Crime in Progress

by Glenn Simpson;Peter Fritsch;

  That was when an unexpected attack came from within the Fusion camp.

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  Before he became its biggest breach, Russell Carollo was one of Fusion’s greatest assets.

  Carollo was a former Pulitzer Prize–winning journalist with a rarefied and somewhat quirky talent: forcing reluctant bureaucrats to cough up information under the Freedom of Information Act. At its best, FOIA gives Americans more transparency into government and holds public servants accountable. Enacted in 1967, FOIA mandates the disclosure of previously unreleased federal records when they are requested by the public. But it takes an obsessive, relentless personality to stick with the fight and force compliance with open-records laws. Most of the time it is an exercise in frustration, leading many reporters to eschew the process altogether. Every so often, though, it yields priceless discoveries.

  Carollo was something of a secret weapon and Fusion’s longest-tenured contractor. Shortly after Simpson left The Wall Street Journal in 2009, he hired Carollo to file FOIAs on a couple of his first research contracts and never stopped. After Fusion was founded in 2010, the firm became Carollo’s anchor client for a cottage business he built making FOIA requests for private clients from his home in rural Colorado.

  He was a bit of an eccentric and a definite Luddite who required equal amounts of gentle persuasion and cash subsidies to ditch his Netscape browser and put in a new scanner—qualities that only endeared him to everyone at Fusion. And clients loved the results. After perusing some of Carollo’s juicier product and hearing a bit of his backstory, one client dubbed him the “FOIA bomber” for the obsessive attributes he shared with Unabomber Ted Kaczynski. It stuck.

  The FOIA bomber’s emails, always eccentric missives filled with administrative arcana, began to take a turn toward the paranoid and conspiratorial in the fall of 2016. People were out to get him, he said. The other thing Carollo revealed to the Fusion partners was that he’d recently been diagnosed with Parkinson’s disease. Informed by his doctors that his prospects for treatment were poor, Carollo announced in an email that he’d decided to sell his house and go off to Europe for some last adventures while he still had his health. Simpson set him up with some potential job leads and promised that Fusion would continue to give him work if he needed to support himself.

  In December, he reappeared—in Sarajevo. “I am on the 9th floor of Radon Plaza, the largest hotel in Bosnia,” he began in a rambling email. “I am in a suite reserved for the president of the country, or The President’s Suite in case you call. The suite would cost $10,000 a night in New York, but I am paying a Motel 6 rate thanks to a friend I met here in 1994.”

  By the spring of 2017, mutual friends in Europe were expressing alarm at Carollo’s behavior. Toward the end of September, at the height of the congressional investigations into Fusion, Fritsch and Simpson got a particularly distressing email. “Glenn: All you had to do was call me and say you needed help,” Carollo wrote. “Instead, tracer files were put in my computer.”

  The note ended menacingly: Fusion would have to wire him 15,000 Swiss francs to buy back copies of all the FOIA files he’d executed on Fusion’s behalf over the years, or else. As blackmail plots go, this was nothing to get suicidal over. After all, Carollo’s job was looking for public records. He did, however, have about eight years’ worth of email with Fusion that he also wanted to sell back—for another 5,000 francs. (A franc was roughly equivalent to a U.S. dollar at the time.)

  “Poor guy, sounds like he may have dementia,” said Catan. A quick check of medical websites showed that many early-onset Parkinson’s victims were indeed prone to dementia. Fritsch wrote Carollo back, ignoring the extortion attempt: “No one here wants anything but the best for you, Russell. We had a great working relationship for a lot of years and see you as a colleague and friend.”

  His sense of reality dimming and with no promise of payment from Fusion, Carollo began trying to sell his material to newspapers from a perch in Switzerland. He sent Fusion an email recounting an unsuccessful effort to sell its proprietary data to The New York Times. Fritsch encouraged Carollo to seek help. His dementia was clearly getting worse. The threats were another absurd yet real problem: In the political environment now enveloping Fusion, even the most banal internal company material was liable to be spun in ways that would be damaging to the company’s reputation and its clients. They debated filing a complaint with the Swiss police but couldn’t bring themselves to do it.

