More trouble for DeLay

The Preston Gates Mates

The venerable Seattle law firm launched key players in the Tom DeLay scandal.

by Rick Anderson


The nation's political scandal du jour is a strange Republican brew with a strong Washington state flavor. Its leading characters include Rep. Tom DeLay, R-Texas, and Jack Abramoff, a former lobbyist for one of Seattle's most prestigious law firms, Preston Gates & Ellis. DeLay and Abramoff deny wrongdoing, and Abramoff has pleaded the Fifth. A third figure, Mike Scanlon, another ex-employee of Preston Gates, is ducking subpoenas (and is not to be confused with Michael F. Scanlon, no relation, who coincidentally works in the firm's D.C. office). The scandal has at least two fronts?-D.C. and Texas, deep in George Bush territory?- and revolves around more than $60 million in political giving and taking, mostly corporate and Indian casino money. Another front might open in the House Ethics Committee, where possible charges could be presided over by a Washingtonian?- Rep. Doc Hastings, R-Pasco, the incoming chair who has received campaign money from a DeLay political action committee.

In another Evergreen State twist, it turns out that DeLay and Abramoff were introduced to each other more than a decade earlier by Seattle radio host Rabbi Daniel Lapin, a friend of both men. He hoped it would be the beginning of a long friendship. But today, DeLay, the House majority whip known as "The Hammer," and Abramoff, a board member of a Mercer Island charity Lapin runs, could face federal or state indictments.

So far, 32 indictments have been issued in Texas, including eight to corporations such as Sears and Bacardi. Two companies have agreed to turn state's evidence. The probe in the Lone Star State, led by Democrats, centers on possible illegal fund-raising by a political action committee (PAC) founded by DeLay.

In D.C., the FBI, a federal grand jury, and a Senate committee are reviewing questionable lobbying fees and influence peddling that link DeLay, Abramoff, and Scanlon and tie into the Texas probe. The questioned fees were apparently generated shortly after Abramoff, one of the capital's top lobbyists, left Preston Gates in 2001. It was at Preston that he developed his weighty reputation and first made contact with some of the Indian tribes now claiming that they were ripped off by him and Scanlon. Abramoff, according to e-mails obtained by investigators, referred to some of his clients as morons and idiots. He also worried about his cover being blown on allegedly covert deals in which he urged tribes to hire Scanlon, without revealing that he, Abramoff, was sharing in the enormous fees.

Abramoff and Scanlon, who is a former DeLay aide, aren't commenting, their attorneys say. DeLay, who was admonished for three congressional ethics violations last year alone, calls it all a Democratic plot. And a Preston Gates spokesperson last week said it is the firm's policy "that we do not comment on former employees or ongoing legal matters." The firm would not say whether its practices were being reviewed by any outside agency in connection with the probes.

Abramoff, 45, who grew up in Beverly Hills, has been one of D.C.'s highest-paid arm-twisters the past 10 years, with monthly retainers of up to $175,000. He earned his considerable repute through Preston Gates as a power broker for offshore sweatshops and for American Indian casinos in the 1990s. A self-described ultraconservative Orthodox Jew, Abramoff is a longtime pal of Bush brain Karl Rove, antitax guru Grover Nordquist, and religious-right leader Ralph Reed. He helped raise funds for Ronald Reagan and Ollie North, was the movie producer/writer of a Cold War potboiler called Red Scorpion, and founded a political group that supported the South African apartheid government.

Abramoff also was a founder and chair of Toward Tradition, the nonprofit Mercer Island faith-based, right-wing political coalition run by Lapin, who is a Seattle radio host on KTTH-AM (770), a GOP fund-raiser, and a native South African. Toward Tradition started in 1991 after Lapin moved here from California, where his then-followers included such Hollywood heavyweights as devout liberal Barbra Streisand. Paid $165,000 a year, according to a 2003 IRS filing, Lapin calls his Mercer Island organization a coalition of Jews and Christians formed to counter antireligious bigotry and preserve the social fabric. He is also co-chair of American Alliance of Jews and Christians, created with former GOP presidential also-ran Gary Bauer. Its board of advisers includes Jerry Falwell, Pat Robertson, Watergate conspirator Charles Colson, Abramoff, and Lapin's longtime friend and fellow radio talker Michael Medved. Lapin did not respond to repeated phone calls and e-mails to him and his staff the past two weeks.

