washingtonpost.com
A Jackpot From Indian Gaming Tribes
Lobbying, PR Firms Paid $45 Million Over 3 Years

By Susan Schmidt
Washington Post Staff Writer
Sunday, February 22, 2004

A powerful Washington lobbyist and a former aide to House Majority Leader Tom DeLay (R-Tex.) persuaded four newly wealthy Indian gaming tribes to pay their firms more than $45 million over the past three years for lobbying and public affairs work, a sum that rivals spending to influence public policy by some of the nation's biggest corporate interests.

Touting his ties to conservatives in Congress and the White House, lobbyist Jack Abramoff persuaded the tribes to hire him and public relations executive Michael Scanlon to block powerful forces both at home and in Washington who have designs on their money, according to tribe members.

Under Abramoff's guidance, the four tribes -- Michigan's Saginaw Chippewas, the Agua Caliente of California, the Mississippi Choctaws and the Louisiana Coushattas -- have also become major political donors. They have loosened their traditional ties to the Democratic Party, giving Republicans two-thirds of the $2.9 million they have donated to federal candidates since 2001, records show.

The payday for the GOP is small though, compared with the $15.1 million the tribes have paid Abramoff and his law firm, Greenberg Traurig, which has rocketed to the ranks of top lobbyists on the fees it has charged gaming tribes, lobbying records show.

And those fees -- 10 or 20 times what the tribes paid their former lobbyists -- are about half of what Scanlon has taken in. Scanlon, 33, himself a former Greenberg lobbyist who was recommended by Abramoff, has been paid $31.1 million, according to documents and interviews with tribal members.

The fees are all the more remarkable because there are no major new issues for gaming tribes on the horizon, according to lobbyists and congressional staff. The tribes' payments for lobbying and public affairs work are comparable to what large corporations spend on lobbying in Washington: General Electric Co. paid more than two dozen lobbying firms $30.4 million over the same three-year period, according to federal records. The nation's top four pharmaceutical companies paid dozens of lobbying and law firms $34.8 million between mid-2002 and mid-2003, according to the records.

"Those fees would certainly stand out as greater in magnitude than what rank-and-file tribes pay," said Phil Hogen, chairman of the National Indian Gaming Commission, which regulates Indian gaming. "I guess they have been persuaded there is some value or return for that, but what that is, I'm not aware," Hogen said.

Abramoff has also advised tribes to give hundreds of thousands of dollars to obscure groups whose connections to Indian concerns are unclear, according to documents and numerous tribe members. One of those organizations, located at a Scanlon property in Rehoboth Beach, Del., paid $1.5 million in lobbying fees to Greenberg Traurig over a recent two-year period.

Battles Within the Tribes

The spending by tribal leaders has spawned passionate battles within the tribes. Audrey Falcon, newly elected chief of the Saginaw Chippewas, told tribe members in a letter last week that "$14 million of your dollars was spent for lobbyists that yielded little or no results for our tribe."

Her predecessor, Maynard Kahgegab, defended the spending in an interview. Abramoff won federal funds for the tribe and Scanlon built a database "market protection program" to try to defeat the slot machines of other tribes and at racetracks, he said.

Chris Petras, who was ousted last month from his job as legislative director of the Saginaw Chippewas, said Greenberg Traurig "really established the tribe in Washington as a serious entity in terms of being a policy player." He said Abramoff got funding for several projects earmarked for the tribe, including a $1.2 million residential treatment facility and $3 million for a new school.

Abramoff declined to catalogue the accomplishments he has brought the tribes. Asked what he provides the tribes for the fee of $180,000 a month that each pays , he said: "I think we bring an order of magnitude in terms of our success and our approach on behalf of the tribes. A lot of these tribes who have thrown off the relatively inexpensive lobbyists basically come to us with the comment of 'you get what you pay for.'"

Scanlon declined to be interviewed, but he said in a faxed statement that some newly elected tribal leaders have criticized him because they "want to send business to their own guys."

"The bottom line is that my firm delivers. We provide expensive services, in an expensive industry and we get the job done," his statement said.

Abramoff's lobbying fees must be publicly reported under federal laws, but Scanlon's revenue is largely hidden from public scrutiny. Nowhere must Scanlon disclose his fees for public relations and grass-roots organizing. Copies of some of the contracts he has entered into with the tribes have been provided to The Washington Post by tribal members and sources close to the tribes who are outraged by the fees they are paying.

