E-mails undermine Reed claim | ajc.com

By JIM GALLOWAY
The Atlanta Journal-Constitution
Published on: 03/04/06
Ralph Reed has said he didn't know it until last year, but emails suggest he was informed that eLot — a firm then in the online lottery business — was behind his effort to fend off a ban against internet gambling in 2000.

The e-mails passed between Reed and Jack Abramoff, the now disgraced Washington lobbyist. Abramoff was lobbying for eLot Inc. of Connecticut, parent company of eLottery Inc., against a bill in Congress that would have banned most online betting. ELottery opposed the bill because it wanted to help states sell tickets online.

Reed, a lifelong opponent of gambling, said last year that he did not know in 2000 he was actually working on behalf of eLottery.

But e-mails obtained by The Atlanta Journal-Constitution show Reed was offered the name of the company at the beginning of his involvement in the campaign, in May 2000. The e-mails emerged as dozens of federal investigators have increased their focus on events surrounding the defeat of the Internet gaming ban.

Abramoff included the company's name — referring to "the elot project" — in an e-mail he forwarded to Reed, as the two worked out details of Reed's contract for the campaign.

A spokesman for Reed, a Republican candidate for lieutenant governor, said the e-mail does not contradict Reed's earlier statements that he did not know eLot, or eLottery, was financing the gambling fight. Campaign manager Jared Thomas declined to discuss the apparent inconsistency of Reed's earlier statements and the date of the "elot" e-mail.

Another e-mail exchange written only months after the gambling ban was defeated suggests that, much earlier than Reed implied last year, he knew of Abramoff's ties to elottery.

In the Jan. 30, 2001, e-mail, Reed teased Abramoff when the lobbyist asked about the White House's choice for a new "technology czar."

"Tell your elottery friends that the next czar will be an anti-gambling [Pentecostal] Christian whose main interest in life is banning smut from the Internet," Reed wrote.

Thomas acknowledged for the first time that Reed learned several years ago that Abramoff had a business relationship with eLottery, but said it wasn't until the gaming ban was defeated. And he said Reed didn't know the company funded the gaming ban's defeat until last year.

Reed's work on behalf of eLottery came at the same time he was doing other work for Abramoff. That work had Reed conducting anti-gambling campaigns across the South on behalf of two Indian tribes that feared the expansion of gambling would generate competition and harm their interests.

Although Reed's opponents in the lieutenant governor's race have made an issue of his work on behalf of gambling interests, Reed has not been accused of any criminal wrongdoing. Abramoff pleaded guilty in January to bilking his Indian clients of $25 million, and to conspiring to bribe public officials.

Reed says Abramoff, a lifelong friend, assured him that he wouldn't be paid with money derived from gambling. And Reed has expressed remorse for his association with Abramoff.

"If I had known then what I know now, I would have turned that work down," Reed told a Republican student group at Emory University last weekend.

Where it started

The eLottery story began in 1997, when a bill banning most Internet gambling was filed by U.S. Rep. Bob Goodlatte (R-Va.) — with the backing of Reed, then head of the national Christian Coalition. Reed left the coalition shortly afterward to start Duluth-based Century Strategies, a political consulting firm.

The Internet Gambling Prohibition Act didn't gain traction until three years later, when a deal was struck among sponsors of the bill, representatives of the gambling industry, and some of the nation's most prominent religious conservatives.

On May 17, 2000, James Dobson, president of Focus on the Family; Charles Donovan, then the acting head of the Family Research Council; Jerry Falwell, founder of the Moral Majority; and Pat Robertson, founder of the Christian Coalition, put their names to a compromise that gave the bill serious heft.

In a letter to House Speaker Dennis Hastert (R-Ill.), the religious leaders said they were willing to accept "minor" exceptions to an Internet gaming ban, for such things as dog racing and horse racing.

But essential to the bill, they said, was a ban on the sale of state lottery tickets over the Internet — which put the biggest names in Christian conservatism in conflict with eLot.

That's when Reed entered the picture. Abramoff's law-lobbying firm at the time, Preston Gates, hired Reed's firm for $20,000 a month to rally grass-roots voters against the ban in targeted congressional districts.

In an interview with the AJC in October, Reed said he found out that he had worked for eLottery five years after the fact — as a result of federal probes into Abramoff's activities. "I believe we learned as the facts emerged during the ongoing inquiry," he said.

But the e-mails obtained by the AJC indicate he was provided the company's name in 2000.

'Elot' mentioned by name

Within five days of the evangelicals' letter to Hastert, Abramoff had drawn up a contract for the services of Reed and his firm. Abramoff e-mailed the draft to his boss, Jonathan Blank, managing partner of Preston Gates.

It was preceded by a personal note: "Jonathan, here is a draft for the retainer letter with Reed on the elot project. Can you review and approve, or give me your edits?"

Blank made his revisions and sent the entire message back to Abramoff, including the reference to "the elot project."

On May 23, 2000, Abramoff forwarded the contract to Reed, with the "elot" reference still intact, and the notation: "Ralph, are these changes okay?"

Reed responded, "Yes."

The letter of retainer itself did not mention eLot, or eLottery. Nor did it include restrictions as to what kind of funds — gambling-related or not — Reed was to be paid with.

The contract had three basic points: Reed would be paid a stipend of $20,000 a month plus expenses; his services would be "at the direction of Jack Abramoff," and none of his activities would "require registration as a lobbyist in any state or with the federal government."

The latter clause allowed Reed to keep his work against the gambling ban quiet until last year.

Facts on record

At the time of the lobbying effort, there was a public record of Abramoff's association with eLottery.

Several days after Preston Gates retained Reed, Abramoff's firm registered as eLottery's representative on Capitol Hill, citing the Internet gaming ban as the company's chief interest. The information was available to anyone who inquired with the secretary of the U.S. Senate. Asked whether Reed ever checked the register, his spokesman declined to comment.

Through direct mail and other tools, Reed's task was to persuade religious conservatives in the districts of wavering congressmen that that the exceptions agreed to by Robertson and the others had turned the ban on Internet betting into an endorsement of gaming.

ELottery paid Abramoff's firm $1.15 million to defeat the Internet gaming ban. Expense money from eLottery was routed to Reed's firm through two organizations. Documents and copies of e-mails from Abramoff, obtained by The Washington Post last year, documented the flow of cash.

First the money was sent by eLottery to Americans for Tax Reform, a Washington anti-tax group headed by Grover Norquist, who knew both Reed and Abramoff from their days as college Republicans.

Norquist then wrote a check for $150,000 to a group called Faith and Family Alliance of Virginia Beach. Faith and Family Alliance wrote a check for the same amount to Reed's Century Strategies. That wasn't the only connection between the groups: One of Faith and Family's founders, Tim Phillips, was a vice president for Century Strategies.

This month, the Senate Finance Committee received unpublished documents generated by the Senate Indian Affairs Committee, detailing transfers of cash by Abramoff to nonprofit organizations. Sen. Charles Grassley (R-Iowa), the committee's chairman, said it would review the evidence as part of its "ongoing, broad-scale look at whether tax-exempt groups are misused for financial or political gain."

The Internet gaming ban was defeated on July 17, 2000.

Goodlatte, the sponsor of the ban on Internet gaming, has placed blame for the 2000 defeat on "the efforts of Jack Abramoff and those who acted on his behalf."

Goodlatte reintroduced the measure last month, and predicts victory this time.