Crime in Progress

by Glenn Simpson;Peter Fritsch;

  Veselnitskaya was perfectly positioned to attack Browder at a time when Russia’s need to discredit him had increased exponentially. In early 2016, Congress took up a major expansion of the Magnitsky Act that would allow the government to impose harsh sanctions on any foreign government officials implicated in human rights abuses.

  In the spring of 2016, Veselnitskaya launched an effort to dilute the expanded Magnitsky Act. Part of that job was to diminish Browder’s credibility in the eyes of Congress. Veselnitskaya worked with BakerHostetler and Akhmetshin to point to contradictions in Browder’s story of his past in Russia.

  Fusion never did a dollar’s worth of business with Akhmetshin, and no one ever asked Fusion to conduct research for him, but Akhmetshin eventually testified that some of Fusion’s Browder findings for the Prevezon litigation were “later recycled for some of the work” on Capitol Hill. That was not up to Fusion, whose research for BakerHostetler was legally the property of Prevezon. Fusion had no say in the matter if Prevezon decided to take evidence from a court case and repurpose it.

  But all this would come back to haunt Fusion, long after the Prevezon work ended and even before the news broke of Donald Trump Jr.’s meeting with the Russians.

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  In his new assignment, Steele wasted no time digging into Trump’s Russia connections. In mid-June, just days after the still-secret Trump Tower meeting, Steele called Simpson with concern in his voice. His sources had come back to him with astonishing reporting, information he wasn’t comfortable sharing over the phone, even on an encrypted line. He was assembling the information in a report he didn’t want to transmit electronically.

  The moment was already fraught. Not long before, Fusion had learned that the Democratic National Committee’s computer systems had been thoroughly breached by Russian hackers in March 2016, a fact later reported by The Washington Post on June 14, 2016. Around the same time, a new website emerged called DCLeaks that promised the real truth about Hillary Clinton and her backers. Fusion also heard that in April the DNC had hired a cyber-investigations firm called CrowdStrike to look into the hack, and it quickly determined that at least one of the digital break-ins had been committed by a group of hackers for Russia’s Foreign Intelligence Service (SVR).

  Fusion’s in-house cyber ninja, Laura Seago, was asked to analyze the DCLeaks site. Her assessment came back quickly. “The poor English and amateurish site architecture—no SSL encryption, open downloads folder—screams ‘Russian hackers’ to me,” she said.

  The same day Steele was writing up his first memo, he and his countrymen were going to the polls to vote in a referendum on whether the United Kingdom should get a divorce from the European Union. All spring, advocates for remaining in the EU had warned that Russia was quietly pulling for Brexit, a claim that Brexit supporters mocked. The surveys all seemed to indicate that the question was immaterial, since voters appeared to favor remaining in the EU by a small but solid margin of four percentage points. Yet when the votes were counted that night, the percentages came out reversed. The British far right had scored a huge, shocking victory, one that was sure to thrill Putin, who was intent on undermining both the EU and NATO.

  Something weird was going on. And now here was Steele saying he had something alarming to report from Russia.

  Prior to this moment, Fusion didn’t really have a need for a heightened level of operational security. Email was fine. Fusion had moved to encrypted telephone communications as a precaution but didn’t have a reliable system in place to ensure the secure transmission of sensitive documents. A human courier was the safest way to go, but that was expensive and time-consuming and carried its own risks.

  So Steele called FedEx.

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  The first memo almost didn’t make it to Washington.

  Steele’s FedEx package was due to arrive at Fusion’s office on June 23, but it didn’t turn up as scheduled. A frazzled Simpson assumed it was missing and emailed Steele and Fritsch at 3:45 A.M. on June 24, urging Orbis to take the shipment “to United Airlines at Heathrow first thing in the morning and have it delivered via the United Airlines same-day package delivery service.”

  Two hours later, Steele replied that FedEx had tried to deliver it twice the previous day, at 11:21 A.M. and 2:22 P.M. That set off a mad scramble to figure out what had gone wrong. It turned out Fusion’s intercom was broken—again. Their office manager soon tracked down the package.

  The FedEx sleeve was addressed to Simpson. He went into his office, closed the door, and ripped it open. Inside was a blank envelope. There was no cover letter or other marking to indicate who had written what was inside, or why. The document’s header read CONFIDENTIAL/SENSITIVE SOURCE. Below was a simple two-and-a-half-page document of text with a four-paragraph summary and six bullet points. At the end, it was dated “20 June 2016,” European style.

  The opening assertion of “Company Intelligence Report 2016/080” was written in the eccentric, telegraphic style of a British intelligence report. It was as hard as they come: “Russian regime has been cultivating, supporting and assisting Trump for at least 5 years. Aim, endorsed by PUTIN, has been to encourage splits and divisions in the western alliance.”

  That was a big claim, but the report pulled no punches. Russia’s main spy service, the report said, “has compromised TRUMP through his activities in Moscow sufficiently to be able to blackmail him.” The Russians had also amassed a mound of compromising material on Hillary Clinton, which they had yet to share with the Trump campaign. “Russian intentions for its deployment still unclear.”

