Facebook Fallout Deals Blow to Mercers’ Political Clout


“They’re selling magic in a bottle,” said Matt Braynard, who worked alongside Cambridge on the Trump campaign, for which he served as the director of data and strategy, and now runs Look Ahead America, a group seeking to turn out disaffected rural and blue-collar voters. “And they’re becoming toxic.”

The Mercers have made no public statements about Cambridge Analytica’s troubles. Through a spokeswoman, Ms. Mercer declined to answer questions about her role in Mr. Trump’s circle or the Facebook meeting about Cambridge Analytica.

But the effort by Ms. Mercer’s friend to help mend fences with Facebook hints at both Cambridge’s importance to her family’s political ambitions and the perils posed by Facebook’s ban.

Although a Cambridge spokesman last month downplayed Ms. Mercer’s role at the company — saying she had a “broad business oversight” role and no involvement in its daily operations — she serves on the company’s board and in the past has worked to drum up campaign business for Cambridge, according to Republicans who have worked with or competed against the firm. Former Cambridge employees said she was close to Alexander Nix, the company’s chief executive, who was suspended last month after reports on Cambridge’s harvesting of Facebook data.

Ms. Mercer’s intermediary with Facebook was Matthew Michelsen, a tech entrepreneur and investor based in San Diego, who lists his employer as GothamAlpha, a consulting firm. According to his LinkedIn profile, he has also advised major Silicon Valley companies, including Facebook and Palantir, a data-mining firm and intelligence contractor.

Mr. Michelsen’s meeting came on March 20, the day after Facebook announced that Cambridge had agreed to let it audit the firm’s computer servers. Mr. Michelsen met informally with a Facebook acquaintance who was accompanied by a Facebook lawyer, according to a person briefed on the meeting, and both Cambridge Analytica and the Mercers were discussed. The person discussed the meeting on the condition of anonymity because he was not authorized to speak about it publicly. No immediate actions were taken as a result of Mr. Michelsen’s outreach.

Mr. Michelsen acknowledged in an interview on Thursday that he visited the company but he would not discuss the purpose of the trip, citing nondisclosure agreements Facebook required him to sign. Ms. Mercer declined to say whether she and Mr. Michelsen had discussed the purpose of the meeting or whether he had briefed her on it afterward.

Cambridge also mounted a more formal effort to assuage Facebook, the person said, sending its own lawyers to meet with Facebook on the same day Mr. Michelsen was there. The Cambridge lawyers asked Facebook officials whether the firm could be reinstated on the platform. Mark Zuckerberg, Facebook’s chief executive, acknowledged that meeting in an interview with The Times last month, saying that his company had not decided whether to lift the ban.

A Cambridge spokesman did not respond to requests for comment. In a lengthy public statement on Monday, the company stated that “the vast majority of our business is commercial rather than political, contrary to the way some of the media has portrayed us.”

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Stephen K. Bannon and Kellyanne Conway, White House advisers, with Ms. Mercer at the 2017 inauguration. The firm helped the Trump campaign target voters.

In recent years, the Mercers have become among the most prominent and highly scrutinized political donors in the United States. In the early years of the Obama administration, they began doling out tens of millions of dollars to an eclectic array of conservative groups — many of them outside Washington’s mainline Republican establishment. Mr. Mercer invested $10 million in Breitbart News, the nationalist website, bringing on Mr. Bannon as chairman, while Ms. Mercer joined the boards of leading conservative think tanks.

The Mercers were critical of the Republican Party’s existing data apparatus, which was controlled by the party officials and consultants they hoped to disempower. Mr. Mercer bankrolled Cambridge Analytica in 2014, and Ms. Mercer encouraged candidates and PACs that took the family’s money to also hire the family’s data firm. Early in the 2016 presidential campaign, the Mercers backed Senator Ted Cruz of Texas, putting millions of dollars — and Cambridge Analytica — behind him.

But after Mr. Trump prevailed in the primaries, the Mercers switched candidates. In summer 2016, Ms. Mercer helped orchestrate a shake-up that put Mr. Bannon at the head of the Trump campaign. After Mr. Trump won the presidential election, he attended a costume ball at the Mercer estate on Long Island.

Ms. Mercer secured a slot on his transition team and prime seats at his inauguration. As Mr. Trump took office, she sought to take a leading role in America First Policies, a nonprofit formed to back the president’s agenda. Last spring, Ms. Mercer and her father attended the Time 100 black-tie gala, where she was feted as one of the country’s most influential people.

But her insistence on using Cambridge to provide the Trump group with voter data, and other clashes over strategy, alienated other donors and Trump allies, according to other Republicans. Ms. Mercer formed her own group, Making America Great, and hired Emily Cornell, a Cambridge executive, to run it.

Yet after an initial splash of spending in 2017 to promote Mr. Trump’s policies on environmental deregulation and other issues, Making America Great appears to have gone quiet. Ms. Cornell said she was no longer affiliated with Making America Great and could not comment on the group.

