<DOC>
[109 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:24471.wais]
S. Hrg. 109-135, Pt. 2
TRIBAL LOBBYING MATTERS
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON INDIAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
ON
OVERSIGHT HEARING REGARDING TRIBAL LOBBYING MATTERS, ET AL
__________
NOVEMBER 2, 2005
WASHINGTON, DC
__________
PART 2
__________
U.S. GOVERNMENT PRINTING OFFICE
24-471 WASHINGTON : 2006
_____________________________________________________________________________
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COMMITTEE ON INDIAN AFFAIRS
JOHN McCAIN, Arizona, Chairman
BYRON L. DORGAN, North Dakota, Vice Chairman
PETE V. DOMENICI, New Mexico DANIEL K. INOUYE, Hawaii
CRAIG THOMAS, Wyoming KENT CONRAD, North Dakota
GORDON SMITH, Oregon DANIEL K. AKAKA, Hawaii
LISA MURKOWSKI, Alaska TIM JOHNSON, South Dakota
MICHAEL D. CRAPO, Idaho MARIA CANTWELL, Washington
RICHARD BURR, North Carolina
TOM COBURN, M.D., Oklahoma
Jeanne Bumpus, Majority Staff Director
Sara G. Garland, Minority Staff Director
(ii)
C O N T E N T S
----------
Page
Statements:
Baggett, Fred, managing shareholder; chairman, National
Government Affairs Practice, Greenberg Traurig,
Tallahassee, FL............................................ 20
Cathcart, Christopher, former associate, Capitol Campaign
Strategies................................................. 57
Dorgan, Hon. Byron L., U.S. Senator from North Dakota, vice
chairman, Committee on Indian Affairs...................... 6
Griles, J. Steven, former deputy secretary, Department of
Interior................................................... 88
Halpern, Gail, Jack Abramoff's former tax advisor............ 59
Leeper, Charlie, esq., Spriggs and Hollingsworth............. 57
McCain, Hon. John, U.S. Senator from Arizona, chairman,
Committee on Indian Affairs................................ 1
McConnon, B.R., president, Democracy Data and Communications. 57
Rossetti, Michael, former counsel to the Secretary of the
Interior, Department of the Interior....................... 89
Sickey, David, council member, Coushatta Tribe of Louisiana.. 13
Sickey, Kevin, chairman, Coushatta Tribe of Louisiana........ 10
Thomas, Hon Craig, U.S. Senator from Wyoming................. 9
Van Hoof, Kathryn, former outside counsel, Coushatta Tribe of
Louisiana.................................................. 19
Worfel, William, former tribal council member, Coushatta
Tribe of Louisiana......................................... 17
Appendix
Prepared statements:
Baggett, Fred................................................ 109
Sickey, David................................................ 112
Sickey, Kevin................................................ 110
Thomas, Ronnie, chairman, Alabama-Coushatta Tribe of Texas
(with attachment).......................................... 443
Additional material submitted for the record:
Hartman, Barry M., Kirkpatrick & Lockhart Nicholson Graham
LLP, letter to Senator McCain on behalf of Steven Griles... 116
Murphy, Kevin M, Carr Maloney P.C., letter to Senator Dorgan
on behalf of Gail Halpern.................................. 123
Additional e-mails........................................... 125
TRIBAL LOBBYING MATTERS
----------
WEDNESDAY, NOVEMBER 2, 2005
U.S. Senate,
Committee on Indian Affairs,
Washington, DC.
The committee met, pursuant to notice, at 9:30 a.m. in room
216, Senate Hart Building, Hon. John McCain (chairman of the
committee) presiding.
Present: Senators McCain, Akaka, Burr, Cantwell, Coburn,
Conrad, Crapo, Domenici, Dorgan, Inouye, Johnson, Murkowski,
Smith, and Thomas.
STATEMENT OF HON. JOHN McCAIN, U.S. SENATOR FROM ARIZONA,
CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS
The Chairman. Good morning.
Last year, this committee launched its investigation into
serious allegations of misconduct levied by a number of Indian
tribes against their former lobbyist, Jack Abramoff and
political consultant Michael Scanlon. The picture painted by an
earlier Washington Post article about the duo had given cause
for grave concern.
Little did we know then what a complex and tangled web we
would begin to unravel. Some may have known. According to one
e-mail sent by former Abramoff associate Kevin Ring on February
22, 2004 to a colleague, ``I know more than the article and the
truth is worse.'' Indeed, the truth has proven much, much
worse.
