Hearing Links Abramoff, Reed

McCain Sees Fraud in Millions

Posted June 22, 2005 at 6:45pm

The financial ties between former GOP lobbyist Jack Abramoff and prominent conservative activist Ralph Reed were deeper, and began earlier, than had been previously disclosed, according to documents released at a Senate Indian Affairs Committee hearing Wednesday.

Several years worth of e-mail correspondence between the pair show Reed was aware that funds he was being paid came from American Indian tribes with casino operations.

Reed — who’s running for lieutenant governor of Georgia — now contends that since he wasn’t taking casino money from the tribes, but was instead being paid with money from other tribal businesses, his actions are consistent with his religious aversion to gambling.

“The work we did was legitimate, lawful and effective. And we are proud of it,” said Lisa Baron, a spokeswoman for Reed’s consulting firm, Century Strategies. “We have no problem working with Indian tribes as long as we are assured — as we were in these cases — that the contributions did not derive from gambling revenues.”

Baron said that Wednesday’s revelations did not contradict any prior statements to the media. In August 2004, Reed told Roll Call that Century Strategies never did business with casino operators, including American Indian tribes. “And at no time did my firm have a relationship with, nor were we retained by, any casino or casino company,” Reed said at the time.

Grover Norquist, another well-known conservative figure, also played a role in Abramoff’s activities, and he apparently benefited from his relationship with Abramoff as well, according to e-mails released by the committee.

In May 1999, Norquist asked Abramoff is he could get $75,000 from the Mississippi Choctaws to cover a “hole in my budget.” Norquist is the founder of Americans for Tax Reform and a longtime Abramoff ally. ATR acted as a conduit for hundreds of thousands of dollars in fund transfers between Reed and the Choctaws.

Norquist also sought $100,000 in August 2002 from several tribes to help put together a meeting with President Bush. Choctaw officials said they did not respond to ATR’s request for funds, and that no tribal representative took part in an earlier meeting with Bush in 2001 arranged by Norquist.

The Indian Affairs Committee hearing, chaired by Sen. John McCain (R-Ariz.), included charges that Abramoff and a former business partner, Michael Scanlon, used phony documents, padded expense accounts and front groups they secretly controlled to bilk millions of dollars from the Mississippi Choctaw tribe in a scheme the two dubbed “gimme five.” According to McCain, in 2001 alone, Abramoff and Scanlon overcharged the Choctaws by $6.5 million for political consulting work.

One e-mail released Wednesday by the committee referred to $30 million in “gimme five” money out of a total of nearly $44 million paid by the Choctaws. “Gimme five” was code name for profits that Abramoff and Scanlon made on their Choctaw account through overcharging tribal leaders for their services.

McCain himself said the Choctaws paid at least $15 million to Scanlon’s companies for consulting work, of which $5 million to $7 million went back to Abramoff, a longtime lobbyist for the tribe, as “referral fees.” McCain said that term “strains credulity.”

“Today’s hearing is about more than contempt, even more than greed,” the Arizona Republican said. “It is simply and sadly a tale of betrayal.”

Roll Call and other media outlets previously reported that Reed, the former executive director of the Christian Coalition and a political advisor to both of President Bush’s White House campaigns, was paid at least $4 million by Abramoff and Scanlon to help whip up opposition among evangelical and anti-gambling groups to more casinos or legalized gambling in several Southern states, including Alabama, Mississippi and Louisiana. These efforts helped Abramoff’s tribal clients as they sought to prevent rivals, including other tribes, from moving into their turf.

Numerous e-mails and memos between Reed and Abramoff show that Reed turned to Abramoff for help in soliciting corporate clients in November 1998, shortly after the mid-term elections were over. Reed served as a political consultant to a dozen Republican campaigns during that period.

“Hey, now that I am done with electoral politics, I need to start humping in corporate accounts,” Reed wrote to Abramoff on Nov. 12, 1998. “I’m counting on you for some help with contacts.” Abramoff even invited Reed to an upcoming Washington Redskins football game, where Abramoff had a luxury suite paid for by some of his tribal clients.

By late March 1999, Reed had developed a program for the Choctaws, and the tribe’s legislative liaison, Nell Rogers, wanted more information before she committed to the plan. It was unclear from the e-mails where the program was to take place; the Indian Affairs Committee redacted some information in the messages.

