By James V. Grimaldi
Washington Post Staff Writer
Saturday, August 13, 2005
MIAMI, Aug. 12 -- The indictment this week of lobbyist Jack Abramoff in a wire fraud case here could provide an important boost to federal investigators in Washington examining the prominent Republican's activities to influence Congress and the Bush administration on behalf of Indian tribes and other clients, people with knowledge of the case said Friday.
Abramoff was released from a federal correction center in Los Angeles on $2.2 million bail Friday after he and a business associate were indicted here on charges of conspiracy and wire fraud in applying for loans in the purchase of a Florida-based casino cruise-ship company that later fell into bankruptcy.
Although attorneys for Abramoff, 46, and associate Adam Kidan, 41, professed their clients' innocence in the fraud case, the six-count indictment is expected to apply pressure on the two to provide information on a separate criminal investigation in Washington examining Abramoff's work on behalf of the casino-rich American Indian tribes. In addition, there are two Senate committees investigating Abramoff's activities.
Unlike Kidan, who was permitted to surrender to authorities in Florida and to put up a $500,000 personal bond, the FBI arrested and jailed Abramoff while he was on a business trip to Los Angeles with his 12-year-old daughter, sending a clear message about the gravity of the case.
The men are charged with falsifying documents that said they had provided a S23 million down payment for the cruise line when they allegedly had not. Each count could bring five years in prison and a $250,000 fine. Prosecutors are also seeking $60 million from Abramoff and Kidan, the money lost by a lender they had sought out for help in financing the company's purchase.
In Washington, a task force that includes the Justice Department, the FBI, the Internal Revenue Service and the Interior Department's inspector general has been picking through thousands of Abramoff's e-mails and lobbying records for more than a year to determine if any favors or gifts to lawmakers amounted to bribes for official actions. The two Senate committees -- Indian Affairs and Finance -- are investigating Abramoff's representation of tribes and the alleged abuse of charities for political purposes.
Legal analysts agree that this first indictment is typical of government prosecutions of people who are under investigation in more than one case. The first indictment sends a signal that prosecutors are serious, and then they typically wait to see if lawyers want to begin discussions about possible cooperation. If not, prosecutors often bring another set of indictments.
"What they're looking for is how many names can they give -- and by names I mean members of Congress or other prominent people -- and what kind of message do they want to send," said Mike Missal, a former government lawyer now practicing white-collar-crime defense in Washington. "If just Abramoff goes down, it is not that big a deal for prosecutors. If he brings down members of Congress, it is a much more noteworthy case. That would be the ultimate target here."
Once among the most influential lobbyists in Washington, Abramoff had relationships with powerful officials in Congress and the Bush administration. He was a major campaign contributor who also lent his sports stadium suites to politicians for fundraisers without ever charging a fee.
Though Abramoff was close to many members of Congress, the friendship that has garnered the most attention was the one with House Majority Leader Tom DeLay of Texas.
The Florida fraud case and the Washington influence-peddling investigation now has a key figure who could provide an investigative bridge between the two inquiries. Michael Scanlon, a public relations operative who worked with Abramoff in Florida and in Washington, has been in discussions with the Justice Department, according to people familiar with the talks but who spoke on the condition of anonymity because of the sensitivity of the investigation.
Scanlon provided public relations advice to SunCruz Casinos, the gambling company at the center of the Florida fraud case. Once DeLay's communications director, Scanlon persuaded Rep. Robert W. Ney (R-Ohio) to add statements about the company to the Congressional Record at crucial times in Abramoff's acquisition of SunCruz. Ney now says he was duped.
The potential cooperation of Scanlon with prosecutors could provide crucial evidence in the federal task force investigation of Abramoff and his lobbying. Scanlon, a key partner in Abramoff's representation of Indian tribes, might have information about meals, sporting-event tickets and trips that Abramoff showered on lawmakers. Abramoff paid Scanlon more than $10 million in fees, according to documents discovered by Senate Indian Affairs Committee investigators.
The indictment of Abramoff could force the House ethics committee to postpone any investigation of DeLay, according to an official familiar with the committee's discussions. The committee has not been operating this year because of a partisan standoff, but House officials had expected the committee to finish hiring its staff and to get on with its business this fall.
DeLay is not facing any formal ethics complaint. His staff has prepared documents for the committee in an effort to clear up questions about his travel and its connection to lobbyists. "DeLay's situation is substantially complicated by the Miami indictments," the official said. "The Justice Department often will ask a parallel congressional investigation to take the back seat until the department has finished its own investigation. And if DeLay wants to call Abramoff as a witness, there's no way his lawyers will let him get near a congressional committee, ethics or otherwise."
DeLay's association with Abramoff clearly has become a concern for those in the majority leader's camp. In recent months, DeLay has been distancing himself from Abramoff. Earlier this year, DeLay told a group of conservative supporters at a private meeting that sometime shortly after SunCruz Casinos founder Konstantinos "Gus" Boulis was gunned down in Fort Lauderdale, Fla., on Feb. 6, 2001, he confronted Abramoff over his SunCruz involvement, according to people in attendance.
"Immediately, he had Abramoff called in and told him, 'I want no more dealings with you,' " said conservative activist Paul M. Weyrich, a longtime DeLay friend, recounting a speech DeLay gave to a conservative group earlier this year. "I think he felt blindsided by Abramoff" over the SunCruz affair, Weyrich said.
In Los Angeles, Abramoff agreed to post $250,000 in a corporate surety bond, while his wife signed for $1 million and Abramoff's brother and father jointly signed for another $1 million. U.S. District Judge Paul Game Jr. ordered Abramoff to appear at the U.S. attorney's office in Fort Lauderdale on Tuesday for a hearing to ensure that none of the bond money comes from illegal sources. Abramoff surrendered his passport and agreed to travel nowhere but to Florida and Maryland, where he lives.
Staff writers Sonya Geis in Los Angeles and Mike Allen and R. Jeffrey Smith in Washington and database editor Derek Willis in Washington contributed to this report.