The Daytona Beach News-Journal: Former Abramoff partner a key witness in SunCruz fraud case

FORT LAUDERDALE -- A former partner of Jack Abramoff has agreed to cooperate in the fraud case against the fallen Washington lobbyist and former associate Adam Kidan stemming from their 2000 purchase of the SunCruz Casinos gambling fleet.
Documents filed in federal courts in Miami and Washington say Michael Scanlon, once a top aide to ex-House Majority Leader Tom DeLay of Texas, agreed to cooperate in the SunCruz prosecution as part of a plea deal Scanlon reached with federal prosecutors in a separate case.

"The defendant understands that this plea agreement is explicitly dependent upon his providing completely truthful testimony in any trial or other proceeding, whether called as a witness by the government, the defense or the court," the plea agreement said.

If Scanlon provides "substantial assistance," prosecutors will seek a lighter sentence, according to the documents that were signed by Miami U.S. Attorney R. Alexander Acosta and other federal prosecutors.

Scanlon pleaded guilty Monday in U.S. District Court in Washington to conspiring to bribe public officials, a charge growing out of the government investigation into attempts to defraud Indian tribes and corrupt a member of Congress.

"It would be accurate to say, based on the publicly filed plea papers, that Mr. Scanlon has agreed to cooperate in SunCruz mattes," said Scanlon's Washington attorney, Stephen Braga, in an e-mail message Wednesday. He declined comment on any specifics.

Abramoff and Kidan are scheduled to go to trial in Miami in January on wire fraud, mail fraud and conspiracy charges in connection with their $147.5 million purchase of SunCruz from businessman Konstantinos "Gus" Boulis, who was shot to death in February 2001 in Fort Lauderdale amid a bitter dispute over the fleet's operations.

Three men, one of them with ties to New York's Gambino crime family who was an associate of Kidan's at SunCruz, were arrested in September on murder and other state charges in the killing of Boulis. They are jailed without bail in Fort Lauderdale and likely will go to trial sometime next year.

In response to a public records request from The Associated Press and other news outlets, Broward County prosecutors on Wednesday released several hundred pages of witness statements and investigative documents related to the Boulis killing. There was no statement from Abramoff, but Kidan is quoted as telling detectives in March 2001 that Abramoff had told him that Boulis wanted Kidan killed.

"There was a real danger here. He had a violent past, a violent background," Kidan said, adding that he knew of no one who wanted Boulis murdered.

One of the three accused in the Boulis killing, 67-year-old Anthony "Big Tony" Moscatiello, said in an interview with detectives after his arrest in Howard Beach, N.Y., in September that he did not solicit others to murder Boulis as accused. Instead, Moscatiello said he wanted to tie Boulis up with lawsuits in hopes of winning a large judgment.

"The only conversation we ever had about Gus Boulis is, don't ever hurt this guy," Moscatiello said. "Don't get yourself in jeopardy with this guy because we'll lose everything and I meant it from the bottom of my heart."

Moscatiello is also quoted as telling New York detectives who arrested him that "a rat had to be involved" and asking police if they had nabbed Kidan and Anthony "Little Tony" Ferrari, 48, who is also charged in the Boulis murder.

"What other guys have you arrested?" Moscatiello is quoted as asking.

In the federal case, prosecutors say that Abramoff and Kidan defrauded lenders Foothill Capital Corp. and Citadel Equity Fund in the SunCruz purchase by faking a $23 million wire transfer to make it appear they had put a large stake of their own money into the deal. Both have pleaded not guilty and remain free on bail.

In his plea agreement, Scanlon admits taking part in an effort to help Abramoff and Kidan buy SunCruz by persuading U.S. Rep. Bob Ney, R-Ohio, to insert comments into the Congressional Record that were "calculated to pressure the then-owner to sell on terms favorable" to Abramoff and Kidan.

"On the Ohio River we have gaming interests that run clean operations and provide quality entertainment," Ney said in the March 2000 statement. "I don't want to see the actions of one bad apple in Florida, or anywhere else, to affect the business aspect of this industry or hurt any innocent casino patron in our country."

Scanlon, a former spokesman for DeLay on Capitol Hill, was working at the time with Abramoff as a public relations specialist at the Washington law firm of Preston Gates & Ellis LLP.

In October 2000, after the SunCruz sale was completed, Ney inserted more comments into the Congressional Record, again at Scanlon's request, according to court documents.

"Since my previous statement, I have come to learn that SunCruz Casino now finds itself under new ownership and, more importantly, that its new owner has a renowned reputation for honesty and integrity," Ney's second statement said. "The new owner, Mr. Adam Kidan, is most well known for his successful enterprise, Dial-A-Mattress, but he is also well known as a solid individual and a respect member of his community."

The Scanlon plea deal contains three pages of trips or other things of value that were allegedly provided to Ney and or his staff in return for various official acts. Ney, who has not been charged, has repeatedly denied any wrongdoing and said he was duped by Scanlon and Abramoff.