NEW YORK —An ex-associate of Lev Parnas — the Ukrainian-born businessman who helped Rudolph W. Giuliani pursue political dirt on Joe Biden — pleaded guilty Thursday to defrauding investors in an insurance start-up that paid Giuliani for consulting work and to lying to federal regulators investigating suspected campaign finance violations.
David Correia, whose arrest last year along with Parnas and two other men played a passing role in President Trump’s impeachment, told a federal judge in Manhattan that he gave false information to backers of his company, Fraud Guarantee, which paid Giuliani $500,000 before the former New York mayor teamed with Parnas to look for information in Ukraine that they hoped would damage Biden politically.
Giuliani, who is Trump’s personal lawyer, was not mentioned during Thursday’s proceeding. He has maintained there was nothing improper about his consulting work or his efforts to undermine Biden, though his activities abroad have drawn the scrutiny of federal prosecutors here.
[Giuliani associate Lev Parnas faces new criminal charges]
Appearing virtually due to the coronavirus pandemic, Correia, 45, told U.S. District Judge Paul Oetken that he misled investors in Fraud Guarantee. The start-up claimed it would provide insurance and “risk management tools” to other companies, but it was never operational and offered “no insurance product whatsoever,” said Assistant U.S. Attorney Douglas Zolkind.
Investors provided between $200,000 and $500,000 to build a legitimate business, but prosecutors say the money was used instead on luxury purchases and to pay Parnas’s rent.
“At no point did it become operational,” Zolkind said. “Nor did it have any customers.”
Prosecutors disclosed the fraud case last month in a superseding indictment that made clear their investigation was not solely focused on a campaign finance scheme. At the time, a lawyer for Parnas, Joseph Bondy, signaled he would fight the new charges, having pleaded not guilty in the campaign finance case.
Bondy did not immediately respond to a request for comment.
Correia had pleaded not guilty to the initial set of charges but later changed course and agreed to a deal with prosecutors. In the campaign finance portion of their investigation, prosecutors had focused on statements he gave to the Federal Election Commission concerning the source of a $325,000 donation made to a pro-Trump super PAC, America First Action.
Correia had said in a sworn statement that the donation was funded by a natural gas import firm for which he worked and characterized to election regulators as a flourishing operation with “substantial bona fide capital investment,” Zolkind said.
It turned out to be a nonfunctioning business entity, and the donation was made instead using cash from a mortgage loan procured by another co-defendant in the case, Igor Fruman, prosecutors have said.
Correia admitted in court Thursday that he “just wanted the FEC to end its investigation,” which he “believed at the at the time was unwarranted.”
“I knew this was wrong at the time I did it,” he told the judge.
As part of the agreement, Correia needs to pay more than $2 million in restitution and forfeit about $46,000, representing illicit profits.
Correia’s plea agreement says he should spend up to 3 1/2 years in prison. His sentencing was set for Feb. 8.
Parnas, Fruman and another defendant, Andrey Kukushkin, are due in court next month to be arraigned on the superseding indictment that included the Fraud Guarantee allegations. Like Parnas, Fruman and Kukushkin have pleaded not guilty to the campaign finance charges.