deciding whether to testify against his father-in-law. There are other possibilities of course, but the above scenario goes far in explaining the president’s concern regarding the Flynn investigation and why he may well have obstructed justice in allegedly hinting that Comey drop the Flynn case and then firing the FBI Director when his request was not met.

Related front page panorama photo credit: Adapted by WhoWhatWhy from Sergei Gorkov (President of Russia), Sergey Kislyak (The Russian Presidential Press and Information Office / Flickr – CC BY 4.0) and Jared Kushner (Chairman of the Joint Chiefs / Flickr – CC BY 2.0).

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