Tribal spending is seldom scrutinized by federal law enforcement authorities, who regulate gaming but must be careful about trampling on tribal sovereignty. In recent months, however, the FBI has stepped up an investigation into alleged spending irregularities by one of Abramoff's clients -- the 800-member Louisiana Coushatta tribe, which takes in hundreds of millions of dollars yearly from its casino. Last week, FBI agents in Michigan also interviewed members of the Saginaw Chippewas, tribal sources there said.

Abramoff's work for the tribes is not the first time he has encountered controversy in connection with gaming interests. In 2001, a federal magistrate ruled that a $23 million down payment put up by Abramoff and a partner as part of the $147 million purchase of Florida-based SunCruz Casinos was never actually paid. Abramoff declined to comment on SunCruz, citing ongoing litigation.

The rise of Indian gaming over the past 15 years has brought riches to some tribes long mired in poverty. Democrats were the first to make inroads in courting tribal leaders often unfamiliar with Washington politics. More recently, Republicans have tapped into growing tribal largess. In 1990, Indian tribes gave no money to Republicans; now tribes are giving much more overall, and almost half of it goes to Republicans.

Lobbyist's Credentials

Abramoff's conservative-movement credentials date back more than two decades to his days as a national leader of the College Republicans, along with Grover Norquist, an anti-tax activist close to the Bush White House, and Ralph Reed, former head of the Christian Coalition. He spent nearly a decade as a Hollywood producer before finding his niche in the 1990s as a Washington lobbyist, with entree to the conservatives who were taking control of Congress. He enjoys a close bond with DeLay.

Abramoff counts as a major success his 1995 efforts to persuade DeLay and other Republicans to defeat a proposed tax on Indian gaming. Tribes don't want to be taxed, he said, and in that sense they are "engaged in the same ideological and philosophical efforts that conservatives are -- basically saying, 'Look, we want to be left alone.'"

Abramoff currently represents seven gaming tribes. Scanlon represents four of the wealthiest in that group.

But some members of the tribes in Louisiana and California have begun to complain that they are getting little for their money.

Contracts Canceled

New members of Michigan's Saginaw Chippewa tribal council have gone a step further. They canceled Abramoff's contract two months ago and have just terminated a contract with Scanlon that would have paid him another $2.7 million this quarter. In just over two years, the tribe paid $3.9 million to Greenberg Traurig and $10 million to Scanlon's firm, according to lobbying reports, contracts and tribal documents obtained by The Post. The fees accounted for 25 percent of the tribe's entire budget in 2002.

"Tribes are gullible," said Bernard Sprague, a Saginaw Chippewa tribal council member who has led the effort to cancel the contracts. "These guys come in and say, 'They are going to take your sovereignty or your land or your livelihood unless you pay us outrageous amounts of money.' They need to be exposed because tribes don't know."

The Agua Caliente Band of Cahuilla Indians in Palm Springs, Calif., hired Abramoff's firm in mid-2002, and a year later had paid $1.68 million in lobbying fees. At Abramoff's direction, tribe members said, the tribe hired Scanlon to build a database of political supporters and to conduct a $7.4 million letter-writing campaign designed to win support from then-Gov. Gray Davis (D) for more slot machines. That unsuccessful effort generated about 2,000 letters, according to sources close to the tribe -- at a cost of $3,700 per letter.

"There are people here, just like at other tribes, concerned about the fees and whether they are appropriate for what they are getting for the tribes," said Barbara Gonzales Lyons, vice chairman of the Agua Caliente tribal council.

In Michigan and in Louisiana, a few tribal council leaders sometimes made spending decisions without disclosing the details to others, according to the minutes of council meetings and interviews with tribe members. "We were dishing out huge amounts of money for campaigning and lobbying. We're trying to find out what we were paying for," said David Sickey, who was elected in June to Louisiana's Coushatta Choctaw tribal council.

That tribe has spent $32 million on unspecified "lobbying" costs since 2001, according to an internal memo prepared in May by outgoing tribe comptroller Erick LaRocque. Complaining that "documentation of the nature of these expenditures is very limited," LaRocque's memo said that "approximately $24 million of these funds were taken from the funds designated for health, housing and education of tribal members," and that the council had obtained a $10 million line of credit to cover other expenditures.

"It's disturbing -- it is a huge sum," said Sickey, adding that the "lion's share" of the money went to Scanlon's Capital Campaign Strategies public affairs firm. The Daily Town Talk newspaper in Alexandria, La., has reported that an internal tribe audit shows that the firm received $13.7 million during a one-year period ending in 2002. "Tribal members were not aware of this, not at all," Sickey said.

