Lobbygate's Gateses (Seattle Weekly)

The coincident D.C. connections of the lawyer father and the software-titan son.
By Rick Anderson

It's hard to miss the irony. Fallout from Lobbygate, the political scandal generated by former lobbyists for the Seattle law firm bearing the name of co-founder William H. Gates II, is affecting the political fortunes of the Redmond software company co-founded by William H. Gates III.

The illegal influence peddling of Jack Abramoff and Michael Scanlon, former lobbyists for Preston Gates Ellis, has led to the announced closure of a scandal-scarred D.C. lobbying arm of a firm employed by Microsoft. The Alexander Strategy Group, which undertook $315,000 worth of lobbying for Microsoft the past few years, says it will get out of the lobbying business because of direct ties to the disgraced Abramoff and now-deposed-and-indicted House Majority Leader Tom DeLay, R-Texas. Two Alexander Strategy Group Republican lobbyists are prominent figures in the scandal and make up part of an inner circle of ethically challenged GOP lobbyists and consultants who have worked for both Microsoft and Preston Gates Ellis.

At Alexander Strategy Group, the firm that's closing its lobbying shop, Microsoft lobbyists Ed Buckham and Tony Rudy are former DeLay aides who worked independently with Abramoff while he was at Preston Gates Ellis.Lobbygate's cause and effect is the latest example of how small the political world is in power-happy D.C., where the software giant regularly teams up with its Seattle-based law and lobbying partner to seek favorable corporate legislation. Microsoft has paid Preston Gates Ellis $1.98 million in lobbying fees since 1998, according to their latest filings. That includes $60,000 the first half of last year for work by Preston Gates Ellis lobbyist Slade Gorton, the former U.S. senator from Washington state. He lobbied his old friends in the Senate on Internet regulation sought by Microsoft.

Neither Microsoft nor Preston Gates Ellis has been accused of any wrongdoing in connection with Lobbygate. Their spokespersons would say little about the business or familial relationships of the two Gates entities. "William H. Gates Sr. was never a registered lobbyist and was not involved in the policy practice at Preston Gates & Ellis," according to a statement from the firm. The junior Gates is directly involved in Microsoft operations, while his father, a 1990 founding partner of the law firm, has been semiretired in recent years. The elder Gates also is co-chair of the Bill & Melinda Gates Foundation and is a University of Washington regent.

The law firm and software company shared an especially parallel universe in election year 2000. That's when former Christian Coalition leader Ralph Reed was paid by both, with questionable results. Reed was helping coordinate the George W. Bush presidential campaign when Microsoft put his Atlanta consulting firm, Century Strategies, on a $20,000-a-month retainer to push for settlement of the landmark antitrust lawsuit against Microsoft. Reed's effort included urging Christian supporters to write his candidate, Bush, in support of his client, Microsoft. Reed later apologized for any "misperception" that it might have caused.

Reed was also on a Microsoft retainer as a "consultant" during the 2004 Bush election but was dropped last summer after his name began to surface in connection with Preston Gates Ellis and Lobbygate. He had been brought aboard Preston Gates Ellis as a subcontractor in 1999 by his friend and political ally, Abramoff. The two, in concert with another mutual friend, Grover Norquist, the GOP antitax guru who is also an ex– Microsoft lobbyist, launched a plan to funnel millions of dollars in Indian casino gambling money to Reed's firm to pay for an antigambling effort being run by Reed in the South. The initial money to launch the antigambling drive, $121,000, came from Preston Gates Ellis and was authorized by the Seattle headquarters, according to Senate documents. Norquist, who is now a consultant for Microsoft, has confirmed he helped launder subsequent funds to Reed that were passed to him by Abramoff from Preston Gates Ellis clients. Preston Gates Ellis says it wasn't fully aware of the money transfers.

Lobbygate is only the latest example of the Gates-Gates relationship. Abramoff, who worked for Preston Gates Ellis from 1994 through 2000, and whose lobbying clients back then included Microsoft, has confessed to federal charges of conspiracy, mail fraud, and tax evasion that date back in part to his Preston Gates Ellis days. He and Scanlon, a onetime DeLay aide who worked at Preston Gates Ellis in 2000 and recently pleaded guilty to corrupting public officials, have both agreed to name members of Congress and staffers who might have received favors or bribes in return for legislation. Abramoff's crimes from 1997 through 2004 include the period he worked at Preston Gates Ellis and for a second firm, Greenberg Traurig of Miami.

