Former powerhouse lobbyist Jack Abramoff and public relations entrepreneur Michael Scanlon are the focus of widening investigations this summer, one by Congress and the other a criminal probe involving five federal agencies.
A criminal task force of investigators from the FBI, Internal Revenue Service, the Justice Department's public integrity section, the National Indian Gaming Commission and the Interior Department inspector general's office is looking into payments Abramoff and Scanlon received from an array of clients, including 11 wealthy Indian tribes that operate gambling casinos, according to officials familiar with the investigation.
In Congress, the Senate Indian Affairs Committee has set a deadline of this week for responses to subpoenas it has issued. Congressional staff members from the Indian Affairs Committee and the Commerce Committee have spent five months gathering documents and interviewing tribal members and others in preparation for a public hearing in September, officials said.
Government sources and people who have been interviewed said the twin investigations are examining tens of millions of dollars in fees that Abramoff and Scanlon received from clients, including, in Abramoff's case, a number of foreign entities. Investigators also are looking into ties the two have to members of Congress, into campaign donations and into whether criminal or tax codes were violated in the work they contracted to do or by the fees they collected, the sources said.
The Washington Post reported earlier this year that Abramoff, who is well-connected to conservative Republicans in the White House and Congress, and Scanlon, a former spokesman for House Majority Leader Tom DeLay (R-Tex.), received more than $45 million in lobbying and public affairs work from four newly wealthy tribes in the past three years. Those fees rival what some of the biggest corporate interests in the country pay to influence public policy.
The fees and $2.9 million in federal political contributions Abramoff advised the tribes to make, two-thirds of it to Republicans, have led to battles in some tribes. Some tribe members question why their leaders approved such payments.
Abramoff also directed tribes to donate to several obscure foundations that appear to have no connection to Indian concerns, including a think tank in Rehoboth Beach, Del., set up by Scanlon.
The revelations led to Abramoff's ouster in March from Greenberg Traurig, the law firm where he led one of Washington's most successful lobbying groups. Greenberg Traurig said it acted after Abramoff "disclosed to the firm for the first time personal transactions and related conduct which are unacceptable to the firm."
Lawyers for Abramoff and Scanlon declined to comment this week on the investigations.
Congressional investigators learned in March that Scanlon or organizations he was associated with paid Abramoff $10 million, an arrangement that was not known to the tribes or to Greenberg Traurig. Abramoff, who must publicly disclose lobbying fees, urged the tribes to hire one of Scanlon's public relations firms, often for much higher amounts than Abramoff's firm was receiving. Those public relations fees did not have to be disclosed under federal lobbying rules.
In an interview earlier this year, Abramoff denied having any financial stake in Scanlon's business.
Federal law permitting Indian gambling requires that the proceeds be spent to benefit the tribe, but regulators in Washington do not normally become involved in monitoring the money that closely. "Nobody is tasked to see where all the dollars get spent," said Philip N. Hogen, chairman of the National Indian Gaming Commission.
Hogen declined to comment on the investigations of Abramoff and Scanlon. But he said federal agencies have formed a working group to more closely coordinate criminal investigations that have arisen out of Indian gambling over the past six months.
"This is really high on the priority list of tribal concerns," he said. "This is a cash cow in many circumstances, and tribes are concerned about protection of tribal assets."
Indian gambling, officials said, has grown from a $100 million-a-year industry in 1988 to a $16 billion industry today.
Ernst Weyand, an official in the FBI's Indian Country investigative unit, said his office is working closely with organized-crime investigators. Officials in various agencies said the new working group makes it easier for federal investigators to take on larger and more complex investigations.
One person who has been interviewed by the FBI in connection with the investigation of Abramoff and Scanlon said the areas of interest ranged from foreign lobbying clients to billing practices involving the tribes and whether there were efforts to illegally fix tribal elections. He also said the FBI is looking at the relationship Abramoff and Scanlon and their firms had with some members of Congress.