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  By the end of October, Simpson and Fritsch thought the sad episode with Carollo had faded away, until they got a call one day from The Washington Post. The paper’s reporters had worked closely with Fusion on some of its biggest Trump scoops and had largely ignored Republicans’ efforts to create an alternative narrative about a rogue deep state in the Justice Department. But the bank records fight was in the news, and Fusion’s clients had come forward. Now the paper needed a profile of Fusion, and fast. Fusion found out the Post reporters were working with Carollo and his email cache when Carollo mistakenly left a message on Fusion’s voicemail intended for Shawn Boburg, the Post reporter working on the story.

  “Hey, Shawn, it’s Russell. I’m in Zurich,” he said. “There’s some other people interested in the story and I just wondered what’s going on.”

  Fusion’s partners could hardly complain about being investigated, and it certainly wasn’t the first time. But the line the reporters were taking seemed to buy into some of the conspiracy theories swirling at the time. Does Fusion pay journalists? Does Fusion routinely dig through divorce files? Does Fusion encourage its contractors to misrepresent themselves as journalists? The answer to all of these questions was a simple no, and there was no evidence to the contrary in Carollo’s files.

  In the end, Carollo’s trove of emails confirmed that Fusion did what it said it did—obtain public records and analyze them. To the editors of the Post, that didn’t seem sexy enough. The paper’s headline—“ ‘Journalism for Rent’: Inside the Secretive Firm Behind the Trump Dossier”—sounded sexier. Fusion, the story suggested, “operates with the secrecy of a spy agency,” with almost mystical powers to mold the public debate according to its whim. The facts in the article weren’t particularly concerning. But the sinister mood music employed by the Post set the tone and implied that Fusion’s business model was to frustrate honest journalism on behalf of clients in crisis.

  Fusion, the Post said, had worked to “blunt aggressive reporting” by the Journal on the embattled blood-testing company Theranos and its founder, Elizabeth Holmes. That was not right. Theranos had hired Fusion in early 2015 to research publicly available whistleblower cases filed against lab-testing competitors Quest Diagnostics and LabCorp in order to document cases in which they were alleged to have overbilled Medicare. It was a typical Fusion assignment: A startup wanted competitive intelligence on the market leaders. The assignment wasn’t particularly sexy: a deep and mind-numbing document dive into years of court and regulatory records.

  Fusion was in the midst of that work when Journal reporter John Carreyrou surfaced that spring asking tough questions about Theranos and Holmes. Fritsch happened to have worked at the Journal with Carreyrou, so Holmes and her lawyers asked Fritsch for advice on how to handle Carreyrou’s queries. It wasn’t what he signed up for, but Fritsch agreed. He urged Holmes to be totally transparent and engage with the Journal. Holmes ignored that advice and took a much more confrontational approach with the paper, as chronicled in Carreyrou’s book Bad Blood. Her company eventually collapsed and Holmes was indicted for fraud.

  The truth of Fusion’s role in such cases was nuanced, and Fusion wasn’t permitted to discuss those cases publicly, so it was hard to complain too much about the coverage. But the reporters writing about the company didn’t know Simpson or Fritsch: Most of the reporters who dealt with Fusion over the years or during the
2016 election recused themselves from covering the controversies now enveloping the firm.

  The easy assumption for journalists unfamiliar with Fusion to make was that its main line of business was a field known as “crisis PR,” which is heavily populated by former journalists. Many crisis management professionals do indeed work to frustrate honest journalism. Reporters do battle with crisis PR guys all the time. That wasn’t the line of work Fusion was in.

  There was no arguing that Fusion wasn’t fair game for a tough-minded journalistic examination, but the Post story was disappointing. Fritsch and Simpson thought the paper had exploited an old friend during the most precipitous part of his heartbreaking physical decline. The episode was one of the saddest moments of the whole post-dossier madness.

  Russell Carollo died in Switzerland in December 2018, at age sixty-three.

