The Wall Street Journal - 26.11.2019

THE WALL STREET JOURNAL. **** Tuesday, November 26, 2019 |A

since 2007, when it bought the

business from Messrs. Baker

and Fluhr for $310 million.

StubHub accounted for about

14% of eBay’s $2.6 billion of rev-

enue in the third quarter.

Mr. Baker launched Viagogo

in London in 2006. The com-

pany grew through partnerships

with soccer, rugby and other

sports leagues, as well as

through ticketing for festivals

and other music events.

Both companies have faced

criticism over the years for sell-

ing tickets marked up well

above face value.

The live-events business has

been growing for several years

as consumers, especially millen-

nials, continue to shell out for

premium experiences. Concerts,

in particular, have been com-

manding record-high ticket

prices amid rising demand for

live shows.

StubHub faces competition

from nimbler upstarts including

Viagogo, Vivid Seats LLC and

Seat Geek. Ticketmaster, the

largest ticket seller, has been ex-

panding its resale business, too.

WASHINGTON—A federal
judge has ruled that close
presidential advisers aren’t
immune from being forced to
testify in congressional inqui-
ries in an opinion that could
eventually clear the way for
numerous administration offi-
cials to be summoned as part
of the impeachment investiga-
tion of President Trump.
U.S. District Judge Ketanji
Brown Jackson struck a blow
against a decades-old legal
doctrine known as absolute
immunity, which has long
been asserted by lawyers rep-
resenting presidential admin-
istrations of both parties but
has remained largely untested
in the courts.
The Justice Department
said it would appeal and
would seek to stay the ruling
while it asks a higher court to
review the matter.
The Monday ruling comes as
part of a lawsuit brought by the
House of Representatives to en-
force a subpoena against Don
McGahn, Mr. Trump’s former
White House counsel. Though
the House is seeking Mr. Mc-
Gahn’s testimony in matters
unrelated to the president’s in-
teractions with Ukraine that are
part of the current impeach-
ment inquiry, the ruling could
have broader implications.
“The primary takeaway
from the past 250 years of re-
corded American history is
that Presidents are not kings,”
Judge Jackson, an appointee
of President Obama, wrote in
her opinion.
Several administration offi-
cials asked to testify by the
House in the impeachment
probe, including former White
House national security offi-
cials John Bolton and Charles
Kupperman, were ordered not
to appear by the White House.
They have indicated a willing-
ness to testify but were await-
ing court guidance on the im-
munity question raised in the
McGahn suit.
“Don McGahn will comply
with Judge Jackson’s decision
unless it is stayed pending ap-
peal,” said an attorney repre-
senting Mr. McGahn.
“This decision contradicts
longstanding legal precedent
established by administrations
of both political parties,”
White House press secretary
Stephanie Grisham said. “We
will appeal and are confident
that the important constitu-
tional principle advanced by
the administration will be vin-
dicated.”
Democrats in Congress cel-
ebrated the ruling and called
on Mr. McGahn to testify as
soon as possible. “I am
pleased the court has recog-
nized that the Trump adminis-
tration has no grounds to
withhold critical witness testi-
mony from the House during
its impeachment inquiry,” said
Judiciary Committee Chair-
man Jerrold Nadler, whose
panel filed to suit to enforce
its subpoena.

BYBYRONTAU

No Blanket

Immunity

For Aides,

Judge Says

Subpoenas described to The

Wall Street Journal listed more

than a half dozen potential

charges under consideration:

obstruction of justice, money

laundering, conspiracy to de-

fraud the United States, making

false statements to the federal

government, serving as an

agent of a foreign government

without registering with the

Justice Department, donating

funds from foreign nationals,

making contributions in the

name of another person or al-

lowing someone else to use

one’s name to make a contribu-

tion, along with mail fraud and

wire fraud.

It isn’t known whether all

these lines of inquiry relate to

prosecutors’ examination of

Mr. Giuliani and his consulting

business.