In November, Mr. Mercer stepped down from the helm of Renaissance Technologies, one of the world’s most successful hedge funds, as some investors began expressing dismay over his alliance with Mr. Trump.

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Donald J. Trump arriving for a party at the home of Robert Mercer, one of his biggest campaign donors, in December 2016.

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Evan Vucci/Associated Press

The family is likely to retain significant influence in broader conservative circles thanks to its vast fortune, which finances donations that many political organizations and candidates are eager to accept. The family foundation handed out about $20 million to more than two dozen conservative think tanks, charter school groups, watchdog outfits and other nonprofit organizations in 2016, according to its most recent tax return.

Ms. Mercer remains a trustee of the Heritage Foundation, a prominent Washington think tank that has provided the Trump administration with grist for a range of initiatives. The foreign policy hawk John R. Bolton, whose super PAC the Mercers lavished with cash and whom Ms. Mercer once lobbied the White House to make secretary of state, was recently tapped to become Mr. Trump’s national security adviser.

The family has also donated $4.5 million to Republican candidates and super PACs during the 2018 election cycle, putting the Mercers among the top 20 donors in the country. And the father-daughter duo still inspire fear: Virtually no Republicans were willing to speak on the record about the family’s troubles.

“I would not confuse silence with them being out,” said Dan K. Eberhart, a Colorado drilling-services executive who is active in America First Policies, now the lead pro-Trump political advocacy group. “I think they’re very strategic, and I think they’re quiet folks.”

Any contributions the family gives directly to candidates and super PACs will be disclosed to the Federal Election Commission. But their contributions to ideological nonprofit groups like the Heartland Institute, which disputes the scientific consensus on climate change, may become less visible in the future. In 2016, when the Mercers’ backing of Mr. Trump subjected the family to intense public scrutiny, the Mercer foundation’s largest contribution was to DonorsTrust, an advisory group for conservative givers.

That grant, the Mercer foundation’s first recorded contribution to DonorsTrust, could herald a shift in the family’s philanthropic strategy. DonorsTrust helps wealthy conservatives obtain charitable tax benefits while — if so desired — shielding their giving from public view. The donor records a contribution to DonorsTrust and recommends potential recipients, while grantees receive a donation from DonorsTrust charitable vehicles. In 2016, DonorsTrust disbursed more than $66 million worth of such grants.

“Donor-advised funds offer you any level of privacy you’d like from the receiving organization,” states a promotional pamphlet available from the DonorsTrust website. “A donor can ask the fund provider to share their full name with one favored grantee and keep their identity private from other.” Such privacy can be useful to donors who “may be supporting a sensitive or personal cause that could endanger familial or professional harmony,” according to the pamphlet.

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Alexander Nix, chief executive of Cambridge Analytica, at the Concordia Summit for public-private business partnerships in New York in September. The firm claimed to have developed psychographic profiles that could predict the political leanings of every American adult.

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Bryan Bedder/Getty Images

Such mechanisms, which are legal, are used by many donors on the right and the left. Ms. Mercer declined to answer questions about whether she intended to shift more of her family’s future political philanthropy into intermediaries like DonorsTrust. A 2017 tax return for the Mercer foundation is not yet publicly available.

“Ms. Mercer is a private person,” her spokeswoman said in a statement. “And she does not intend to discuss with the media either the conversations she has with her close friends or her philanthropic and charitable giving.”

Lawson Bader, the president of DonorsTrust, referred questions to the Mercers. “I do not discuss DonorsTrust accounts real or imagined,” he said in an email.

The Facebook scandal has hit just as the Mercers appear to be expanding their business in the world of big data. Public records show that Ms. Mercer, her sister Jennifer and Mr. Nix serve as directors of Emerdata, a British data company formed in August by top executives at Cambridge Analytica and its affiliate, SCL Group, according to British corporate records.

Incorporation documents state that Emerdata specializes in “data processing, hosting and related activities.” An SCL official told Channel 4, a British television station, that Emerdata was established last year to combine SCL and Cambridge under one corporate entity.

Exactly what ambitions the Mercers, who joined the Emerdata board last month, have for the company is unclear. Another Emerdata director, Johnson Ko Chun Shun, is a Hong Kong financier and business partner of Erik Prince — the brother of the education secretary, Betsy DeVos, and founder of the private security firm formerly known as Blackwater. Mr. Ko, who declined to comment, is a substantial shareholder and deputy chairman in Mr. Prince’s Africa-focused logistics company, Frontier Services Group.

Mr. Ko and Mr. Prince have links to the Chinese government: Another major Frontier investor is Citic, a state-owned Chinese financial conglomerate that for decades has employed the sons and daughters of the Communist Party’s elite families.

Emerdata has a second Hong Kong-based director, Peng Cheng. Little public information about Ms. Peng, a British citizen, is available. But a woman with the same name is the chief executive of a publishing and online game company located in the same Hong Kong office tower as Frontier Services. In 2016, Mr. Ko’s brokerage company said it would buy a stake in Ms. Peng’s company, Culturecom.

