Witness May Have Pivotal Role in Probe of Alleged Corruption

By Susan Schmidt and James V. Grimaldi
Washington Post Staff Writers
Sunday, November 20, 2005; A08



Before he hit his mid-thirties, Michael Scanlon played enough roles to fill a lifetime: lifeguard, press aide to a powerful congressman, multimillionaire public relations entrepreneur.

Now the sandy-haired, buttoned-down Republican -- author of e-mails detailing wildly brash schemes to make money in politics -- is likely to take a turn as a star witness for the prosecution in the Justice Department's investigation of lawmakers, lobbyists, Capitol Hill staffers and executive branch officials.

Scanlon's help could be important to the probe, which focuses on the activities of former influential lobbyist Jack Abramoff. Scanlon was Abramoff's closest business partner at the height of the lobbyist's power, joining in an enterprise that collected $82 million in fees from Indian tribes between 2000 and 2004.

On Friday, Scanlon was charged with conspiracy, accused of plotting with Abramoff to defraud the tribes and bribe government officials, including a member of Congress. He is to appear in court tomorrow to enter a guilty plea worked out with prosecutors who have spent nearly two years sifting through the deals that made Scanlon a rich man almost overnight.

His cooperation also increases pressure on Abramoff to make his own deal with the prosecution. Abramoff has told his legal team that despite the millions of dollars he brought in, he is all but out of money, lawyers in the case said. Abramoff and another business partner are facing trial in Florida on separate fraud charges.

Scanlon has more to show from his alliance with Abramoff. He was a reporter-friendly spokesman for then-House Majority Whip Tom DeLay (R-Tex.) in 2000 when he quit Capitol Hill to join forces with Abramoff. Soon he was raking in a seven-figure salary, astounding former colleagues as he shed his student loans and picked up a mansion on the Delaware shore, an estate in St. Barts and an in-town apartment at the Ritz-Carlton in the District.

E-mail released by Senate investigators shows that Scanlon and Abramoff referred to their secret partnership as "gimme five" -- code for their arrangement to split tens of millions of dollars in profits Scanlon's firm was taking in from the tribes. Abramoff, who cultivated a reputation as the best-connected Republican lobbyist in Washington, typically urged his tribal clients to hire Scanlon, never telling them he would be getting a chunk of the fees they paid Scanlon.

As a witness in the wide-ranging, influence-peddling probe of Abramoff and government officials, Scanlon may have knowledge of many areas of interest to investigators. In addition to Abramoff's dealings with the tribes, Scanlon was in a position to know whether lawmakers and their aides provided legislative favors for Abramoff's lobbying clients, including the tribes. E-mail shows Abramoff often talked of gaining sway over key officials at the Interior Department, which plays a regulatory role in tribal land issues and Indian gambling operations.

Scanlon's cooperation is crucial to helping prosecutors prove that any favor to a lawmaker was in explicit exchange for an official act, said Leonard Garment, an attorney for President Nixon during Watergate.

"It is important because you have direct evidence from someone who was involved who can testify with respect to the payment of money or some other thing of value to the legislator," Garment said.

"Scanlon presumably is in a position to say that it wasn't just ordinary assistance of a neutral or innocent character, that it was a quid pro quo, that if you vote a certain way or introduce a certain bill, I will pay you money or give you a brace of tickets to a Washington Redskins game. That is the way a case is proved."

Scanlon, a relatively junior member of DeLay's staff -- he refers to his former boss as "Mr. DeLay" -- may not have been privy to all of DeLay's dealings with Abramoff, a lobbyist the Texas lawmaker once called "one of my closest and dearest friends." But Scanlon could be a guide to the activities of top House GOP staffers, some of whom are now lobbyists and political consultants who work closely with DeLay, now the former majority leader.

The criminal charge against Scanlon shows that the lawmaker of most immediate interest to prosecutors is House Administration Committee Chairman Robert W. Ney (R-Ohio). Prosecutors charged that Scanlon and Abramoff conspired to bribe Ney -- referred to in the charging document as "Representative #1" -- by providing him and staff members with a golf trip to Scotland, sports tickets, meals, and campaign contributions.

From Ney, prosecutors allege, Scanlon and Abramoff "sought and received" a series of official acts, including meeting with clients, sponsoring legislation and approving a license to install wireless communications in the U.S. House for an Abramoff client.

Ney also placed comments in the Congressional Record favorable to Abramoff's 2000 purchase of the Florida casino boat company, SunCruz Casinos. Scanlon handled SunCruz's dealings with Ney and his chief of staff, Neil Volz, who later also went to work for Abramoff.

Ney has denied wrongdoing, and his lawyer said that any official acts Ney performed had no connection to favors from Abramoff's team.

Solomon L. Wisenberg, a former federal prosecutor, said a guilty plea and cooperation agreement often are announced to pressure other potential witnesses to cooperate. He said it also is a signal that investigators think Scanlon has told them what they need to make their bribery cases.

"The government would not enter into a plea agreement with somebody and offer to give them credit for cooperation unless they were getting something in return," Wisenberg said.

