Former Force on Capitol Hill Admits Fraud

Times Staff Writers

Asking forgiveness from “the Almighty and from those I have wronged,” an ashen Jack Abramoff, once a powerful Republican lobbyist on Capitol Hill, stood before a federal judge Tuesday and pleaded guilty to a scheme of fraud and tax evasion that could send him to prison for 11 years.

Abramoff now becomes a prospective witness for the prosecution in an ongoing influence-peddling investigation of Congress that has mushroomed into a major corruption scandal. It has already ensnared one member of Congress and two former congressional aides, and Abramoff’s guilty plea gives the inquiry a new impetus.

The plea deal requires that Abramoff, who once showered some members of Congress with expensive meals and golf outings, cooperate in the probe of his actions over a decade, a process that could significantly reduce his jail time. Abramoff also must make restitution of about $25 million and pay a little more than $1.7 million in back taxes to the Internal Revenue Service.


Speaking softly, at times barely above a whisper, Abramoff, 46, responded with mostly “yes” and “no” answers as he entered the guilty pleas in a 50-minute session before U.S. District Judge Ellen Segal Huvelle. Abramoff wore a rumpled black suit and appeared pale as he stood beside his lawyer, Abbe Lowell, in the packed fourth-floor courtroom.

At the end of the court session, Abramoff stood and, with the judge’s permission, read from a folded piece of paper.

“I only hope that I can merit forgiveness from the Almighty and those I have wronged or caused to suffer,” he said. “Words will not ever be able to express how sorry I am for this, and I have profound regret and sorrow for the multitude of mistakes and harm I have caused.”

Abramoff admitted to engaging in a conspiracy to defraud Indian tribes of more than $20 million through secret kickbacks. Abramoff also admitted to defrauding his former law and lobbying firm, Greenberg Traurig, by having clients direct payments to entities he controlled.

His prison sentence will be set later and will depend on his continued cooperation, said Mary K. Butler, the Justice Department’s lead prosecutor in the case.

The charges of conspiracy, fraud and tax evasion carry a maximum prison term of 30 years, but federal sentencing guidelines call for nine to 11 years, officials said.


The agreement marks a significant turn in an investigation the FBI launched in March 2004. Justice Department officials said Abramoff had already begun sharing information and documents with them.

Officials declined to discuss any additional charges, but documents released Tuesday indicated prosecutors were focusing on benefits provided by Abramoff and his colleagues to members of Congress, their relatives, and current and former congressional staffers and their relatives.

“The corruption scheme with Mr. Abramoff is very extensive, and we will continue to follow it wherever it leads,” said Assistant Atty. Gen. Alice Fisher, head of the Justice Department’s criminal division. “This case is very active and ongoing. We are going to expend the resources that are necessary to make sure that people know that government is not for sale.”

“This is just the beginning,” predicted Stanley Brand, a Washington lawyer and former general counsel to the House of Representatives. “That is the pattern of the Justice Department. They start with the lobbyists and the outsiders and they build into the public officials. The members of Congress are the highest point in the food chain.”

The scandal is “about an 8 on the Richter scale, and it is probably going to be a 9 before it is all over,” Brand said.

Abramoff has also agreed to plead guilty today to conspiracy and wire fraud charges in Florida relating to the purchase of a fleet of gambling boats, according to Neal Sonnett, his lawyer in that case. The sentences in the two cases are expected to be served concurrently.


Tuesday’s plea agreement mirrors charges brought earlier against one of Abramoff’s former partners, Michael P.S. Scanlon. Scanlon has entered a guilty plea and has promised to cooperate with investigators.

According to court documents, Abramoff and Scanlon hid millions of dollars in fees by persuading Indian tribal clients with casino interests to pay consulting fees to companies and a nonprofit corporation Abramoff had set up. The two then shared the excess profits “pursuant to their secret agreement.”

Abramoff, the documents charge, knew that the same services could have been provided by others at a far lower cost. But Abramoff, the government said, lied to the tribes, telling them he was working for nothing and, in some cases, denying any connection to the companies receiving the payments.

Abramoff and Scanlon called their scheme “Gimme Five,” and in one case simultaneously collected fees from two Indian tribes on opposite sides of the same issue, said prosecutor Fisher.

Abramoff also admitted to providing things of value to a member of Congress identified in court papers as “Representative #1,” widely known to be Rep. Bob Ney (R-Ohio), chairman of a key House committee. Abramoff acknowledged providing the congressman and members of his staff with, among other things, “a lavish trip to Scotland to play golf on world-famous courses, tickets to sporting events and other entertainment.”

