Mueller Is Said to Ask About Money Flows to Social-Media Firm

(Bloomberg) -- Special Counsel Robert Mueller’s team has asked about flows of money into the Cyprus bank account of a company that specialized in social-media manipulation and whose founder reportedly met with Donald Trump Jr. in August 2016, according to a person familiar with the investigation.

The inquiry is drawing attention to PSY Group, an Israeli firm that pitched its services to super-PACs and other entities during the 2016 election. Those services included infiltrating target audiences with elaborately crafted social-media personas and spreading misleading information through websites meant to mimic news portals, according to interviews and PSY Group documents seen by Bloomberg News.

The person doesn’t believe any of those pitches was successful, and it’s illegal for foreign entities to contribute anything of value or to play decision-making roles in U.S. political campaigns.

One of PSY Group’s founders, Joel Zamel, met in August 2016 at Trump Tower with Donald Trump Jr. and an emissary to Saudi Arabia and the United Arab Emirates to discuss how PSY Group could help Trump win, the New York Times reported on Saturday.

Marc Mukasey, a lawyer for Zamel, said his client “offered nothing to the Trump campaign, received nothing from the Trump campaign, delivered nothing to the Trump campaign and was not solicited by, or asked to do anything for, the Trump campaign.” He also said reports that Zamel’s companies engage in social-media manipulation are misguided and that the firms “harvest publicly available information for lawful use.”

Donald Trump Jr. recalls a meeting at which he was pitched “on a social media platform or marketing strategy,” said his attorney, Alan Futerfas, in an emailed statement. “He was not interested and that was the end of it.”

Trump Jr. Meetings Test Laws on Foreigners, Campaigns: QuickTake

Following Trump’s victory, PSY Group formed an alliance with Cambridge Analytica, the Trump campaign’s primary social-media consultants, to try to win U.S. government work, according to documents obtained by Bloomberg News.

FBI agents working with Mueller’s team interviewed people associated with PSY Group’s U.S. operations in February, and Mueller subpoenaed bank records for payments made to the firm’s Cyprus bank accounts, according to a person who has seen one of the subpoenas. Though PSY Group is based in Israel, it’s technically headquartered in Cyprus, the small Mediterranean island famous for its banking secrecy.

Shortly after those interviews, on Feb. 25, PSY Group Chief Executive Officer Royi Burstien informed employees in Tel Aviv that the company was closing down. Burstien is a former commander of an Israeli psychological warfare unit, according to two people familiar with the company. He didn’t respond to requests for comment.

PSY Group developed elaborate information operations for commercial clients and political candidates around the world, the people said.

‘Poisoning the Well’

Tactics deployed by PSY Group in foreign elections included inflaming divisions in opposition groups and playing on deep-seated cultural and ethnic conflicts, something the firm called “poisoning the well,” according to the people.

In a contracting proposal for the U.S. State Department that PSY Group prepared with Cambridge Analytica and SCL Group, Cambridge’s U.K. affiliate, the firm said that it “has conducted messaging/influence operations in well over a dozen languages and dialects” and that it employs “an elite group of high-ranking former officers from some of the world’s most renowned intelligence units.”

Although the proposal says that the company is legally bound not to reveal its clients, it also boasts that “PSY has succeeded in placing the results of its intelligence activities in top-tier publications across the globe in order to advance the interests of its clients.”

That proposal was the result of a collaboration that gelled after Trump’s victory -- a mutual non-disclosure agreement between Cambridge and PSY Group is dated Dec. 14, 2016 -- but the documents don’t indicate how the companies initially connected or why they decided to work together.

Companies Shut Down

Cambridge Analytica and the elections division of SCL shut down this month following scrutiny of the companies’ business practices, including the release of a secretly recorded interview of Cambridge CEO Alexander Nix saying he could entrap politicians in compromising situations.

The joint proposal for the State Department’s Global Engagement Center was for a project to interrupt the recruitment and radicalization of ISIS members, and it provides insight into PSY Group’s use of fake social-media personas.

The company spent months preparing for the proposal by developing a persona for “an average Chicago teenager” named Madison who converted from Christianity to Islam and became alienated from her parents. Over a period of many weeks, Madison interacted with an ISIS recruiter, received instructions for sending money to fighters in Syria, and began an extended flirtation with a fighter in Raqqa, Syria.

Among the long-term objectives of Madison’s persona were obtaining names and contacts of “radical Turkish Islamic elements” and obtaining bank accounts and routing numbers for donating to ISIS, according to the proposal seen by Bloomberg News.

The State Department’s Global Engagement Center entered into a contract with SCL Group last year, but it didn’t include provisions for work to be performed by any subcontractors, according to a department spokesman. That contract didn’t involve social media and was focused on in-person interviews, according to an earlier department briefing.

Tower Meeting

The Trump Tower meeting in August 2016 included Zamel, the PSY Group founder, and George Nader, an adviser to the ruling families of Saudi Arabia and the United Arab Emirates, according to the New York Times report. PSY Group’s decision to shut down appears to have come the same week that Nader testified before the grand jury working with Mueller, according to the timing of that testimony previously reported in the Times.

Following the election, Nader hired a different company of Zamel’s called WhiteKnight, which specializes in open-source social media research and is based in the Caribbean, according to a person familiar with the transaction.

The person described WhiteKnight as a high-end business consulting firm owned in part by Zamel that completed a post-election analysis for Nader that examined the role that social media played in the 2016 election.

There is little public information about WhiteKnight or its products, and the company does not appear to have a website.

Another person familiar with PSY Group’s operations said that months ago, there was discussion about rebranding the firm under a different name.

The name being discussed internally, according to the person, was WhiteKnight.

©2018 Bloomberg L.P.

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