At Alexander Strategy Group, the firm that's closing its lobbying shop, Microsoft lobbyists Ed Buckham and Tony Rudy are former DeLay aides who worked independently with Abramoff while he was at Preston Gates Ellis. Buckham has been identified in congressional records as attempting to help Abramoff rig an election for Preston Gates Ellis clients in the Commonwealth of the Northern Marianas Islands. On Wednesday, Jan. 11, five House Democrats asked U.S. Attorney General Alberto Gonzales to look further into that and other incidents involving Abramoff's work for the Marianas. Rudy, though not named, is said to be "Staffer A," singled out in Abramoff's Jan. 3 felony plea agreement as the person who benefited from a $50,000 kickback from Abramoff in 2000. Prosecutors say the money was washed through a Mercer Island charity, Toward Tradition, on whose board Abramoff sat. (See "A Rabbi's 'Regret,'" below.) The $50,000 came from two of Abramoff's Preston Gates Ellis clients. They and the firm deny any knowledge of the scheme.

Microsoft has little to say about its quest for D.C. influence. "Over the course of the last several years," says Ginny Terzano of Microsoft's D.C. office, "we've made it policy not to talk about our lobbying activities or any consultants we may have on retainer." Facing the antitrust charges, the company powered up D.C. operations and stepped into the middle of hardball politics around 1999, broadening its reach with a new in-house lobbying team. Microsoft laid out $23.6 million for in-house and third-party lobbying from 1999 through the first half of 2005, according to a new accounting of federal lobbying disclosure records. About $1.7 million of that was spent on outside firms from July 2004 through July 2005. Microsoft dramatically increased campaign contributions in recent years, too, doling out $13.9 million in corporate and individual-employee donations from 1998 through 2005, according to the Center for Responsive Politics. Gates also expanded what might be seen as politically connected donations, such as the $100,000 his Bill & Melinda Gates Foundation gave in 2003 to the DeLay Foundation for Kids, operated by the congressman now charged with campaign money laundering.

Microsoft also added the DeLay-connected Alexander Strategy Group to a list of outside firms in 2003. Federal records show that Alexander lobbied for Microsoft on such issues as tax credits for research and development and for the Economic Development Act of 2005. Microsoft spokesperson Terzano wouldn't be more specific. Firms are often hired for their connections and influence. But, insists Terzano, "We mostly outsource our lobbying for a firm's technical expertise."

USATODAY.com - Ties to Abramoff shadow Reed's run in Georgia

DANIELSVILLE, Ga. — Races for lieutenant governor aren't usually the stuff of high drama. But they don't usually feature an ambitious Republican strategist with links to both the White House and a national corruption scandal.

Ralph Reed, a former Christian Coalition leader and high-ranking Bush 2004 campaign official, mobilized Christian conservatives into a grass-roots army for Republicans in the 1990s and has helped crush Democrats in contests from president on down.

The mix of religion and hardball turned him into a lighting rod years ago. Now his longtime ties to fallen Republican lobbyist Jack Abramoff are giving new fuel to his opponents and turning the race into a closely watched test of the Abramoff effect on the 2006 elections.

Abramoff has pleaded guilty to fraud, conspiracy and tax evasion and agreed to cooperate with federal prosecutors. Careers and reputations are on the line as investigators probe the financial and political activities of lawmakers, aides and Abramoff associates.

"Reed is a polarizing figure" to begin with, says Trey Hood, a political scientist at the University of Georgia. Now, he says, "who knows what Abramoff's going to say?"

While the probe has created no legal problems at this point for Reed, now does not seem like the ideal moment for him to emerge from behind the scenes. He calls it "a perfect time" for his political debut.

"Given my profile, I was going to be the subject of personal attacks if I ever ran" for office, he said in an interview. "I wish it hadn't happened," he added, referring to revelations about his old friend's activities. "But I've got no problem dealing with it."

Reed, 44, recently told 50 people at a GOP breakfast here in north Georgia, "I don't have thin skin." He vowed to become the state's first Republican lieutenant governor, and beyond that, "I promise you I'm going to be an impact player."

