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The issue started getting renewed scrutiny from the Justice Department in 2017 as Mr. Mueller’s team traced the flow of overseas cash to fund Mr. Manafort’s lobbying efforts. The special counsel had subpoenaed or requested documents from Skadden Arps and two lobbying firms recruited by Mr. Manafort’s team to help build support for Mr. Yanukovych’s government, and Mr. Mueller’s investigators had interviewed people who worked with all three firms, including Mr. Craig. But last year, Mr. Mueller’s team referred the matters related to the three firms to federal prosecutors in Manhattan for potential prosecution as FARA violations.
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The investigations into Mr. Craig and others who worked with Mr. Manafort, President Trump’s former campaign chairman, have left Washington’s K Street lobbying corridor scrambling.CreditBrian Snyder/Reuters
According to people familiar with the case, Manhattan prosecutors have retained control of the investigations of the two lobbying firms. They are Mercury Public Affairs, whose lead partner on the account was Vin Weber, a former Republican member of Congress, and the Podesta Group, led by Tony Podesta, a prominent Democratic fund-raiser whose business collapsed in 2017 under the glare of Mr. Mueller’s scrutiny.
The prosecutors have interviewed lobbyists who worked with Mercury and Podesta on the Ukraine account as recently as January, but people familiar with the interviews said the prosecutors provided no clues about their plans.
The investigation of Mr. Craig, on the other hand, was moved in January to Washington, where the government has signaled that it is moving quickly toward a decision about an indictment, people familiar with the case said.
The Justice Department’s national security division announced a settlement with Skadden Arps in January that brought even more attention to Mr. Craig. He left the firm last year as scrutiny of his work with Mr. Manafort escalated and after a former associate of the firm pleaded guilty to lying to investigators about his work on the effort.
In exchange for a pledge by the Justice Department not to prosecute Skadden Arps, the firm agreed to pay $4.6 million, to retroactively register its Ukraine work under FARA, to beef up its compliance processes and to cooperate with government investigations of the work on Ukraine.
The settlement accused Mr. Craig of working with Mr. Manafort to hide the funding from the Ukrainian oligarch for Skadden Arps’s work, and of making “false and misleading” statements to other partners at the firm and the Justice Department about his interactions with a reporter for The New York Times related to the Tymoshenko report. Those representations led the Justice Department’s FARA unit to conclude in January 2014 that Skadden Arps was not required to disclose the work under FARA, according to the settlement.
In announcing the settlement, John C. Demers, the head of the Justice Department’s national security division, said Skadden Arps’s failure to register under FARA “hid from the public that its report was part of a Ukrainian foreign influence campaign,” depriving Americans of the ability “to consider the identity of the speaker as they evaluate the substance of the speech.”