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Untangling a Lobbyist's Stake in a Casino Fleet
Kidan later acknowledged that he and Abramoff never made the $23 million cash payment to Boulis. Kidan testified in a court deposition that Boulis secretly agreed instead to accept two promissory notes totaling $20 million just before the closing when Kidan had threatened to walk away from the deal because he thought the price was too high.
"I told Mr. Boulis we would not be closing the deal," Kidan later said in a deposition. "He said under what terms would I do it? And I told him I would do it if the price was adjusted accordingly."
Kidan later testified in a deposition there was nothing in writing about the change, but he said that he, Abramoff and Boulis orally agreed to do it. "There was a discussion between myself and Mr. Boulis and Mr. Abramoff, and then Mr. Boulis went off to Greece" to attend his father's funeral, Kidan testified. Boulis left his subordinates to handle the closing.
In effect, Kidan and Abramoff were allowed to buy Gus Boulis's gambling company without putting in a cent of equity.
When Foothill Capital eventually sued to recover its loans, one of its lawyers said it would never have lent the $60 million if it had known about the secret promissory notes. The loan agreements with the banks required that Abramoff and Kidan have a cash stake in SunCruz, just as a bank usually requires a cash down payment before issuing a home mortgage. Foothill Capital has said it relied on the financial statements provided by Abramoff and Kidan in which they represented that they had the necessary means to put up $23 million in cash.
Foothill Capital also said that the buyers and sellers knew that the secret arrangement was fraudulent and tried to conceal it. Foothill Capital cited a fax to Kidan at his hotel from Joan Wagner, Boulis's chief financial officer and his representative at the closing. The fax included copies of the two promissory notes and the hand-scrawled instruction: "Please review and if 'ok' sign and give to Jimmy in a sealed envelope."
"Jimmy" was another Boulis lawyer, according to Foothill Capital. The lender said in a court filing "the clear implication of this directive was to hide the very existence of the substituted notes from the lenders."
Foothill Capital also said it has even stronger evidence of fraud.
The lender had asked for proof that the Kidan group had paid the $23 million to Boulis. In response, Kidan and Waldman each faxed copies of a purported wire-transfer document to Greg Walker on Sept. 27, the final day of closing. The document was a Sept. 22 notice of a wire transfer of $23 million "by order of Adam Kidan" from Chevy Chase Bank to Boulis's account at Ocean Bank. However, Kidan's account at Chevy Chase had been closed weeks earlier, according to court documents. Even when the account was active, there was never a transaction larger than $107,000, Chevy Chase told Foothill Capital.
Waldman did not respond to repeated requests seeking comment.
Kidan's lawyer has argued that Foothill Capital may not be an innocent victim. "Everyone needs to look at what knowledge the lender had," said Martin Jaffe of Hollywood, Fla., adding that he could not comment on the details of the case. "You can't be defrauded if you know what's going on and are a party to it."
Court records show that Foothill Capital did have a confidential side agreement with Kidan. Under the agreement, prepared just before the closing, Kidan promised to resolve the liabilities in his personal bankruptcy within 45 days.
At the top of a draft of the letter is a puzzled note from Citadel's lawyer: "Looks fine, but who are we hiding these items from & why?"
Lawyers for Foothill Capital did not respond to repeated requests for comment.
Boulis Was Incensed
When the deal was done, Kidan moved to Florida to run SunCruz. Abramoff stayed in D.C.
Abramoff and Kidan started paying themselves $500,000-a-year salaries. Among the first checks Kidan wrote were payments totaling $310,000 that he sent to Abramoff to help pay for the sports skyboxes at FedEx Field, MCI Center and Camden Yards.
Operating out of SunCruz's offices near Fort Lauderdale, Kidan moved into a $4,300-a-month luxury condo paid for by SunCruz and bought a 34-foot powerboat. He quickly put his mark on the business, firing SunCruz employees including several of Boulis's friends and relatives.