State Sen. Ralph Hudgens, who hosted the breakfast, calls Reed a strong candidate and says he is satisfied with how Reed is handling the Abramoff situation. "You have to be willing to break the relationship and that's what Ralph has done," he says.

Democrats and some Republicans are alarmed by Reed's candidacy. Lieutenant governors here run separately from governors and are president of the state Senate, making the office more powerful in Georgia than in most states. It's also a frequent launchpad for future governors. And governors have a good record of becoming president; four of the last five came from state executive mansions.

"We believe that Ralph wants to be president. The only place to stop him is right now," says former state senator Greg Hecht, the leading Democrat in the race.

Hecht and state Sen. Casey Cagle, Reed's Republican rival in the July 18 primary, readily give Reed credit for smarts and good looks. They also say he is unqualified for statewide office and hypocritical about moral values. "This race is about honesty and integrity," Cagle says. "You can't say one thing and then do another."

Both men have set up websites devoted to negative information about Reed (www.stopralphreed.com and www.readaboutreed.com). The sites highlight Reed's work for Abramoff clients with gambling interests, despite Reed's longstanding opposition to gambling.

They also show what his opponents allege are conflicts between Reed statements and documents released in a Senate Abramoff investigation. Reed, meanwhile, has put up www.reedfacts.com to rebut his accusers.

What's undisputed is that Reed received several million dollars to help Abramoff shut down a Texas tribe's gambling casino on behalf of tribes with competing casinos. Reed says Abramoff assured him he would not be paid out of the competing tribes' gambling profits.

The criticism

But the tribes have few other resources, and Reed's critics say the ultimate source of his fees appear to have been casino revenue. "The amounts are so huge, there's no other explanation," says Craig McDonald, director of Texans for Public Justice.

McDonald's group and two others allege that Reed broke Texas law by not registering as a lobbyist there. Reed calls the lobbying accusations "utterly without merit." Travis County Attorney David Escamilla says he'll decide by month's end whether to bring charges.

Reed and Abramoff met more than 20 years ago and were so close that Reed introduced Abramoff to the woman who became his wife. More recently, Abramoff helped Reed get lobbying work, donated to his successful 2001 campaign for Georgia GOP chairman and took him golfing in Scotland with a congressman.

Reed is careful and choreographed when he discusses Abramoff. His most extensive remarks came Dec. 9 to Christian teens. He posted the comments on www.ralphreed.com.

"We will never know how many marriages and lives were saved, or how many children were spared the consequences of compulsive gambling, because of our work" to shut down casinos, he told the teens. But "had I known then what I know now, I would not have undertaken that work," he added.

Since then, Reed's public statements have tracked the speech text almost verbatim. At the breakfast here, he arranged to have Hudgens ask about Abramoff, according to Hudgens. Then Reed gave his standard response. He refused to talk about Abramoff on the record to USA TODAY.

Some non-partisan Georgia analysts say Reed should be more open. "He's going to have to answer a lot more questions if he's to survive this," says political scientist Merle Black of Emory University in Atlanta.

Reed stormed onto the field with a money take of nearly $1.4 million in the first half of last year. In the second half, he trailed both Cagle and Hecht. His rivals say that signals erosion in Reed's support. Reed calls the falloff expected after such a spectacular first half. He still has a huge financial advantage, he says, and 22 fundraising events scheduled through March.

Cagle, a sitting legislator, is barred from raising money for the first quarter while the state Senate meets, but says he expects a surge of money in April. A recent poll for TheAtlanta Journal Constitution found he did better than Reed against an unnamed Democrat.

Reed and Cagle oppose abortion and gay marriage and hold similar views on other social issues. "They're both fine Christian gentlemen," says Gerald Harris, editor of The Christian Index newspaper.

It's unclear whether Reed's link to Abramoff will turn off Christian voters. Sadie Fields of the Georgia Christian Coalition, says Reed will get a warm welcome when he and Cagle appear before the group Saturday.

"He has apologized for any disappointment anyone might have felt over Abramoff," she says. "It's time to move on."

Reed is a candidate now, but he's still a strategist to the core. When Hudgens joked to the breakfast group about an e-mailer calling him "a Republican thug," Reed interrupted him from the audience. "Don't repeat the negatives," he instructed with a laugh. He's following his own advice to the letter, and gambling it will work.