The Justice Department is investigating the work of a consulting firm linked to the president’s son for potential illegal lobbying, four people familiar with the probe told POLITICO.
The firm, Blue Star Strategies, took on as a client the Ukrainian energy company Burisma while Hunter Biden served on its board. Republican operatives’ efforts to investigate Burisma and the alleged corruption that surrounded the firm were at the heart of the first Trump impeachment.
The probe comes as the Justice Department ramps up its scrutiny of foreign governments’ efforts to influence U.S. politics through covert lobbying operations. Much of that enforcement work has focused on Republicans linked to former President Donald Trump, including an active probe of his personal lawyer Rudy Giuliani. The existence of the investigation into Blue Star, meanwhile, shows that DOJ’s torqued-up enforcement efforts may also create legal jeopardy for firms and operatives aligned with the Democratic Party.
The Delaware U.S. Attorney’s Office is involved in the probe, and is coordinating with lawyers in the National Security Division at DOJ’s Washington headquarters, the sources said. The Delaware office is also investigating Hunter Biden for potential tax violations.
The existence of the federal probe into Blue Star Strategies has not been previously reported. There has been grand jury activity in connection to the probe, two of the people said.
One focus of the investigation is whether the firm failed to comply with disclosure requirements under the Foreign Agents Registration Act, a law that requires Americans to disclose lobbying and public affairs work for foreign officials and political parties. There is no indication that Hunter Biden is a target of the investigation into Blue Star. Karen Tramontano, one of Blue Star;s co-founders, testified that Hunter Biden did not direct any of the firm’s work for Burisma.
Blue Star did not respond to a request for comment. A spokesperson for the Justice Department declined to comment. Hunter Biden and a lawyer for him did not respond to requests for comment.
Blue Star Strategies is a Washington lobbying and public affairs firm that also has offices in Brussels, Buenos Aires, Paris and Vienna. Its co-founders, Tramontano and Sally Painter, are well-connected longtime Washington operatives and alums of the Clinton administration. Their connections extend beyond high-profile politics; on Oct. 24, 2019, one of the firm’s co-founders posted a photo on Facebook showing her standing arm-in-arm with pop star Nick Jonas and movie star Priyanka Chopra.
Blue Star Strategies has worked on a host of major endeavors, including the effort to secure permanent normal trade relations between the U.S. and China, according to their website. Filings with the Justice Department show that in recent years, the firm has worked for clients in Azerbaijan and Bangladesh, and an affiliate of a Latvian bank accused of money laundering by the U.S. Treasury Department.
But it is the firm’s work for Burisma Holdings, an energy company based in Ukraine facing allegations of corruption, that has subjected Blue Star to government scrutiny. Blue Star did not disclose its work for Burisma in any federal lobbying databases. Such disclosures would have revealed when the firm started working for Burisma and when it concluded its work.
In November 2015, its co-founders took on a troubled client: Burisma Holdings, an energy company based in Ukraine whose founder tussled with British authorities over millions of dollars and who faced accusations of corruption from the then U.S. ambassador to Ukraine. Then-Vice President Joe Biden’s son, Hunter Biden, was on the company’s board at the time.
Mykola Zlochevsky, Ukraine’s natural resources minister from July 2010 to April 2012, controlled Burisma. In April 2014, British law enforcement officials seized $23 million from Zlochevsky, saying it had been corruptly misappropriated. But a British judge ruled in January of 2015 that Zlochevsky could get his money back, citing a letter from Ukraine’s prosecutor’s office saying Zlochevsky was not under investigation there, as The Guardian has detailed.
In September 2015, then-U.S. ambassador to Ukraine Geoffrey Pyatt called Burisma corrupt, and criticized the prosecutor’s office for helping Zlochevsky get back the $23 million.
Pyatt’s comments vexed the leaders of Burisma. For help, they turned to Blue Star. Devon Archer, who co-founded an investment firm with Hunter Biden and served on Burisma’s board with him, connected Blue Star to the energy company, according to Blue Star co-founder Karen Tramontano’s Congressional testimony on August 28, 2020 as part of a Republican-led Senate investigation.
Orest Logunov, the deputy CEO of Burisma, declined to comment. Karl Masi, a lawyer for London firm Peters & Peters which represents Zlochevsky and Burisma, did not comment.
