Former public relations executive Michael Scanlon was charged yesterday with conspiring with former lobbyist Jack Abramoff to bribe government officials, including a congressman, and bilk millions of dollars from Indian tribes.
The government officials were not named in a court document filed by federal prosecutors in the District. But the document's description of legislative favors allegedly provided by a person identified as "Representative #1" matches the actions of Rep. Robert W. Ney (R-Ohio), chairman of the House Administration Committee.
Ney, who this month received a grand jury subpoena for testimony and documents, has denied any wrongdoing. His attorney, Mark H. Tuohey, confirmed yesterday that Ney is the congressman referred to in the charging document but said prosecutors have not alleged that Ney had knowledge of any bribery scheme.
"He was wined and dined the way lots of political people are, and he did some official acts, but there's no connection between the two," Tuohey said. "I've had no indication he's a target of anything."
Scanlon, 35, is charged with one count of conspiracy. He has agreed to cooperate with prosecutors, said sources familiar with the investigation who spoke on the condition of anonymity. Such cooperation from a pivotal figure in the Abramoff case is a major advance in the 18-month federal investigation into alleged bribery and corruption involving the lobbyist, members of Congress and executive branch agencies.
In the court documents, prosecutors said Scanlon, once a press aide to former House majority leader Tom DeLay (R-Tex.), worked with Abramoff in a scheme in which the lobbyist would direct tribes to hire Scanlon's public relations firm without telling them Scanlon had agreed to kick back half of the profits to Abramoff.
Prosecutors said the conspiracy also involved a scheme to "corruptly offer and provide things of value, including money, meals, trips and entertainment to federal public officials in return for agreements to perform official acts."
Scanlon, who could receive a maximum of five years on the conspiracy charge, is scheduled to appear at a hearing in U.S. District Court here on Monday.
"Mr. Scanlon and the Department of Justice will present a proposed plea agreement to the court to resolve the charge in the information," said Scanlon's attorney, Stephen L. Braga.
Abramoff's attorney, Abbe D. Lowell, declined to comment on the charges against Scanlon.
Scanlon and Abramoff received $82 million in lobbying and public relations fees from half a dozen Indian tribes they represented from 2000 to 2004. Reports of those enormous fees -- coupled with millions in political contributions made by the tribes at Abramoff's direction -- prompted a Senate investigation and the Justice Department probe that resulted in the case filed yesterday.
Investigations related to Abramoff's activities in Washington and Florida have resulted in six previous indictments. Abramoff and a business partner were indicted in August in connection with their allegedly fraudulent purchase in 2000 of a Florida casino ship company. In September, three other men were indicted in the 2001 gangland-style slaying of the former owner of the cruise ships. And in October, David H. Safavian, the White House's top procurement official and a former Abramoff associate, was indicted for allegedly lying to federal investigators.
In the charging document filed yesterday, prosecutors said Scanlon and Abramoff "provided a stream of things of value to Representative #1 and members of his staff," including a "lavish" Scotland golf trip in 2002, tickets to sporting events and meals at Abramoff's Pennsylvania Avenue restaurant. The two also allegedly provided campaign contributions to Ney's political action committee and to other political committees on Ney's behalf.
In return, federal prosecutors allege, Ney agreed to "support and pass legislation," meet with Scanlon and Abramoff clients, and place statements in the Congressional Record. Ney also agreed to help an Abramoff client get the contract to install a wireless telephone system in the House office buildings.
Public records show that Ney placed comments in the Congressional Record favorable to Abramoff's 2000 purchase of the casino boat company, SunCruz Casinos. Two sources involved in the case, who spoke on the condition of anonymity, said prosecutors have e-mails in which Abramoff and Scanlon discussed making contributions to the National Republican Congressional Committee that Ney could take credit for as an inducement to getting him to place comments in the Congressional Record.
In March 2002, Ney agreed to back legislative language that would benefit the Tigua tribe of El Paso, an Abramoff and Scanlon client. The lobbyists wanted Ney's help to reopen the Tigua casino, which the state of Texas had shut down.
"Just met with Ney!!! We're f'ing gold!!!! He's going to do Tigua," Abramoff told Scanlon in a March 20, 2002, e-mail made public by Senate investigators.
Six days later, Abramoff directed tribal officials to make three contributions totaling $32,000 to Ney's campaign and political action committees. A Ney spokesman recently said that money has since been donated to Ohio charities and Ney said in a statement a year ago that he had been misled.
"I am absolutely outraged by the dishonest and duplicitous words and actions of Jack Abramoff," Ney said in November 2004. "I too was misled and I regret that I put faith in the representations that he made to me."
Ney also approved granting a 2002 license to install cellular telephone antennas in House office buildings to an Israeli telecommunications company. The company had donated to an Abramoff-controlled charity and later became Abramoff's lobbying client.
When Ney informed the House on Nov. 4 that he had been subpoenaed by the Abramoff grand jury, his spokesman said Ney had not been informed that he was a target of the investigation. His spokesman, Brian Walsh, reiterated that yesterday.
"Congressman Ney will fully cooperate in the investigation of the Abramoff matter," Walsh said in a statement. "He has not been told that he is the target of any investigation and there would be no grounds to do so. Mr. Scanlon's being charged with lying to and cheating his clients does not change that. In the meantime, the Congressman will continue to focus on working hard and doing the job he was sent to Congress to do."
Scanlon worked until 2000 for DeLay, who stepped down from his leadership post in September after being charged with violating campaign finance laws in Texas. When Scanlon left Capitol Hill to join forces with Abramoff, he was still paying off student loans. Soon he was buying millions of dollars in real estate and traveling by helicopter and corporate jet.
The charge against Scanlon alleges that Abramoff advised tribes in Mississippi, Louisiana and Michigan to hire Scanlon's company, Capital Campaign Strategies LLC, for grass-roots public relations work while hiding the fact that Abramoff would receive half the profits. The purpose of the scheme, the prosecutors allege, was to "enrich themselves by obtaining substantial funds from their clients through fraud and concealment and through obtaining benefits for their clients through corrupt means."
Prosecutors detailed the alleged fraud perpetrated on four tribes, contending that Scanlon billed the four tribes $53 million and then kicked back $19 million to Abramoff.
Abramoff's lobbying fees had to be publicly reported under federal rules, but Scanlon's public relations fees were not subject to public scrutiny.
At the time Abramoff was one of Washington's most successful Republican lobbyists, first at the firm of Preston Gates and then jumping in early 2001 to Greenberg Traurig. He was ousted from Greenberg Traurig in March 2004, after reports in The Washington Post about his fees and the funds he received from Scanlon.
Greenberg Traurig has since reached settlements with several tribes, agreeing to return millions in fees collected by its former lobbying star.
Jack Abramoff, right, consults with a lawyer last year at a Senate Indian Affairs Committee hearing on the $82 million a half-dozen tribes paid Abramoff and associate Michael Scanlon in lobbying and public relations fees.
Rep. Robert W. Ney (R-Ohio) is referred to as "Representative #1" in the government charging papers.