While in Hong Kong in September to speak at a conference, Mr. Nix told Bloomberg that Cambridge Analytica was looking into China for commercial ventures. “We’ve been scoping this market for about a year,” he said. “We see huge opportunity to bring some of these technologies to advertising and marketing space brands.”

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DealBook Briefing: It’s Showtime for Mark Zuckerberg


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Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Amie Tsang in London.

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Are these two things related?

The Dow Jones industrial average and the S.&P. 500 tumbled in the last 10 minutes of trading yesterday.

What had happened? The NYT reported that the F.B.I. had raided the office and hotel room of Michael Cohen, President Trump’s personal lawyer, looking into potential bank fraud. The searches, which arose from a referral by Robert Mueller (and prompted a lengthy public complaint by Mr. Trump) suggest the special counsel’s investigation is moving closer to the president.

To put the market move into perspective:

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But today’s another day: S.&P. 500 futures are up after President Xi Jinping of China urged “dialogue rather than confrontation” in trade talks.

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Pete Marovich for The New York Times

Will the tax cuts pay for themselves?

The Congressional Budget Office doesn’t think so, and now projects that the federal deficit will surpass $1 trillion by 2020.

The question is how much growth the cuts will stimulate. Republicans projected G.D.P. growth rates of 3 percent. The C.B.O. is expecting an average of 1.9 percent over the next decade.

Critics’ corner: The Peterson Foundation said, “It’s clear that lawmakers have added significantly more debt on top of an already unsustainable trajectory.” Harm Bandholz of UniCredit said, “The C.B.O. strongly contradicts the administration’s claim that the stimulus will pay for itself.”

The political flyaround

• A year before Apollo Global Management lent millions of dollars to Kushner Companies, Jared Kushner reportedly approached its co-founder Josh Harris about leading the Office of Management and Budget. (The Guardian)

• Investors are looking for a “Kudlow put” or a “Powell put.” (The Upshot)

• Russian markets, bonds and the ruble plunged yesterday after the U.S. imposed new sanctions. (NYT)

• Gov. Rick Scott’s run for Senate in Florida could hurt Democrats nationwide: It’s an expensive market, he’s rich, and he’s ready to spend. (Politico)

• Qatar may be bringing President Trump around to its point of view on the blockade against it. (NYT)

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Rick Wilking/Reuters

The ‘Forrest Gump of Bitcoin’

Gary Shteyngart’s New Yorker profile of Mike Novogratz — hard-partying financier turned accidental cryptocurrency evangelist — is worth a read. Some notable lines:

• “Some of Novogratz’s fellow hedge funders have questioned his grasp of the finer details of his trading strategies. ‘He acts like a visionary, but at heart he’s still a salesman,’ one manager told me.”

• Novogratz is said to consider himself “halfway between center-left and progressive,” and “During my lunch with him at the Mercer Kitchen, he told me, ‘I’ve always said I’d run for office if I had a five-year period in my life where really I felt, like, Hey, my behavior is laudable.’”

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Viacom’s Bob Bakish

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Jeon Heon-Kyun/European Pressphoto Agency

Where do CBS and Viacom go from here?

Public negotiations between the corporate siblings have intensified. Viacom’s counterproposal — 0.68 of a CBS share for every Viacom share, or $14.7 billion; CBS had offered 0.55, or $11.9 billion — is likely to be rejected.

Price may be less of a sticking point, however, than CBS’s insistence on keeping its chief operating officer, Joe Ianniello, in the No. 2 spot after a merger. That’s the job Viacom wants for its C.E.O., Bob Bakish. Michael has heard that this is a serious disagreement, with little movement toward a compromise as yet.

A shareholder speaks: Below is an excerpt from a letter sent to CBS’s board and reviewed by DealBook, by what was described as a top 10 investor:

In the event CBS management is not the ongoing management team, then Viacom should have to provide CBS a premium to the unaffected exchange ratio, which implies a very substantial premium from current levels.

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Volker Hartmann/Getty Images

The deals flyaround

• The Justice Department has reportedly approved Bayer’s $56 billion purchase of Monsanto after the companies agreed to sell more businesses. (WSJ)

• Ant Financial is reportedly raising another $9 billion, making it the world’s biggest unicorn. (WSJ)

• How Saudi Arabia’s Tadawul stock exchange — current value listed: $500 billion — is preparing to host Aramco, at a valuation of up to $2 trillion. (WSJ)

• Uber has agreed to buy Jump, a maker of electric (sorry, “pedal-assist”) bikes after the two tested a bike-sharing program in January. (NYT)

• Elliott Management has raised its stake in Telecom Italia to 9 percent ahead of a vote at the company’s board on May 4. (FT)

• I.P.O. corner: Why the San Mateo Superior Court, Calif., hears so many cases about listings. Regulations might not be responsible for a drop in U.S. publicly traded companies. And a plan to turn Eminem royalties into a publicly traded company has collapsed.

