In a Rare Move, DOJ Enters DPAs To Resolve Two Individual FARA Prosecutions

The Department of Justice (DOJ or Department) launched another year of FARA enforcement by entering a pair of Deferred Prosecution Agreements (DPAs) with former Trump consultants Barry Bennett and Douglas Watts. On January 2, the government simultaneously filed an Information and Motion for Continuance in each case, attaching the DPA and Statement of Facts to each continuance motion. The motions provide that “if, upon completion of the period of deferred prosecution, the government verifies that [the defendant] has complied with all the conditions of deferred prosecution set forth above, the government will move to dismiss the Information with prejudice within two months of receiving this report.”

The use of DPAs is rare, especially for individuals, making their deployment here particularly remarkable given the Department’s aggressive approach to FARA enforcement in recent years. As we have explained in other Enforcement Edge blog posts, DOJ’s National Security Division has devoted substantial resources to high-profile criminal prosecutions targeting foreign malign influence — including in cases brought under FARA, 18 U.S.C § 951, and provisions prohibiting false statements to U.S. officials — but it has sometimes struggled to obtain convictions on FARA-related charges at trial.

Here, the Department’s use of DPAs travels a middle road between inaction and leniency on the one hand, and full-blown adversarial criminal proceedings on the other. Because DPAs let defendants avoid convictions, such resolutions hold little appeal for the government when prosecutors are confident that they can secure a guilty plea or obtain a conviction at trial. At the same time, DPAs offer certain advantages over the blunt instrument of a criminal prosecution, including the ability to craft individualized remedies and to secure admissions of wrongdoing without the expense and risk of a criminal trial.

So, what exactly were Bennett and Watts accused of doing, and why did the Department agree to resolve their cases with DPAs?

Nature of the Charges

According to the Statements of Facts, Bennett, a Virginia lobbyist, and Watts, a New Jersey political consultant, accepted funds from an unnamed country in exchange for favorably influencing U.S. policy and public attitudes in favor of that country. Bennett owned and operated a company called Avenue Strategies Global LLC, which performed lobbying work for Qatar under a US$2.1 million contract, according to Avenue Strategies’ FARA registration forms. As part of the company’s lobbying efforts, Bennett directed Watts to form “Country C Watch” — likely the same entity named in Watts’ DPA, Yemen Crisis Watch — which was funded solely by the Qatari government. The Statements of Facts cite emails between Bennett and Watts, which show the two concealing the true ownership and mission of Yemen Crisis Watch. Yemen Crisis Watch engaged in a campaign from September 2017 to December 2018, on Qatar’s behalf, to influence the American public and members of Congress to cease their support for intervention in Yemen by unidentified “Country B” (which public commentators widely speculate to be Saudi Arabia). The Statements of Facts cite numerous activities, payments, doctored invoices, and contacts with congressional and White House staffers by Bennett, Watts, and their entities in furtherance of Avenue Strategies’ agreement with Qatar.

Neither Watts nor Yemen Crisis Watch registered under FARA as agents of Qatar. While both Bennett and Avenue Strategies registered under FARA for the company’s lobbying work for Qatar, Bennett’s Statement of Facts states that Avenue Strategies’ FARA filings “failed to disclose the creation of [Yemen Crisis Watch], Avenue Strategies’ and Bennett’s affiliation with [Yemen Crisis Watch], Avenue Strategies’ disbursements to [Yemen Crisis Watch], Watts’s work on behalf of Yemen Crisis Watch and [Qatar], or any of [Yemen Crisis Watch’s] FARA registrable-activities.” Bennett’s Statement of Facts further concedes that the statutory “humanitarian” exemption from FARA registration did not apply to his work because the publicity campaign’s primary purpose was to “rais[e] awareness of the humanitarian crisis” in Yemen in a bid to benefit Qatar, rather than to the crisis’ Yemeni victims.

The Information for Bennett charges that he engaged in a scheme to falsify, conceal, and cover up material facts from DOJ’s FARA Unit in violation of 18 U.S.C. § 1001(a)(1), and that he made false statements and material omissions in FARA filings in violation of 22 U.S.C. §§ 612 and 618(a)(2). The Information for Watts charges that he acted as an unregistered agent of a foreign principal in violation of 22 U.S.C. §§ 612(a) and 618(a)(1), and it includes two counts of making false statements or representations to a department or agency of the United States in violation of 18 U.S.C. §§ 1001(a)(1) and 1001(a)(2).

Use of DPAs

The DPAs here are noteworthy, both in substance and in what they signify for DOJ’s ongoing FARA enforcement.

First, as noted above, DPAs are rare, especially for individuals. The government tends to use them when criminal prosecution is not viable or is inappropriate under the circumstances of the case. For example, a DPA may be appropriate where the Department has an interest in prosecution but legal or factual weaknesses undermine its ability to secure a plea or obtain a conviction at trial, or when the equities suggest that criminal prosecution would be too harsh. The DPAs here come on the heels of several high-profile FARA-related cases in which DOJ unsuccessfully tried to sharpen the statute’s teeth, as shown by the acquittal of former Trump advisor Tom Barrack on § 951 charges and the failure of DOJ’s civil suit to compel the retroactive registration of casino magnate Steve Wynn.

These new DPAs offer a way for the Department to compel retroactive registration, particularly while it awaits the outcome of its appeal in the Wynn case. There, the U.S. District Court for the District of Columbia rejected DOJ’s attempt to force Wynn to register retroactively as an agent of China and applied binding D.C. Circuit precedent to conclude that the registration obligation ends when the agency relationship ends. DOJ maintains that Wynn was wrongly decided, and Department officials suggested at the recent ACI FARA conference that they are thinking through potential workarounds.

Second, the conditions imposed by the DPAs show that DOJ is embracing more creative and individualized means of enforcing FARA. For example, Bennett’s DPA bars him from engaging in any conduct that would require FARA registration for 18 months from the agreement’s date. Bennett also must correct Avenue Strategies’ FARA filings for the period when Yemen Crisis Watch was active, pay a $100,000 fine, and comply with the terms of the court’s Order of Release. Similarly, Watts is barred from activity that would require FARA registration for 12 months. Watts also must file an accurate and complete FARA registration for the activities described in the DPA, pay a fine of $25,000, and comply with the terms of the court’s Order of Release.

These conditions are consistent with DOJ’s stated desire for new statutory authority to pursue civil monetary penalties for failure to register under FARA. Such remedies would offer an alternative to DOJ’s currently limited enforcement options: (1) seeking voluntary compliance, which requires the prospective registrant to cooperate with the FARA Unit; (2) filing civil suits to compel registration (as was attempted in Wynn); and (3) criminal prosecution, which requires the government to clear the high bar of proving that the defendant “willfully” failed to register, i.e., with knowledge of the unlawfulness of that course of action.

Finally, and perhaps most importantly for the vast majority of FARA registrants: Bennett’s case highlights that the mere filing of a broad or incomplete registration statement will not necessarily satisfy a registrant’s disclosure obligations under the statute. Although Bennett was already registered under FARA as an agent of Qatar, the DPA requires him to amend his previous FARA registration statements to include previously undisclosed information about the scope of his activities.

We at Enforcement Edge will continue to monitor these developments and report back on DOJ’s ongoing enforcement of FARA.

© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.