Messrs. Parnas and Fruman,

both Florida businessmen and

U.S. citizens born in former So-

viet republics, have pleaded

not guilty. A lawyer for Mr.

Parnas didn’t respond to a re-

quest for comment; a lawyer

for Mr. Fruman didn’t com-

ment.

Investigators have sought

information from prospective

witnesses about Messrs. Par-

nas’s and Fruman’s political

and business activities, and

how they intersected with the

Trump administration and Mr.

Giuliani’s work, according to

the people.

The subpoenas also sought

materials related to America

First Action and America First

Policies, two pro-Trump

groups. Kelly Sadler, a spokes-

woman for the groups, said the

organizations contacted the

Manhattan U.S. attorney’s of-

fice last month and offered to

cooperate. She said neither

group received a subpoena.

Prosecutors alleged in the

indictment last month that

Messrs. Fruman and Parnas

concealed the true source of a

$325,000 donation to America

First Action by listing it as a

gift from an energy company

they had recently founded. The

super PAC said it has placed

the contribution into a segre-

gated bank account.

Mr. Giuliani said when cli-

ents have asked him to do

something related to the

Trump administration, he has

referred them to registered

lobbyists. He also denied busi-

ness dealings in Ukraine since

he started as Mr. Trump’s law-

yer in April 2018. “All they

have to do is come and ask

me,” he said of investigators.

Messrs. Giuliani and Trump

have pressed Ukraine to inves-

tigate former Vice President

Joe Biden, now a Democratic

presidential candidate, and his

son, Hunter Biden. They allege

it was corrupt for Hunter Biden

to serve on the board of Bu-

risma Group, a Ukrainian gas

company, while his father as

vice president was leading an

anticorruption effort. The Bi-

dens have denied wrongdoing.

The younger Mr. Biden has said

he used “poor judgment” when

he joined the board, but said

he did nothing improper.

Messrs. Parnas and Fruman

assisted Mr. Giuliani in his

push for investigations in

Ukraine, efforts that at times

aligned with business opportu-

nities sought by the two men,

the Journal has previously re-

ported, citing people familiar

with the matter.

At least two of the people

who got subpoenas had been

asked by Mr. Parnas to invest

in Fraud Guarantee—a fraud-

insurance company he helped

set up in Florida—or to help

fund a promised $500,000 pay-

ment to Mr. Giuliani, people

familiar with Mr. Parnas’s re-

quests said.

A representative for one of

those people, a Florida busi-

nessman, said the man had de-

clined to provide any money.

The other man, also a Florida

businessman, did invest in

Fraud Guarantee after Mr. Par-

nas told him his plan was to

secure a $20 million federal

grant, according to one of the

businessman’s associates.

—Joe Palazzolo

and Alex Leary

contributed to this article.

Subpoenas issued to people

with ties to President Trump’s

personal lawyer, Rudy Giuliani,

indicate a broad federal inves-

tigation into possible money

laundering, obstruction of jus-

tice and campaign-finance vio-

lations and show that prosecu-

tors are probing Mr. Giuliani’s

consulting businesses and

other sources of income, ac-

cording to people familiar with

the matter.

In recent weeks, prosecutors

have sent subpoenas and other

requests to potential witnesses

seeking records and informa-

tion related to Mr. Giuliani and

two of his associates, according

to the people. The investiga-

tion, led by the Manhattan U.S.

attorney’s office and the Fed-

eral Bureau of Investigation,

already has led to campaign-fi-

nance charges against the asso-

ciates, Lev Parnas and Igor

Fruman.

A concern of the investiga-

tion is whether Mr. Giuliani vi-

olated federal lobbying laws by

serving as an unregistered

agent of a foreign government

or hid his work for foreign na-

tionals, said one person famil-

iar with the investigation. Mr.

Giuliani has denied ever serv-

ing as a lobbyist of agent of a

foreign government.

Prosecutors seek documents

and correspondence with Mr.

