Prosecutors said the two men served as straw donors for Allied Wallet’s wealthy owner, Andy Khawaja, and a businessman active in the Middle East, George Nader, in an attempt to curry favor with Clinton. The men shifted their donations and their focus to Republican causes after Clinton’s defeat in the 2016 election, exceeding donation limits and using go-betweens like Diab to transfer the gifts, prosecutors said.
Neither the Democratic nor Republican campaigns who received the funds were aware that the money did not belong to the donors, according to prosecutors.
Prior to the acquittals this week, prosecutors secured guilty pleas from Nader and four other men charged in the case. All agreed to cooperate in the investigation and the four other than Nader testified as government witnesses at the trial. Nader was not called, apparently due to his recent conviction on child pornography and sexual abuse charges.
The campaign finance case appears to have originated with a referral from Special Counsel Robert Mueller, who extensively debriefed Nader in connection with the investigation into foreign influence on Donald Trump’s 2016 presidential campaign.
During a pretrial hearing last month, a prosecutor said the roughly $5 million that Nader pumped into the U.S. political system between 2016 and 2018 actually originated with the government of the United Arab Emirates. However, jurors were only told that the funds came from a company in that country.
At the trial that led to the verdicts this week, defense attorneys stressed that U.S. campaign finance laws are complex. To prove a criminal violation of campaign finance laws, prosecutors have to show that a defendant willfully violated the statutes, essentially that he or she knew that it was illegal to donate in someone else’s name or to exceed donation limits and did so anyway.
A Justice Department spokesperson declined to comment on the verdicts.
Diab’s lawyer, Harland Braun, said in front of the jury that the case appeared to have resulted from the Trump Justice Department’s effort to target Clinton donors. Asked for comment on the verdicts, he repeated that suggestion, adding, “Why wasn’t it dismissed before trial?”
Khawaja was arrested on the indictment by authorities in Lithuania in 2019 and has been fighting extradition to the U.S. Judge Randy Moss has declared him a fugitive.
Following the not guilty verdicts Friday afternoon, Diab was visibly relieved and emotional. His eyes welled with tears and he rushed from the courtroom to make phone calls sharing news of the verdicts.
Despite the victory for Diab on Friday, he and Khawaja — who are cousins — still face criminal charges in a federal court case in Boston that essentially claim the business model of Khawaja’s Allied Wallet relied on defrauding banks and payment processing networks like MasterCard and Visa.
An indictment returned last year alleged that Allied Wallet used “sham merchants” to trick the financial services firms into handling transactions that the firms would otherwise have rejected because the true merchants were considered high-risk or were involved in transactions the banks prohibited on their networks.