In a recent letter to Sen. Chuck Grassley (R-Iowa), the Department of Justice offered a rare public glimpse into the enforcement activities of the small unit in the Department that enforces the Foreign Agents Registration Act.  Some of the details highlighted in the letter are consistent with observations that we have shared in this blog; others complement and confirm our experiences in practice.

The Department’s letter was prompted by an inquiry from Sen. Grassley regarding press reports indicating that Sidney Blumenthal conveyed a letter from Bidzina Ivanishvili, leader of the Georgian Dream political coalition, to Hillary Clinton when she served as Secretary of State.  The Department had very little to say on this particular issue, except to note that it was aware of the press reports and was taking “appropriate steps” to determine whether any actions were warranted.

The Department’s comments about FARA enforcement were more interesting and confirmed our observations that the FARA Unit has been considerably more active in recent years.

Increased Enforcement

First, the letter demonstrated that the Department is increasingly focused on uncovering apparent failures to register under FARA by conducting outreach to unregistered individuals and organizations that may have an obligation to register.  The letter noted that the FARA Unit had issued about 130 letters of inquiry over the past 10 years.  These letters typically reference press reports and ask whether the recipient has an obligation to register.  The Department noted that these inquiries resulted in 38 new registrations under the statute.  The letter publicly confirmed our understanding that the FARA Unit personnel rely primarily on “open-source information” including “online and print media” to identify these potentially unregistered agents.  DOJ stressed that this monitoring occurs “each day.”

Notably, the Department disclosed (for the first time, we believe) the frequency of the inquiry letters:

2015 6     (partial year)
2014 20
2013 15
2012 17
2011 16
2010 11
2009 1
2008 6
2007 17
2006 14
2005 4

 

Increased Audits

We previously disclosed that the FARA Unit had settled into a pattern of conducting about 15 audits of existing FARA registrants each year.  In these audits, the Department examines the books and records required by the statute to be maintained, and ensures that the entity’s public disclosures accurately reflect its activities.  The pattern of 15 audits a year has been sustained since 2008, following no reported audits from 2004 through 2007.  The letter to Sen. Grassley noted that the Department has conducted 101 audits since 2005.

Challenges to Enforcement

The letter noted that the FARA Unit focuses on promoting voluntary compliance with the law, rather than pursuing more aggressive enforcement proceedings.  First, the Department noted that “the FARA Unit does not possess Civil Investigative Demand authority,” despite submitting legislation twice to Congress that would have provided such authority to the Unit.  Additionally, even though the FARA statute offers civil injunctive authority and stiff criminal penalties, the Department has difficulty accessing these procedures “because of challenges in proving ‘direction and control’ by a foreign principal, broadly worded language in exemptions available under the statute, and the heavy burden of proving willfulness to impose a criminal penalty.”  The Department stated that it “would welcome the opportunity to work with Congress” to increase the enforcement tools related to FARA.

Inquiry Letters are Rebuttable

It is interesting to note the limited number of inquiry letters that resulted in new registrations.  The Department stated that 130 inquiry letters (over the past decade) resulted in 38 new registrations.  In the remainder of the cases, the recipients had no obligation to register or were subject to a continuing review by the Department.  Because the FARA Unit relies on open-source information and media reports to identify those who have potentially failed to register, we have found it common for inquiry letters to be based on incomplete or inaccurate information contained in press reports.  As indicated by the data released in the letter, targets of inquiry letters are often able to allay the Department’s concerns and demonstrate that they do not, in fact, have a registration obligation.  Individuals and organizations that operate close to the line with respect to FARA should take note and consider whether they are well positioned to answer questions from the Department, should they receive an inquiry letter.