Lobbyist Pleads Guilty in Corruption Probe

Times Staff Writers

Promising to cooperate fully in a burgeoning federal probe that has engulfed Congress, a former partner of lobbyist Jack Abramoff entered a guilty plea Monday to a charge that he and the lobbyist conspired to bribe public officials, including a senior Republican member of Congress, and to defraud Indian tribes of millions of dollars.

“Guilty, your honor,” Michael P.S. Scanlon told U.S. District Judge Ellen S. Huvelle, pleading to one criminal conspiracy count leveled against him.

Scanlon faces up to five years in prison and agreed to make restitution of $19.6 million, half the amount that prosecutors say he and Abramoff split in profits from four Indian tribes.


He was released on a $5-million unsecured bond and must give notice to the court and prosecutors before traveling out of the country.

The actual sentence to be imposed on Scanlon, a onetime aide to then-House Majority Whip Tom DeLay (R-Texas), is dependent on cooperation in the ongoing investigation, said one of his lawyers, Stephen Braga.

In the 18-page plea agreement made public after the hearing, prosecutors detailed evidence against Scanlon that would have been presented had his case gone to trial.

He and his lawyers agreed to all of the evidence. The new items include details on trips and other gifts made to the member of Congress and members of his staff.

The documents describe the recipient as “Representative #1.” Details in the plea agreement describe actions taken by Rep. Bob Ney (R-Ohio), who chairs the House Administration Committee. He has repeatedly denied any wrongdoing.

“Any allegation that Rep. Ney did anything illegal or improper is false,” his spokesman, Brian J. Walsh, said in a written statement. “This plea agreement mentions a number of unsubstantiated allegations, but in fact, many of the things suggested to have occurred did not actually take place.”

Walsh said that whatever steps Ney took, “he did so based on his best understanding of what was right and not based on any improper influence.... All that this plea agreement shows is that Mr. Scanlon had a deliberate, secret and well-concealed scheme to defraud many people, and it appears, unfortunately, that Rep. Ney was one of the many people defrauded.”

Scanlon’s guilty plea is the latest development in a long-standing criminal investigation into Senate charges that he and Abramoff defrauded Indian tribes with casino gambling interests of millions of dollars in fees. Abramoff has not been charged in the case.

Another former Abramoff colleague, David H. Safavian, was charged last month with obstructing a federal investigation and lying to a federal investigator. He has entered a not-guilty plea but stepped down from his post as a top federal procurement official in the Bush administration before being arrested.

Scanlon was a spokesman for DeLay, who was the House majority whip when Scanlon left the public payroll to join forces with Abramoff in early 2000. He eventually formed his own firm, Capitol Campaign Strategies, which was one of the entities through which much of the $53 million in total payments from the Indian tribes flowed.

Records show that after joining with Abramoff, Scanlon -- through one of his newly formed companies -- purchased more than $1 million worth of real estate, much of it on the Delaware shore.

The relationship among Abramoff, Scanlon and Ney became evident through testimony and documents over the last year before the Senate Indian Affairs Committee.

New details in Monday’s prosecution statement include a $10,000 contribution arranged by Scanlon at Ney’s request to the National Republican Campaign Committee, and an all-expenses-paid trip for a Ney staff member to the Northern Mariana Islands in 2000. A golf trip to Scotland in 2002 by Ney and an aide had previously been detailed.

Among the new disclosures was the involvement of a California Indian tribe that had hired Scanlon and Abramoff to get support for legislation affecting the taxation of tribal members and for help with a post office.

The prosecutors did not name the tribe. However, lobbying reports show that the Agua Caliente tribe hired Abramoff’s law firm in 2002 to represent it on post office matters.

According to the prosecution document, “Representative #1” met with representatives of the tribe to discuss his agreement to support the tax legislation and to assist in the post office matter.

Dressed in a dark suit with a polka-dot tie, Scanlon, 35, offered only the briefest comment after the 30-minute court hearing.

“He’s regretful,” one of his lawyers, Plato Cacheris, said to reporters.

Scanlon, standing in a steady rain outside the courthouse, said only, “You guys will be seeing me around.”

Although Cacheris declined to predict whether any other people would be implicated, Scanlon’s plea agreement alluded to that possibility.

His signed statement said the details disclosed in the agreement did “not include all of the facts known to me concerning criminal activity in which I and others engaged.”

In an eight-page charging document made public Friday, prosecutors accused Scanlon of engaging in a conspiracy with “Lobbyist A” -- understood to be Abramoff -- to set up a kickback scheme under which the two split nearly $40 million in profits from fees paid by four Indian tribes with casino gambling interests.

The kickbacks, the document charges, were hidden from the clients who had been told the money was earmarked for specific purposes when, in fact, Scanlon and Abramoff “would use those funds for their own personal benefit.”

According to the charges, Abramoff and Scanlon conspired to “corruptly offer and provide things of value” to unnamed public officials “in return for agreements to perform official acts” benefiting Scanlon, Abramoff and their clients.

Scanlon’s plea agreement says that Ney agreed in March 2002 to introduce legislation that would allow the Tiguas, a Texas tribe and a Scanlon client, to reopen their shuttered casino. Six days later, Abramoff asked the tribe to send three checks to the congressman’s political committees, according to Senate hearings. The tribe sent checks totaling $32,000.

In August 2002, Abramoff flew Ney, his chief of staff and others on a chartered jet to St. Andrews golf course in Scotland.

Ney reported to the House that the Scottish golf outing was paid for by a conservative think tank, the National Center for Public Policy Research -- which the group denies.

Records released by the Senate committee show that Abramoff’s private charity, the Capital Athletic Foundation, paid $166,634 for the trip.

It is against House rules for a lobbyist to pay for a congressman’s trip.

Ney came to Abramoff’s aid in 2000, inserting a statement in the Congressional Record criticizing the owner of a Florida gambling cruise ship company that Abramoff was trying to purchase but was facing resistance. After Abramoff’s group bought the company, Ney inserted another statement praising the new owners.

According to documents filed by prosecutors, Scanlon and Abramoff also conspired to influence Ney to advance the application of one of Abramoff’s clients to win a license to provide wireless telephone services to the House of Representatives.

Ney, acting as House Administration Committee chairman, awarded that licensing agreement on Nov. 26, 2002, to Foxcom Communication.

The agreement had an estimated $3-million value and Foxcom, now renamed Mobile Access Networks, hired Abramoff to represent it in the efforts to win the agreement.

The documents released Monday state that Ney agreed in August 2001 to use his position “to endorse and support a client” of Abramoff’s, Foxcom.

“As one part of his course of conduct,” the document states referring to Ney, “Representative #1 and members of his staff agreed to use and did use their official positions and influence” to perform a variety of actions for Scanlon, Abramoff and their clients.