The story is alarming in its depth and breadth of potential
wrongdoing. It is breathtaking in its reach. It has spanned
across the United States, sweeping up a number of tribes, the
Coushatta Tribe of Louisiana, the Mississippi Band of Choctaw
Indians, the Saginaw Chippewa Indian Tribe of Michigan, the
Agua Caliente Band in Palm Springs, the Tigua Indians of El
Paso, and the Pueblo Sandia Tribe of New Mexico.
It has taken us from tribal reservations across the land to
luxury sports boxes here in town; from a sham international
think tank in Rehoboth Beach, DE, to a sniper workshop in
Israel, and then beyond. But let us not forget that the
unifying threads of this entire investigation have been the
astronomical fees the tribes paid Michael Scanlon, where those
fees ultimately went, and why.
Recall that between 2001 and 2004, six tribes paid more
than $66 million to Michael Scanlon's company, Capitol Campaign
Strategies, and its affiliates. Remember, too, what the $66
million figure does not include. The $66 million does not
include payments made by the tribes for lobbying services
provided by Greenberg Traurig. The $66 million does not include
the substantial payments made by the tribes directly to other
entities owned or controlled by Abramoff, such as the Capital
Athletic Foundation. The $66 million does not include the
substantial political and dubious charitable contributions that
the tribes made at Mr. Abramoff's direction. The $66 million
only includes the payments by the tribes to Mr. Scanlon's
companies.
The revelations in the Washington Post's February 22, 2004
article sparked many reactions. Upon its publication, Mr. Ring
wrote again to his colleague: ``Now what do you think of my
partner Jack? Not too shady, huh?'' Mr. Ring's colleague could
only reply, ``That is a lot of cake.'' It was. Mr. Abramoff and
Mr. Scanlon considered the Coushatta to be the biggest slice.
In a September 10, 2001 e-mail, Mr. Abramoff asked Mr.
Scanlon, ``Can you let me know how much more, than the current
$660,000, we would each score should Coushatta come through for
this phase and Choctaw continue to make the transfers. I need
to assess where I am at for the school's sake.'' Mr. Scanlon
replied, ``Coushatta is an absolute cakewalk. Your cut on the
project as proposed is at least $800,000.''
All in all, Mr. Scanlon reported that Mr. Abramoff would
get at that time $1.5 million on top of the $660,000, for a
total of $2.1 million. Mr. Abramoff heaped praise on his
partner: ``How can I say this strongly enough? You iz da man!''
Mr. Scanlon, however, was not content with the $2.1
million. He exhorted Mr. Abramoff in that same e-mail, ``Let's
grow that $2.1 million to $5 million. We need the true `gimme
five'.'' ``Gimme five,'' as we learned from the last hearing,
was Mr. Abramoff's and Mr. Scanlon's code phrase for their
alleged money-making scheme. Mr. Abramoff and Mr. Scanlon
apparently convinced the tribes to pay grossly inflated fees to
Mr. Scanlon's companies.
How did they do this? According to Mr. Ring's February 22,
2004 e-mail, Mr. Abramoff, ``talks tribes into hiring
Scanlon.'' Ultimately, the two men each reaped at least $21
million in profit.
Almost 6 months after the ``cake walk'' exchange, Mr.
Abramoff and Mr. Scanlon tried to achieve the true ``gimme
five'' with the Coushatta. While Mr. Scanlon was drafting a
grassroots proposal for the tribe, Mr. Abramoff guided him in a
March 12, 2002 e-mail: ``It is great, but don't give the option
of shaving costs. Of course, they should do all at once, and
there are no savings!!!, otherwise we will sacrifice $2 million
that they would otherwise gladly pay.''
Mr. Abramoff and Mr. Scanlon saw the Coushatta as their
``money train.'' Mr. Abramoff summed it up in his June 2, 2002
e-mail to Mr. Scanlon, ``They are ripe for more pickings. We
have to figure out how.''
The committee has tried to determine how expensive the
money train was. Preliminarily, the committee has determined
that in less than 3 years, the tribe paid Capital Campaign
Strategies over $26.6 million; American International Center
another $3.6 million; and the Capital Athletic Foundation $1
million, for a grand total of almost $32 million.
Again, that does not include lobbying fees paid to
Greenberg Traurig at a rate of $125,000 per month. Thirty-two
million dollars is an astounding number over such a short
period of time. When one examines what benefits the tribe
actually derived, some may say the payments were almost
criminal.
Today, we have with us Kevin Sickey, the current chairman
of the tribe, and David Sickey, a current council member. We
also have with us William Worfel, the tribe's former vice
chairman, and Kathryn Van Hoof, the tribe's former general
counsel. I want to thank them and the tribe for their
continuing cooperation with the committee's investigation. I am
interested to hear their reaction to the evidence presented
today.