Giuliani, Giuliani Partners—a

security-consulting firm

founded by Mr. Giuliani in

2002—or “any related person

or entity,” according to one of

the subpoenas. It also seeks

documents “related to any ac-

tual or potential payments, or

agreements” with Mr. Giuliani.

The subpoenas offer the

clearest indication yet that fed-

eral prosecutors are examining

Mr. Giuliani’s consulting work.

Giuliani Partnershas had sev-

eral foreign clients, including a

city in Ukraine. The subpoenas

also sought information on a

company co-founded by Mr.

Parnas that paid Mr. Giuliani

for business and legal advice.

Mr. Giuliani said in an inter-

view he hadn’t been contacted

by prosecutors and has denied

wrongdoing.

ByRebecca Davis

O’Brien,Rebecca

Ballhaus

andShelby Holliday

Subpoenas Signal Broad Probe of Giuliani

Federal prosecutors have sent subpoenas to potential witnesses seeking records related to Rudy Giuliani and two of his associates.

SIAVOSH HOSSEINI/NURPHOTO/ZUMA PRESS

and likely drawn antitrust scru-

tiny. Because of StubHub and

Viagogo’s largely complemen-

tary geographic businesses, in-

dustry experts don’t expect sig-

nificant regulatory hurdles.

“Versus other potential buy-

ers, this does the most to main-

tain the status quo in the eco-

system,” said David Goldberg, a

former Ticketmaster executive

and now senior adviser to pri-

vate-equity firm TPG’s growth-

investing arm.

EBay decided to explore sell-

ing StubHub shortly after two

activist investors surfaced in

January and urged it to exit

businesses unrelated to its core

marketplace.

The company agreed to con-

sider selling StubHub and its in-

ternationally focused classified

business. It also added board

members as part of a settlement

with the investors, Elliott Man-

agement Corp. and Starboard

Value LP.

Elliott had said it believed

StubHub could sell for between

$3.5 billion and $4.5 billion,

and eBay’s classified businesses

for between $8 billion and $

billion.

In September, eBay CEO

Devin Wenig stepped down, in

part because of disagreement

over selling StubHub and the

classifieds business.

EBay in October warned in-

vestors it could report its first

quarterly revenue decline in

four years. The company also

said sluggish sales of merchan-

dise through its main platform

helped cause a 57% year-over-

year decline in third-quarter

profit.

Its shares have slumped since

then but are still up on the year,

and rallied 2.1% to close at

$35.85 Monday. That gives the

company a market value of

about $29 billion.

EBay has been working for

years to redefine itself as shop-

pers increasingly turn to their

phones, showing little patience

for scrolling through thousands

of listings.

The company touts that 80%

of items on its website are new,

with the bulk sold at a fixed

price rather than being auc-

tioned. It has rolled out im-

proved search features and per-

sonalized recommendations and

reviews. It recently launched

marketing campaigns aimed at

shedding what some see as an

outdated image.

The all-cash takeover, re-

ported Monday by The Wall

Street Journal, was financed

with cash on hand, debt under-

written by JPMorgan Chase &

Co. and new equity funding

from existing backers Bessemer

Venture Partners and Madrone

Capital Partners.

The secondary ticketing mar-

ket overall, meanwhile, has been

contending with a more-aggres-

sive primary ticketing market.

Concert promoters, venues

and teams have been pricing the

most coveted seats and VIP ex-

periences at a premium to cap-

ture more of the value of a

ticket and squeeze out brokers.

Vivid Seats had been in dis-

cussions about buying StubHub,

according to people familiar

with the matter, a deal that

many in the industry said would

have consolidated market share

Showtime

StubHubaccountsforasmall

shareofeBay’stotalrevenue.

Quarterly segment revenue

Source: the company

$3.

0

0.

1.

1.

2.

