Israeli Intelligence Company Formed Venture With Trump Campaign Firm Cambridge Analytica
Psy-Group is owned by entrepreneur Joel Zamel, who has been questioned by special-counsel investigators
Israeli entrepreneur Joel Zamel has met with investigators involved in the probe led by special counsel Robert Mueller, above.
Photo: Zach Gibson/Bloomberg NewsWASHINGTON—A company owned by Joel Zamel, an Israeli entrepreneur whose work has drawn the scrutiny of special counsel Robert Mueller, formed a strategic partnership with a data firm for President Donald Trump’s campaign in a joint bid to win business from the U.S. government and other clients after the 2016 election, according to people familiar with the matter.
The Psy-Group, one of Mr. Zamel’s firms, signed a memorandum of understanding with Cambridge Analytica LLC, a digital media firm that helped propel Mr. Trump to the presidency, these people said. Facebook Inc. in March suspended Cambridge over allegations that it improperly harvested the data of millions of Facebook users, accusations that in part led to the firm’s closure earlier this month.
The Dec. 14, 2016, memorandum, as described to The Wall Street Journal, outlines a partnership whereby the two firms could cooperate on a case-by-case basis to provide intelligence and social-media services, or pitch business to an array of clients.
Related Video
A person familiar with the work of Psy-Group, a private intelligence firm, said the partnership was intended in part to help win government contracts—something that Cambridge and its parent company, SCL Group, were aggressively seeking to do as their allies in the Trump administration took power, according to people familiar with the efforts.
Capital Journal
The existence of the memorandum is an example of how the president’s allies sought to gain entry and influence in Washington after the election.
SCL Group won a $500,000 contract from the State Department starting in February 2017 aimed at providing “target audience research,” according to federal records. No government contracts have been awarded to the Psy-Group, according to public records, though not all government contracts—for example, in the arena of intelligence and foreign policy—are publicly disclosed.
A spokesman for SCL and for Cambridge Analytica didn’t respond to requests to comment.
Marc Mukasey, a lawyer for Mr. Zamel, said his client “had nothing to do with Cambridge Analytica.” He has previously said investigators have told him Mr. Zamel isn’t a target of the Mueller investigation.
A person familiar with the memo between Cambridge and Psy-Group, which was first reported by Bloomberg, said it was signed without Mr. Zamel’s involvement. It was unclear whether Mr. Zamel was aware of the deal at the time it was reached.
Mr. Zamel has met with Mr. Mueller’s investigators, who appear to have expanded their inquiries to questions about the influence of a Gulf monarchy during the 2016 election, the Journal has previously reported. Mr. Mueller is investigating whether Trump associates colluded with Russia in the 2016 U.S. election. Mr. Trump denies colluding with Russia, and Moscow denies that it meddled in the election.
In the months before the 2016 election, Mr. Zamel met with Donald Trump Jr. , Mr. Trump’s eldest son, at Trump Tower along with George Nader, a top adviser to the crown prince of the United Arab Emirates, to discuss an offer from Messrs. Zamel and Nader to help boost the campaign, the Journal has previously reported. Mr. Zamel is said to be close to top officials in the U.A.E.
Cambridge Analytica earlier this month announced it was shutting down its operations, along with its U.S. and U.K. affiliates SCL Group and SCL Elections. The firm is liquidating its assets, an administrator for the firm said Tuesday.
Cambridge Analytica faced mounting legal fees in the U.K.’s investigation of the data firm and was rapidly losing clients, according to people familiar with the matter. In March, it suspended its chief executive, Alexander Nix, after undercover journalists at British broadcaster Channel 4 released a video that depicted him describing campaign tactics he said the company had used, among them entrapping political opponents with bribes and sex.
In the video, Mr. Nix said Cambridge Analytica used Israeli companies in its campaign efforts. “We use some British companies, we use some Israeli companies,” he said. “From Israel. Very effective in intelligence gathering.”
Mr. Nix has said he regretted his role in the video, and Cambridge Analytica has said it didn’t use the tactics he described.
One person familiar with the work of both firms said Mr. Nix in the video appeared to be referring to Psy-Group, which does work that tracks closely with Mr. Nix’s description. The intelligence firm’s website says the company’s motto is “shape reality.”
Some of Psy-Group’s work involves setting up “honey traps”—real-world scenarios where people are caught saying embarrassing or incriminating things to gain leverage over them—sometimes using the promise of a romantic relationship as part of the approach, which often begins online, according to people familiar with the firm’s operations.
“The general aim is to get their trust, take that relationship to the next level,” said one person who was familiar with the company’s work. “In many cases, they are able to take that relationship offline. Then they can meet in real life.”
After the 2016 election, Cambridge Analytica aggressively pitched federal agencies, often partnering with larger corporations, according to a person familiar with the efforts.
A wave of negative publicity over the course of 2017 slowed the company’s efforts. When news first emerged last fall that Mr. Nix had contacted WikiLeaks founder Julian Assange during the election, some companies told Cambridge Analytica they no longer wanted its involvement in pitching the government, the person said. Recent revelations over the company’s alleged use of Facebook data brought about “the biggest drop-off,” the person said.
Sometime around 2014, Mr. Zamel began making contacts in the U.A.E., becoming close to the national security adviser there, people familiar with the matter said. A Zamel-owned consulting firm, Wikistrat, which aimed to crowdsource expert opinions on geopolitical problems for corporate clients and governments, conducted war-games scenarios for the government of the U.A.E., though many of the company’s employees remained in the dark about who they were working for, they said. Former employees say that it became increasingly clear that the U.A.E. government was one of the firm’s major clients.
At some point during this time period, Mr. Zamel also launched Psy-Group. In early 2016, the firm began using a London-based headhunter to look for a head of sales—possibly based in the U.S., according to documents reviewed by The Wall Street Journal.
The head of sales position was marked “confidential,” and a pitch in the documents described Psy-Group as a firm that is “founded and is managed by an experienced group of former high-ranking officers from elite units of some of the world’s most renowned intelligence agencies.”
“Their team has a proven track record in information gathering, analysis, research, special intelligence operations and technology in the physical and cyber domains,” the document said.
Mr. Zamel’s interest in running Wikistrat began to wane around the same time. The firm had one year of profitability, according to one person familiar with its balance sheets, and in 2015 had approximately $6 million in gross revenues, the person said. Mr. Zamel put Wikistrat up for sale in 2016, sending a prospectus to a number of companies looking for a buyer, according to a person who has seen the document.
The person said Mr. Zamel was seeking about $25 million for the company. It hasn’t found a buyer.
Corrections & Amplifications
Wikistrat was put up for sale in 2016. An earlier version of this article incorrectly said it had been put up for sale in 2015. (May 23)
Write to Byron Tau at byron.tau@wsj.com and Rebecca Ballhaus at Rebecca.Ballhaus@wsj.com