According to Congressional testimony, Blue Star’s co-founders met with U.S. government officials as part of their work for Burisma. They had not disclosed to the Justice Department that Burisma was a client, which could potentially put them in legal jeopardy, said a former top DOJ official.
Tramontano testified that when she first discussed Burisma with Archer, she did not know Hunter Biden was also on its board. She also said that she didn’t recall when she specifically learned he was on the board, and that he had been an acquaintance of hers before her firm took on the energy company as a client.
Tramontano also testified to Congressional investigators that Burisma first retained her firm to find out why Pyatt had criticized the company and whether his criticisms represented the views of the State Department. The firm’s co-founders did mention that Hunter Biden was on their client’s board when seeking a meeting at the State Department, as The Wall Street Journal reported. They “mentioned him again during the meeting as part of an effort to improve Burisma’s image in Washington,” according to the paper.
Tramontano said that she met with multiple U.S. officials as part of her work with the company, including Pyatt and Cathy Novelli, a State official focused on energy. She also said explicitly that she did not intend to influence U.S. policy as part of that work. Another Blue Star co-founder, Sally Painter, said the same thing when she testified separately before the investigators.
But one of the officials who took a meeting with Painter and Tramontano gave testimony that appears to contradict their claims.
Amos Hochstein, then a State Department official handling international energy affairs, testified before Congressional investigators that in a meeting with representatives from Blue Star, they wanted him to know that “they were frustrated with — did not agree with the U.S. government officials’ view of Mr. Zlochevsky.”
Hochstein testified that Tramontano, a former deputy chief of staff to President Bill Clinton, and Painter produced a report concluding that Zlochevsky had been cleared of corruption allegations. In March 2016, he took a meeting with the two of them and with lawyer John Buretta, who represented Burisma. In the meeting, they gave him “a verbal view of where they stood,” he said in Congressional testimony.
“They were unhappy with the rhetoric from U.S. officials, myself included, regarding Mr. Zlochevsky,” Hochstein said.
But Hochstein told the Congressional investigators he disagreed with their views on Zlochevsky.
“They did not like my answer, and they tried to convince me otherwise,” Hochstein said.
Tramontano and Painter did not respond to attempts seeking comment. Buretta also did not respond to a request for comment.
“The Justice Department could arguably assess that the lobbying firm was engaged in ‘political activities’ under FARA creating a facial obligation to register,” said David Laufman, who from 2014 to 2018 oversaw FARA enforcement at the Justice Department as chief of the Counterintelligence and Export Control Section, when presented with POLITICO’s reporting. “But the firm also might qualify for an exemption from registration if it was acting solely on behalf of the business interests of Burisma, neither the Ukrainian government nor any Ukrainian political party had anything to do with the firm’s activities in the United States, and the firm’s outreach to the State Department or other U.S. agencies was not directly promoting the public or political interests of the Ukrainian government or a Ukrainian political party.”
The Burisma saga kicked off events that momentarily jeopardized Donald Trump’s presidency. Rudy Giuliani, Trump’s personal lawyer, tried to investigate Hunter Biden’s relationship with Burisma but found little success getting Ukrainian government officials on board. So in a phone call, Trump pushed Ukraine’s president to help Giuliani with his investigation.
Administration officials indicated to their counterparts in Kiev that unless Ukraine’s president announced that the country’s law enforcement was investigating Burisma, the U.S. would refuse to deliver anti-tank missiles that it had promised to send. That episode triggered the first Trump impeachment.
As that impeachment saga unfolded, two Republican Senate chairs — Sen. Ron Johnson of the Homeland Security and Governmental Affairs Committee, and Sen. Chuck Grassley of the Finance Committee — were running a concurrent probe into Hunter Biden’s relationship with Burisma. As part of that probe, they scrutinized Blue Star’s work for the firm. Their investigation generated vociferous criticism from Democrats, who said it was an effort to run interference for Trump and find information that could boost his reelection campaign.
But now, Justice Department investigators are scrutinizing some of the same subject matter.
“Justice Department enforcement of FARA is now considerably more rigorous, seen not only in high-profile criminal prosecutions but also in day-to-day regulatory enforcement such as administrative inquiries into why parties are not registered, accountability for deficiencies in filings, and inspections of books and records,” said Laufman, now a partner at Wiggin & Dana. “The risks of non-compliance with FARA are therefore greater than in years past.”