  The memo went on to recount a bizarre episode that allegedly took place in the presidential suite of Moscow’s Ritz-Carlton hotel in 2013. Steele’s sources said that Trump’s hatred of the Obamas ran so deep that he had asked “a number of prostitutes to perform a ‘golden showers’ (urination) show in front of him,” to defile the bed in which the Obamas had slept years earlier. The report said Russian intelligence had it on videotape for potential use as a tool of blackmail. Steele would later point out that one of his sources was a hotel staffer who had been on duty at the time.

  Fusion had expected Steele to come back with information about Trump’s many failed business deals in Russia, perhaps explaining how the Trump Organization had run afoul of some corruption agency or bungled some bribe. Or perhaps some information that would help Fusion fill out the picture of Trump’s odd associations with Sater and other criminals. Simpson later told congressional investigators: “We threw a line in the water and Moby Dick came back.”

  After reading the memo, Simpson walked a copy over to Fritsch’s office and closed the door behind him. Fritsch read it, too. Once he was finished, he looked up at Simpson, aghast. “What the fuck?” he said. “I know,” Simpson said. They called Steele and had a brief conversation about sourcing. They kept things vague and understated over the phone, even on an encrypted line.

  “Chris, Peter’s here with me,” Simpson said. “We read your report. Very interesting, to say the least. You feel pretty good about the sourcing here?”

  Steele was elliptical but firm. The sources were good: Source A was “a senior Russian Foreign Ministry figure”; source B “a former top-level intelligence officer still active in the Kremlin”; source C “a senior Russian financial official”; source D “a close associate of Trump”; sources E and F were inside the Ritz; and source G was “a senior Kremlin official.”

  Steele offered a bit more detail on the specific placement of these sources, which only confirmed their credibility in the Fusion partners’ minds. That was all he wanted to say over the phone.

  Stylistically, the memo was typical of a field intelligence report: a sober recitation of what sources had said, without much elaboration or context. As with the other fifteen memos that Steele would file over the course of the summer and fall, it didn’t purport to b
e flawless or 100 percent accurate, but it did purport to be credible, a crucial distinction. His memoranda, like all such humint products, are designed to pass along meaningful tips from credible sources to help flesh out or buttress other reporting. And, equally important, they are meant for an intentionally small audience who understands their context and purpose but also their idiosyncrasies and limitations.

  Steele and Burrows had agreed between themselves to include the “golden showers” incident, Steele said, since it seemed to reflect a political statement about Trump’s hatred for Obama and its availability as a potential weapon of blackmail, not because of its salaciousness. But Burrows objected to Steele’s characterization of the act as “perverted.” He believed that was subjective and imposed a value judgment that didn’t belong in a client report.

  As an intelligence specialist, Steele was trained to filter out disinformation and never relied on a single source for any one claim. He also took care to avoid the echo chamber effect of one source having picked up information from another source.

  For Simpson, the possibility that a foreign government was seeking to influence an American presidential election was not hard to accept. He’d written at the Journal about Chinese efforts to help Bill Clinton win re-election, and he also knew that the FBI quietly devotes substantial counterintelligence resources to the threat in every national election. Fritsch, too, understood what Russia was capable of, having covered Russia’s war on Georgia in 2008. But this was another order of magnitude, an allegation that the Russians had gotten inside a U.S. presidential campaign.

  Initially, few inside Fusion knew of the Steele memoranda. Much was beyond its ability to verify. At the same time, the June 20 memo did offer a coherent explanation for the disparate data points Fusion had assembled over the past ten months pointing to a special relationship between Trump and Russia.

  Fusion needed to know more.

  *1  The exchange was later captured by the FBI in a classified submission to a special court in Washington that deals exclusively with intelligence matters: “Source #1,” a.k.a. Steele, “was approached by an identified U.S. person, who indicated to source #1 that a U.S.-based law firm had hired the identified U.S. person to conduct research regarding candidate #1’s ties to Russia….The identified U.S. person never advised Source #1 as to the motivation behind the research into candidate #1’s ties to Russia.”

  *2  Perhaps they should have figured it out sooner, but only much later did it become clear to Fusion that Veselnitskaya did indeed have high-level contacts in the Russian government. According to a 2019 federal indictment of her for obstruction of justice, as early as 2014 she was secretly working with a senior prosecutor in Moscow to hamper U.S. prosecutors investigating the Prevezon matter.

  Within days of sending Fusion his first memo, Christopher Steele called Simpson to say he’d reached a startling conclusion: He needed to inform the FBI of what he had found. This was just one memorandum, but if the thrust of it was correct, Steele said, the United States and its allies were facing a potential national security emergency. He believed he had a duty to act.

  Simpson was taken aback. His first thought was that Fusion’s client would likely object to such a move. Steele didn’t know it at the time, but the client was the Clinton campaign, whose standard-bearer was still under investigation by the FBI. It would be unusual practice for a contractor working for the Clinton campaign to turn around and send the FBI information about Trump. But from where Steele sat, his concern was security, not politics.

  In any event, Simpson added, he didn’t know anyone at the FBI that he could report something like this to and be believed. Steele told Simpson not to worry. He could handle it. He knew the perfect person. Simpson asked for time to mull it over.

