WASHINGTON — In the year after he disclosed a state investigation into his “tax affairs” in late 2020, President Biden’s son, Hunter Biden, paid off a significant tax liability even as a grand jury continued to gather evidence in a wide-ranging audit of his international operations, according to people familiar with the case.
Mr. Biden’s failure to pay all of his taxes has been a focus of the ongoing Justice Department investigation. While removing his liability doesn’t preclude criminal charges against him, paying it could make it harder for prosecutors to convict or face a lengthy prison sentence for tax crimes, tax experts say, because juries and judges tend to be more understanding of defendants who’ve paid their bills.
But Mr. Biden’s taxes are just one element of the broader investigation emerging from his work around the world. A Yale-educated attorney, Hunter Biden’s professional life has intersected with his father’s public service, including working as a registered domestic interest lobbyist and pursuing deals and clients in Asia and Europe while his father was vice president.
Just last month, the federal grand jury in Wilmington, Delaware, heard two witnesses, one of whom was a former Hunter Biden employee whose attorney was later subpoenaed over financial documents that reflected money Mr Biden received from a Ukrainian energy company.
The investigation, which began as a tax investigation under the Obama administration, was expanded in 2018 to include possible criminal violations of tax laws and foreign lobbying and money laundering rules, according to people familiar with the investigation.
But prosecutors face a number of hurdles to bringing charges, people familiar with the investigation said, including proving Mr Biden intentionally violated the Foreign Agents Registration Act (FARA), which prohibits disclosure of lobbying or public relations Assistance to the Ministry of Justice required on behalf of foreign customers.
The Justice Department has given no public indication that it has made any decisions on any element of the case, and Mr. Biden has not been charged with a crime.
Disclosing the investigation after the 2020 election, Hunter Biden said that “a professional and objective review of these matters will show that I have conducted my affairs legally and appropriately.”
Mr. Biden’s attorney, the Justice Department and the US Attorney’s Office in Delaware, which is overseeing the investigation, all declined to comment.
It’s not clear if the criminal investigation is solely focused on Hunter Biden or if he is among a group of people and companies being investigated. Prosecutors have also asked about possible FARA violations by a Washington consulting firm, Blue Star Strategies, which worked for the Ukrainian energy company in a deal that Mr. Biden helped broker, according to documents and people familiar with the investigation.
For President Biden, the long-running case is both politically and personally strained. Hunter Biden’s work for Burisma Holdings, the Ukrainian energy company, became a flashpoint in his father’s race against President Donald J. Trump in 2020 and helped spark the events that led to Mr. Trump’s first impeachment.
The elderly Mr. Biden now oversees the Justice Department, which is conducting the investigation. And Hunter Biden, who has pursued a career as a painter in recent years, has admitted to serious drug addiction and other issues during the period he sought international business while dealing with the illness and death of his brother Beau.
The investigation is being led by David C. Weiss, the US Attorney for Delaware. He worked at the office during the Bush and Obama administrations and was nominated by Mr. Trump to head it. Mr. Weiss has been allowed to remain in office until the Biden case is resolved.
Hunter Biden told his staff in recent months that he has paid federal taxes, which have been the subject of the Justice Department’s audit. He told an employee that the tax liability was more than $1 million and that he needed to take out a loan to pay it off.
Federal tax attorneys generally struggle to keep jurors from knowing whether defendants paid their tax returns, arguing that the crime happens when the tax return is filed incorrectly or not at all, said Jeffrey Neiman, a former Justice Department tax attorney and Partners at Marcus, Neiman, Rashbaum & Pineiro. Such knowledge could influence juries even if a judge asks them not to consider it.
Mr. Neiman said defense attorneys encourage clients to pay their taxes back if they think they could be charged with federal tax crimes, as doing so often aids in convictions.
Mr. Biden’s extensive work with foreign companies has come under scrutiny by prosecutors investigating whether he should have registered with the Justice Department as a foreign agent.
According to people familiar with the probe, investigators have looked into Mr Biden’s ties to interests in Kazakhstan, a Chinese energy conglomerate, and Burisma, the Ukrainian energy company.