2.

billion

2016 ’17 ’18 ’

Marketplace StubHub

Classifieds

countries, the benefit of scale
in a $10 billion global resale
market.
“The ultimate vision really is
that fans can go to one place to
buy any ticket for any event
anywhere in the world in their
own language and currency,” Vi-
agogo Chief Executive Eric
Baker, a StubHub co-founder,
said in an interview.
StubHub, the No. 1 competitor
in the secondary-ticketing mar-
ket, was founded in San Francisco
in 2000 by Mr. Baker and Jeff
Fluhr, both former Stanford Busi-
ness School students.
It essentially established the
market for legitimate online re-
sale of tickets. It has become so
prolific as a destination for
purchasing tickets that many
fans don’t realize it is a resale
platform.
The website had more than
240 million unique visitors last
year and sold tickets valued at
more than $4.75 billion.
EBay has owned StubHub

ContinuedfromPageOne

EBay Sets

Sale of

StubHub

U.S. NEWS

of the president’s appeal after

he files a formal petition with

the court next month. Given

the magnitude of the constitu-

tional questions involved, the

court’s decision to give Mr.

Trump time to mount the ap-

peal doesn’t come as a sur-

prise.

The justices, in a brief writ-

ten order on Monday, stayed

an October appeals court rul-

ing that upheld a subpoena by

the House Oversight Commit-

tee to Mazars USA LLP. The

committee is seeking eight

years of financial records

about Mr. Trump and his affil-

iated businesses as part of its

probe into White House ethics

issues, including whether the

president is improperly profit-

ing from his office.

Mr. Trump has said the

Democratic-controlled House

is using the subpoena as a po-

litical weapon that isn’t tied to

any legitimate legislative pur-

pose. The House panel said

Mr. Trump is engaged in a le-

gal assault on the authority of

a coequal branch of govern-

ment to hold the White House

accountable for its actions.

The court, as is its custom

with emergency stay orders,

didn’t explain its reasoning.

The justices, as part of issu-

ing the stay, said Mr. Trump

must file his high-court appeal

by Dec. 5. That timeline would

give the court enough operat-

ing room to formally accept

the case for review, hear argu-

ments and issue a ruling dur-

ing its current term, which

runs through the end of June.

But, a June decision means

House Democrats will be wait-

ing another seven months for

a chance at the records.

The president’s lawyers, in

their emergency request filed

Nov. 15, argued that blocking

the subpoena was especially

important because the litiga-

tion raises “unprecedented

separation-of-powers issues

that warrant the court’s re-

view.” The case “will have

lasting consequences for the

functioning of the presidency,”

they said.

The oversight panel urged

the court to deny the stay so

it could move forward to col-

lect the Trump financial re-

cords, noting the subpoena al-

ready has been pending for

more than 200 days. The

committee in court papers

said it would suffer “severe

harm...by being deprived of

information it urgently needs

to exercise its constitutional

functions.”

The committee’s probe be-

gan before the House

launched a formal impeach-

ment inquiry of Mr. Trump,

and its focus is separate from

the House’s examination of

Mr. Trump’s dealings with

Ukraine. The House, however,

has left open the possibility

that it may bring articles of

impeachment against the

president for other conduct.

WASHINGTON—The Su-

preme Court granted President

Trump’s emergency request to

suspend enforcement of a con-

gressional subpoena seeking

his financial records from his

accounting firm, a move that

could keep the documents from

House Democrats for months—

if they see them at all.

Along with blocking the

subpoena for now, the court

signaled Mr. Trump would

have to move quickly with his

appeal, ensuring the president

can’t delay proceedings

through the 2020 election.

The high court’s action also

makes it likely that the jus-

tices will agree to a full review

BYBRENTKENDALL

Court Halts Trump Record Release

StubHub’s website had more than 240 million unique visitors last

year and sold tickets valued at more than $4.75 billion.

K.C. ALFRED/SAN DIEGO UNION-TRIBUNE/ZUMA

One concern in the

federal probe is

whether Mr. Giuliani

broke lobbying laws.