  The following day, Steele called again. This time he was even more insistent.

  Simpson still didn’t think the matter was of great urgency. For one, the information was quite fresh and needed more consideration. For another, the most eye-popping element of the memos was a sex story that would probably be difficult to prove or disprove. Allegations of sex tourism against Trump were not particularly surprising or significant and likely to cause nothing but trouble if they surfaced during the campaign.

  Steele had a very different view. There was cause to believe that a leading candidate for president of the United States was under the sway of Russia, he told Simpson. He explained the importance of sexual kompromat in espionage and Russia’s long history of using the practice against Western officials. He’d spent much of his career dealing with the issue. Both the U.S. and U.K. governments, he said, invest huge sums to vet high government officials to assure they’re not harboring any dark secrets, sexual or otherwise, that would render them susceptible to blackmail. The alleged Trump tape Steele had heard about was exactly the sort of blackmail material that counterintelligence officials feared.

  This was above Fusion’s pay grade, they agreed. Steele was the national security professional. Simpson and Fritsch were former journalists. Besides, these were Steele’s findings, not Fusion’s, so it made sense for Steele to escalate the matter if he felt the need to.

  Simpson told Steele he wouldn’t object. Fritsch agreed. The reasoning went like this: The allegations outlined a criminal conspiracy involving a hostile foreign power. If the allegations turned out to be true, there was no question that the government needed to know what was happening. If they didn’t prove true, probably nothing would come of it—so long as Fusion didn’t involve the client or itself in the matter and risk politicizing the reporting.

  Simpson and Fritsch decided not to tell Elias, the Clinton campaign’s attorney, that Steele was going to the FBI. In fact, Elias had never even heard of Steele. While Elias was aware that Fusion had engaged someone outside the United States to gather information on Trump’s ties to Russia, he did not ask who it was or what the person’s credentials were. In this case it was better to ask forgiveness than permission, they reasoned.

  The decision to keep Elias in the dark about Steele’s outreach to the FBI put Fusion in a bind. In legal engagements, investigators work at the direction of attorneys and are essentially their agents. Yet Simpson and Fritsch knew there was also a competing ethical and legal obligation under the law to report a possible felony. The potential crimes outlined in Steele’s memos included possible violations of the Federal Election Campaign Act, the Computer Fraud and Abuse Act, and, not least, the Espionage Act. Later on, Republicans in Congress—many of whom are lawyers and former prosecutors—would behave as if they were oblivious to this well-known legal concept.

  Meanwhile, Steele made plans to go to the FBI.

  His own sense of urgency was animated by the alarming nature of the intelligence, but the political calendar was also relevant. This was the end of June, and the Republican National Convention was a couple of weeks away. Once confirmed as the nominee, Trump would become eligible to receive a national security briefing from the Intelligence Community. Steele thought that community needed urgently to know—if it didn’t already—that the next possible U.S. president was potentially under the sway of Russia.

  In what had by then become a persistent, unsettling pattern, the newspaper headlines reinforced Steele’s deep concerns. On June 17, Putin told the St. Petersburg International Economic Forum that he would “welcome” a Trump presidency, saying Trump was “ready to fully restore Russian-American relations.” Three days later, Trump fired campaign manager Corey Lewandowski and handed over his duties to Manafort, who had already assumed the role of campaign chairman and chief strategist on May 19. On June 25, a hacker named Guccifer 2.0, strongly suspected of being tied to Russia, published thousands of emails stolen from the DNC.

  In Washington, Simpson and Fritsch agreed they had to keep going. And Steele needed to keep working his sources, regardless of what he did with the FBI.

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  Understanding the quality of those sources was Fusion’s first order of business. Steele believed he had enough to go to law enforcement. But Fusion knew that the minute they shared Steele’s explosive reports with Elias, even verbally, they would get a lot of questions they might not be able to answer, at least right then. If they were going to share this field intelligence, they wanted to understand as best they could why Steele found it so credible. Simpson and Fritsch pressed Steele for details that would help them evaluate that.

  After reviewing the first month’s findings with them, Steele ran through a separate report he called a “source key” that listed and described his “sub sources”—people who had existing relationships with Orbis’s sources. That key identified, sometimes by name, no fewer than seven sources for the report’s shocking hotel scene. It also detailed the relationships of numerous other sources to senior people close to the Kremlin and Putin. It was an impressive roster of people in and out of government.

  Steele said that one of his collectors was among the finest he had ever worked with, an individual known to U.S. intelligence and law enforcement. Neither Simpson nor Fritsch was told the name of this source, nor the source’s precise whereabouts, but Steele shared enough about the person’s background and access that they believed the information they planned to pass along was credible.*

  But just because the source was credible did not mean everything the source produced would turn out to be true. In intelligence, as journalism, all sources merely pass along what they see, hear, or think—not all of which turns out to be correct. Eyewitnesses to a car accident routinely give strikingly different versions of how it happened. That’s why news organizations require reporters to have two sources for every key claim in a story. But having two sources in intelligence is oftentimes a luxury.