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Kirsten Green, founder of Forerunner Ventures

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Jake Naughton for The New York Times

The most and least diverse venture capital firms

The Information and Social Capital just released their third survey of diversity at the big tech investment firms. Key findings:

• Canvas Ventures and Kirsten Green’s Forerunner Ventures tied for first place on The Information’s V.C. Diversity Index. Tied for last: Tiger Global Management and Slow Ventures.

• The number of women in senior positions at U.S. venture firms rose to 14.2 percent last year, from 10.7 percent. The percentage of Hispanic decision makers rose to 2.3 percent from 1.9 percent, while that of black senior leaders stayed roughly flat at just over 1 percent.

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Come watch Corner Office interview Chobani’s founder live

On April 14 at 5 p.m., hear from Chobani’s founder and C.E.O., Hamdi Ulukaya, who has resurrected economies in two communities and made headlines for his leadership practices. He’ll be interviewed by David Gelles for a live version of the Corner Office column.

DealBook readers get $10 off tickets.

Revolving door

• Galaxy Digital, the cryptocurrency start-up run by Mike Novogratz, has hired a C.O.O.: Richard Kim, most recently a London-based V.P. at Goldman Sachs. (Bloomberg)

• Glencore’s C.E.O., Ivan Glasenberg, has left Rusal’s board after the Russian aluminum producer was sanctioned by the U.S. (CNBC)

• Coinbase has hired Rachael Horwitz, formerly head of marketing at Spark Capital, as its first V.P. of communications. (Recode)

• The C.E.O. of Gizmodo Media Group, Raju Narisetti, has left, as Univision reportedly considers deep cuts. (The Daily Beast)

The speed read

• The Consumer Financial Protection Bureau is seeking a record fine against Wells Fargo for abuses in auto insurance and mortgage lending, unnamed sources said. (Reuters)

• Investors from the Middle East and Asia have offered about $25 billion to buy an expanded version of FIFA’s Club World Cup. (NYT)

• The S.E.C. has widened the definitions of “micromanaging” and business relevance, making it harder for shareholders to put up proxy resolutions. (WaPo)

• Elon Musk likes it in Adelaide, but the Australian city hasn’t fully transformed manufacturing decline into technological progress. (NYT)

• WPP is expected to publish the findings of its Martin Sorrell investigation next week. (Reuters)

• Wynn Resorts has created a culture and community department after its sexual misconduct scandal. (WSJ)

• Pressure is mounting on Deutsche Bank’s chairman, Paul Achleitner, over the messy sacking of John Cryan and the rush to replace him with Christian Sewing. (FT)

• The European Court of Justice ruled that the French government had the right to ban some transport services, including Uber, without notifying European officials first. (FT)

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You can find live updates throughout the day at nytimes.com/dealbook.

We’d love your feedback. Please email thoughts and suggestions to bizday@nytimes.com.

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Best of Late Night: Dr. Evil Tells Jimmy Fallon He Was Fired From the White House


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Mike Myers appeared as Dr. Evil on “The Tonight Show,” claiming to have been “an ideas guy” in the Trump administration.

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NBC

Welcome to Best of Late Night, a rundown of the previous night’s highlights that lets you sleep — and lets us get paid to watch comedy. If you’re interested in hearing from The Times regularly about great TV, sign up for our Watching newsletter and get recommendations straight to your inbox.

‘Secretary of Evil’

Dr. Evil made a surprise appearance on “The Tonight Show” on Wednesday to talk about — what else? — the Trump administration.

Jimmy Fallon announced that he’d just heard about a White House firing that wasn’t yet reported in the news. Then in came Dr. Evil, the famous “Austin Powers” character played by Mike Myers, Fallon’s guest on that evening’s show.

JIMMY FALLON: I’ve got to say, I had no idea you were part of the Trump administration. What exactly did you do there?

DR. EVIL: Well naturally, I was going to be secretary of evil. But Steve Bannon got that job.

Dr. Evil said he was “more of an ideas guy,” and he was the one who first thought to build a wall on the United States-Mexico border. Then he clarified, in typical Dr. Evil fashion: “I wanted it to be a moat, filled with spiky blowfish.”

Video by The Tonight Show Starring Jimmy Fallon

He took some backhanded swipes at Trump’s immigration policy, and at Ben Carson, the secretary of housing.

DR. EVIL: All the most evil stuff was me.

FALLON: Even deporting Dreamers?

DR. EVIL: No, Jimmy, even I have my limits. I’m evil, but I’m not a monster.

FALLON: That’s good to know. Did you at least make any friends at the job?

DR. EVIL: Well, I got along swimmingly with Ben Carson.

FALLON: And why is that?

DR. EVIL: We were both evil doctors who didn’t know why we were there.

Dr. Evil ended the segment by declaring his own candidacy for president. He said he’d be running under the campaign slogan “Make the World Evil Again,” and that his running mate would be “the only man who’s more hated right now than Donald Trump”: Mark Zuckerberg.