"We got involved with them around 2000 when we had to get a gaming compact renewed with the state of Louisiana," said Bert Langley, who then served as the Coushattas' secretary-treasurer. "Scanlon and Jack were around for a few meetings. They said they had a good network going. They would mention Tom DeLay and all that bunch, but I'm not sure what they did or who they talked to."

Langley said that Abramoff and Scanlon dealt primarily with tribal council member William Worfel.

Worfel issued a statement praising Scanlon's database and public relations work, saying he helped the Coushattas win a potentially costly compact fight with another tribe seeking to build a casino nearby. "The reports of how much the tribe paid Capital Campaign Strategies and other firms are completely inaccurate," the statement said. He did not return calls seeking an interview.

A fourth tribe, the Mississippi Choctaws, has paid Greenberg Traurig $4.5 million since 2001. A spokeswoman said the tribe also employs one of Scanlon's firms, but she declined to say how much it has been paid.

Donations Recommended

In addition to recommending political contributions, Abramoff advised the tribes to give hundreds of thousands of dollars to groups whose connection to Indian issues is unclear, according to tribe members. One of those, American International Center (AIC), described itself on its Web site as an "international think tank" that "seeks to expand the parameters of international discourse in an effort to leverage the combined power of world intellect."

The Coushatta audit cited by the Louisiana paper found that AIC received $566,000 in tribal funds. The AIC address listed in Delaware corporate records is a property owned by Scanlon in Rehoboth Beach. AIC's telephone has been disconnected. Reports filed in Congress show that AIC was one of Greenberg Traurig's biggest lobbying clients from 2001 to 2003, paying the law firm fees totaling $1.5 million.

Abramoff declined to comment, citing client confidentiality both for the tribes and AIC. He also declined to comment on a $25,000 donation that tribe documents show the Saginaw Chippewas made to the Capital Athletic Foundation, a local charity he supports.

Tribes have given to two political organizations associated with Norquist; one of the groups, the Council for Republican Environmental Advocacy, was founded by Interior Secretary Gale A. Norton, whose department oversees Indian affairs. Norton is no longer part of the organization. Abramoff said he recommends that tribes contribute to conservative groups.

PR Executive's Background

Scanlon was still paying off student loans when he left his job as a DeLay press spokesman to join the lobbying world of K Street three years ago, court records show. He worked with Abramoff first at the Preston Gates law firm, then followed him to Greenberg Traurig, where he was a registered lobbyist for the Coushattas before establishing two public affairs firms, Capital Campaign Strategies and Scanlon-Gould Public Affairs. The address on company correspondence is a mail drop on Pennsylvania Avenue.

Property and divorce records reveal that Scanlon or his companies have purchased at least $14 million worth of real estate since 2001 , including a $6.3 million Delaware office park and a seaside mansion in Rehoboth Beach that he bought for $4.7 million in cash. In 2002, he took a $17,000-a-month apartment at the Ritz Carlton in Washington's West End.

Abramoff said in an interview that he does not have an ownership interest in any of Scanlon's firms. He refused to discuss his business dealings with Scanlon, or respond to tribal members' assertions that he advised the tribes to hire Scanlon. In an interview attended by five colleagues from Greenberg Traurig, Abramoff said the firm has no official ties to Scanlon's companies.

"In terms of Mike or any other third party, the firm does not have any formal relationship to my knowledge with any third-party vendor used by any of the tribes for some of their activities," he said.

Scanlon's companies are incorporated in Delaware, where privacy laws shield corporations from disclosing ownership.

Asked whether Greenberg Traurig knew of Abramoff's work with Scanlon, Jill Perry, a spokeswoman for the law firm, said: "At this time we have no comment."

Sprague, a Saginaw Chippewa tribal council member, and David Otto, a former member, contend that in 2001, before Scanlon was hired, his firm provided mailings for council members facing election.

"Michael Scanlon's company sent out election mailers to tribal members promoting the election of the 'Slate of Eight,' " said Otto, who was on the slate. "It was kind of like, 'We'll do this for you, and we'll talk about -- once you get in office -- doing work for you.'"

Federal law bars the use of tribe resources for election campaigns. "If we have evidence that the fees are for activities that benefit individuals rather than the tribe as a whole, we would investigate that as a possible misuse of gaming revenues," said Alan Fedman, director of enforcement for the National Indian Gaming Commission.

Research editor Margot Williams contributed to this report.

View all comments that have been posted about this article.

© 2004 The Washington Post Company