Lapin's friend Abramoff was first hired as a lobbyist in 1994 by Preston Gates' D.C. office, Preston Gates Ellis & Rouvelas Meeds, where 60 of the firm's 400 attorneys work. Rather than litigate, most troll the power corridors in search of friendly legislation for such clients as Microsoft and the Port of Seattle, as well as an assortment of Indian tribes. The mid-1990s was the era of the Gingrich Revolution in Congress and the Contract With America, which subsequently crashed and burned. Abramoff's "relationship with Tom DeLay helped put him on the fast track," reported the monthly Texas Observer last fall. "In 1994 Abramoff got behind DeLay's whip race. When DeLay won . . . Abramoff was a made man. 'He's someone on our side,' said Ed Buckham, DeLay's chief of staff at the time. 'He has access to DeLay.'" Abramoff's Mercer Island nonprofit also joined in the GOP backslapping when, in December 1994, Toward Tradition ran an advertisement in The New York Times, offering a congratulatory "Mazel Tov" to Gingrich, noting, in reference to the Ten Commandments, "We know all about 10 Point Contracts."

Around that time, Abramoff cultivated sweatshop and casino clients for his Seattle firm, bringing in millions in fees over the next seven years and pushing Preston to near the top of the D.C. power-lobby list. He and associate Scanlon (who later helped DeLay clandestinely operate a war room to impeach Bill Clinton) used DeLay's connections to defend and promote $3-an-hour sweatshop operations in the Northern Mariana Islands, a U.S. protectorate. (See "The New Apparel Line," Sept. 16, 1999.) DeLay even showed up to play golf, visit the sweatshops, and dub it all "a perfect petri dish of capitalism." The strategy apparently worked. In 2001, the Marianas' public auditor determined that the island state had doled out $9.5 million in lobbying fees over eight years, and "about $6.7 million was paid to one lobbyist, Preston Gates." Most of $3.1 million of that amount was paid to Preston "without a valid contract," the auditor added.

Abramoff carved out the lucrative casino business for Preston, building on the 1988 law that created and controlled gambling on reservations, turning poor tribes into instant multimillionaires. (U.S. tribal casino revenue last year came to $18.5 billion.) Abramoff depended on the assistance of Delay, who, for example, was instrumental in killing an Indian-casino tax bill. Among Abramoff's clients back then, in the late 1990s, was the Mississippi Band of Choctaw Indians, who paid Preston Gates $7 million over several years and, at Abramoff's urging, gave an estimated $10 million in tribal contributions to conservative causes, according to a 2000 Wall Street Journal report. The Journal suggested that Abramoff was, among other things, "milking naive clients." But Preston continued to embrace him. No one seemed to mind that, as Abramoff put it, he was willing "to do whatever it takes to win."

In 2001, Abramoff got a better offer. He stunned Preston by taking his high fees and client list to rival Greenberg Traurig, a law and lobbying firm whose fortunes soared while, in tandem, Preston's billings tumbled. In the ensuing years, Abramoff and Scanlon, who left Preston to start his own consulting service, expanded their business alliance and zeroed in on the casinos. Investigators say they racked up as much as $34 million from just one tribe, the Coushatta of Louisiana, offering political muscle and connections. According to the Texas Observer, $24 million of that came out of the tribe's social budget, cutting short tribal health, education, and housing funds. In three years of paying lobbying costs to protect their gambling monopoly, the 800-member tribe outspent even corporate giant General Electric by $3 million. So much money flowed through Abramoff's accounts that he couldn't explain one $5 million transaction, according to a 2004 Senate Indian Affairs Committee review headed by Republican Sens. Ben Nighthorse Campbell and John McCain. (In an e-mail, Abramoff guessed, "I think I understand what he [Scanlon] did. We received $5 million . . . he divided the $5 million into three piles: $1M for actual expenses, and $2M for each of us.")