They said prosecutors investigated payments and gifts Mr Biden or his associates received from foreign prospects, including a vehicle paid for using funds from a company linked to a Kazakh oligarch and a diamond from a Chinese energy magnate. Prosecutors were also looking for documents related to companies through which Mr. Biden and his associates did business with prospects around the world.
However, there has been debate within the Justice Department as to whether the available evidence proves Mr. Biden intended to violate FARA, which the government must prove in order to secure a criminal conviction. Prosecutors have discussed addressing potential FARA violations as a civil matter, which would require retrospective registration of Mr. Biden as a foreign agent but would avoid criminal charges, according to people familiar with the case.
Such a solution could complicate a potential money laundering case, since money laundering is usually charged in connection with another crime.
Over the past two years, federal prosecutors in Delaware have issued dozens of subpoenas for documents related to Hunter Biden’s overseas work and for bank accounts associated with him and his associates, including two formerly close business partners, Eric Schwerin and Devon Archer, so the statements of persons familiar with the investigation.
Last year, prosecutors interviewed Mr. Archer and subpoenaed him for documents and testimony before the grand jury, the people said. Mr. Archer, who was convicted last month in an independent securities fraud case that reversed a decision to vacate his conviction, has served on the Burisma board of directors with Mr. Biden since 2014.
People familiar with the investigation said prosecutors looked into emails between Mr. Biden, Mr. Archer and others about Burisma and other foreign business activities. Those emails were obtained by The New York Times from a cache of files that appear to have come from a laptop left by Mr. Biden at a Delaware repair shop. The email and others in the cache have been authenticated by people familiar with them and the investigation.
In some of the emails, Mr. Biden showed a familiarity with FARA and a desire to avoid triggering.
In an email to Mr. Archer in April 2014, Mr. Biden outlined his vision for working with Burisma. In the email, Hunter Biden noted that Vice President Biden’s upcoming announcement of a trip to Ukraine — who is referred to in the email as “my husband” but not by name — “marked as part of our advice and thinking.” should be – but what he will say and do is not in our hands.”
The announcement “could be a really good thing, or it could end up creating too much of an expectation. We need to lower expectations about this visit,” Hunter Biden wrote.
Vice President Biden traveled to the Ukrainian capital, Kyiv, about a week after the email.
In the same April 2014 email, Hunter Biden noted that Burisma officials “need to know unequivocally that we will not and cannot intervene directly with domestic policymakers and that we comply with FARA and all other U.S. laws to the strictest Senses must hold over the border.”
He suggested hiring the law firm where he was then working, Boies Schiller Flexner, to help Burisma through “direct talks with state, energy and NSC,” citing two cabinet departments and the National Security Council at the White House .
The firm “can develop a media plan and provide legal protection and, if necessary, mitigate adverse US domestic press regarding current leadership,” Biden wrote in the email.
Mr. Biden, Mr. Archer, Boies Schiller Flexner and Blue Star Strategies have not registered under FARA on behalf of Burisma.
In another series of emails investigated by prosecutors, Hunter Biden and Mr. Archer discussed inviting foreign business associates, including a Burisma executive, to a dinner in April 2015 at a Washington restaurant where Vice President Biden would stop by . It is not clear if the Burisma executive attended the dinner, although the vice president did show up, according to people familiar with the event.
Prosecutors also subpoenaed records related to a lawsuit filed in Arkansas state court by former employee of Mr. Biden, Lunden Alexis Roberts, according to her attorney.
Ms. Roberts sued Mr. Biden for child support and paternity in 2019 after one of his companies stopped paying her and didn’t offer her health insurance, according to court documents.
Mr. Biden and Ms. Roberts reached an out-of-court settlement in the paternity case in March 2020.
Last year, prosecutors traveled to Little Rock, Ark., and questioned Ms. Roberts and her attorney about Mr. Biden’s finances, including the business entity he used to pay them and whether that entity received payments from Burisma, according to a person with the questioning trusted.
And last month, in response to another subpoena, Ms. Roberts testified before the Delaware grand jury, according to her attorney.