"We fired his friends, we fired his family and he wasn't happy with it," Kidan later told the Sun-Sentinel in Fort Lauderdale.
Kidan said that he found the ships were in disrepair and that there were overdue bills. He refused to make his loan payments to Boulis.
Boulis was incensed. In October 2000, he wrote letters to Kidan demanding payment, threatening to tell the lenders and Abramoff that Kidan was reneging.
Two former SunCruz insiders say that Boulis's truculence sent Abramoff and Kidan back to their friends on Capitol Hill. Scanlon, at the time a public relations consultant employed by SunCruz, once again asked Ney to place comments in the Congressional Record. Two days after Boulis's last letter, Ney did so. "I have come to learn that SunCruz Casino now finds itself under new ownership," Ney stated in the record. Kidan's "track record as a businessman and a citizen lead me to believe that he will easily transform SunCruz from a questionable enterprise to an upstanding establishment."
In the midst of the infighting with Boulis, Kidan decided to hire an old New York friend, Anthony Moscatiello, who was running a catering hall. Kidan made him a food-and-beverage consultant. Moscatiello has been described by law enforcement as an unofficial bookkeeper for New York City's Gambino crime family.
He and Kidan first met about 1990 when Kidan was running a bagel business in the Hamptons. Moscatiello had been indicted on federal heroin-trafficking charges in 1983 along with Gene Gotti, brother of John Gotti, the boss of the Gambinos. Moscatiello was accused of trying to dissuade witnesses from testifying in the case. After Gotti and several others were convicted and sentenced to prison, charges against Moscatiello were dropped.
In Florida, Moscatiello began visiting Kidan's condominium and golfing with Kidan and Waldman, according to depositions of Kidan and Waldman. Kidan later testified he was unaware of Moscatiello's legal troubles or the alleged Gambino affiliations.
'This Guy Is Violent'
In early November 2000, Abramoff flew to Miami to meet with Boulis and Kidan "to try to mediate their differences for the good of the business," Abramoff's attorney said later. "Abramoff met alone with Boulis and his representatives. Boulis recounted Kidan's bad acts and at one point stated 'Kidan stole my company.' " Abramoff said later in court documents he learned for the first time at this meeting with Boulis that Kidan had not given Boulis the $23 million. "Abramoff was flabbergasted by this news," his attorney wrote. "He could not believe that it could be true, given Kidan's representations to Abramoff."
But Abramoff, along with Kidan, had signed sworn documents faxed to the closing in which he and Kidan attested that they had paid Boulis the $23 million. And in e-mails exchanged with Kidan and Wagner, Abramoff continued to support Kidan.
By late November, threats were flying. Boulis's allies began to stir trouble, including a business associate who accused Kidan of having mafia connections at a community meeting in Mayport, Fla., where SunCruz docked one of its gambling boats. Kidan threatened to sue.
The conflict exploded on Dec. 5. Joan Wagner, Boulis's chief financial officer, had called a meeting of the SunCruz principals except for Abramoff, who was traveling abroad. They met at the company's offices in Dania Beach, Fla., to try to resolve the increasing acrimony. What happened there is in dispute.
Kidan later filed a police report stating that Boulis assaulted him with a pen, drawing blood. He claimed in court papers that Boulis "attacked [Kidan] in the face and neck and kicked his body," before being pulled off by a SunCruz employee.
Police said that at least one other witness stated that Kidan provoked Boulis by calling Wagner names and making threats. According to this account, Boulis told Kidan to stop, but Kidan instead repeated an insult. Boulis then punched Kidan.
The day of the fight, Wagner e-mailed Abramoff pleading with him to come to Florida to mediate.
"The crisis at suncruz took on new meaning today with gb [Gus Boulis] and ak [Adam Kidan] getting physical," Wagner wrote. "Money is being wasted and lost and it shouldn't continue. . . . I'm telling you that you must address the issue asap. Your delay is only emboldening Adam and he is really on the edge."
