U.S. Investigating GOP Lobbyists with Ties to Indian-Run Casinos

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

A federal grand jury in Washington, D.C., is hearing testimony and analyzing thousands of banking and billing records connected to two prominent Republican lobbyists and strategists as part of a racketeering probe involving Indian-run casinos.


The men, Jack Abramoff and Mike Scanlon, have received a total of more than $45 million since 2001 from 11 tribes with gambling casinos ranging from Louisiana to Mississippi, to California to Michigan, and to Texas.


They are under investigation for possible money-laundering, racketeering, and tax fraud, federal law enforcement and Senate sources say.


The investigation is opening a window on the murky world of Indian gambling, Washington lobbying, money washing, and campaign finance. It also is a cautionary tale for New York, which has four Indian-run casinos and is considering adding at least four more.


A task force that includes the FBI, IRS, and the Justice Department’s public integrity section is running the criminal probe. Indictments are expected this fall, according to sources close to the task force.


Mr. Abramoff was ousted from his prominent law firm – Greenberg Traurig – in March, reportedly after his partners discovered he took more than $10 million in payments from Mr. Scanlon without the firm’s knowledge.


Investigators say most of the $45 million was paid to Mr. Scanlon as a public relations consultant, meaning he did not have to make public disclosure. Mr. Abramoff, one of Washington’s top lobbyists, must report such payments.


Mr. Scanlon, 33, is the former press secretary to the House majority leader, Tom DeLay. Mr. Abramoff, 45, who was the registered lobbyist for the dictatorship of the late Mobutu Sese Seko of Zaire, received $7 million from the government of the Mariana Islands to keep the protectorate exempt from American minimum-wage laws.


When the Senate repealed this exemption, Mr. DeLay killed the repeal in the House.


Neither Mr. Scanlon nor Mr. Abramoff returned phone calls from reporters for several months and both have hired criminal attorneys, who say their clients have done nothing illegal.


The federal prosecutors, who have amassed a “war room” of more 100,000 documents, have subpoenaed the banking records of a foundation created by Mr. Abramoff and his wife and of a campaign consulting company and a “think tank” in Delaware run by Mr. Scanlon. These institutions are suspected of laundering large sums of money “donated” by the tribes for personal and political use by the lobbyists.


For example, Mr. Scanlon’s Capitol Campaign Strategies, which received at least $30 million in fees from the tribes, donated $500,000 to the Republican Governor’s Association in 2002, but the contribution – the single biggest to the RGA – wasn’t disclosed until this year, after the grand jury probe began. About 90% of all of Mr. Scanlon’s revenue came from gambling tribes.


Mr. Scanlon’s think tank – the American International Center – received a $556,000 donation from the 800-member Coushatta tribe of Louisiana. The AIC, was run by a former lifeguard and a former yoga instructor, produced no policy work, and went defunct after a year. The AIC, located on property owned by Mr. Scanlon, paid Mr. Abramoff $1.5 million in fees, much of it after it after it closed.


Mr. Abramoff’s Capitol Athletic Foundation received $1 million each from the Coushatta tribe of Louisiana, and the Choctaw tribe of Mississippi. This foundation then made a $1.8 million donation to an Orthodox Jewish private school founded by Mr. Abramoff. The school closed when Mr. Abramoff was expelled from his law firm.


A 2003 audit of the Coushattas by the tribe’s former controller, Erick LaRoque, found the tribe had a $40 million deficit, and that “operating equity and cash reserves have suffered significant decline. “The audit reported that $24 million had been taken from the tribe’s education, health care, and housing funds, and, “There is no documented plan for reimbursement.”


Three dissident leaders of the tribe – secretary treasurer Harold John, tribal council member David Sickey, and Ben Langley – have told The New York Sun they were excluded from all meetings and decision-making involving the lobbyists, their fee structure, and what the men did to earn these fees.


Mr. Sickey said he is “disgusted” by the donation of “sacred tribal education funds” to the foundation and think tank “without proper documentation.”


Law enforcement sources have told the Sun that one aspect of the “hydra headed” grand jury probe is that the Coushatta tribe paid Mr. Scanlon’s company to spy on dissidents and their lawyers. Another focus is whether some local tribal leaders received kickbacks to help Messrs. Abramoff and Scanlon.


In the last few months, there has apparently been a power shift within the Coushatta tribe against the lobbyists, under the pressure of subpoenas, visits by FBI agents, and a drumbeat of investigative stories in the local daily, American Press.


Messrs. Abramoff and Scanlon have been fired, a new Texas law firm has been hired, and a new public relations spokesman hired by the Texas law firm, with the consent of the pro-Abramoff faction.


Louisiana consultant Roy Fletcher, who helped run Senator McCain’s presidential campaign in Louisiana in 2000, is the tribe’s new spokesman. He said the tribe was taken advantage of and shortchanged.


In addition to the ongoing grand jury probe being run out of the Justice Department, the Senate’s Indian Affairs Committee is to hold a public hearing September 29 into some aspects of the alleged fleecing and overcharging of the tribes. Mr. McCain, a Republican from Arizona and a longtime advocate of Indian rights and campaign finance reform, is the driving force behind the hearing.


Both probes have started tracing the tribal money in political campaigns. Since the late 1990s,the 220 tribes with casinos have become a major source of campaign funds for politicians. Since the tribes are considered sovereign nations, they are exempt from the Mc-Cain-Feingold campaign finance law.


Eleven tribes represented by Messrs. Abramoff and Scanlon have donated about $1 million to Republican candidates and PACs since 1998, according to records at the Center for Responsive Politics.


The Agua Caliente tribe of California, which has been resisting a union organizing drive, gave $100,000 to the Republican National Committee shortly after hiring Mr. Abramoff.


The Agua Caliente tribe paid Mr. Abramoff $1.6 million in lobbying fees for one year and hired Mr. Scanlon to run a $7.4 million letter-writing campaign to then-governor, Gray Davis, a Democrat, for more slot machines. This failed effort generated 2,000 letters, at a cost of $3,700 per letter, according to tribal dissidents.


The Tigua tribe of Texas, an Abramoff client, donated $92,000 to national Republican candidates and committees, according to the Federal Elections Commission.


Mr. Abramoff, tribes he represented, and his former law firm have given Mr. De Lay about $100,000. Mr. Abramoff alone contributed to 12 GOP congressmen and six senators.


Until Messrs. Abramoff and Scanlon began to represent Indian tribes, most of the tribes gave the bulk of their donations to Democrats and hired Democratic lobbyists when President Clinton was in office.


The Democratic lobbyists were getting about $15,000 a month in fees, and Messrs. Scanlon and Abramoff were each been getting an average of $150,000 a month, according to investigators working for the Senate committee. Mr. McCain says the exorbitant nature of the fees – and their diversion from the human needs of the tribal rank and file – first focused his attention.


When Mr. Scanlon was Mr. DeLay’s press secretary he was known for his bullying tactics during the impeachment proceedings against President Clinton.


Long Island Rep. Peter King, a Republican of Long Island, told the Sun that Mr. Scanlon threatened him after he joined three other GOP House members who voted against impeachment.


“Mike was just a punk staff kid,” Rep. King told the Sun, “telling me I would lose my committee assignment because I went against DeLay.”


The New York Sun

© 2025 The New York Sun Company, LLC. All rights reserved.

Use of this site constitutes acceptance of our Terms of Use and Privacy Policy. The material on this site is protected by copyright law and may not be reproduced, distributed, transmitted, cached or otherwise used.

The New York Sun

Sign in or  Create a free account

or
By continuing you agree to our Privacy Policy and Terms of Use