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Witness in Mueller Inquiry Who Advises U.A.E. Ruler Also Has Ties to Russia


Mr. Nader has received at least partial immunity for his cooperation, and it appears unlikely that Mr. Mueller is trying to build a case against him. Instead, it is common for prosecutors to interview as many people as possible to corroborate the testimony of a key witness like Mr. Nader.

Mr. Nader’s dealings with Russia date at least to 2012, when he helped broker a controversial $4.2 million deal for the government of Iraq to buy Russian weapons. At the time, he was an informal adviser to Prime Minister Nuri Kamal al-Maliki of Iraq, and he accompanied Mr. Maliki to Moscow in September 2012 to sign the arms deal at a meeting with President Vladimir V. Putin of Russia.

The deal was canceled shortly after because of concerns about corruption, and a spokesman for the prime minister said it would be renegotiated.

Earlier that year, Mr. Nader also attended the St. Petersburg International Economic Forum, an invitation-only conference organized by senior officials close to Mr. Putin that Russia presents as its answer to the World Economic Forum held annually in Davos, Switzerland. Mr. Nader is on a list of participants from 2012. Representatives of the St. Petersburg forum did not respond to inquiries about his attendance in subsequent years.

Since then, according to people familiar with his travels, Mr. Nader has returned frequently to Russia on behalf of the Emirati government. He even had his picture taken with Mr. Putin, according to one person who has seen the photograph, although it is unclear when the picture was taken.

Crown Prince Mohammed bin Zayed Al-Nahyan of Abu Dhabi, the de facto ruler of the U.A.E., is a close ally of the United States and a frequent visitor to the White House. He has also visited Moscow and met with Mr. Putin several times in recent years. One person briefed on the matter said Mr. Nader had accompanied the crown prince to Moscow on numerous occasions.

Last year, days before Mr. Trump took office, Mr. Nader helped set up a meeting at a Seychelles resort between Mr. Dmitriev, Emirati officials and Erik Prince, the former head of Blackwater Worldwide and an adviser to Mr. Trump’s transition team. The meeting, at the bar of a Four Seasons Hotel overlooking the Indian Ocean, was brokered in part to explore the possibility of a back channel for discussions between the Trump administration and the Kremlin, according to people familiar with the meeting.

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Kirill Dmitriev, the manager of a state-run Russian investment fund, met with Mr. Nader and an adviser to the Trump campaign days before Donald J. Trump took office.

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Ramil Sitdikov/Sputnik, via Associated Press

Such contacts are at the heart of Mr. Mueller’s investigation, and his investigators have repeatedly used aggressive tactics to press witnesses. About four weeks ago, F.B.I. agents working with Mr. Mueller’s team stopped a Russian oligarch at a New York-area airport, questioned him about his dealings with Mr. Trump and seized his electronics, according to a person familiar with the matter, which was first reported by CNN.

Mr. Mueller’s investigators have asked multiple witnesses about the Seychelles meeting, part of a broader line of inquiry surrounding contacts between Emirati advisers and Trump administration officials. They have also pressed for details about a meeting Mr. Nader attended in New York in early 2017 with Mr. Kushner and Mr. Bannon with the hedge fund manager Richard Gerson, a friend of Mr. Kushner’s and the founder of Falcon Edge Capital.

Mr. Mueller’s particular interest in that meeting is unclear, although Mr. Gerson has had business dealings with the court of the U.A.E.’s Prince Mohammed. Mr. Gerson has developed relations with several senior Emirati officials over the years, including with Prince Mohammed himself, and he has often sought investments from Emirati state funds.

Mr. Gerson’s family also has business and philanthropic ties to the Kushners. Mr. Kushner has been friends for more than a decade with Mr. Gerson’s brother Mark, a founder of the specialized research company Gerson Lehrman Group. Mark Gerson was also an early investor in Cadre, a real estate technology company founded by Mr. Kushner and his brother, Josh.

Jared Kushner’s family foundation has also donated tens of thousands of dollars to an Israeli medical aid group led by Mark Gerson.

A lawyer for Mr. Nader and a spokesman for Rick Gerson declined to comment. Mark Gerson did not reply to requests for comment.

Mr. Mueller’s investigators have also questioned Joel Zamel, an Australian entrepreneur who has an office in Tel Aviv and knows Mr. Nader, according to people briefed on the matter. Mr. Zamel has had contacts with senior U.A.E. officials close to its ruler since at least 2014.

In February, federal agents working for Mr. Mueller stopped Mr. Zamel at Reagan National Airport outside Washington and briefly seized his electronic devices, the people said. Mr. Zamel later appeared before a grand jury and was questioned about Mr. Nader, though it was unclear whether Mr. Zamel had any information about Mr. Nader’s ties to Russia.

Mr. Zamel is a witness in Mr. Mueller’s investigation and is not suspected of any wrongdoing, according to Marc Mukasey, a lawyer for Mr. Zamel and his crowdsourced consulting firm, Wikistrat. The Wall Street Journal reported on Monday that Mr. Zamel informally met with Mr. Mueller’s team.