Although the questionable transactions in which Mr.
Abramoff and Mr. Scanlon engaged are too numerous to cover in
this hearing, I want to focus on an illustrative few. Take, for
example, $3.17 million that Mr. Scanlon requested from the
Coushatta for the Louisiana Battleground Program.
In an October 24, 2001 e-mail, Mr. Abramoff wrote to Mr.
Scanlon, ``I want to see if we can pump up our LDA for the
second-half to make sure we do not fall out of the top 10. I
can achieve this if I can run some of the money for the
Coushattas through the firm, then get it to CCS.'' Concerned,
Mr. Scanlon asked, ``Are you sure Baggett will let you rip it
back out?'' Mr Abramoff responded, ``If not, it will be a cold
day in hell that they get this check from my grubby hands.''
To get the money into Greenberg Traurig, Scanlon made the
pitch to Kathryn Van Hoof, outside counsel to the Coushatta at
the time. ``We broke this into two invoices, one to be paid to
Greenberg Traurig for $1 million and one paid to Capitol
Campaign Strategies, GT's public affairs entity, for the
balance. We usually just invoice through Capitol Campaign
Strategies, so the lawyers at the firm rest easy, while we are
out burning the countryside. In this instance, however, we plan
to do some things through the law firm umbrella due to their
highly sensitive nature and confidentiality reasons. I hate
hiding behind lawyers, but we are going to do some crazy stuff
on this one so I guess it is okay.''
The attached invoice Mr. Scanlon submitted under Greenberg
Traurig's name identified the purpose of the payment as
``public affairs services.'' It appears that at no point did
Mr. Scanlon or Mr. Abramoff tell the Coushatta that their money
would be used for anything other than political activities.
But that $1 million never went to the tribe's political
activities. At Mr. Abramoff's direction, it instead padded the
coffers of the Capital Athletic Foundation, Jack Abramoff's
private charity. Greenberg Traurig, too, was deceived in this
transaction. To extract the money from Greenberg Traurig's
trust accounts, Mr. Abramoff told the firm that the Coushatta
knew about the payment to the Foundation and had authorized it.
Let me be clear. The tribe did not know about and had not
approved the transaction. Certainly, the tribe had no intention
of providing what turned out to be the seed money for
Abramoff's private charity. I think the Department of Justice
and the Internal Revenue Service will be interested in this
apparently fraudulent and tax-evasive transaction.
I want to stop for a moment and recognize Greenberg Traurig
and its able lawyers at Williams and Connolly. I know this
chapter in the firm's history is embarrassing and painful in
many ways, but I want the record to reflect that consistent
with their professional obligations, Greenberg Traurig and its
counsel have always been responsive to the committee's
requests; always made themselves available to answer questions;
and have always conducted themselves with dignity and
professionalism in these trying circumstances. I thank them for
their assistance in this investigation.
Now, if you look back at Mr. Scanlon's e-mail to Ms. Van
Hoof, we need to ask: How did Capitol Campaign Strategies spend
the other $2.17 million it requested? According to Capitol
Campaign Strategies' internal records, a small part was paid to
outside vendors for actual work before Mr. Scanlon began to
raid it. On November 2, 2001, Mr. Scanlon took $1.4 million as
a shareholder draw. Later entries in the CCS accounting ledger
show at least $115,000 apparently going for Mr. Scanlon's
wedding which did not happen. Of course, Mr. Scanlon ultimately
paid some to Mr. Abramoff.
What happened to the more than $4 million the tribe paid to
CCS on January 18, 2002 for another of Mr. Scanlon's ``high-
octane'' programs? Mr. Scanlon withdrew the first $1.9 million
as a shareholder draw. He paid another $20,000 to Jon van Horn,
who was at that time an employee of Greenberg Traurig. Mr.
Scanlon then paid $2.7 million to Kaygold, Mr. Abramoff's
alter-ego.
And where did the $2.3 million that the Coushatta paid into
the American International Center on April 9, 2003 go? Four
days after its receipt, $991,000 went to Kaygold, Jack
Abramoff's company. Another $1.3 million went to Capitol
Campaign Strategies on April 22. From there, $15,000 was paid
to a research company for work performed. Michael Scanlon drew
down $1.4 million, apparently for work on his house, personal
expenses and as a general shareholder draw.
Where it went after that, the committee cannot yet say.
What it can say, however, is that the Coushatta apparently
received little of the intended benefit for the vast sums it
paid. During his pitch to the tribes, Mr. Scanlon made much of
the databases he sold them. He called them customized and state
of the art. They were technological wonders that contained
everything from voter preferences to opposition research. He
claimed that his company constructed, maintained and updated
them.