“Ralph, I spoke with Nell this evening,” Abramoff wrote to Reed on March 29, 1999. “She wants more specifics. They are not scared by the number, but want to know precisely what you are planning to do for this amount.”

In an e-mail dated April 9, 1999, Abramoff asked Reed if the Choctaws could send $100,000 directly to Reed’s firm to cover the cost of work Century Strategies had been doing on behalf of the Choctaws. “Any chance that a wire directly from the Choctaw would be okay?” Abramoff wrote. It is unclear if that transfer occurred.

By April 21, 1999, Reed had already sent Abramoff an invoice for $122,000, and he needed another $250,000 to $300,000 to cover the cost of telephone banks, a week-long TV ad campaign and a radio blitz that included an ad from James Dobson, founder of the conservative Christian group Focus on the Family.

On Jan. 27, 2000, Reed sent a memo to Abramoff outlining the costs of one of the anti-gambling programs Reed was mounting in Alabama, where legalization of video poker and the adoption of a state lottery was being debated in the state legislature. The invoice concluded charges of $40,000 per month for a “Management Fee,” and another $40,000 for “Legislative Counsel.” The entire program was estimated to cost $867,511, Reed wrote.

On Feb. 3, 2000, Reed estimated that it would cost roughly $2.6 million to defeat video-poker and lottery proponents if the battle extended though both the Alabama House and Senate. “We will keep doing all we can to raise money from national anti-gambling groups, Christian CEOs, and national pro-family groups,” Reed wrote.

Reed and Abramoff also discussed whether the National Center for Public Policy Research, a conservative think tank, could be used as a conduit for Choctaw payments, although that idea was rejected. The two discussed using another non-profit group for transferring the funds. “Let me know if it will work just to do this through ATR until we can find another group,” Abramoff wrote to Reed.

Norquist was also taking a cut of the Choctaw money. In one Feb, 22, 2000, e-mail, Abramoff said “grover kept another $25K!” of the hundreds of thousands of dollars in Choctaw funds that were being passed through his organization to Reed. Norquist has publicly admitted that at least $1.1 million was given to ATR with Reed’s firm as the final destination.

Sen. Byron Dorgan (D-N.D.), the ranking member on Indian Affairs, suggested that such “laundering” was an effort to hide the original source of the funds. At one point in early 2000, video-poker supporters in Alabama said Mississippi casinos were funding anti-gambling coalitions in Alabama, a charge that the anti-gambling groups, including churches and the Alabama Christian Coalition, denied.

In early 2001, Reed began working on an anti-gambling drive in Texas. Abramoff and Scanlon were working to close down three tribal casinos that threatened one of the pair’s big casino clients, the Louisiana Coushattas. The Coushattas were afraid they would lose Texas customers to the new Texas-based casinos.

For this campaign, initially budgeted at just under $550,000 for two months, Reed was charging $45,000 per month in “management fees” and another $60,000 for “Legislative Strategy/Coordination.” At that time, Scanlon and Abramoff planned to use a front group controlled by Scanlon, the American International Center, to pay Century Strategies. On May 2, 2001, Abramoff told Scanlon to send $100,000 from AIC to Century Strategies, Reed’s firm.

On April 2001, Abramoff told an unidentified e-mail recipient to send $10,000 in Choctaw funds to Reed’s campaign for chairman of the Georgia Republican Party. Reed later won that race.

By December 2001, Reed bragged to Abramoff in an e-mail that his outreach program for evangelicals was causing problems for local Texas politicians.

“The volume must be off the charts to have jammed their switchboard,” Reed said to Abramoff in a Dec. 3, 2001 message.

A week later, Reed told Abramoff that he needed “$225 a week for TV” and another “$70K a week for radio” to keep the anti-gambling campaign going. Abramoff complained to Reed that the Coushattas “are going to faint when they see these numbers.”

However, by early 2002, Abramoff and Scanlon had grown disenchanted with Reed. In one e-mail exchange, Scanlon and Abramoff debate whether Reed has used all the funds they sent him for one program, and are not sure if they believe his assertion that he did.

“[Reed] is a bad version of us!” Abramoff wrote to Scanlon on Jan. 4, 2002. “No more money for him.”

On Feb. 7, 2002, Abramoff told Scanlon to “go ahead and pay him so I can get him off my back.”