Indicted lobbyist helped get work for firm founded by Ehrlich adviser, testimony says
By Andrew A. Green
Sun reporter
Originally published October 7, 2005
Indicted lobbyist Jack Abramoff "strongly recommended" that Tyco International give more than $2 million in contracts to a company founded by Gov. Robert L. Ehrlich Jr.'s current deputy chief of staff while he was on the state payroll, according to testimony to Congress.
The deputy, Edward B. Miller, was the sole owner of Grassroots Interactive, a company that produced "false or misleading" reports to cover up Abramoff's use of the firm to divert money for his own purposes, according to written testimony from Timothy E. Flanigan, a former general counsel to Tyco Inc. and a Bush nominee to be deputy attorney general.
The diversion was "a major fraud," Flanigan said in a written statement released yesterday by the U.S. Senate Judiciary Committee, which is considering his confirmation.
Miller founded Grassroots in May 2003, a month after he began work as a senior official in the state Department of Business and Economic Development. He was promoted to deputy chief of staff in the governor's office early last year.
Flanigan said Tyco paid Grassroots $2 million "in the spring of 2003" for a national lobbying campaign. Despite assurances from Greenberg Traurig, the law firm that employed Abramoff at the time, that the lobbyist had no ownership or other special interest in Grassroots, Abramoff was able to divert at least $1.5 million of the contracts to entities he controlled, Flanigan said.
"I was shocked and disappointed when I learned that these representations were inaccurate," Flanigan said.
Since then, Abramoff has been indicted on charges that he faked a $23 million wire transfer to defraud lenders in his effort to buy a casino boat company in Florida. He has close ties to Rep. Tom DeLay, who resigned as House Majority Leader last week after he was indicted on charges of campaign finance law violations in Texas.
Miller, through a spokesman, declined to comment yesterday. After earlier Flanigan testimony, an Ehrlich spokesman said Miller was "a valuable member of the team" and had been cooperating with federal investigators for more than a year.
Grassroots received a subpoena last year from a federal grand jury investigating Abramoff's work on behalf of Indian tribes and other matters.
Miller's connections to the governor date back at least 15 years, when he helped work on Ehrlich's 1990 re-election campaign to the state House of Delegates. Both are graduates of the Gilman School.
"I've always felt that his perspective was refreshing. He was energetic and he had a wonderful take on the political system," Miller said in a November 2003 article in the Baltimore Jewish Times.
Flanigan's testimony, a follow-up to his previous answers to senators' questions about the Grassroots deal, provides new details about Abramoff's connection to the firm and the work it was supposed to have done for Tyco.
According to state business incorporation documents and financial disclosure statements, Miller founded Grassroots with a $10,000 investment in May 2003, just weeks after he started work for the state. Around that time, Flanigan testified, he was introduced to Abramoff and retained him as a lobbyist.
Abramoff and his firm persuaded Tyco to hire Grassroots for a lobbying effort to protect tax breaks the company received as an offshore corporation based in Bermuda.
"The firm's recommendation of Grassroots Interactive carried great weight with us," Flanigan testified. "Greenberg Traurig vouched for the integrity and effectiveness of the Grassroots Interactive team based on their prior interactions with those specific individuals in projects like the one proposed for Tyco."
Tyco paid Grassroots to promote its position that not all offshore companies were seeking to avoid U.S. taxes, Flanigan said. Grassroots was also supposed to coordinate efforts with advocacy groups who shared Tyco's views and to arrange for radio ads supportive of the company's position.
"There was nothing at the time in Tyco's relationship with the Greenberg Traurig team working on our matter to suggest that anything was amiss, much less that a major fraud was about to be committed by the lead partner on the Tyco engagement," Flanigan said.
In September 2003, according to state documents, Miller sold Grassroots for $10,000 to Samuel Hook, an associate of Abramoff's from Greenberg Traurig who has also been questioned by federal investigators.
According to Flanigan, Tyco paid Grassroots another $75,000 for a lobbying campaign in California in the fall of 2003.
In November, Miller became chief of staff at the state department of Business and Economic Development. In January 2004, Ehrlich tapped him for his current job, in which he oversees several state agencies.
Three months later, Greenberg Traurig officials contacted Flanigan to inform him that the firm had conducted an internal investigation and found that Abramoff had used Grassroots to launder about $1.5 million in Tyco money, which he diverted to accounts he controlled, the nominee testified.
Greenberg Traurig agreed to repay Tyco that sum after learning they "were apparently deceived" by Abramoff, Flanigan said.
Prior to that, he said, he had no idea that the payments to Grassroots had been diverted, in part because he had requested and received written descriptions from Grassroots about the activities it conducted on Tyco's behalf.
"Some of those descriptions were evidently false or misleading as to the extent and value of services actually provided," Flanigan said.