But ``high-technology'' came at a steep price, according to
Mr. Scanlon. In his October 23, 2001 memorandum to the tribe
about their Battleground Program, Mr. Scanlon claimed that
modifying the tribe's already existing database would cost
$1,345,000. In the Coushatta political program, Mr. Scanlon
pitched in 2003, for which the tribe paid millions of dollars,
he claimed that ``we are well underway in what is the most
significant part of the 2003 program, and quite frankly the
most expensive part of the program thus far.'' Yet Mr. Scanlon
paid no more than $105,000 for the Coushatta database. His
company did not construct it. He outsourced the database to
another company.
We are fortunate to have with us today B.R. McConnon, the
president of Democracy Data and Communications, the vendor that
actually provided the software program and constructed the
database. I think his testimony will be instructive on this
issue and I thank him for his appearance and cooperation.
I could continue identifying other individual transactions,
but our time today is limited. Suffice it to say that Mr.
Scanlon and Mr. Abramoff made much money off the Coushatta.
Today, the committee will also examine certain issues
related to a nonprofit called the Council of Republicans for
Environmental Advocacy, commonly known as CREA. Information in
the committee's possession indicates that Mr. Abramoff directed
at least four of his tribal clients to contribute no less than
$250,000 to this organization from 2001-03. The question is
why. The committee can point to nothing that the CREA did for
the tribes in particular, or on Native American issues in
general, that merited such generosity.
In fact, documents obtained in the course of the
investigation suggest that Mr. Abramoff might have had his
tribal clients pay so much because he perceived that CREA's
president, Italia Federici, would help him get inside
information about, and possibly influence, tribal issues
pending at the Department of the Interior. Internal business
communications between Mr. Abramoff and his associates reflect
that Mr. Abramoff believed that Ms. Federici had ``juice'' at
the Department of the Interior and deemed her ``critical'' to
his tribal lobbying practice. Whether she actually did have
access and influence or whether she was just saying so to have
Mr. Abramoff's tribes continue their donations is a question I
hope is answered today.
Whatever the answer, one point should be made clear, and I
believe all the witnesses on the fourth panel will agree. There
has been no evidence to suggest that Secretary Norton knew of,
much less sanctioned, Mr. Abramoff or anyone else using her
name in seeking fees and donations from Native Americans. To
suggest otherwise based on the current record would do a great
disservice to the Secretary.
This hearing brings the committee one step closer to
concluding its investigation. Over the next few months, the
committee will continue its work and early next year it will
prepare an appropriate report. Of course, should the evidence
warrant, the committee will conduct further hearings.
As I sit here today, I cannot say what specific legislative
remedies will result from this investigation. Clearly, lobbying
reform is one of the issues that will be addressed. Whatever
those remedies, I sincerely hope that the sanitizing light of
public scrutiny shed on these lobbying practices has benefitted
not just the affected tribes, not just Indian country, but all
who participate in and are part of our great democratic
process.
Finally, in preparation for this hearing, Vice Chairman
Dorgan has asked that certain documents produced in response to
committee subpoenas in this matter that he is keenly interested
in be made part of the record. I have likewise asked that
certain documents be made part of the record. I now ask for
unanimous concurrence that both sets of documents, which were
exchanged and agreed upon before today's hearing, be made part
of the record.
Finally, I believe that Ms. Federici is not here. Is that
correct? As far as we know, Ms. Federici has not chosen to
respond to subpoena or we have been unable to subpoena her. As
I wrote to her lawyer, we will have another hearing with her as
the witness at whatever time we are able to track her down. It
is very unfortunate that she has chosen not to cooperate in
this hearing.
Senator Dorgan.
STATEMENT OF HON. BYRON L. DORGAN, U.S. SENATOR FROM NORTH
DAKOTA, VICE CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS
Senator Dorgan. Mr. Chairman, I will not repeat much of
what you have added. However, I do have a statement of some
length.
Let me say that when this committee began this odyssey some
long while ago, I doubt if any of us would have imagined the
tangled web that we would have uncovered. Schemes and
personalities; it is a little like a bad novel with many
characters and sub-plots. Each additional hearing has raised
even more questions and added to the bizarre twists of the
story. Each successive hearing has also increased my concern
about a political system that in these circumstances seemed to
encourage and reward unethical behavior.
While the committee has focused on the corruption and greed
of two individuals, in particular Jack Abramoff and Michael
Scanlon, I think in some ways they are symptomatic of larger
problems. We only need to open the newspaper each morning to
read of the latest scandals.
One person has been indicted, in fact, in part for giving
false information to this committee during this investigation.
