Federal prosecutors question legal fee arrangement in case against former Trump adviser

By Kara Scannell, CNN

Federal prosecutors in New York have asked a judge to inquire about potential conflicts of interest in their case against an employee of Tom Barrack, a former adviser to then-President Donald Trump who is facing federal foreign lobbying charges.

Matthew Grimes, an assistant to Barrack at his company Colony Capital, was charged along with Barrack in July with acting as a back channel for the United Arab Emirates to influence US policy during Trump’s 2016 presidential campaign and his time in office. Prosecutors with the US Attorney’s Office for the Eastern District of New York are now raising questions about potential conflicts of interest after learning that Grimes’ co-defendant and former boss is paying his legal fees.

In a letter to the judge on Thursday, the prosecutors advised that they had recently learned about the fee arrangement, in which Barrack “has agreed to advance Grimes’ legal fees.” They asked the judge to inquire with Grimes whether he understands the potential conflict of interest, including whether his’ lawyer will provide the best legal advice for him or for Barrack, who is paying his bill.

“The Fees Agreement, which was executed after the defendants were arrested has the potential to affect defense counsel’s advice, including (1) whether to seek possible leniency by cooperating with the government against Barrack (the party who is paying his legal fees), and (2) whether Grimes should testify in his own defense at trial, where such testimony might implicate Barrack,” the prosecutors wrote.

Grimes’ attorney Abbe Lowell said, “We have discussed this issue with the government and the response we file will make clear that no issue exists here and any concern raised is misplaced.”

A spokesman for Barrack declined to comment. In a court filing later Thursday, Barracks’ lawyers told the judge: “We wish to advise the court that this is a matter that we brought to the government’s attention so that the parties could address any issues in advance of any payments. To date, no advancement of fees has occurred, Additionally, the Fee Agreement specifically provides that Mr. Grimes retains and has the right to control his defense in this action, and that his counsel shall take direction from Mr. Grimes alone.”

A previously scheduled hearing is the case is set for January 5.

Barrack was charged in a seven-count indictment with acting as an agent of the UAE between April 2016 and April 2018. He was also charged with obstruction of justice and making false statements to federal law enforcement agents. According to the indictment, Grimes and Rashid Sultan Rashid Al Malik Alshahhi, a UAE national, capitalized on Barrack’s status as a senior outside adviser to the Trump campaign to “advance the interests of and provide intelligence to the UAE while simultaneously failing to notify the Attorney General that their actions were taken at the direction of senior UAE officials.”

Both Grimes and Barrack have pleaded not guilty. Alshahhi fled the US three days after being interviewed by the FBI in April 2018, prosecutors alleged.

Following their arrests earlier this year, a federal judge set Barrack’s bond at $250 million and Grimes’ bond at $5 million, reflecting their flight risk and extensive overseas contacts. In November, Grimes asked to have a GPS-monitoring ankle bracelet removed because it interfered with surfing, tennis and job interviews.

At the hearing, Judge Brian Cogan retorted that “he’s already got a pretty big burden for employment.” The judge denied the request, agreeing with prosecutors’ concern about potential foreign pressure to flee in order to prevent sensitive information from being made public at a trial.

Lowell said there was no risk of flight.

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