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Lobbyist Accused of Swindling

According to Senate testimony, Jack Abramoff and a partner divvied millions of dollars from tribes that were overbilled.

June 23, 2005|Mary Curtius and Chuck Neubauer | Times Staff Writers

WASHINGTON — In a scheme they dubbed "gimme five," Washington lobbyist Jack Abramoff and a partner created shell organizations and overcharged their tribal clients millions of dollars by grossly inflating their services and expenses, according to new documents released Wednesday by a Senate committee.

In 2001 alone, Abramoff's partner, Michael Scanlon, billed the Mississippi Band of Choctaw Indians $7.7 million for various projects. Of that amount, Scanlon spent $1.2 million on the projects, while he and Abramoff split $6.5 million, Indian Affairs Committee Chairman John McCain said, citing an e-mail from Abramoff to Scanlon.

Over several years, the Choctaw paid Scanlon a total of $15 million, according to documents uncovered by the committee. Scanlon secretly paid $5 million of that to Abramoff, the documents showed.

Tribal officials said at the hearing that they never knew that Abramoff, their longtime lobbyist who had recommended that they hire Scanlon as a consultant, was getting paid by Scanlon.

"Never did [Abramoff and Scanlon] reveal that together they set prices to account for Mr. Abramoff's stake in the profits," McCain said. "Never did they even hint that the two devoted a small fraction of the payments to the uses intended by the tribe, pocketing the rest."

Abramoff was once one of the most powerful lobbyists in Washington, boasting of his close ties to House Majority Leader Tom DeLay (R-Texas). He now is under investigation by the Indian Affairs Committee and a federal grand jury for his and Scanlon's financial dealings with several tribes, including the Choctaw. Scanlon is a former press secretary for DeLay.

Abramoff also has come under scrutiny for lavish overseas trips he arranged for DeLay and other members of Congress. Both DeLay and Abramoff have insisted that the trips did not violate ethics rules.

Abramoff has said that the fees he charged the tribes were not out of line, given the services he rendered. Democrats and congressional watchdog groups paint him as an extreme example of a lobbying culture they say is out of control in a town where one party -- the Republicans -- holds the White House and dominates Congress.

McCain, however, laid the blame squarely on Abramoff. "Today's hearing is about more than contempt, even more than greed," McCain said. "It is simply and sadly a tale of betrayal" by Abramoff of his clients, colleagues and friends.

Sen. Byron L. Dorgan of North Dakota, the committee's ranking Democrat, said Scanlon and Abramoff used what he called a "mind-boggling list of organizations ... as financial and grass-roots conduits" for the money they took in from the tribes, then paid themselves excessive fees or, unbeknown to the tribes, funded causes unrelated to tribal interests. Abramoff, for instance, financed a Jewish religious school that he founded and paramilitary operations mounted by Jewish settlers in the West Bank.

"The goal was always the same: to hide, obscure and mislead where the money was coming from and where it was going," Dorgan said.

He said he believed Abramoff may have tried to evade paying taxes by funneling some of his income to the Capitol Athletic Foundation, the lobbyist's private charity. The group, which was supposed to fund sports activities for inner-city youth, "seemed also to serve as [Abramoff's] personal piggy bank," Dorgan said.

Andrew Blum, a spokesman for Abramoff, said in a statement issued Wednesday: "With an ongoing political investigation being directed by the U.S. Senate and an investigation by the Department of Justice, Mr. Abramoff is put into the impossible position of not being able to defend himself in the public arena until the proper authorities have had a chance to review all the accusations.

"Mr. Abramoff hopes that those who are quick to judge him now will remember that there are two sides to every event and that the media can condemn someone before he ever has a chance to right the record," Blum said.

Two former Abramoff associates who worked with him at the law firm of Greenberg Traurig -- Kevin Ring and Shawn Vasell -- appeared before the committee but refused to testify, invoking their constitutional right against self-incrimination.

The committee questioned Vasell about how Abramoff billed the tribes and whether any time charged to the tribes was fabricated, as some e-mails between Abramoff and Vasell indicated. It questioned Ring about charging the Choctaw for his club dues and other issues.

Another witness was Nell Rogers, the Choctaw official who dealt directly with Scanlon and approved millions of dollars in payments.

"I'm past anger and bitterness," Rogers told the committee. Abramoff's dealings with the Choctaw were "an extraordinary story of betrayal after deliberately building trust," she said.

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