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  The outing of the Free Beacon and Perkins Coie as Fusion’s clients merely whetted the appetite of congressional pursuers, who soon came up with additional justifications for demanding Fusion’s TD Bank records. These included the allegation that Fusion’s nefarious methods included bribing journalists. “The Committee therefore seeks records related to Fusion’s payments to journalists who have reported on Russia issues relevant to its investigation,” the House argued in court. Fusion often hired freelance and former journalists to conduct research, not write stories.

  After reviewing the records still being sought by the House, the Fusion partners realized that there was nothing in them likely to be of great interest to the House Intelligence Committee or to the media. The vast majority of Fusion’s clients were ordinary companies and law firms—many of them supportive of Republicans—that retained Fusion for commercial research that had nothing to do with Fusion’s political work. That was all the more reason to fight.

  “Let’s let the Republicans exhaust themselves chasing a rainbow that does not have a pot of gold at the end,” argued Simpson.

  Federal court was also an ideal venue for Fusion to shine a light on the Republican Party’s quiet revival of some of the long-discredited investigative practices first used by Joseph McCarthy to sully and falsely incriminate innocent Americans. In a blizzard of filings in November and December, Fusion piled on new allegations accusing the House of additional violations of its own rules, of improper leaks, of trashing the Bill of Rights, and other abuses of power.

  Central to this argument, Fusion believed, was that Nunes and his staff had found out that Fusion had an account at TD Bank from someone in Grassley’s staff. The contents of Simpson’s Senate testimony in August were supposed to be strictly confidential, but the information had somehow jumped the fence from Senate Judiciary to House Intelligence.

  After Simpson testified before Grassley’s committee, most of the committee’s members had become reluctant to go along with further demands on the company. That meant Grassley’s investigative counsel, Jason Foster, needed a new champion to pursue his case against Simpson and Fritsch. Grassley’s office appeared to have found a willing partner in Nunes’s office, whose chief investigative counsel, Kashyap Patel, was one of the staffers who’d traveled to London over the summer in the much-lampooned attempt to ambush and grill Steele.*

  Fusion’s suspicions about Grassley’s underhanded dealings with Patel and House Intelligence were all but confirmed when Foster appeared at a court hearing about the bank records and was seen conferring with House lawyers.

  As an anonymous blogger, Foster had once praised McCarthy and accused liberals of “anti-American tendencies.” His own tactics borrowed directly from the methods of the disgraced Wisconsin senator. In the 1950s, McCarthy had given himself unilateral subpoena power to go after alleged Communists lurking in Hollywood and elsewhere. His abuse of that power led the Senate to all but abandon the practice of unilateral subpoenas. That was basically the state of affairs in the House, too, until the 1990s, when Republicans in the House resumed the practice with the help of a young staff attorney named Jason Foster. Now Foster had revived the McCarthy playbook in the service of Trump.

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  Throughout late 2017, Fritsch and Simpson were tending to multiple fires a day. The Alfa Bank suit. The bank records fight with Nunes. Carollo’s emails. Threats from Trump followers. Reporters wanting to know how much Fusion was paid. Anxious calls with Steele about his security and legal woes. And a budding legal fight with Fusion’s insurance company, which didn’t want to pay for any of the costs of fighting those battles. With the legal bills piling up, Fritsch worked with Fusion’s lawyers to create a legal defense fund, a low-key effort supported by a few donors. That helped, some.

  Nunes still wanted his shot at Fusion. Having been spurned by Steele, the Senate Intelligence Committee also wanted its interview with Simpson. He was due to appear before the House Intelligence Committee on November 8 and its Senate counterpart a week later. Simpson had planned to take the Fifth, as Fritsch and Catan had. But what was expected to be a routine ten-minute appearance before House Intel turned out to be anything but, thanks to Adam Schiff, the committee’s ranking member from California.