Scanlon's cooperation will be a key element incriminal trials that rely heavily on documents, such as e-mails and memos. "You have to have someone who can tell the story," Wisenberg said.

Scanlon was also a link between Abramoff's SunCruz dealings and DeLay's office.

On Inauguration Day 2001, Scanlon and Abramoff's SunCruz business partner Adam Kidan were guests at a reception in DeLay's Capitol Hill office celebrating the swearing in of George W. Bush, according to two people who were at the reception who spoke on the condition of anonymity.

A week later, Abramoff and his partners leased a corporate jet to ferry congressional staffers to the Super Bowl in Tampa and a night of gambling aboard a SunCruz ship. Among those aboard were DeLay aide Tim Berry, who left this year as DeLay's chief of staff, and DeLay's former deputy chief of staff, Tony Rudy, by then a newly minted lobbyist working for Abramoff. Two staff aides to Sen. Conrad Burns (R-Mont.) also went on the trip.

Scanlon could help investigators learn more about the purpose of gifts and nearly $3 million in campaign contributions Abramoff and his tribal clients lavished on members of Congress and their staffers, who night after night filled the lobbyist's four sports skyboxes. Scanlon may also be able to elaborate on e-mails that have been made public by the Senate Indian Affairs Committee, in which Abramoff discussed job offers to public officials and his efforts to get political appointees at the Interior Department to intercede on issues affecting clients.

Scanlon may also be knowledgeable about Abramoff's direction of tribal funds to several charitable foundations and advocacy groups and tax-exempt organizations, including one run by anti-tax crusader Grover Norquist. E-mail shows that Scanlon was intimately familiar with some of the financial dealings of anti-gambling activist Ralph Reed, former executive director of the Christian Coalition.

Reed, a Republican candidate for lieutenant governor in Georgia, has acknowledged receiving $4 million in dealings with Abramoff to whip up anti-casino campaigns in the South, but has maintained he did not know the funds came from the gaming proceeds of tribes that wanted to scuttle competition.

E-mails and other documents obtained by The Washington Post, and some released by the Indian Affairs Committee, show that Reed was routinely paid with tribal funds that were sent to Scanlon's firm, then routed to an Abramoff company called KayGold, and then sent to one of Reed's Atlanta-based political consulting firms.

Scanlon's e-mails and memos often reveal an aggressive, take-no-prisoners style. In a 2001 memo to a representative of the Louisiana Coushatta tribe, Scanlon said his political program was "designed to make the Coushatta Tribe a politician's best friend -- or worst political nightmare."

Abramoff, polished and soft-spoken in public, often showed contempt for his clients in private communications with his young partner. It was in an e-mail to Scanlon that Abramoff infamously referred to members of one tribe as "monkeys." In another exchange about a new client, the Tigua tribe of Texas, Abramoff said, "Fire up the jet baby, we're going to El Paso!!" Replied Scanlon: "I want all their MONEY!!!" Said Abramoff: "Yawzah!"

Abramoff turned to Scanlon when he wanted to disguise the origins of money from foreign entities, including the Malaysian government, e-mails and records show -- another area of likely interest for prosecutors and the Internal Revenue Service. Scanlon set up the American International Center, a Rehoboth Beach foundation that claimed on its Web site to be "a premiere international think tank."

Scanlon, who friends say never shook off the lure of summer days in the lifeguard stand even when he was making millions, staffed it with two longtime beach buddies -- one a former lifeguard and another a yoga instructor.

� 2005 The Washington Post Company

DeLay Ex-Aide to Plead Guilty in Lobby Case - New York Times

By ANNE E. KORNBLUT
WASHINGTON, Nov. 18 - Michael Scanlon, a former top official for Representative Tom DeLay and onetime partner of the lobbyist Jack Abramoff, has agreed to plead guilty in a deal with federal prosecutors, according to his lawyer. The deal reveals a broadening corruption investigation involving top members of Congress.

Criminal papers filed in federal court outlined a conspiracy that not only named Mr. Scanlon but also mentioned a congressman, identified only as Representative No. 1, as part of the exchange of favors from clients funneled to lobbyists and officials.

This was the first time that a member of Congress, identified by lawyers in the case as Representative Bob Ney, Republican of Ohio, has been implicated in criminal papers as part of the inquiry, which has sprawled from Indian casinos to the lucrative lobbying firms of Mr. Abramoff and Mr. Scanlon and then reached to the Republican leadership.

Federal prosecutors announced a single conspiracy charge against Mr. Scanlon on Friday, in advance of a Monday court hearing at which he is expected to plead guilty in exchange for his cooperation. Investigators accused Mr. Scanlon of conspiring to defraud Indian tribes of millions of dollars as part of a lobbying and corruption scheme.

Mr. Scanlon, 35, is a former spokesman for Mr. DeLay. News of his cooperation with law enforcement officials sent a jolt through the Republican majority in Congress.

Mr. DeLay has been indicted in Texas on unrelated charges involving fund-raising practices for state Republicans. His ties to Mr. Abramoff, along with costly overseas trips, have been under investigation for more than a year. The indictment forced Mr. DeLay to step aside as House majority leader this fall.

