Former Obama White House Counsel Greg Craig leaves federal court in Washington, D.C., on Aug. 22, 2019. Credit: Diego M. Radzinschi / ALM

In 2012, as Greg Craig considered taking on a project for the Russia-aligned government of Ukraine, a colleague in London raised concerns that the work would create a "no-win situation" for their law firm, Skadden, Arps, Slate, Meagher & Flom.

Craig, a prominent Washington lawyer who'd recently served as President Barack Obama's first White House counsel, had been asked to prepare an independent report for Ukraine on the widely criticized prosecution of the country's former prime minister, Yulia Tymoshenko. Before signing on, Craig consulted Bruce Buck, then a senior partner in the firm's London office, who asked whether he'd considered the "implications" of the Skadden team concluding that Tymoshenko did not receive a fair trial.

"The general view seems to be that this is a no-win situation. If we come out that it was not fair, they will not use our opinion and we could very probably be persona non grata for doing work there in the future. If we come out that it was fair, it would be viewed by Russia and others as a politically influenced opinion," wrote Buck, chairman of the Chelsea Football Club.

Buck's email reemerged Friday as a former Skadden partner, Cliff Sloan, was called to testify against Craig at his trial, where current and former lawyers from the firm are revisiting its past work for Ukraine. Sloan, who left the firm earlier this year, helped prepare the Tymoshenko report.

Craig was charged in April with misleading the Justice Department about his role in the public release of the Tymoshenko report, just months after Skadden agreed to pay $4.6 million to resolve charges that it failed to disclose the project under the Foreign Agents Registration Act, or FARA, an 80-year-old law designed to shed light on foreign influence in the U.S.

Craig's case is seen as a test of the Justice Department's stepped-up enforcement of FARA. Among those watching Friday's proceedings was Brandon Van Grack, a former prosecutor on Robert Mueller's team who was recently appointed as the new leader of the Justice Department unit tasked with enforcing the disclosure law.

Prosecutors have alleged Craig misled the Justice Department to avoid the perceived stigma of registering as a foreign agent and to conceal the identity of the Ukrainian oligarch who secretly funded the review of Tymoshenko's prosecution: Viktor Pinchuk.

With Sloan on the stand, prosecutors reviewed emails revealing the trepidation felt by some within Skadden as the firm weighed the prospect of working for the Russia-aligned government of Ukraine. The emails also displayed how Craig fretted over registering as a foreign agent and sought to structure the firm's deal with Ukraine to steer clear of FARA.

A heavyweight in Democratic legal circles, Sloan left Skadden in 2013 to lead the Obama administration's efforts to close the military prison at Guantanamo Bay, Cuba. Sloan returned to Skadden in January 2015 but left earlier this year to join Georgetown University Law Center. In his testimony, Sloan said he is writing a book about the Supreme Court during World War II and recalled meeting Craig about 40 years ago, shortly after graduating from Harvard. Sloan recalled having a "major role" in recruiting Craig to Skadden after he left the Obama White House.

Sloan appeared in the emails to be encouraging the Skadden team to operate strictly as "rule of law advisers" without providing Ukraine with the public relations advice it requested for the Tymoshenko report. The Skadden team should serve as "lawyers, not spin doctors," Sloan wrote in one email, expressing concern that any public relations advice from the firm would undercut the credibility of the report.

The questioning of Sloan shed light on Skadden's initial response to a Justice Department inquiry into whether the firm was required to register as a foreign agent of Ukraine.

Prosecutor Molly Gaston went through emails Craig and Sloan exchanged as they edited Skadden's response to the Justice Department's questions about the Ukraine work. In a May 2013 email, Sloan suggested that Craig send a draft of the response to Skadden's general counsel, Lawrence Spiegel, who is expected to testify in the trial.

The Justice Department's inquiry followed Sloan to the Obama State Department, where he received emails from Skadden as it continued to respond to questions concerning whether the firm needed to register under FARA. When Gaston asked whether the inquiry was concerning to him then, Sloan replied, "I don't remember having a concern about it, no."

Prosecutors have seized on Craig's dealings with reporters around the release of the Tymoshenko report, pointing repeatedly at trial to his decision to deliver a copy to the home of New York Times reporter David Sanger and provide him with a quote. Craig has argued he was entirely truthful with the Justice Department about the nature of his work for Ukraine, and while he has not been charged with failing to register as a foreign agent, he has dismissed claims that the work required him to register as a foreign agent.

Craig's defense team has argued he was driven to speak with reporters to protect his own reputation and counter efforts to spin the Tymoshenko report, not to advance the interests of Ukraine.

Ukraine had publicly stated that it was paying only $12,000 for the Tymoshenko report, but the emails Sloan reviewed Friday conveyed that he and others at Skadden understood that Pinchuk would bankroll the project. (As part of its January settlement with the Justice Department, Skadden registered retroactively as a foreign agent for Ukraine and stated that it understood that the Tymoshenko report "was to be largely funded" by Pinchuk.)

Prosecutors on Friday displayed an email Craig sent to Sloan in April 2012, on the eve of a meeting in Kiev with Pinchuk.

"We meet the pay master tomorrow at breakfast," Craig wrote.

"Now that is an important meeting," Sloan replied. "Don't be bashful about asking for a lot."

Zuckerman Spaeder partner William Murphy leaves federal court in Washington, D.C., on August 22, 2019. Credit: Diego M. Radzinschi / ALM

Pinchuk eventually paid Skadden more than $4 million. Under questioning from Zuckerman Spaeder partner William Murphy, a defense lawyer for Craig, Sloan elaborated on his April 2012 email, testifying that he expected the Ukraine work to involve significant travel and expenses and wanted to ensure that the firm would be adequately compensated.

Ukraine's public claim that it was paying the firm only $12,000 was met with skepticism, becoming the subject of an editorial titled "Skadden Stink" in an English-language newspaper in Kiev. Prosecutors displayed emails showing that Sloan was concerned about the scrutiny of the project's cost and pressed for Pinchuk's role to be publicly revealed.

"It was raising serious questions, and I thought they were unwarranted, because I thought it was very easily explained," Sloan testified. He said that it is "not an uncommon arrangement" for third parties to fund legal work.

"I thought the misunderstanding could easily be dispelled," he said.

Murphy used his cross-examination to underscore that, without permission from clients, law firms are often prevented from disclosing information about fees.

Sloan testified that Pinchuk "refused" to be outed as the financier of the Tymoshenko report.

"And that was the end of that?" Murphy asked.

"That's my recollection," Sloan said.

As the cross-examination ended, Murphy asked whether Sloan had ever takens steps with Craig to deceive the Justice Department.

"No, absolutely not," he replied.

When Murphy asked Sloan if he ever viewed himself an agent of Ukraine, Gaston objected.

"He's the co-author of the report, your honor," Murphy said.

After a brief discussion with Gaston and Judge Amy Berman Jackson at the bench, Murphy retreated to the well of the courtroom and said, "Thank you, Mr. Sloan. I have no further questions."