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Lobbyist Tied to DeLay Indicted

Jack Abramoff and an associate are accused of using a counterfeit wire transfer to get financing. He surrenders to the FBI in L.A. and is jailed.

August 12, 2005|John-Thor Dahlburg | Times Staff Writers

FORT LAUDERDALE, Fla. — Washington lobbyist Jack Abramoff was indicted Thursday on federal fraud charges accusing him and an associate of using a counterfeit $23-million wire transfer to get financing to buy a fleet of casino boats five years ago.

Abramoff, formerly a powerful and highly paid lobbyist who boasted of his ties to House Majority Leader Tom DeLay (R-Texas) and others, also is under investigation by a separate federal grand jury in Washington for his dealings with Indian tribes. DeLay once described Abramoff as a close friend.

After the indictment by the federal grand jury in Florida was unsealed, Abramoff's Miami-based attorney, Neal R. Sonnett, said his client had not committed fraud.

Under an arrangement worked out by his attorney, Abramoff surrendered at the FBI's field office in Los Angeles. He was taken to the federal Metropolitan Detention Center, where he was to spend the night while he awaits a detention hearing today before a U.S. magistrate judge.

Thom Mrozek, spokesman for the U.S. attorney's office in Los Angeles, said Abramoff probably would be released on bond.

The indictment alleges that Abramoff, 46, and a former business associate, Adam R. Kidan, 41, a New York businessman, submitted a false document as part of a loan application in 2000 showing that they had transferred $23 million into the account of Konstantinos "Gus" Boulis, then owner of SunCruz Casinos, a group of gambling boats.

But "that document was counterfeit; the defenders never transferred these funds and never made a cash equity contribution toward the purchase of SunCruz," R. Alexander Acosta, the U.S. attorney in Miami, said in a statement with Michael S. Clemens, the FBI's special agent in charge in Miami.

Foothill Capital Corp. and Citadel Equity Fund agreed on Sept. 27, 2000, to lend the two partners about $60 million toward the $147.5-million purchase of SunCruz, the indictment said. It alleged that the two men submitted fraudulent information about their assets and liabilities.

Abramoff and Kidan are each charged with five counts of wire fraud and one count of conspiracy to commit wire fraud and mail fraud. Each count carries a possible prison term of up to five years, as well as a $250,000 fine. The indictment also seeks criminal forfeiture of about $60 million.

Sonnett, Abramoff's lawyer, did not immediately return a telephone call from The Times, but told Associated Press that his client had been notified that he was a target of the investigation.

"We were hopeful we'd be able to convince the prosecutor not to file charges because he was not involved in fraud involving SunCruz," Sonnett told AP.

In a statement released by his Florida attorney, Kidan said: "I did nothing wrong and these allegations are totally unfounded." Attorney Martin Jaffe said his client planned to surrender to federal authorities today in Fort Lauderdale.

Clemens, of the FBI, said: "This indictment is the culmination of a complex financial investigation and demonstrates that regardless of position, status, wealth or associations, fraudulent activity will not be tolerated."

In the year after the SunCruz deal, Boulis, a Greek immigrant, was shot to death. The Feb. 6, 2001, killing remains unsolved.

Within months of the change in ownership, SunCruz filed for bankruptcy protection. Now under new ownership, it operates 11 ships from ports in Florida and South Carolina.

Abramoff became a high-profile figure in Republican fundraising circles, collecting more than $100,000 for President Bush's 2004 reelection campaign. He also raised thousands of dollars for DeLay and other Republican members of Congress.

DeLay has been stung by charges that Abramoff paid some of his expenses on a 2000 trip to Britain that included a golf outing in Scotland in potential violation of House ethics rules, which prohibit such trips from being funded by a lobbyist. DeLay has said he thought that the expenses were properly paid for by a think tank.

Last year, the Senate Indian Affairs Committee accused Abramoff and another business associate, Michael Scanlon, of cheating six Indian tribes that had paid $66 million for lobbying and public relations work. Both Abramoff and Scanlon, a former DeLay press secretary, took the Fifth Amendment before the committee.

The fallout from those scandals has already touched Abramoff's onetime friends in Congress, including DeLay and Rep. Robert W. Ney (R-Ohio), chairman of the House Administration Committee. Ney, too, has faced criticism for taking a 2002 golf trip to Scotland arranged by Abramoff.

In 2000, Ney came to Abramoff's aid as he was attempting to buy SunCruz. Ney attacked the then-owner of the gambling fleet in remarks that were placed in the Congressional Record.

DeLay for years blocked legislation, strongly opposed by Abramoff's clients, to end the use of low-wage workers in what critics called sweatshops in the Northern Mariana Islands. More recently, the Texas congressman has been trying to distance himself from the lobbyist.

Times staff writers Chuck Neubauer in Washington and David Rosenzweig in Los Angeles contributed to this report.

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