David Correia, a business partner of Rudy Giuliani’s former associate Lev Parnas, is set to plead guilty in a case where both he and Parnas are charged with defrauding investors in a would-be company named “Fraud Guarantee, a court filing revealed.
Both Correia and Parnas were slapped with a superseding indictment last month in Manhattan federal court that charged them with conspiring to commit wire fraud in connection with Fraud Guarantee, which was ostensibly supposed to offer fraud protection to customers.
Correia and Parnas previously were charged in 2019, along with two other men, with conspiring to violate the law banning political donations by foreigners.
A court filing on Wednesday said that Correia, who like Parnas has pleaded not guilty in the case, is scheduled to appear at a change of plea hearing on Thursday.
The filing did not make clear whether Correia would change his not-guilty plea to all of the charges that he faces, or just to the one related to Fraud Guarantee.
Correia’s lawyer William Harrington declined to comment when contacted by CNBC.
Prosecutors have said that Correia and Parnas obtained more than $2 million from investors for the stated purpose of funding Fraud Guarantee.
“While a portion of the victims’ funds was used for Fraud Guarantee business expenses, the majority was not,” the Justice Department said last month in a press release.
“Rather, the funds were largely withdrawn as cash, transferred to accounts in the name of Parnas or Correia or their family members, or spent on various apparently personal expenditures, including hundreds of thousands of dollars in rent for Parnas’ personal residence and tens of thousands of dollars at luxury car leasing companies,” the Justice Department said.
The two men “also used certain victim money to fund political donations,” the release said.
FBI Assistant Director Bill Sweeney said last month, “We couldn’t say it better ourselves – the behavior alleged today is indeed fraudulent – guaranteed.”
Giuliani, who is President Donald Trump’s personal lawyer, has not been criminally charged in the case.
But as of last November, the former New York City mayor was known to be the subject of an investigation by the U.S. Attorney’s Office for the Southern District of New York.
That is the same Manhattan-based prosecutors’ office that charged Correia, Parnas, and their co-defendants, Igor Fruman and Andrey Kukushkin. Fruman and Kukishkin have also pleaded not guilty.
Giuliani received $500,00 in 2018 to work on behalf of Fraud Guarantee, The New York Times has reported. The money reportedly came from a Long Island lawyer, also a Trump donor, who paid Giuliani as part of a deal to invest in Fraud Guarantee.
Giuliani told The Times last year that he was paid to give “a combination of business advice and consulting, consistent with what my company does, and legal advice” for Fraud Guarantee.
Parnas and Fruman previously worked with Giuliani, to uncover information about former Vice President Joe Biden and his son Hunter Biden’s relationship with a Ukrainian natural gas company.
Giuliani in recent weeks has continued to promote allegations of wrongdoing by the Bidens in Ukraine and in connection with business interests related to China. Joe Biden, who is the Democratic nominee for president, has denied any wrongdoing.
Both Parnas and Fruman were subpoenaed last year by the House of Representatives for testimony and documents as the House moved toward impeaching Trump.
The president, who was acquitted after a Senate trial, was impeached for withholding congressionally approved military aid to Ukraine as he pressured that nation’s government to investigate Hunter Biden and Joe Biden, who at the time was a leading contender for the Democratic presidential nomination.