Snake Eyes for 'Casino Jack'
Lobbyist Jack Abramoff was the toast of the town. Now he's persona non grata. It's a Washington story
In the winter of 2002, the Tiguas of West Texas, a small tribe of American Indians whose origins go back some 10,000 years, had come to a very modern understanding of money. After a history of grinding poverty, they suddenly found themselves rich. The money, nearly half a billion dollars of it, was generated by their 1,500-slot-machine, adobe-style Speaking Rock Casino on the outskirts of El Paso. But trouble was brewing. Texas-size trouble.
After a long court fight, Texas had won the right to shut down Speaking Rock, arguing that casino gambling was illegal in the state, even on nominally sovereign soil like that of an Indian reservation. The Tiguas needed help--fast.
Enter Jack Abramoff. A onetime producer of B movies, Abramoff was a superstar Washington lobbyist with lots of well-placed friends, Republican lawmakers who wielded the levers of power on Capitol Hill. His deep involvement in conservative-movement politics dating back to the Reagan years and his longstanding associations with many of the icons of the Republican revolution of the mid-1990s made Abramoff an unusually hot commodity in the nation's capital. "He had unbelievable access," says one Democratic lobbyist, bestowing the ultimate compliment among the city's well-heeled influence peddlers. "He got results."
Needed a meeting with a committee chairman? Some special language in a pending bill? Abramoff was your man. Which is precisely why the Tiguas reached out to him back in 2002, after Texas authorities shut the doors on Speaking Rock. As it happened, Abramoff had quite a stable of Indian gaming clients already, and as a result, "Casino Jack," as he was known to some around the Capitol, knew a thing or two about how the arcane world of Indian gambling worked. In the case of the Tiguas, the solution was relatively straightforward. The fix would be in the form of language inserted in a bill by a friendly congressman--language that would override the court decision that allowed the state of Texas to close the casino. Presto!--the Tiguas and Speaking Rock would be back in business. Better still, Abramoff promised, he would take on the Tiguas as a client initially at no charge. There was, of course, a catch. What the Tiguas didn't know at the time, investigators say, is that the man offering to help them reopen their casino had actually been an integral part of an earlier effort by Texas Attorney General John Cornyn to shut it down.
Specifically, Abramoff and his partner, Michael Scanlon, had sent $4 million to Abramoff's old friend Ralph Reed, former head of the Christian Coalition, to run a grass-roots operation to generate support for Cornyn's effort to shut Speaking Rock. But never mind that; Abramoff and Scanlon were still able to get $4.2 million out of the Tiguas for an ultimately unsuccessful campaign to reopen Speaking Rock. In fact, the Tigua tribal council voted on the deal the very same day a local newspaper ran a story about 450 casino employees being laid off--an irony that wasn't lost on Abramoff. "Is life great or what!!!" he wrote Scanlon in an E-mail.
Some had a different view. Marc Schwartz, a Texas consultant who served as the Tiguas' point man on the deal with Abramoff, told a congressional panel it was one of "the most despicable acts of greed and fraud that I hope to never, ever see again." Today, the Tigua affair is at the heart of a complex series of deals and machinations that may, in sum, represent the biggest political lobbying scandal to hit Washington in a generation. A federal grand jury is looking into Abramoff's lucrative lobbying on behalf of several Indian tribes and examining his relationships with influential members of Congress. Along with Scanlon, Abramoff collected a staggering $87 million over five years from tribes in Louisiana, Michigan, California, Mississippi, and Alabama, congressional investigators say.
What the feds want to know now is how all that money was spent and just what, if anything, it bought. Among the allegations under investigation: that Abramoff, 46, overcharged and defrauded his Indian clients; that he used a series of nonprofit, tax-exempt organizations run by his friends to surreptitiously deliver favors to lawmakers and their staffs; and that he took unfair advantage of his relationships with tribal clients by persuading them to deliver huge campaign contributions to his political allies and make charitable donations to his pet causes. Investigators are also curious about whether Abramoff improperly steered business to Scanlon by suggesting to his tribal clients that they augment his lobbying efforts by hiring a grass-roots field organizer to build political support. The grass-roots outfit Abramoff recommended, investigators say, was none other than Scanlon's Capital Campaign Strategies, and what the tribes didn't know was that the two men were allegedly splitting the fees paid to the firm. Congressional records show that over a five-year period, Scanlon billed six Indian tribes for more than $66.3 million and Abramoff pocketed $21 million of it. That's over and above what Abramoff billed the tribes on behalf of the firms he worked for, to whom they paid monthly retainers of between $125,000 and $150,000.
Southern discomfort. That's only part of the story, however. Earlier this month, Abramoff and a former business partner were indicted on federal fraud charges related to the failed purchase of a Florida casino-boat company. The six-count indictment alleges that Abramoff and Adam Kidan falsified a wire transfer of $23 million in order to persuade two lenders to produce $60 million to finance the purchase of the firm, SunCruz Casinos, from Konstantinos "Gus" Boulis, in 2000. Boulis was killed by three gunshots to the chest in early 2001 as he drove home from a business meeting, and the crime remains unsolved. The indictment makes no mention of the killing. Through his attorney, Abramoff has denied the fraud charges.