  Nunes had hoped for another Fusion walk of shame before the Fox News cameras when Simpson appeared on the morning of November 8 to take the Fifth. But, while Nunes didn’t manage to show up that morning, Schiff did. He wanted to know why the committee was compelling Simpson’s testimony when it hadn’t taken that step with Michael Flynn or Michael Cohen. If the Republicans withdrew the subpoena, Schiff asked, would Simpson be willing to sit for a voluntary interview under the same conditions that both Grassley and the House Intelligence Committee had granted to the president’s men? Placed on the defensive by Schiff’s articulation of their naked double standard, the Republicans backed down and agreed to offer equal terms for Simpson, who then agreed to an interview.

  The House Intelligence Committee meets in a dimly lit chamber in the basement of the Capitol. The room was so cold that Schiff wore what appeared to be a leather trench coat that went down to his ankles. Simpson’s lead interrogator was a former federal prosecutor from South Carolina, Representative Trey Gowdy, whose smooth, long face took on a lizard-like appearance under the poor lighting.

  After a long back-and-forth over the Prevezon case, seemingly designed to coax Simpson into admitting he was a Russian agent, Gowdy handed the witness to Schiff, himself a former federal prosecutor. Schiff proceeded to elicit from Simpson a litany of sensational allegations against Trump and his associates for consorting with various known gangsters and engaging in possible fraud and money laundering on a massive scale.

  Around 4 P.M., the proceedings broke so that members could go cast votes on pending legislation. To the great surprise of Simpson and his lawyers, when the hearing resumed, most of the Republicans, including Gowdy, hadn’t returned. Instead, the Republicans handed off the questioning to Nunes staffer Patel, who resumed the monotonous attempts to fish out some sort of incriminating admission regarding the Prevezon case.

  The Democrats, meanwhile, were having a field day. When their questions turned to the NRA, Simpson let it drop that “it appears the Russians, you know, infiltrated the NRA….Broadly speaking, it appears that the Russian operation was designed to infiltrate conservative organizations. And they targeted various conservative organizations, religious and otherwise, and they seem to have made a very concerted effort to get in with the NRA.”

  Fusion would be ridiculed in the right-wing media for promoting this allegation—until mid-2018, when a federal indictment against Russian gun activist Maria Butina leveled exactly that allegation.

  What seemed to be shaping up as a possible shutout for the Republicans took a turn when Patel began grilling Simpson about any dealings he might have had with the government. “You’ve never heard from anyone in the U.S. government in relation to those matters, either the FBI or the Department of Justice?�
� he asked. Lacking any wiggle room, Simpson disclosed his dealings with Justice Department prosecutor Bruce Ohr.

  “We were, frankly, you know, very scared for the country and for ourselves and felt that if we could give it to someone else, we should, higher up. And so Chris suggested I give some information to Bruce, give him the background to all this. And we eventually met at a coffee shop, and I told him the story.”

  That honest answer from Simpson handed the Republicans a new cudgel in their search-and-destroy operation against the mythical deep state, resulting in severe professional and legal consequences for Ohr.

  A week later, Simpson was back on Capitol Hill for a third appearance before a congressional committee.

  The Senate Intelligence Committee’s offices had the feel of a submarine or a weird terrarium out of a sci-fi movie. In these hermetically sealed spaces, the outside world becomes almost an abstraction and things like truth and reality are up for debate.

  Here, in contrast to the stilted House proceedings, everyone sat around a conference table and pretended to be friends. At least until the questioning got going. Then it was the usual stuff about whether Fusion had wittingly or unwittingly been working for the Kremlin.

  During a break, Simpson and the lawyers went down to the federal courthouse a few blocks away to watch the arguments between Fusion lawyers and the House over the bank records. None of it was fun.

  Fusion eventually lost the bank records case. In early January, federal judge Richard Leon ruled that it wasn’t his place to second-guess a congressional subpoena. Nunes would get Fusion’s records after all. In one of the many delicious ironies of Fusion’s fights with congressional Republicans, that ruling would later be cited in another momentous case—this time when Trump tried, unsuccessfully, to stop Deutsche Bank from turning over records of its dealings with the Trump Organization in response to a subpoena from House Democrats.