Abramoff Indicted in Casino Boat Purchase
Friday, August 12, 2005
MIAMI, Aug. 11 -- Washington lobbyist Jack Abramoff and a business partner were indicted by a federal grand jury in Fort Lauderdale on Thursday, charged with five counts of wire fraud and one count of conspiracy in their purchase of a fleet of Florida gambling boats from a businessman who was later killed in a gangland-style hit.
Abramoff, 46, was arrested in Los Angeles in the late afternoon and was expected to be taken before a U.S. magistrate there on Friday. He was indicted along with Adam Kidan, the former owner of the Dial-a-Mattress franchise in Washington. Kidan, 41, of New York City, will surrender to the FBI here by Friday morning, his attorney, Martin I. Jaffe, said in a written statement.
Five years ago, while he was still one of the capital's most prominent Republican lobbyists, Abramoff, with Kidan and former Reagan administration official Ben Waldman of Springfield, Va., took over SunCruz Casinos. The company operated a fleet of gambling boats from as many as 11 ports in Florida. Although the indictment does not detail the effort, Abramoff leveraged his connections with members of Congress to advance the SunCruz deal, according to interviews and thousands of documents, court records and e-mails filed in related bankruptcy cases.
Abramoff's spokesman in New York, Andrew Blum, declined to comment, referring calls to Abramoff's Miami attorney, Neal Sonnett, who did not return calls. Kidan said in a statement that he had cooperated with investigators, adding: "I did nothing wrong and these allegations are totally unfounded."
Each of the six counts in the indictment could bring a punishment of as much as five years in prison and a $250,000 fine. Federal authorities are also seeking $60 million from Abramoff and Kidan, the money lost by a lender they had sought out to help finance the casino ships' purchase.
The indictment marks the first formal charges against Abramoff, who has been at the center of a Washington controversy this year involving the large sums of money he collected from Indian casino interests and the influence he exerted on their behalf.
Abramoff and Kidan are accused of faking a wire transfer of $23 million, the equity they had agreed to put into the $147.5 million purchase of SunCruz from Konstantinos "Gus" Boulis, the multimillionaire founder of the popular Miami Subs chain of sandwich shops. The wire transfer, said R. Alexander Acosta, the U.S. attorney here, "was counterfeit."
"The defendants never transferred the funds and never made a cash equity contribution toward the purchase of SunCruz," Acosta said.
As part of the fraud, Abramoff and Kidan lied on their personal financial disclosure statements, the indictment alleges. The two also used money borrowed from individuals, which they called "flash funds," to lead "potential lenders to believe [they] had the necessary funding to complete the sale of SunCruz," the indictment alleges. In reality, they did not have those funds, according to the indictment.
"Abramoff and Kidan did not put any of their own money into this deal," said Timothy J. Delaney, assistant special agent in charge of the FBI's Miami office.
After the sale, Boulis retained a piece of the business, but relations among the partners quickly soured, according to lawsuits and bankruptcy records. Boulis accused Kidan of maintaining connections to organized crime, and he and Kidan came to blows during a business meeting.
On Feb. 6, 2001, Boulis was killed as he drove home from a business meeting by someone in a Mustang who fired three hollow-point bullets into his chest. No one has been arrested in the slaying.