“Joel and Wikistrat have not been accused of anything, have done nothing wrong and are not the focus of the special counsel,” said Mr. Mukasey, a global chairman of Greenberg Traurig’s white-collar defense and special investigations practice. “Prosecutors like to question as many people as they can — even if they have tangential involvement and limited knowledge.”

Mr. Zamel briefly met last spring with Jared Kushner at the White House, another person said, though that meeting does not appear to be a focus of Mr. Mueller’s inquiry.

Wikistrat, which pays security experts around the world for their insights, has landed several government contracts, according to databases and news reports. Its website says the firm can draw from a group of more than 2,200 analysts worldwide who share their thinking on an interactive platform.

Some well-known experts serve on Wikistrat’s advisory council, including Michael V. Hayden, a former head of the C.I.A. and the National Security Agency, and Dennis Ross, a former United States diplomat with deep expertise in the Middle East.

Continue reading the main story

How Trump Consultants Exploited the Facebook Data of Millions


“They want to fight a culture war in America,” he added. “Cambridge Analytica was supposed to be the arsenal of weapons to fight that culture war.”

Details of Cambridge’s acquisition and use of Facebook data have surfaced in several accounts since the business began working on the 2016 campaign, setting off a furious debate about the merits of the firm’s so-called psychographic modeling techniques.

But the full scale of the data leak involving Americans has not been previously disclosed — and Facebook, until now, has not acknowledged it. Interviews with a half-dozen former employees and contractors, and a review of the firm’s emails and documents, have revealed that Cambridge not only relied on the private Facebook data but still possesses most or all of the trove.

Cambridge paid to acquire the personal information through an outside researcher who, Facebook says, claimed to be collecting it for academic purposes.

During a week of inquiries from The Times, Facebook downplayed the scope of the leak and questioned whether any of the data still remained out of its control. But on Friday, the company posted a statement expressing alarm and promising to take action.

“This was a scam — and a fraud,” Paul Grewal, a vice president and deputy general counsel at the social network, said in a statement to The Times earlier on Friday. He added that the company was suspending Cambridge Analytica, Mr. Wylie and the researcher, Aleksandr Kogan, a Russian-American academic, from Facebook. “We will take whatever steps are required to see that the data in question is deleted once and for all — and take action against all offending parties,” Mr. Grewal said.

Alexander Nix, the chief executive of Cambridge Analytica, and other officials had repeatedly denied obtaining or using Facebook data, most recently during a parliamentary hearing last month. But in a statement to The Times, the company acknowledged that it had acquired the data, though it blamed Mr. Kogan for violating Facebook’s rules and said it had deleted the information as soon as it learned of the problem two years ago.

In Britain, Cambridge Analytica is facing intertwined investigations by Parliament and government regulators into allegations that it performed illegal work on the “Brexit” campaign. The country has strict privacy laws, and its information commissioner announced on Saturday that she was looking into whether the Facebook data was “illegally acquired and used.”

In the United States, Mr. Mercer’s daughter, Rebekah, a board member, Mr. Bannon and Mr. Nix received warnings from their lawyer that it was illegal to employ foreigners in political campaigns, according to company documents and former employees.

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The conservative donor Robert Mercer invested $15 million in Cambridge Analytica, where his daughter Rebekah is a board member.

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Patrick McMullan, via Getty Images

Congressional investigators have questioned Mr. Nix about the company’s role in the Trump campaign. And the Justice Department’s special counsel, Robert S. Mueller III, has demanded the emails of Cambridge Analytica employees who worked for the Trump team as part of his investigation into Russian interference in the election.

While the substance of Mr. Mueller’s interest is a closely guarded secret, documents viewed by The Times indicate that the firm’s British affiliate claims to have worked in Russia and Ukraine. And the WikiLeaks founder, Julian Assange, disclosed in October that Mr. Nix had reached out to him during the campaign in hopes of obtaining private emails belonging to Mr. Trump’s Democratic opponent, Hillary Clinton.

The documents also raise new questions about Facebook, which is already grappling with intense criticism over the spread of Russian propaganda and fake news. The data Cambridge collected from profiles, a portion of which was viewed by The Times, included details on users’ identities, friend networks and “likes.” Only a tiny fraction of the users had agreed to release their information to a third party.

“Protecting people’s information is at the heart of everything we do,” Mr. Grewal said. “No systems were infiltrated, and no passwords or sensitive pieces of information were stolen or hacked.”

Still, he added, “it’s a serious abuse of our rules.”

Reading Voters’ Minds

The Bordeaux flowed freely as Mr. Nix and several colleagues sat down for dinner at the Palace Hotel in Manhattan in late 2013, Mr. Wylie recalled in an interview. They had much to celebrate.

Mr. Nix, a brash salesman, led the small elections division at SCL Group, a political and defense contractor. He had spent much of the year trying to break into the lucrative new world of political data, recruiting Mr. Wylie, then a 24-year-old political operative with ties to veterans of President Obama’s campaigns. Mr. Wylie was interested in using inherent psychological traits to affect voters’ behavior and had assembled a team of psychologists and data scientists, some of them affiliated with Cambridge University.

