WASHINGTON – Lobbyist Jack Abramoff (search) and his partner created tax-exempt groups to funnel money to themselves from Indian tribes trying to build political support for their casinos, according to documents released at a Senate hearing Wednesday.
Sen. John McCain (search), R-Ariz., chairman of the Senate Indian Affairs Committee, described it as a scheme to bilk millions of dollars from the tribes.
"Today's hearing is about more than contempt, even more than greed," he said. "It is simply and sadly a tale of betrayal."
In one case, Abramoff and partner Michael Scanlon hired a former lifeguard, David Grosh, to head a group billed as an international think tank — the American International Center — to receive payments.
Abramoff and Scanlon used that think tank and other tax-exempt groups to steer the money from the Mississippi Band of Choctaw Indians (search) and other tribes, according to documents released by the committee.
McCain said American International paid a total of $840,000 in 2002 to Greenberg Traurig, the law and lobbying firm where Abramoff worked, making it the firm's fifth largest lobbying client.
Grosh told the committee the center was set up on the bottom floor of the home in Rehoboth Beach, Del., where he was living. He said he was paid about $2,500 and left the job when he learned the center was involved with the federal government, Indian tribes and gambling.
Grosh said he became the center's director after Scanlon called and asked whether he wanted to head an international corporation.
"I asked him what I had to do and he said, 'Nothing,' so that sounded pretty good to me," Grosh told the Senate panel. Grosh has also held jobs as an excavator and machine operator and in construction and bartending.
In a 2001 e-mail, Abramoff divvied up an expected contribution the Mississippi Band of Choctaw Indians planned to make to the center.
"I am going to try to get us $175 K. $100 to Ralph; $25K to contributions ($5K immediately to Conservative Caucus); rest gimme five," Abramoff wrote. Ralph referred to Ralph Reed, former Christian Coalition leader whose name also shows up in other e-mails.
McCain urged the Justice Department to look at whether Abramoff's tribal billings and the movement of the money associated with them constitute mail or wire fraud. A federal grand jury in Washington has been investigating Abramoff's dealings for several months.
Documents released by the committee suggest Abramoff and Scanlon used the tax-exempt groups as fronts for collecting tribal money to avoid tax problems and other regulations.
Correspondence between Abramoff and others released by the committee outlines the "gimme five" scheme in which Abramoff and Scanlon allegedly skimmed off a share of tribal lobbying payments for themselves.
Eventually, payments from the Mississippi Choctaw to Scanlon totaled roughly $15 million, and Scanlon gave Abramoff a $5 million cut, McCain said.
In one e-mail discussing work for the Choctaw, Abramoff suggested to Scanlon how to prepare tribe officials for large billings to come.
"Tell her as of now you are finally willing to say that we will win this, but laughingly say, `I don't know how I am going to get back all the money I had to dump into this. I hope the Golden Moon (casino) turns out to be real golden!' That will set her up for a discussion about payments."
Abramoff spokesman Andrew Blum said the fees Abramoff earned were justified when compared with the economic benefits the tribes enjoyed as a result of his efforts.
"With an ongoing political investigation being directed by the U.S. Senate and an investigation at the Department of Justice, Mr. Abramoff is put into the impossible position of not being able to defend himself in the public arena," Blum said in a statement Wednesday.
Scanlon's attorney did not return phone calls to his office Wednesday.
Documents released by the committee also shed light on Abramoff's relationship with Reed, currently a candidate for lieutenant governor in Georgia. The committee included Reed in its investigation after learning that Abramoff and Scanlon paid him to lobby the Texas Legislature to close the Tigua tribe's casino in El Paso. The Tigua tribe had paid Scanlon roughly $4 million to help it win back a casino license.
"On the political front, did Ralph spend all the money he was given to fight this — or does he have some left?" Scanlon asked Abramoff in an e-mail, the subject of which is blacked out on the documents released by the committee.
"That's a silly question! He `spent' it all the moment it arrived in his account. He would NEVER admit he has money left over," Abramoff e-mailed Scanlon. "Would we?"