According to the committee, Abramoff, as the tribes' lobbyist, urged them to hire Scanlon to organize their political operations and push their agendas?-work that Scanlon mostly subcontracted to other operatives, earning steep fees that he'd then share with Abramoff. At the least, Abramoff "owed the tribes he represented a duty to disclose his financial stake in the multimillion-dollar contract he was steering Michael Scanlon's way," said McCain. Some of the tribal money that flowed to Abramoff found its way into DeLay's political action committees and other Republican endeavors, including Texans for a Republican Majority. Those funds are among the money being probed by the state of Texas, the Senate, and the FBI and, perhaps, will be reviewed by Hastings' House ethics panel. Hastings, recipient of $5,930 in campaign contributions from another DeLay PAC, Americans for a Republican Majority, has not announced any hearings.

The scandal is great sport for the Democrats, especially the religion/gambling contradiction. Former Christian Coalition leader and now-GOP strategist Ralph Reed, for example, admitted he accepted $1.23 million in Indian-casino consulting fees from Scanlon's firm. Reed claims he never directly worked on behalf of a casino?-therefore the fees were "consistent . . . with my beliefs" opposing gambling. Also embarrassing is the Senate revelation of e-mails from Abramoff to Reed. Said one, discussing a casino battle involving the Tigua tribe of Texas: "I wish those moronic Tiguas were smarter in their political contributions. I'd love us to get our mitts on that moolah." Another, from Abramoff to buddy Scanlon regarding their backroom wheeling-dealing, exclaimed: "That ******* idiot put my name on an e-mail list! What a ******* moron. He may have blown our cover!" (You can see these and other e-mails at www.indian.senate.gov.)

Though Abramoff was let go by his new firm, Greenberg Traurig, in 2004, that didn't keep him from working feverishly for the re-election of the president. Abramoff was one of the Bush campaign's "Pioneers," a title bestowed on those who raise at least $100,000. No matter that, in the midst of the presidential campaign last fall, Abramoff and pal Scanlon were summoned to testify before the Indian Affairs Committee. Only Abramoff showed, and he invoked the Fifth Amendment. Scanlon lay low, eluding service of a subpoena. Senate records indicate that Abramoff and Scanlon split $42 million of a boggling $66 million in fees paid by various casinos, and another $16 million went directly to Greenberg Traurig.

As the investigations continue, DeLay is sounding like he wishes he'd never met Rabbi Lapin's pal Abramoff, who, DeLay once declared, is "one of my closest and dearest friends." If Abramoff or anyone else is "trading on my name to get clients or to make money," said an indignant DeLay, "that is wrong and they should stop it immediately." He apparently didn't want to give influence peddling a bad name.

[email protected]

S. Korean Group Sponsored DeLay Trip
Visits May Have Broken House Rules

By Mike Allen and R. Jeffrey Smith
Washington Post Staff Writers
Thursday, March 10, 2005; Page A01

A delegation of Republican House members including Majority Leader Tom DeLay accepted an expense-paid trip to South Korea in 2001 from a registered foreign agent despite House rules that bar the acceptance of travel expenses from foreign agents, according to government documents and travel reports filed by the House members.

Justice Department documents show that the Korea-U.S. Exchange Council, a business-financed entity created with help from a lobbying firm headed by DeLay's former chief of staff, registered under the Foreign Agents Registration Act on Aug. 22, 2001. DeLay; his wife, Christine; and two other Republican lawmakers departed on a trip financed by the group on Aug. 25 of that year.


Thursday's Question:

Raising the retirement age is a component of some of the plans to overhaul Social Security. What was the retirement age when Social Security was first enacted in 1935?
55
58
62
65







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The exchange group in late 2003 hosted three Democratic House members and another Republican on a similar trip. It spent at least $106,921 to finance the three-day trip in 2001 from Washington to Seoul by the Republicans, which DeLay (Tex.) and accompanying staff assistants described at the time as having an "educational" purpose.

DeLay's aides said yesterday that the congressman did not learn of the group's registration until this week. "There's no way we could have known, and they didn't inform us of the fact that their status changed," said DeLay's communications director, Dan Allen.

