New York(CNN) Two men who have served as Rudy Giuliani's conduit to Ukraine pleaded not guilty in Manhattan federal court Wednesday to charges that they funneled foreign money to US campaign coffers, with one of their lawyers suggesting executive privilege could apply to material in the case.
Igor Fruman and Lev Parnas were indicted earlier this month on four counts, including conspiracy to violate the ban on foreign donations to federal and state elections, making false statements and falsifying records to the Federal Election Commission.
The two are linked closely with Giuliani, President Donald Trump's personal attorney. For months, they have aided Giuliani's effort to compile what he has claimed is damaging information on Trump's political rival, Democratic presidential candidate Joe Biden, whose son, Hunter Biden, was on the board of the Ukrainian energy company Burisma.
Belarus-born Fruman and Ukraine-born Parnas, both US citizens and Florida residents who wore American flag pins on the lapels of their jackets Wednesday, introduced Giuliani to former and current Ukrainian officials, and Parnas' company, Boca Raton-based Fraud Guarantee, paid Giuliani $500,000, he told Reuters.
Giuliani himself is a subject of the ongoing investigation by the federal prosecutors who charged Fruman and Parnas, a probe that is examining Giuliani's Ukrainian business dealings, CNN has reported.
In court Wednesday, Parnas' lawyer raised possible issues of attorney-client privilege and executive privilege in the material prosecutors have obtained in their investigation, invoking Giuliani's name for the first time in court in the campaign finance case.
Parnas' lawyer appeared to imply that because Giuliani had both represented Parnas and worked for President Donald Trump, some evidence could be subject to executive privilege.
"Mr. Parnas was using Rudy Giuliani as his lawyer. Some of the companies were using Rudy Giuliani as their lawyer," Parnas' attorney, Ed MacMahon, said. "And then we have the issue of Mr. Giuliani working as personal attorney for the President."
He continued: "These are issues that we need to be very sensitive to."
He suggested the matter might warrant the involvement of the US Justice Department, its Office of Legal Counsel or the White House counsel's office.
US District Judge Paul Oetken asked MacMahon: "So he was working for Mr. Giuliani, and Mr. Giuliani worked for him?"
MacMahon didn't respond directly in court, though when asked again later by reporters he replied: "Yes, as to both." MacMahon declined to specify what kind of work Giuliani had done for his client's companies. Shaking his head, he said, "I've already said enough."
In response to MacMahon's concerns in court, prosecutor Rebekah Donaleski told the judge that prosecutors have already set up a filter team, which is a separate set of prosecutors who are assigned to comb through evidence and eliminate material that is subject to attorney-client privilege.
She suggested discussing the issue of potential executive privilege in a separate setting, an idea Oetken endorsed.
Concerns about privilege arose in court after prosecutors told the judge about the scope of discovery material, which they said includes returns from more than a dozen search warrants, including those for premises as well as email and social media accounts, and subpoena returns for more than 50 bank accounts and telephone numbers.
Following the hearing Wednesday, Parnas, accompanied by his wife, defended himself in remarks outside the courthouse.
"Many false things have been said about me and my family in the press and media recently," he said. "I look forward to defending myself vigorously in court, and I'm certain that in time the truth will be revealed, and I will be vindicated. In the end, I put my faith in God."
Fruman and Parnas' co-defendants, David Correia and Andrey Kukushkin, who are each charged with one count of conspiracy, were arraigned last week and pleaded not guilty.
All four are due in court again on December 2.
This story has been updated.