Prosecutors often like to use criminal charges from one inquiry as leverage in another, and that may well happen with the investigation underway in Washington. But people familiar with the investigations say prosecutors aren't in a big hurry. "There is no need to rush into this thing," says a person familiar with the Washington inquiry. "It is almost a foregone conclusion that [the grand jury] could indict him anytime [it] wanted to. For now, he spent a night in jail [in relation to the Florida charges]. Let's see what his mind-set is." Prosecutors would ultimately like to secure Abramoff's cooperation, the source added. With more than 40 FBI agents assigned to the case, there is every indication that prosecutors are interested in more than just a couple of lobbyists. The source also confirmed a recent Washington Post report that Scanlon, a former press aide to House Majority Leader Tom DeLay, has been in discussions with Justice Department lawyers. Stephen Braga, a Washington lawyer representing Scanlon, did not respond to E-mail or phone messages. Andrew Blum, a spokesman for Abramoff, says his client "has been singled out and vilified with exaggerated and false allegations. The truth is that Mr. Abramoff's actual conduct was proper and constituted lobbying techniques used by almost every lobbyist in Washington, D.C., on a daily basis." As for the Tigua affair, Blum says Abramoff was initially fighting not against the tribe but against another casino just outside Houston that Abramoff felt was in direct competition with a Louisiana casino run by one of his other American Indian clients, the Louisiana Coushattas. "When work under state law to stop the Houston casino spilled over to also affect the Tiguas, which was not the goal of Mr. Abramoff or his clients," says Blum, "Mr. Abramoff then sought to help the Tiguas obtain relief under federal law."
Once the toast of Washington's K Street lobbying corridor, Abramoff, who charged clients up to $750 an hour, is keeping a low profile. Greenberg Traurig LLP, the law firm and lobbying outfit where he was once a major rainmaker, has given Abramoff the bum's rush. Old friends have stopped hanging out at the restaurant he owned, Signatures. It was sold earlier this summer. The meter for his own legal bills is now spinning dizzily.
Tee times. It is difficult to chart the scope of political scandals with any exactitude, but every few years a real doozy blows through the concrete canyons of the nation's capital, trailing a long, comet's tail of dirty money, backroom deals, and expensive tee times. The Abramoff saga seems to touch all the bases. "What sets this tale apart, what makes it truly extraordinary is the extent and degree of the apparent exploitation," said Arizona Sen. John McCain, who now chairs the Senate Indian Affairs Committee, which is also investigating Abramoff's lobbying efforts.
The jury is still out on that. But some Democrats are elated by the fact that DeLay has been drawn into the Abramoff inquiry. "One of my closest and dearest friends," DeLay once said of Abramoff. The two men enjoyed lavish overseas trips together and played some memorable golf at historic links like Scotland's St. Andrews. The trips, too, are being examined by federal and congressional investigators.
Abramoff's difficulties represent a radical departure from what had been a charmed life. Born in Atlantic City, to Democratic parents (they would be persuaded later in life to switch to the GOP by golfing great Arnold Palmer, who employed Abramoff's father), young Jack moved with his family to Beverly Hills, Calif., when he was 10. At 12, Abramoff decided to embrace the strictures of Orthodox Jewish tradition. He was mostly a jock at Beverly Hills High, lifting weights, running track, and playing varsity football, but he was hardly a big man on campus. He moved back east to attend college at Brandeis University, where he became a campus conservative. After graduation, he moved to Washington and later studied law at Georgetown University, but he also continued his political education, winning election as chair of the College Republican National Committee with the help and advice of some future Republican stars. Grover Norquist, the influential antitax crusader, was Abramoff's campaign manager and first executive director of the CRNC. Reed, who was later founding executive director of the Christian Coalition, was a CRNC intern and was later hired by Abramoff to be the group's executive director. Reed even slept on Abramoff's couch. One of Abramoff's predecessors as chairman of the organization was Karl Rove, President Bush's chief political strategist. A woman named Susan Ralston, who once worked for Abramoff, spent time at the White House as Rove's executive assistant.
In the Reagan years, Abramoff worked with a variety of conservative organizations, including taking a turn as executive director of Citizens for America, a lobbying outfit. He stayed in Washington but took a brief break from politics in the late 1980s to write and produce movies, most notably Red Scorpion, a forgettable $17 million thriller starring Dolph Lundgren.
Relationships. In 1994, the historic Republican takeover of Congress refired Abramoff's passion for politics and, perhaps as important, created some significant new business opportunities. Many Washington lobbying firms were suddenly confronted with a troubling realization: They didn't know the new GOP players who had suddenly taken control, and they needed to find people who did. Abramoff not only knew most of the key Republicans in town, but he had worked with them in the trenches for nearly 15 years.