Court papers filed Friday alleged that Mr. Scanlon and Mr. Abramoff, who has not been charged in the Indian lobbying case, had sought 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." The wording suggested that more than one lawmaker was under investigation.

But the document singled out Representative No. 1 as the main recipient of gifts, tickets and meals - including a now infamous golfing trip to Scotland - in exchange for helping Mr. Scanlon and Mr. Abramoff with their clients.

Mr. Ney, chairman of the House Administration Committee, has offered his cooperation to prosecutors, said Brian Walsh, his spokesman, who added that Mr. Ney had contended that he was tricked by Mr. Scanlon and Mr. Abramoff into assisting their clients.

Federal prosecutors and Congressional officials have been conducting extensive investigations into the lobbying practices of Mr. Abramoff and Mr. Scanlon, who earned about $82 million representing a handful of wealthy Indian tribes on gambling issues over four years. Investigators believe the two men funneled millions through charities and front organizations to skim profits, avoid taxes and mask incomplete work.

Beyond accusations of fraud, investigators have delved into the politically delicate territory of the relationship between lobbyists and lawmakers. Until last year, Mr. Abramoff ruled an industry governed by networking because of his close ties to Mr. DeLay, trading on his access to the rising Republican leader to build a lucrative lobbying practice. He and Mr. Scanlon are at the center of a Senate inquiry that held its final hearing this week.

In the eight-page criminal filing, prosecutors accused Mr. Scanlon of taking part in a "corruption scheme" between January 2000 and April 2004, working alongside a "Lobbyist A" who was identified by lawyers involved in the case as Mr. Abramoff.

The pair "provided a stream of things of value" to Representative No. 1 and members of his staff, the charge read. In return, both Mr. Scanlon and Mr. Abramoff received agreements from Mr. Ney "to perform a series of official acts," including "agreements to support and pass legislation, agreements to place statements into the Congressional Record," and meetings with their clients.

The court filing also states that the congressman helped one of the businessmen's clients apply for a license to install wireless telephone infrastructure in the House of Representatives. Mr. Ney's committee manages such issues.

Mr. Ney has been the focus of scrutiny for months after revelations that he took a 2002 golfing trip to Scotland that was sponsored by Mr. Abramoff. Mr. Ney has started a legal defense fund. His legal troubles have added to the growing ethics accusations against Congressional Republicans.

Other lawmakers including Mr. DeLay received campaign donations from Mr. Abramoff's and Mr. Scanlon's Indian clients. But Mr. Ney performed what prosecutors portrayed as blatant favors for Mr. Abramoff and Mr. Scanlon, inserting remarks helpful to their business into the Congressional Record and sponsoring bills at their behest.

Mark H. Tuohey, the lawyer representing Mr. Ney, said that the congressman had never offered any legislative help to the lobbyists in exchange for travel, like the 2002 golfing trip to Scotland, or gifts.

Mr. Ney has said that Mr. Abramoff deceived him over how the Scotland trip was paid for in his travel disclosure forms, saying it was paid for by a conservative educational group, not by Mr. Abramoff or his lobbying firm - and about the details of Mr. Abramoff's purchase of a casino boat fleet in Florida in 2001.

"I think the people who are named in this among others, Scanlon and Abramoff, didn't tell him the truth," Mr. Tuohey said of Mr. Ney.

Mr. Abramoff was indicted in Florida this year on fraud and conspiracy charges relating to a separate effort to buy Sun Cruz, a fleet of casino boats, in 2000. Although Mr. Scanlon did public affairs work for Sun Cruz, he was not charged in that case. It now appears that Mr. Scanlon has been cooperating with the authorities to reach a plea deal in the Indian gambling inquiry. Mr. Abramoff is not cooperating with law enforcement officials, people involved with the case said.

The lawyer for Mr. Abramoff, Abbe Lowell, declined to comment. The lawyer for Mr. Scanlon, Stephen Braga, confirmed that his client would enter a plea on Monday. "Mr. Scanlon and the Department of Justice will present a proposed plea agreement to the court to resolve the charge," Mr. Braga said.

How much Mr. Scanlon knows and has told prosecutors about the business practices of Mr. Abramoff and members of Congress remains unclear. "This puts a tremendous amount of pressure on Abramoff because Scanlon was reportedly his closest associate," said Lawrence Barcella, a former federal prosecutor who is now a prominent defense lawyer in Washington. As for politicians like Mr. DeLay and Mr. Ney, Mr. Barcella said, "I wouldn't be sitting as comfortably today as I was yesterday if I were them."

In addition to the corruption scheme, prosecutors say Mr. Scanlon and Mr. Abramoff carried out a secret kickback deal in which Mr. Abramoff encouraged his Indian clients to hire Mr. Scanlon for public affairs work. Mr. Scanlon then funneled half his profits to Mr. Abramoff. Their aim 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," the charge said.

Tribes in Mississippi, Louisiana, Texas and Michigan fell prey to the conspiracy, the Scanlon papers said.

Philip Shenon, Eric Lichtblau and

David D. Kirkpatrick contributed reporting for this article.