Wagner wrote, "I liked Adam and thought I would be working with all of you to build an empire to be proud of and make us all alot of money too." But now she said, "the only recourse" was for Abramoff to join with Boulis and Waldman to vote Kidan out of SunCruz.
A day later, Wagner pointedly noted that Boulis, as a lender to the Kidan group, could "veto certain activities and transactions," thus canceling the takeover of SunCruz.
Abramoff forwarded Wagner's last e-mail to Kidan and Waldman. In response, Kidan told Abramoff, "We need to shut her down."
Kidan also urged, "Jack, you need to act above all of this."
In his e-mails to Abramoff, Kidan made a cryptic reference to an ally who had sent protection to Kidan in Florida.
"My friend in NY is acting out of concern for my safety," Kidan wrote to Abramoff. "By sending security I am afraid it will make things worse and I will ask him today to remove them. I appreciate his efforts, but the situation is at a critical point."
Kidan proposed "a concerted press effort" against Boulis.
"I was the victim of family violence before," Kidan wrote. "Lets use that in our favor (my mother wouldn't mind) to show how we can't tolerate violence and the like of criminals. Lets get the protective order. By painting the picture we box him. The negative is that his profile shows that he will retaliate against me."
Abramoff replied, "I agree with this completely."
He e-mailed Boulis attorney Anthone Damianakis: "It is my belief that Gus and Adam need to resolve the issue of what Gus is owed and Gus needs to move on out of the company."
Kidan hired a security firm to assess what kind of threat was posed by Boulis, who once had been arrested for harassing a girlfriend who had obtained a restraining order after she accused him of beating her. Kidan paid for three bodyguards and ordered an armor-plated Mercedes, according to court records. He also requested a restraining order, which was granted. He alleged that Boulis vowed to have him killed.
A week later, SunCruz made the first of $145,000 in payments to Moscatiello. Three checks for $10,000 each were made to Jennifer Moscatiello, daughter of Anthony, and $115,000 to Gran-Sons, a company the Moscatiellos ran. The payments were for catering, consulting and "site inspections," Kidan said later.
However, there is no evidence that any food or drink was provided or consulting documents prepared. The checks to Jennifer were made at Anthony's instruction, Kidan said, even though she performed no services. A lawyer for the Moscatiellos declined to comment.
On Jan. 19, 2001, Boulis went to court, seeking an injunction to prevent Kidan from operating the boats and to force him to make his payments to Boulis.
The next day, Kidan and Scanlon were guests at a reception in DeLay's Capitol Hill office celebrating the inauguration of George W. Bush, according to two people who were at the reception.
A week later, Abramoff and his partners leased a corporate jet to ferry congressional staffers down to Tampa for the Super Bowl game and a night of gambling aboard a SunCruz ship. Among those aboard were DeLay aide Tim Berry, who is now DeLay's chief of staff, and two staffers to Sen. Conrad Burns (R-Mont.). DeLay's former deputy chief of staff, Tony Rudy, by then a newly minted lobbyist working for Abramoff, was there, too.
Berry failed to report the trip on his disclosure forms. A DeLay spokesman said Berry had no idea SunCruz paid for the trip. He thought it was a Republican fundraising trip allowable under House rules.
On Jan. 31, the Kidan-Boulis brawl hit the front page of the Sun-Sentinel. Kidan told the newspaper that Boulis said: "I'm not going to sue you, I'm going to kill you. . . . This guy is violent -- he's sleazy."
A Federal Target
Back in Washington, Abramoff was moving his lobby business and many of his clients, including his tribal accounts, from Preston Gates to Greenberg Traurig LLP. He also took at least 10 employees with him from Preston Gates. At Greenberg, Abramoff made Tony Rudy his first hire from Capitol Hill.
