March 15, 2019

Skadden Settlement with DOJ Over Foreign Agents Registration Act Violation

Keith 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)).

Keith Fisher

Principal Consultant and Senior Counsel, ‎National Center for State Courts

An honors graduate of Princeton University and Georgetown University Law Center, Keith Fisher joined the National Center for State Courts in 2015 as Principal Consultant and Senior Counsel for Domestic and International Court Initiatives.  He is an experienced lawyer and law professor and is a nationally known expert on domestic and international financial services regulation and legal and judicial ethics.  Recent speaking engagements on domestic and international  ethics issues include the Center for Judicial Ethics National Judicial College, the International Conference on Court Excellence in Singapore, the Professional Responsibility Training Session for Immigration Judges, an American-Hellenic Chamber of Commerce Symposium on Improving the Greek Court System, the Magistrature de Quebec’s Colloque soulignant les 40 ans du Conseil de la magistrature, the U.N.’s Global Judicial Integrity Network conference on social media in Vienna, and the Konrad Adenauer Stiftung’s conference on judicial ethics and social media..  He also serves on the Board of Editors for UNESCO publications on judicial bioethics.