The Rules of the U.S. House of Representatives on Gifts and Travel state that "a Member, officer or employee may not accept travel expenses from 'a registered lobbyist or agent of a foreign principal.' "

Jan W. Baran, a former general counsel for the Republican National Committee, said that although he was uncertain whether this trip violated the rules, "it's a problem" likely to trigger an investigation by the House Committee on Standards of Official Conduct, known as the ethics committee. DeLay was admonished three times last year by the ethics committee.

An aide to DeLay who asked not to be named said DeLay staff members had general discussions about the trip with the ethics committee before leaving and received verbal approval.

A veteran House official familiar with the case, who declined to be named because of DeLay's involvement, said verbal approval is not granted by the committee on such matters.

Committee staff workers provide advice to lawmakers and their aides, but it does not go beyond what could be read in a manual, the official said. "The only way you can get, quote, approval from the ethics committee that is good for anything other than your own comfort level is to write a letter asking for approval, and to get a letter back," the official said. "If you do that, you're home free. If you don't, you're always running the risk you'll end up in a bind."

No letter was sent by DeLay to the committee, DeLay's aides said.

DeLay was accompanied to Seoul by Reps. Ileana Ros-Lehtinen and Ander Crenshaw, both Florida Republicans. A spokesman for Ros-Lehtinen, Alex Cruz, said she did not know the group had registered as a foreign agent.

"My boss was never told of this," Cruz said. A spokesman for Crenshaw, Kenneth Lundberg, said, "When the trip was brought [to us], we did an internal vetting of it, and that revealed no problems, no issues."

Lundberg said Crenshaw does not typically seek ethics committee approval for travel with other legislators and did not in this case.

The purpose of the trip is spelled out in documents filed with the Justice Department by the Alexander Strategy Group, a firm created by former DeLay chief of staff Ed Buckham that boasts dozens of large corporations and trade associations among its clients. Buckham is close to DeLay, and associates of both men say that DeLay agrees to meetings with corporate officials on Buckham's recommendation.

<snip>

What is it going to take to kick this jerk out of power?

DeLay's fellow Texan, Republican Rep. John Carter, says whether the law was broken depends on what your definition of "administrative" is. "No court has actually defined clearly what administrative purposes is," says Carter. 60 Minutes showed him TRMPAC's brochure with the statement of how the corporate funds would be spent. "Active candidate evaluation and recruitment. Message development. Market research and issue development," says Stahl. "I mean, how is that administrative?"

"Active candidate evaluation and recruitment, that's a party of administrative procedure," says Carter. "That's a party function."

"I thought administration was the running of the office. The Xerox machine. Paying bills," says Stahl.

"This is what the court has to rule on," says Carter. "If they find all these things are administrative, there'll be no convictions in this case."

Tom DeLay is precisely the reason why the GOP invites comparisons to the Nazis.

In the last few weeks:

Delay tried to shield himself from the deluge by making the House ethics committee his puppet, but the flood came anyway:

The National Journal reported that DeLay may have violated House ethics rules when a Swift-Boat/USA Next lobbyist, Jack Abramoff, shelled out $13,000 for DeLay's stay at the London Four Seasons hotel

Raw Story revealed that DeLay has taken a huge London trip funded by an anti-Social Security lobbyist org connected to the SVFT

Two Sundays ago, CBS's "60 Minutes" aired a 12-minute segment reminding a national audience that a Democratic district attorney ("Being called vindictive and partisan by Tom DeLay is like being called ugly by a frog") in Austin is continuing to suggest he might indict DeLay as part of an investigation of the involvement of money from DeLay's Texans for a Republican Majority (TRMPAC) (scandal overview here)

On Wednesday, a front-page story in the New York Times said documents entered as evidence in a civil trial in Austin "suggest that Mr. DeLay was more actively involved than previously known in gathering corporate donations for" the committee

On Thursday, DeLay admitted to the Houston Chronicle that he actively raised funds for TRMPAC

On Thursday, The Washington Post reported that DeLay (and some other Rs and Ds) accepted trips from the Korea-U.S. Exchange Council, which had registered as a foreign agent, in violation of House rules

On Saturday, the Post reported on another London trip by DeLay, this time funded by gambling interests and Indian casinos (with the help of Abramoff)