It was time to cash in. At Preston Gates Ellis & Rouvelas Meeds, and later at Greenberg Traurig, Abramoff was one of the key players in a plan devised by DeLay and Norquist and called the K Street Project. For the GOP, it was payback time. Lobbying firms, long filled with Democrats who had cozy relationships with long-serving committee chairmen, were pressed to hire more Republicans. So hire they did. And Abramoff was the king of the hill. Among his blue-chip clients were Unisys, Tyco, and the government of the Northern Marianas Islands. A friend referred Abramoff to his first Indian client. The Mississippi Band of the Choctaw wanted a potentially onerous tax provision killed. Abramoff began working for them in 1995 and quickly derailed the offending legislation. Not long after, the Indian gaming business began to roll in. By 2002, the future seemed limitless. "We are missing the boat," Abramoff said in an E-mail to Scanlon. "There are a ton of potential opportunities out there. There are 27 tribes which make more than $100 [million] a year . . . . We need to get moving on them."
Before long, Abramoff was hauling in millions a year. Signatures, a high-end watering hole serving contemporary American cuisine on Pennsylvania Avenue between the Capitol and the White House, became the place to be for the GOP elite. With an elaborate plate of exotic seaweed salads and his specially mixed iced tea sweetened with Splenda, Abramoff held forth from a corner table. The bar-restaurant sometimes hosted dozens of fundraisers a week, and some lawmakers and staff felt free to run up enormous tabs without settling the bill. The New York Times reported that tribes were also billed for meetings Abramoff held at Signatures; the Mississippi Band of Choctaw Indians, for instance, was billed more than $5,600 for Abramoff's meals with public officials and lobbyists in 2002, the paper said. Abramoff, through all the glitter and hurly-burly, cut a peculiar figure. Night after night, Signatures was jammed with the beautiful, the powerful, the backslappers, the cronies. From his corner table, Abramoff, deeply religious, strict observer of the Sabbath, father of five, drank it all in quietly. "I never once saw Jack check out a woman in that restaurant," recalls an employee, "and the place was packed with pretty women."
Much of Abramoff's good fortune, at least at the beginning, had to do with his perceived access to DeLay. Abramoff has long rejected any notion that he took advantage of the relationship, and his spokesman, Blum, says "numerous clients . . . have agreed that Mr. Abramoff did not trade on his relationship with Representative Delay." Abramoff acknowledged to intimates, however, that he admired DeLay and continues to do so to this day. People close to Abramoff say the friendship was based on a shared conservatism, a deep interest in the security of Israel, and a determination to promote conservative causes. The two men were fond of discussing the Bible. Both love golf and share a soft spot for Verdi opera. As DeLay rose in stature, from GOP conference secretary to majority whip to majority leader, so did those who were close to him, and Abramoff was regarded as the cream of that crop.
Today, Abramoff and DeLay are both waiting to see what the future holds for them. The Justice Department has confiscated more than 500,000 of Abramoff's E-mails. The House ethics committee, which has admonished DeLay three times already, is set to begin yet another investigation into his relationship with Abramoff. Around town, the $64 million question is whether a sinking Abramoff could take DeLay and others down with him. "If Abramoff flips in the criminal investigation," says a senior federal investigator, "that will be bad for a lot of people." Abramoff, who calls himself a sinner, has told associates that he will not bear false witness against DeLay or anyone else. DeLay, for his part, blames partisan politics for all the questions surrounding his relationship with Abramoff.
But questions remain--and lots of them. Some involve trips taken by DeLay and paid for by Abramoff or groups connected to Abramoff. They have become the basis of accusations that DeLay violated House rules, which require that such trips be paid for by interest groups but not lobbyists. The golf outing to St. Andrews was supposedly paid for by a conservative think tank, the National Center for Public Policy Research, on whose board Abramoff sits. But records reportedly show that some of the expenses were, at least initially, paid for with Abramoff's credit card. Since the accusations came to light, more than 200 lawmakers have filed reports providing new details on who paid for their travel. There are questions, too, about the use of Signatures for political fundraisers. In the wake of news stories about the many fundraisers hosted by the restaurant, a handful of lawmakers, including House Speaker Dennis Hastert, have paid long-overdue tabs for events that were held there.
The most pointed questions by far, however, are about the lobbying that Abramoff and Scanlon did for those Indian tribes. Blum, Abramoff's spokesman, says that "any fair reading of Mr. Abramoff's career would show that his [Indian] clients benefited immensely from the hard work he and his team did on their behalf." Others, unsurprisingly, see it differently. "It is a story of greed run amok," says former Colorado Sen. Ben Nighthorse Campbell, an American Indian who preceded McCain as chairman of the Indian Affairs Committee. "It is a story of two already powerful, wealthy men lining their own pockets with the hard-earned money of people whom they held in contempt."
With Edward T. Pound and Betsy Streisand
This story appears in the August 29, 2005 print edition of U.S. News & World Report.