The group experimented abroad, including in the Caribbean and Africa, where privacy rules were lax or nonexistent and politicians employing SCL were happy to provide government-held data, former employees said.

Then a chance meeting brought Mr. Nix into contact with Mr. Bannon, the Breitbart News firebrand who would later become a Trump campaign and White House adviser, and with Mr. Mercer, one of the richest men on earth.

Mr. Nix and his colleagues courted Mr. Mercer, who believed a sophisticated data company could make him a kingmaker in Republican politics, and his daughter Rebekah, who shared his conservative views. Mr. Bannon was intrigued by the possibility of using personality profiling to shift America’s culture and rewire its politics, recalled Mr. Wylie and other former employees, who spoke on the condition of anonymity because they had signed nondisclosure agreements. Mr. Bannon and the Mercers declined to comment.

Mr. Mercer agreed to help finance a $1.5 million pilot project to poll voters and test psychographic messaging in Virginia’s gubernatorial race in November 2013, where the Republican attorney general, Ken Cuccinelli, ran against Terry McAuliffe, the Democratic fund-raiser. Though Mr. Cuccinelli lost, Mr. Mercer committed to moving forward.

The Mercers wanted results quickly, and more business beckoned. In early 2014, the investor Toby Neugebauer and other wealthy conservatives were preparing to put tens of millions of dollars behind a presidential campaign for Senator Ted Cruz of Texas, work that Mr. Nix was eager to win.

When Mr. Wylie’s colleagues failed to produce a memo explaining their work to Mr. Neugebauer, Mr. Nix castigated them over email.

“ITS 2 PAGES!! 4 hours work max (or an hour each). What have you all been doing??” he wrote.

Mr. Wylie’s team had a bigger problem. Building psychographic profiles on a national scale required data the company could not gather without huge expense. Traditional analytics firms used voting records and consumer purchase histories to try to predict political beliefs and voting behavior.

But those kinds of records were useless for figuring out whether a particular voter was, say, a neurotic introvert, a religious extrovert, a fair-minded liberal or a fan of the occult. Those were among the psychological traits the firm claimed would provide a uniquely powerful means of designing political messages.

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Aleksandr Kogan, a Russian-American academic, built an app that helped the firm harvest Facebook data.

Mr. Wylie found a solution at Cambridge University’s Psychometrics Centre. Researchers there had developed a technique to map personality traits based on what people had liked on Facebook. The researchers paid users small sums to take a personality quiz and download an app, which would scrape some private information from their profiles and those of their friends, activity that Facebook permitted at the time. The approach, the scientists said, could reveal more about a person than their parents or romantic partners knew — a claim that has been disputed.

When the Psychometrics Centre declined to work with the firm, Mr. Wylie found someone who would: Dr. Kogan, who was then a psychology professor at the university and knew of the techniques. Dr. Kogan built his own app and in June 2014 began harvesting data for Cambridge Analytica. The business covered the costs — more than $800,000 — and allowed him to keep a copy for his own research, according to company emails and financial records.

All he divulged to Facebook, and to users in fine print, was that he was collecting information for academic purposes, the social network said. It did not verify his claim. Dr. Kogan declined to provide details of what happened, citing nondisclosure agreements with Facebook and Cambridge Analytica, though he maintained that his program was “a very standard vanilla Facebook app.”

He ultimately provided over 50 million raw profiles to the firm, Mr. Wylie said, a number confirmed by a company email and a former colleague. Of those, roughly 30 million — a number previously reported by The Intercept — contained enough information, including places of residence, that the company could match users to other records and build psychographic profiles. Only about 270,000 users — those who participated in the survey — had consented to having their data harvested.

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An email from Dr. Kogan to Mr. Wylie describing traits that could be predicted.

Mr. Wylie said the Facebook data was “the saving grace” that let his team deliver the models it had promised the Mercers.

“We wanted as much as we could get,” he acknowledged. “Where it came from, who said we could have it — we weren’t really asking.”

Mr. Nix tells a different story. Appearing before a parliamentary committee last month, he described Dr. Kogan’s contributions as “fruitless.”

An International Effort

Just as Dr. Kogan’s efforts were getting underway, Mr. Mercer agreed to invest $15 million in a joint venture with SCL’s elections division. The partners devised a convoluted corporate structure, forming a new American company, owned almost entirely by Mr. Mercer, with a license to the psychographics platform developed by Mr. Wylie’s team, according to company documents. Mr. Bannon, who became a board member and investor, chose the name: Cambridge Analytica.

The firm was effectively a shell. According to the documents and former employees, any contracts won by Cambridge, originally incorporated in Delaware, would be serviced by London-based SCL and overseen by Mr. Nix, a British citizen who held dual appointments at Cambridge Analytica and SCL. Most SCL employees and contractors were Canadian, like Mr. Wylie, or European.

