By James V. Grimaldi
Washington Post Staff Writer
Wednesday, June 3, 2009 4:21 PM
Attorneys for imprisoned former lobbyist Jack Abramoff said yesterday that his wife and five children are living "just above the poverty line" and he should be permitted to continue spending a tax refund of more than $500,000 to pay back his lawyers and creditors, as well as those who have helped his family make ends meet.
The filing by Abramoff's legal team came in response to move by the Justice Department last month to stop Abramoff from using the tax refund to pay his bills. The government lawyers told U.S. District Judge Ellen S. Huvelle that a previous court order required Abramoff to first make $23 million restitution to Indian tribes and others he has admitted defrauding.
Abramoff, who has been behind bars since 2006, received a $520,189 refund from the IRS on May 4 and has already spent a significant chunk of it to pay outstanding bills.
The lobbyist's lead attorney, Abbe D. Lowell, said that Abramoff "did not try to avoid any restitution requirement, he did not seek to hide the fact that he was getting a refund from past taxes and he did not try to do anything but comply" with the law. Lowell said that Abramoff had previously liquidated a retirement account to pay $325,000 toward restitution to victims in a separate Florida fraud case related to Abramoff's purchase of a casino cruise line.
Abramoff's attorneys, including Lowell's firm, received some of the money from their client's tax refund. But Lowell said the Justice Department was well aware of the pending windfall for Abramoff when he negotiated a plea deal in 2006, and attorneys said that the government even helped "on several occasions" to process the tax refund. "It could not have come as any surprise to DOJ that Mr. Abramoff would be receiving a tax refund DOJ officials repeatedly helped facilitate," Lowell said in his court filing.
The refund represents money and tax credits from losses before he was jailed, Lowell said. "This tax refund was a one-time rare occurrence and the money received was spent paying long-standing creditors, paying long overdue fees or to provide living expenses for his family," he said.
Abramoff's wife, Pam, earns $38,000 a year, barely enough to help support the couple's five children, Lowell said. "For a family their size, the Abramoffs are living just above the poverty line," Lowell said. "The family lives in a house it cannot afford to live in, but given the depressed price of the home and their debt on it, they cannot afford to sell it, either." He said the roof on the Abramoff house is leaking.
Some of the tax refund was used to repay loans owed for food, clothing and housing costs while Abramoff was in federal prison in Cumberland, Md. Among the checks written was $87,500 to repay loans from Abramoff's father, who lent the family from his retirement savings and is still owed another $75,000.
Others paid out of the tax refund were Abramoff's attorneys, including Lowell's firm McDermott, Will & Emery LLP, which received $75,000. Another firm, Zuckerman Spaeder LLP, received $25,000, the government said. But the payments were a fraction of outstanding legal bills of more than $3 million, mostly owed to Chadbourne & Park, where Lowell worked until two years ago.
The money paid to Mendelson & Mendelson, Abramoff's accountants, was $104,000, less than half of what was owed, Lowell said. The firm "did the work to help create his plea agreement and then obtain this tax refund," Lowell said.
After learning of the Justice Department's motion last month, Abramoff's wife held off sending $50,000 to the state of Maryland for back taxes, $22,000 to Montgomery County for property taxes and $5,000 for their daughter's private school tuition, Lowell said.
Abramoff pleaded guilty in 2006 to conspiring with Michael Scanlon, a onetime press aide to then-House Majority Leader Tom DeLay (R-Tex.), to defraud tribal clients. Abramoff told tribes to hire Scanlon's public relations firm at inflated prices and the two split the profits. Huvelle sentenced Abramoff last year to four years in prison for fraud and influence-peddling. He had already been serving a term of five years on the Florida conviction. Scanlon also has pleaded guilty but has not yet been sentenced.
A trial for another Abramoff associate, Kevin Ring, is set for this fall. Ring last week filed a motion asking that some evidence be suppressed and that certain Justice Department attorneys be removed from the case because one of the government witnesses has separately been chosen to investigate alleged prosecutorial misconduct in the corruption trial of former Sen. Ted Stevens (R-Ala.). Attorney Henry Schuelke III, listed as a government witness, was recently picked to investigate actions by some of the same Justice Department prosecutors working on the Abramoff matter.