Abramoff Probe Turns Focus on DeLay Aide
Sunday, January 8, 2006
With disgraced lobbyist Jack Abramoff's cooperation secured, federal prosecutors are turning up the pressure on a former senior aide to Rep. Tom DeLay (R-Tex.) in the clearest signal yet that the sprawling public corruption investigation is now focusing on House Republican leadership offices, according to legal experts familiar with the case.
The turn of events in the Abramoff case has all but ended DeLay's hope of returning to the House majority leader's post, which he was forced to relinquish in September after his indictment on unrelated campaign finance charges in Texas. His temporary successor, House Majority Whip Roy Blunt (R-Mo.), is planning to ask House GOP members to elect him permanently to the majority leader's position in the coming weeks. And a small group of Republicans began the formal process of replacing DeLay on Friday, unveiling a petition for a leadership election.
DeLay remains publicly unwilling to renounce a return to power, refusing to bow to a Texas campaign finance indictment that he maintains is politically motivated. But it is the Abramoff case that has changed the political landscape, some Republican House members said last week.
Sources close to the investigation have hinted that at least half a dozen lawmakers could be under scrutiny. But in the Abramoff plea agreement that was made public last week, only three targets were cited in detail. None of the three was named, but their activities, laid out in court documents, identify them as Rep. Robert W. Ney (R-Ohio); Ney's former chief of staff, Neil G. Volz; and DeLay's former deputy chief of staff, Tony C. Rudy.
Rudy, identified as "Staffer A," stands out in particular, because Ney and Volz had been previously identified as targets. Such prominent attention on a "staffer" has led experts on white-collar crime to conclude that the government's 40-member task force on public corruption is seeking Rudy's cooperation, just as it secured the cooperation of Abramoff and another former DeLay aide, Michael Scanlon.
"They're doing it in steps. They go to the staff and roll the staff onto the members," said Stanley M. Brand, a former general counsel to the House, who described DeLay's legal problems as "extreme."
But others cautioned against any such leap to judgment, suggesting the prosecution of a former high-level leadership aide could be the prosecutors' aim. Richard Cullen, a DeLay attorney, said: "If Staffer A is Mr. Rudy and if Mr. Rudy is found to have engaged in acts that were improper, I can tell you that Tom DeLay is going to be very saddened and disappointed that anyone on his staff would act improperly. He has one standard of conduct for all staff members, past and present, and that is that they do the right thing."
The Abramoff plea agreement twice cites "Staffer A" -- identified elsewhere as Rudy -- first in a section on Abramoff's corruption of public officials and then on the fraudulent bilking of a liquor company. The first citation would be of particular concern to DeLay because the events unfolded while Rudy was the majority whip's second-in-command.
Under the plea, Abramoff said that he and others sought Rudy's agreement to help torpedo a prohibition on Internet gambling and a postal rate increase. "With the intent to influence those official acts," the documents say, Abramoff provided "things of value, including but not limited to . . . ten equal monthly payments totaling $50,000" to Rudy's wife, Lisa. Those payments came from clients "that would and did benefit" from Rudy's actions against the measures.
The Post had previously reported that $25,000 had come from eLottery Inc., an Internet gambling firm, which sent the money to a Seattle-based Orthodox Jewish foundation, Toward Tradition, that then paid fees to Rudy's wife.
On Friday, the Magazine Publishers of America, which had hired Abramoff's firm Preston Gates Ellis & Rouvelas Meeds LLP in 2000 for a $10 million campaign against the postal rate increase, revealed where the other half came from.
"I can confirm that based on direction from Preston Gates, the MPA did make a $25,000 contribution to Toward Tradition in 2000," said MPA spokesman Howard J. Rubenstein. The MPA directors "had absolutely no knowledge of how the money would be used, and if it turns out that it was used for an improper purpose, they would be, quite frankly, outraged."
A Preston Gates spokeswoman said Friday night that the firm cannot discuss private matters but that "neither the firm nor the client had any knowledge of Jack Abramoff's orchestration of a payment to a congressional staffer."
The foundation's leader, Rabbi Daniel Lapin, has said Lisa Rudy performed services for the group in exchange for her fees.
DeLay was involved in both legislative gambits. Two Abramoff clients, eLottery and the Choctaw Indian tribe, had underwritten a lavish golfing trip to Scotland that Abramoff took both Rudy and DeLay on in May 2000. Rudy and Abramoff worked furiously to shoot down the bill prohibiting Internet gambling, with Rudy firing off e-mails to the lobbyist using the pronoun "we" as though he belonged to Abramoff's team.
DeLay was an ardent opponent of gambling and presumably would be in favor of the bill, but Abramoff had a plan for that: Argue that the legislation and its exemptions for jai alai and horse racing would have the perverse effect of actually expanding legalized gambling, and then enlist conservative religious groups to oppose the measure. At Abramoff's direction, eLottery paid hundreds of thousands of dollars to Grover Norquist's Americans for Tax Reform, the Rev. Louis Sheldon's Traditional Values Coalition and companies affiliated with Republican strategist Ralph Reed.
On July 17, 2000, the Internet Gambling Prohibition Act went down to defeat. Although a majority of the House voted for it, Rudy had engineered the vote to come up under expedited rules requiring two-thirds of the House to support it.
To this day, DeLay's case against the bill echoes Abramoff's: Its loopholes would have expanded Internet gambling.
Less well known are the events surrounding the postal rate hike. The U.S. Postal Service had proposed a 15 percent increase, triggering a fierce fight from the magazine industry. With a lobbying contract worth millions, Preston Gates put its heavyweights on the team, including Abramoff, and then directed the MPA to make its $25,000 to Toward Tradition, headed by Lapin, a longtime friend of Abramoff's.
On May 1, the Capitol Hill newspaper Roll Call quoted Rudy as saying "we're planning to do all we can so that the postmaster general sticks to his word" and reduces the rate increase. Opposition also came from then-Senate Majority Leader Trent Lott (R-Miss.), then-House Majority Leader Richard K. Armey (R-Tex.), and Reps. Steny H. Hoyer (D-Md.) and Chaka Fattah (D-Pa.).
By December, the magazine publishers were claiming victory: The rate increase that went into effect in January 2001 was considerably smaller.
Both cases could be significant for federal investigators, Brand said. Federal prosecutors need only prove there was an agreement to pursue official action in exchange for favors, and the Abramoff plea repeatedly states that such agreements existed. But juries often want to see that the promised action took place. In both the Internet gambling case and the postal rate fight, Abramoff's clients achieved their desired results, with Rudy's help and, wittingly or unwittingly, DeLay's support.
It is also a federal offense to file false statements on official travel records, Brand said. On the Scotland trip, DeLay listed the purpose of the excursion as "educational." Abramoff and Scanlon could say otherwise, Brand said.
"They've got a panoply of things in addition to bribery that they can use," Brand said. "This is a task force that's been at this for two years with 40 investigators. This isn't just about Bob Ney."