But in July 2014, an American election lawyer advising the company, Laurence Levy, warned that the arrangement could violate laws limiting the involvement of foreign nationals in American elections.

In a memo to Mr. Bannon, Ms. Mercer and Mr. Nix, the lawyer, then at the firm Bracewell & Giuliani, warned that Mr. Nix would have to recuse himself “from substantive management” of any clients involved in United States elections. The data firm would also have to find American citizens or green card holders, Mr. Levy wrote, “to manage the work and decision making functions, relative to campaign messaging and expenditures.”

In summer and fall 2014, Cambridge Analytica dived into the American midterm elections, mobilizing SCL contractors and employees around the country. Few Americans were involved in the work, which included polling, focus groups and message development for the John Bolton Super PAC, conservative groups in Colorado and the campaign of Senator Thom Tillis, the North Carolina Republican.

Cambridge Analytica, in its statement to The Times, said that all “personnel in strategic roles were U.S. nationals or green card holders.” Mr. Nix “never had any strategic or operational role” in an American election campaign, the company said.

Whether the company’s American ventures violated election laws would depend on foreign employees’ roles in each campaign, and on whether their work counted as strategic advice under Federal Election Commission rules.

Cambridge Analytica appears to have exhibited a similar pattern in the 2016 election cycle, when the company worked for the campaigns of Mr. Cruz and then Mr. Trump. While Cambridge hired more Americans to work on the races that year, most of its data scientists were citizens of the United Kingdom or other European countries, according to two former employees.

Under the guidance of Brad Parscale, Mr. Trump’s digital director in 2016 and now the campaign manager for his 2020 re-election effort, Cambridge performed a variety of services, former campaign officials said. That included designing target audiences for digital ads and fund-raising appeals, modeling voter turnout, buying $5 million in television ads and determining where Mr. Trump should travel to best drum up support.

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The White House advisers Stephen K. Bannon and Kellyanne Conway with Ms. Mercer at the 2017 inauguration. The firm helped the Trump campaign target voters.

Cambridge executives have offered conflicting accounts about the use of psychographic data on the campaign. Mr. Nix has said that the firm’s profiles helped shape Mr. Trump’s strategy — statements disputed by other campaign officials — but also that Cambridge did not have enough time to comprehensively model Trump voters.

In a BBC interview last December, Mr. Nix said that the Trump efforts drew on “legacy psychographics” built for the Cruz campaign.

After the Leak

By early 2015, Mr. Wylie and more than half his original team of about a dozen people had left the company. Most were liberal-leaning, and had grown disenchanted with working on behalf of the hard-right candidates the Mercer family favored.

Cambridge Analytica, in its statement, said that Mr. Wylie had left to start a rival firm, and that it later took legal action against him to enforce intellectual property claims. It characterized Mr. Wylie and other former “contractors” as engaging in “what is clearly a malicious attempt to hurt the company.”

Near the end of that year, a report in The Guardian revealed that Cambridge Analytica was using private Facebook data on the Cruz campaign, sending Facebook scrambling. In a statement at the time, Facebook promised that it was “carefully investigating this situation” and would require any company misusing its data to destroy it.

Facebook verified the leak and — without publicly acknowledging it — sought to secure the information, efforts that continued as recently as August 2016. That month, lawyers for the social network reached out to Cambridge Analytica contractors. “This data was obtained and used without permission,” said a letter that was obtained by the Times. “It cannot be used legitimately in the future and must be deleted immediately.”

Mr. Grewal, the Facebook deputy general counsel, said in a statement that both Dr. Kogan and “SCL Group and Cambridge Analytica certified to us that they destroyed the data in question.”

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Cambridge Analytica harvested over 50 million Facebook users’ data, one of the largest data leaks in the social network’s history.

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Justin Sullivan/Getty Images

But copies of the data still remain beyond Facebook’s control. The Times viewed a set of raw data from the profiles Cambridge Analytica obtained.

While Mr. Nix has told lawmakers that the company does not have Facebook data, a former employee said that he had recently seen hundreds of gigabytes on Cambridge servers, and that the files were not encrypted.

Today, as Cambridge Analytica seeks to expand its business in the United States and overseas, Mr. Nix has mentioned some questionable practices. This January, in undercover footage filmed by Channel 4 News in Britain and viewed by The Times, he boasted of employing front companies and former spies on behalf of political clients around the world, and even suggested ways to entrap politicians in compromising situations.

All the scrutiny appears to have damaged Cambridge Analytica’s political business. No American campaigns or “super PACs” have yet reported paying the company for work in the 2018 midterms, and it is unclear whether Cambridge will be asked to join Mr. Trump’s re-election campaign.

In the meantime, Mr. Nix is seeking to take psychographics to the commercial advertising market. He has repositioned himself as a guru for the digital ad age — a “Math Man,” he puts it. In the United States last year, a former employee said, Cambridge pitched Mercedes-Benz, MetLife and the brewer AB InBev, but has not signed them on.

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