In return, the documents state, Scanlon and Abramoff won the congressman’s agreement to support specific legislation and favor an Abramoff client seeking a contract to provide wireless phone services to the House.


Ney, whose actions also had been cited in the Scanlon case, issued a brief statement denying he had done anything wrong.

“Congressman Ney has never done anything illegal or improper, and the allegations in this plea agreement do not change this fact,” said Ney spokesman Brian Walsh. He quoted Ney as stating that he “had no way of knowing the self-serving and fraudulent nature” of Abramoff’s activities.

Fisher, citing the items Abramoff said he provided to Ney and his staff in return for specific actions, said, “That’s not lobbying, that’s a crime.”

In addition to Ney, the documents describe for the first time specific actions taken by two unnamed former congressional aides who worked in collaboration with Abramoff and Scanlon.

One of the former aides, described only as “Staffer A,” solicited a Michigan Indian tribe to make a $25,000 payment to the Abramoff-controlled Capital Athletic Foundation, the documents say.

Abramoff then “used this money for his personal and professional benefit to partially pay for a golfing trip to Scotland for himself, public officials, members of his staff and others.”


That same staffer, according to court documents, solicited $25,000 from a distilled-beverage company that had hired Abramoff’s firm. That payment was funneled to the same nonprofit to fund the same overseas trip. In addition, the wife of that staffer, the filings state, was paid $50,000 through a nonprofit that had received donations from Abramoff clients “that would and did benefit from Staffer A’s official actions.”

Another staffer, described as a former chief of staff to Ney and a former staff director to the House Administration Committee, was cited for violating a restriction barring former aides from lobbying their bosses for a year after leaving the public payroll.

The documents state that the aide intervened with Ney on behalf of Abramoff client Foxcom, which was seeking a contract to provide wireless services to the House. Foxcom, which has since been renamed MobileAccess, obtained the contract with Ney’s approval.

Neil Volz, a former chief of staff to Ney, joined Abramoff’s lobbying team at Greenberg Traurig after leaving the congressional payroll in February 2002. He also served as staff director to the House Administration Committee, chaired by Ney.

Volz on Tuesday referred questions to his lawyer, who did not respond to a request for comment.

Among new items cited in the court filings were $1.1 million in fees skimmed from a New Mexico Indian tribe and $1.6 million in fees diverted from conglomerate Tyco International, which had hired Abramoff and his law firm to fight unfavorable tax legislation. The Tyco money was paid to GrassRoots Interactive, an Abramoff-controlled company, the government charged.


Abramoff, according to the documents, did not disclose to Tyco that he controlled GrassRoots.

Federal sentencing guidelines in Abramoff’s case call for a prison term of 108 to 135 months. The government said in court papers that it would support a further reduction if he fully complied with the plea agreement and provided “substantial assistance” in the investigation. Ultimately, the sentence is up to the judge.

Some legal experts said Abramoff could be providing assistance for a long time.

“It is not unusual for a major white-collar cooperator to spend years cooperating,” said Daniel R. Alonso, a former federal prosecutor and public-corruption expert in New York.


Times staff writer Chuck Neubauer contributed to this report.



Abramoff’s crimes

Here are details of the three federal charges to which lobbyist Jack Abramoff pleaded guilty, according to a Justice Department filing in U.S. District Court in Washington:


* Abramoff and then-partner Michael P.S. Scanlon conspired to defraud Indian tribes in Louisiana, Michigan, Mississippi and Texas of millions of dollars. Abramoff made about $20 million in hidden profits from the scheme. Scanlon pleaded guilty to related charges in November.

* Abramoff provided money, trips, meals and entertainment to public officials and their relatives in return for favorable treatment of his clients. The government says one member of the House of Representatives, identified elsewhere as Bob Ney (R-Ohio), received a “lavish trip to Scotland to play golf on world-famous courses” and other benefits in exchange for the congressman’s support on various issues. Ney has denied wrongdoing.


* Abramoff arranged for one of Ney’s former staff members to lobby the congressman in 2002 before the staffer’s one-year ban on lobbying had expired.

Mail fraud

Abramoff arranged for a $50,000 check to be sent through the mail from Texas to pay for the Scotland golf trip.

Tax evasion

Abramoff filed a tax return for 2002 that concealed his illegal income.

Pending charges

Abramoff is expected to plead guilty to two federal charges in Florida stemming from a 2000 purchase of a fleet of gambling boats, his lawyer said.


Source: Associated Press