Ukraine Tycoon’s Lawyer Says He, Not His Client, Lent to Parnas

(Bloomberg) -- Ukrainian billionaire Dmitry Firtash had no part in a disputed $1 million bank deposit to an indicted associate of Rudy Giuliani, the Ukrainian’s lawyer said.

But the statement issued by the lawyer on Wednesday also contradicted key defense claims that the Giuliani ally, Lev Parnas, wasn’t a party to the real-estate loan and therefore not under any obligation to disclose the funds to prosecutors.

The lawyer, Ralph Oswald Isenegger, said that he, and not his client, was the source of the money. In a written statement, he said he paid five installments of $200,000 each in September to the bank account of Parnas’s wife, Svetlana.

Parnas is a Ukrainian-born U.S. citizen who’s charged with seeking to launder foreign money into U.S. elections. He was allowed to await trial while detained at home, but prosecutors have sought to revoke his bail, asserting he failed to disclose his full financial picture and was a flight risk. Prosecutors have said the $1 million came from a Russian account, raising questions about the source of funding for efforts by Parnas, Giuliani and others to find information in Ukraine to aid President Donald Trump’s 2020 presidential campaign.

“This was a personal business transaction between myself and Lev and Svetlana Parnas,” Isenegger wrote. “The funds were entirely mine, and I was not acting in this matter at the request of or on behalf of any of my clients or indeed anyone else.”

Parnas, through his lawyer, has said the cash was a loan for his wife to buy real estate and had nothing to do with him. Isenegger, in his statement, echoed the explanation that the deposit was a real-estate loan, but he undercut the assertions that it was unrelated to Parnas. “Lev and his wife Svetlana asked me if I could lend them one million dollars for purchasing a home in Florida,” the lawyer wrote.

Isenegger and prosecutors in the Manhattan U.S. attorney’s office didn’t respond to requests for comment. In a statement issued through a spokesman on Wednesday, Firtash said he had no knowledge of the transaction. Parnas’s lawyer, Joseph Bondy, didn’t respond to a request for comment.

The lawyer’s statement was the latest twist concerning the payment, which was first disclosed in court filings a week ago. Bondy, Parnas’s lawyer, has said the payment was a loan to Parnas’s wife, Svetlana. Svetlana Parnas is a stay-at-home mother, according to prosecutors. The loan was unsecured.

Shortly after the loan was issued in September, some $200,000 of the proceeds were paid into an escrow account as an initial payment for a home in Boca Raton, Florida, that Svetlana Parnas was in contract to purchase, according to court filings. The sale price was $4.5 million, and the all-cash transaction was to be completed the following month. Prosecutors said they didn’t know where the balance of the money would come from, since Parnas and his wife had said their cash assets totaled about $450,000. The deal has since been abandoned.

The payment was made just before Parnas said he wouldn’t comply with congressional subpoenas seeking information about the Trump administration’s activities in Ukraine that are now the subject of impeachment proceedings in Washington.

Parnas had been working with Giuliani to dig up political dirt in Ukraine on Hunter Biden and his father, former Vice President Joe Biden, Trump’s top Democratic rival in next year’s presidential election. He had also been hired as a translator by Firtash’s U.S. legal team.

In October, the month after the loan was paid out, Parnas was arrested with a business associate, Igor Fruman, at a New York airport as they sought to leave the country with one-way plane tickets. Federal prosecutors in New York charged the pair with campaign finance violations including hiding the true source of financial contributions.

Bondy said in a court filing last week that the funds didn’t belong to Lev Parnas, noting that they were wired into his wife’s account and distinguishing them from his own financial resources that he was required to disclose to the government.

In court, Bondy said that Parnas didn’t disclose the loan on government forms “because it doesn’t ask him to disclose anything pertaining to his spouse” and that there was a “clear and unequivocal chain of communication” indicating that the loan was being given to her.

But the statement by Isenegger, the Firtash lawyer, said that Lev Parnas was involved in procuring it and described him as a party to the transaction. He said that “Mr. Parnas” asked him to keep the deal confidential and that “neither Mr. Parnas nor his wife” has responded to his requests since he began seeking return of the funds.

Prosecutors and the judge in the case, J. Paul Oetken of Manhattan federal court, expressed skepticism that the loan was extended only to Svetlana Parnas. The judge declined to revoke Parnas’s bail after a two-hour hearing Tuesday. But in his findings, he relied at least in part on the assertion that the money belonged to Svetlana Parnas.

“There is nothing that clearly indicates that he had a duty to disclose his wife’s assets,” the judge said in his ruling from the bench. “There is certainly lots of suspicious information here about the fact that this was, as a practical matter and in reality, Mr. Parnas’s money as opposed to his wife’s, but I don’t think that that’s a clear and intentional misstatement such that bail should be revoked at this point.”

To contact the reporter on this story: Christian Berthelsen in New York at cberthelsen1@bloomberg.net

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, David S. Joachim, Peter Jeffrey

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