Thursday, February 25, 2021

Lev Parnas’s associate David Correia jailed in fraud case

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David Correia, whose business ties to Rudolph W. Giuliani had drawn scrutiny, was sentenced Monday to a year in prison for defrauding investors of an insurance start-up that paid the former New York mayor hundreds of thousands of dollars for consulting work while he was President Donald Trump’s lawyer.

Correia pleaded guilty in October to duping investors in Fraud Guarantee, the business he started with Giuliani’s former associate Lev Parnas. The firm offered fraud protection and “risk management tools” to other companies, but prosecutors say it was never operational and that, instead, Correia and Parnas used over $2 million in investment capital for personal expenses.

Parnas, a Ukrainian-born businessman who later teamed with Giuliani to undermine President Biden’s candidacy in the 2020 election, has maintained his innocence. Giuliani is not accused of wrongdoing and has said there was nothing improper about his work for Fraud Guarantee.

U.S. District Judge J. Paul Oetken ordered Correia, 45, to begin serving his sentence March 22, a penalty that could be closer to 10 months if good behavior applies. Correia must pay $2.3 million in restitution and forfeit another $44,000 to the government. He will be monitored for three years following his release.

Correia’s lawyer, William Harrington, had argued that his client should be spared prison time because he took less than $50,000 over seven years, what Harrington characterized as a small sum overall and far less than what Parnas is accused of pocketing. Correia, he told the court Monday, had been sincere about trying to make Fraud Guarantee a success, having “invested thousands of hours in what he described to me as ‘sweat equity.’ ”

Harrington also noted that Correia is the primary caretaker for two young children.

The judge said that prison time was warranted, though he settled for less than the 2¾ to 3½ years called for under federal sentencing guidelines. Two of Correia’s seven victims had pushed for leniency, which Oetken said “suggests there are positive aspects of him as a person.”

“It is common for fraudsters to try to justify their behavior on the theory that they thought it would all work out in the end,” the judge said. “At the end of the day, that doesn’t justify fraud.”

Correia told the court his crimes “do not reflect what I want to be in life, and I will never repeat them again.”

Assistant Manhattan U.S. Attorney Nicolas Roos argued during Monday’s proceeding that the victims in the case “suffer to this day financially and emotionally.” The defendant’s limited financial gain “does not diminish the overall scope of the fraud.” Roos called Correia Parnas’s equal in the scam.

Correia had also admitted that he lied to the Federal Election Commission about the source of a $325,000 donation made to a pro-Trump super PAC. Correia told election regulators the money came from a natural gas import firm — which prosecutors contend was another nonfunctioning business. Prosecutors say the money came from a mortgage loan obtained by another associate of both Parnas and Giuliani, co-defendant Igor Fruman.

Fruman was arrested along with Parnas in October 2019, as the pair waited to board a flight at Dulles International Airport outside D.C. The case brought intense scrutiny to their relationship with Giuliani and their efforts in Ukraine to look for damaging information about Biden and his family.

Trump, whose second impeachment trial begins this week, was acquitted by the Senate last year of charges he withheld military aid to Ukraine as part of a pressure campaign to spur an investigation of Biden’s activities there while he was vice president and his son served on the board of a Ukrainian energy firm.

The case against Parnas and Fruman, who has pleaded not guilty, is pending.

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