Ex-Obama White House Counsel expects to be charged over Ukraine work - statement

WASHINGTON (Reuters) - Gregory Craig, a former White House Counsel in the Obama administration, expects to be indicted this week on charges stemming from work for Ukraine in 2012, his lawyers said on Wednesday.

"We expect an indictment by the DC US Attorney's Office at the request of the (Justice Department's) National Security Division," Craig's lawyers William Taylor and William Murphy said in a statement.

Craig, White House Counsel for President Barack Obama for one year from January 2009, is expected to be charged with making false statements to the Justice Department but other charges could also be brought, sources familiar with the case said.

"Mr. Craig is not guilty of any charge and the government's stubborn insistence on prosecuting Mr. Craig is a misguided abuse of prosecutorial discretion," his lawyers said.

They said the U.S. Attorney's Office for the Southern District of New York "thoroughly investigated" the case and decided not to pursue charges.

The Justice Department did not immediately respond to a request for comment.

Craig's case is one of several that originated in Special Counsel Robert Mueller's probe into Russian interference in the 2016 U.S. election and were later referred by Mueller to other U.S. prosecutors for further investigation.

Craig has been accused of lying to the Justice Department about his promotion of a 2012 report aimed at justifying the prosecution of a political enemy of Viktor Yanukovych, the Russian-aligned president of Ukraine at the time.

Skadden, Arps, Slate, Meagher & Flom LLP, the New York law firm that produced the report, settled with the Justice Department in January by promising to retroactively register as a foreign agent for Ukraine and agreeing to disgorge the $4.6 million (3.5 million pounds) it was paid for the work.

That settlement implicated Craig as the law firm partner who made "false and misleading" statements to the Justice Department unit that enforces the Foreign Agents Registration Act (FARA), increasing the likelihood that Craig would be charged.

Skadden relied on those false statements in deciding not to register under FARA as it should have, the settlement says.

FARA is a law requiring a person lobbying or doing public relations for foreign interests to disclose that work to the Justice Department. It has rarely been prosecuted since it was enacted in 1938 with the aim of countering Nazi propaganda.

That changed with the May 2017 appointment of Mueller, who employed FARA to prosecute a number of people including U.S. President Donald Trump's former campaign chairman Paul Manafort and former national security adviser Michael Flynn.

The Skadden report examined efforts by the Ukrainian government to prosecute Yulia Tymoshenko, the country's former head of government, who was convicted in 2011 of embezzlement and corruption charges and sentenced to seven years in prison.

Yanukovych's government used the report to justify to the European Court of Human Rights Tymoshenko's pretrial detention.

Craig becomes the second former Skadden lawyer who worked on the report to face charges.

Alex van der Zwaan, the Dutch son-in-law of one of Russia's richest men, served 30 days in prison last year for lying to FBI agents about his communications with two former business partners of Manafort. Van der Zwaan's case was brought by Mueller.

(Reporting by Mark Hosenball; additional reporting by Nathan Layne; editing by Grant McCool)