Abramoff's departure had been coming for months. His style had clashed with others at Preston Gates, who believed he was moving too fast and being careless. Earlier in the year, Manuel Rouvelas, the firm's founding partner in Washington, had warned Abramoff, according to people familiar with the exchange.
"If you're not careful," Rouvelas told Abramoff, "you will end up dead, disgraced or in jail."
In February 2001, less than two months after Abramoff had settled in at Greenberg Traurig, Abramoff and Kidan were abroad prospecting for new business. They were in England preparing to fly to Hong Kong, when Kidan's bodyguard got a call. Boulis was dead.
Kidan rushed home. He told police he knew nothing about the slaying.
Fort Lauderdale police detectives say they know who committed the crime. All they need, they say, is one cooperating witness.
After Boulis's slaying, Kidan and Abramoff conducted business as usual at SunCruz. They asked Foothill Capital for another loan to clear up their debts. They stepped up plans to expand casino operations to the Northern Mariana Islands, where the government had been a client of Abramoff's. They also hired Greenberg Traurig as their lobbyists in Washington.
In March 2001, SunCruz executives, including Abramoff and Kidan, attended a fundraiser in Abramoff's box at MCI Center for Ney. The next month Kidan hosted a fundraiser in his apartment in Fort Lauderdale for his local congressman, Rep. Peter Deutsch (D-Fla.).
But the relationship between DeLay and Abramoff changed. DeLay told a group of conservatives last month "that he had no idea that Abramoff was involved in this and was absolutely shocked when he found out about it," said Paul M. Weyrich, a conservative activist and longtime friend of DeLay's. "Immediately he had Abramoff called in and told him, 'I want no more dealings with you,' and I think he felt blind-sided by Abramoff, that Abramoff was aware of Tom's views on the subject and never bothered to tell him" about his stake in SunCruz.
DeLay, whose campaign committee had been one of the largest recipients of gambling money, has since stopped accepting contributions from Indian tribes that operate casinos.
In late spring, stories began appearing in the Florida media about Kidan's links to the Moscatiellos. In June, Abramoff, Kidan and the Boulis estate abruptly settled their differences by placing the company into bankruptcy. As part of the settlement, Abramoff and Kidan relinquished most of their interest in the company to the Boulis estate, in exchange for an agreement releasing Abramoff and Kidan from their debts and liabilities.
Foothill Capital would later contend that the settlement was intended to cover up the fraud at the closing.
In April 2003, the Court of Appeals for the 11th Circuit threw out the settlement, saying it was marred by conflicts of interest and should not have been approved by the bankruptcy judge. The court said the Kidan management was "riddled with fraudulent and dishonest transactions," including the charges the Boulis side made about Kidan's misuse of funds.
Today, the SunCruz casino boats are sailing under new ownership after a bankruptcy auction. Abramoff and Kidan remain embroiled in litigation with Foothill over the $60 million they were lent.
Neal Sonnett, a prominent Miami criminal defense lawyer hired by Abramoff, said in a court pleading last August that federal prosecutors have told him Abramoff is a "target" of a federal grand jury investigation.
Sonnett told The Post he is confident Abramoff will be cleared, calling him a "victim" in the SunCruz case. Sonnett said he could not discuss specifics, including the wire transfer, because of the ongoing investigation.
Abramoff has had little to say publicly about SunCruz. In 2002, he did talk to the Washington Business Forward.
"I was fortunate to get out of that financially better off than when I entered it," he said. "I was lucky it did not damage me. But it's not something I would repeat."
By then, Abramoff had already embarked on another enterprise -- one that Sen. John McCain (R-Ariz.) would later brand a "truly extraordinary" example of "exploitation and deceit." During a three-year period, Abramoff and Scanlon took in $82 million in lobbying and public relations fees from six Indian tribes.
"We need that moolah," Abramoff e-mailed Scanlon on Jan. 16, 2002. "We have to hit $50M this year (our cut!)."
Researcher Alice Crites and database editor Derek Willis contributed to this report.