McCain Shines Spotlight on Lobbyists’ Excesses

Posted June 22, 2005 at 6:38pm

It all began about four years ago in a phone conversation between a couple of buddies who’d known each other since they were 14.

“Do you want to be the head of an international corporation?” asked Michael Scanlon, a former press aide to Rep. Tom DeLay (R-Texas) with a burgeoning public relations practice.

To David Grosh — a lifeguard in Rehoboth Beach, Del., who also specialized in excavating, machine operations, bartending, mentoring pre-school children and other “typical beach employment” — it was almost too good to be true.

“That’s a hard one to turn down,” Grosh told Sen. John McCain (R-Ariz.) on Wednesday, prompting an outburst of laughter from the Indian Affairs Committee chairman and a packed crowd in Hart 216.

With that, Grosh became the first insider from the world of Scanlon and his partner, former lobbyist Jack Abramoff, to testify openly about how the duo charged $82 million to a half-dozen American Indian tribes in lobbying and PR fees in a few years.

Grosh and the reams and reams of documents the committee produced Wednesday, part of its 15-month-and-counting investigation, provided the clearest glimpse yet into how Abramoff and Scanlon set up a web of interlocking nonprofits, think tanks and small businesses in order to move cash from place to place for their own benefit.

While Grosh often provided comical relief in an otherwise deadly serious hearing, his testimony also laid bare the continuing legal jeopardy that Abramoff and Scanlon placed themselves in by running their affairs through these nonprofits. A federal task force is being headed up by the Justice Department’s public corruption unit, but just as important is the presence of Internal Revenue Service investigators in that task force.

McCain cited the IRS in his opening statement, referring to the Capital Athletic Foundation, a group run solely by Abramoff and his wife. In addition to many questionable activities, the foundation sent money to a high school friend of Abramoff’s who was living in Israel teaching a “sniper school” for members of the “Israeli Defense Force,” cash that paid for his friend’s use of a Jeep.

“Whether the substance, as opposed to the form, of the transaction comports with our tax laws will likely be of interest to the IRS,” McCain observed.

The foundation was funded by many of Abramoff’s clients including the Mississippi Band of Choctaws, whose representatives testified Wednesday that they had no idea that the foundation was run by Abramoff. They thought their donations were going toward grass-roots activities opposing rival tribal casinos, not toward Abramoff’s personal interests such as Israel’s fight with the Palestinians and the Eshkol Academy, a Jewish grammar school started by the Abramoffs.

In Grosh’s case, he became the “president” of American International Center, a think tank set up on the first floor of Grosh’s beach house that handled millions and millions of dollars in its brief existence from early 2001 through 2002.

What, McCain asked, did Grosh have to do other than help set up some computer equipment in the first floor of his house?

“I asked [Scanlon] what I had to do,” Grosh testified. “And he said, ‘Nothing.’”

Grosh barely recalled the one official meeting of the board of the center, which lasted 15 minutes.

“I’m sure we discussed something,” he said, again cracking up McCain and the audience.

The center — the stated mission of which was to “expand the parameters of international discourse in an effort to leverage the combined power of world intellect” — closed in mid-2002, as Roll Call reported last year.

For all of 2002, it paid $840,000 for Greenberg Traurig’s lobbying services. Abramoff’s lobbying clients provided the center’s revenue, including the Embassy of Malaysia, which sent it a $300,000 check in the summer of 2001, according to Indian Affairs documents released Wednesday.

Sitting to Grosh’s immediate left was Brian Mann, introduced by McCain at the hearing as a yoga instructor and also a director of American International Center. Mann, under the advice of his lawyers, cited his Fifth Amendment right against incriminating himself and declined to answer any of the committee’s questions — the same approach taken last September in the first hearing on the issue by Abramoff and again in November by Scanlon.

On Wednesday Mann was preceded in taking the Fifth by Abramoff’s former right-hand men at Greenberg Traurig: Kevin Ring, a former aide to Rep. John Doolittle (R-Calif.) and ex-Attorney General John Ashcroft who has since joined Barnes & Thornburg as a lobbyist; and Shawn Vassell, a former aide to Sen. Conrad Burns (R-Mont.).

The publication “Influence” reported last year that Ring had personally accepted money from Scanlon’s firm, in apparent contradiction to Greenberg Traurig rules. The hearing revealed that Ring had established his own firm, KAR Consulting, based out of his own home and received $50,000 from another of Abramoff’s smaller companies, Grassroots Interactive, and $135,000 from Scanlon’s Capital Campaign Strategies.

Ring pled the Fifth as McCain asked if the money actually came from the Sandia Pueblo in New Mexico.

Buried in the sea of documents released by the panel were a series of other colorful e-mail quips and revealing moments, such as:

• Scanlon’s firm purchased a car worth more than $140,000 in 2002;

• in one e-mail to Abramoff dated August 2000, Scanlon requested permission to take two DeLay aides and one former DeLay aide out to dinner on the Choctaws tab — eventually prompting Abramoff to write, “Don’t skimp too much. I want everyone to have a good time”;

• along with paying for Abramoff’s golf club fees and Ring’s social fees in the University Club, the Choctaws also unwittingly covered an old Abramoff debt of $50,000 from his film producing days in the 1980’s;

• Abramoff expensed $9,300 worth of lunches and dinners in 2002 on the Choctaw tab, most of which occurred at his own restaurant, Signatures — many of the lunches or dinners were with his firm’s lobbyists or people repeatedly referred to as “tax reform lobbyists.”

But no one provided more color and insight than Grosh, who was repeatedly thanked by a smiling McCain for his candor. Grosh even rebuked McCain when the Senator portrayed him as a victim of Scanlon’s excesses.

“I’m an adult. He didn’t use me,” Grosh said.

In all, Grosh said he got about $2,500 for his “services” to the American International Center and got to attend an NHL game between the Washington Capitals and Pittsburgh Penguins for free at the MCI Center for a few months’ of not doing much work.

“That’s a pretty good deal, huh?” McCain asked.

Grosh looked at his surroundings and, clearly reflecting on the legal proceedings he’s been caught up in, again contradicted McCain.

“Well,” he said, “obviously not.”