The Post reported today that Rep. Lamar S. Smith (R-Tex.), one of the ethics committee's new members, was co-host of a 2002 fundraising breakfast to benefit TRMPAC

The New York Times reported today that DeLay's been pullling in massive donations to his legal defense fund, with tens of thousands of dollars coming from corporations indicted in the Texas DeLay investigation

"If death comes from a thousand cuts, Tom DeLay is into a couple hundred, and it's getting up there," said a Republican political consultant close to key lawmakers. "The situation is negatively fluid right now for the guy. You start hitting arteries, it only takes a couple." The consultant, who at times has been a DeLay ally, spoke on the condition of anonymity, saying he could not be candid otherwise.

After the debacle over the ethics rules, more than a few House members say they can ill afford to put their necks out much farther for DeLay. And their support could erode further?-and quickly?-if they start hearing complaints about DeLay from their constituents at home. "As members head home, they'll review the various media reports," says Arizona's Hayworth, who has been burned by revelations that he used a skybox supplied by Abramoff for fund raising. "I'm sure that it's in the best interest of the majority leader and the majority to have an accounting of what transpired."

Money: So Where Did It Go?

Newsweek
March 21 issue -

The FBI is trying to trace what happened to $2.5 million in payments to a conservative Washington think tank that were routed to accounts controlled by two lobbyists with close ties to House Majority Leader Tom DeLay, NEWSWEEK has learned. The payments to the National Center for Public Policy Research were meant for a PR campaign promoting Indian gaming, center officials said.

But internal e-mails obtained by NEWSWEEK show the lobbyists, Jack Abramoff and Michael Scanlon, DeLay's former press secretary, never documented any work performed or explained what they did with the money despite repeated requests. "We're disappointed and frustrated," said Amy Ridenour, the center's president. The group's records have been subpoenaed by a federal grand jury. One focus of the FBI probe, legal sources say, is whether the payments, as well as tens of millions of dollars in other fees collected by the two lobbyists from Indian tribes, were used for political contributions or to pay for trips and gifts to members of Congress.

The widening probe in D.C. may prove more troubling for DeLay than the separate investigation into his fund-raising in Texas. DeLay has had a longstanding relationship with the center; the group, for which he has signed a fund-raising letter, paid for two of his overseas trips?-including a $70,000 excursion in 2000 during which he and Abramoff (a member of the center's board) played golf in Scotland. The Washington Post reported last week the trip was mostly paid for by two $25,000 checks from two Abramoff lobbying clients that were sent to the center the day the trip began. In 2002, the center received a $1 million contribution from one of those Abramoff clients, the Mississippi Band of Choctaw Indians. The funds were intended to finance "educational" efforts promoting the idea that casinos like the one operated by the Choctaws helped Native Americans, Ridenour said. At Abramoff's urging, the center allotted $500,000 to a public-relations firm owned by Scanlon, and an additional $450,000 was paid to a foundation controlled by Abramoff. The next year, the center received its largest donation, $1.5 million, from another Abramoff client, an Internet gambling group in Gibraltar. This time, Abramoff suggested most of the grant, $1.28 million, be given to a firm called "KayGold LLC." Unbeknownst to Ridenour, KayGold was owned by Abramoff.

Ridenour said she and the center's lawyers became concerned in 2003 about the absence of any work product and began pressing Abramoff for documentation. By March 2004, worried about a possible audit, she sent an e-mail saying it would be "extremely helpful" if he could supply any polls or even "leftover printed materials" in order to "reassure anyone, such as the IRS, who might wonder if the effort really took place." But, she said, nothing was ever turned over; Abramoff later resigned from the center's board. The group is now cooperating with the Feds and may sue Abramoff. Asked about the payments, Abramoff's lawyer, Abbe Lowell, said, "No comment." Scanlon's lawyer said suggestions the work was not completed "are totally inaccurate," but declined to elaborate. DeLay, whose spokesman said the congressman knew nothing of the payments, is distancing himself from his former golfing partner. "I go about my job," he told reporters. "Jack Abramoff has his own problems. Any other questions?"

?-Michael Isikoff

But seriously, where is the hue and cry from the right? Why don't they get rid of him themselves?