Our staff has received information indicating there have been
other attempts to obstruct this investigation. Our staff has
received reports and questions of senior Government officials
interceding on behalf of friends in Government decisionmaking.
It is my hope that when the final report is written on this
investigation, it not only recounts the facts and recognizes
the illegal and unethical conduct that has occurred, but that
it will address what is at the heart of why we sit on this dais
today. We cannot change the ethics or the moral conduct of
those who decide for their own reasons to break the law or make
a living deceiving people, but this Congress can tighten up on
the laws to ensure full disclosure and transparency, that it
becomes a practice, not just a concept.
I thank the Chairman and his staff for their persistence in
seeking the truth and making sense of the morass of information
that we have received. I particularly appreciate the respectful
manner in which the committee has worked with the tribes during
the course of the investigation. Our focus has been on fraud
and deception committed against the tribes as the committee's
congressional mandate encompasses all issues affecting Native
Americans and the unique trust relationship that they share
with the Federal Government. But it needs to be emphasized that
the fraud and deception committed by Mr. Abramoff and his
cohorts reached well beyond the tribes.
At the committee's hearing in June of this year, we heard
from witnesses about the fraud that was committed against the
Choctaw Tribe in Mississippi. In preparation for that hearing,
we uncovered a number of questionable transactions involving
tax-exempt charitable organizations.
Subsequent to that hearing, the Chairman and Ranking Member
of the Senate Finance Committee have written us requesting that
this committee provide them with documents that fall within the
jurisdiction of the Finance Committee about the use or
potential misuse of 501(c)(3) and 501(c)(4) organizations. It
is my understanding that we will provide those documents and
pertinent correspondence following today's hearing to the
Senate Finance Committee.
The fraudulent activities that the investigation has
discovered really almost know no boundaries, not by committee
jurisdiction, geography, greed or deception. Our staffs working
together have reviewed over 500,000 documents, documents that
tell a complicated and tortured tale of influence-peddling,
friends betraying friends for political and monetary gain, and
sadly, of many innocent victims who were unwittingly snared
into a web of deceit.
Our focus today is on the Coushatta Tribe of Louisiana, a
tribe that spent a stunning $37 million on Mr. Abramoff and
many of his schemes. Documents suggest that while some of this
money was spent on legitimate lobbying activities, an alarming
amount can be tracked to the pockets and personal interests of
Mr. Abramoff and Michael Scanlon. During the period from
February 2001 to March 2004 when the tribe was represented by
Greenberg Traurig, the Coushattas have two major goals: First,
to renew its compact with the State of Louisiana; and second,
to protect its financial turf by keeping out gaming
competitors.
To be fair, Mr. Chairman, in the beginning the overall
goals of the tribe were for the most part achieved. However,
along the way it appears that about two-thirds or something
nearing that of the money paid by the tribe was skimmed off the
top by Mr. Abramoff and Mr. Scanlon, through Mr. Scanlon's
company called Capitol Campaign Strategies. These millions
could have been directed in other ways, creating new jobs,
providing health care for tribal members and so on, but instead
it appears it helped pay for a very expensive wedding, seaside
mansion, a charitable foundation; charitable, I might add, only
to Mr. Abramoff. I think that once again it calls into question
judgment and ethics and the morals of those who have been
involved in this.
I want to note that the Indian tribes were not Mr.
Abramoff's only targets. His pitch to potential clients was in
fact global. For him, it was a simple proposition. If they had
money, he offered access and influence.
In 2003, he offered to arrange for the President of Gabon a
visit with President Bush, Members of Congress, and other
policy opinion-makers in the United States in exchange for $1
million. To close the deal, he told the President of Gabon that
he was ``willing to travel to Western Africa at the conclusion
of his visit to Scotland with Congressmen and Senators I take
there each year. It is possible they will want to join me in
Gabon, which would be an extra bonus.'' That arrangement was
not concluded, but it shows the global reach and the interests
of influence.
The experience of the Coushatta Tribe continues themes we
have seen in previous hearings. There is substantial evidence
the tribe received value for some of the lobbying fees but a
lot of it, we may never know exactly how much, was siphoned off
by Mr. Abramoff and Mr. Scanlon. The excessive amount of money
involved, a staggering $37 million, magnifies the situation.
Influence-peddling appears to have reached new heights. The use
of shell companies, so-called charitable organizations, to hide
the sources of money has been found to be even more robust.
In two instances, Mr. Abramoff asked the Coushattas to
contribute to the Council of Republicans for Environmental
Advocacy, or CREA, a business-backed 501(c)(4) environmental
group. The executive director of CREA is the person that
Senator McCain indicated has failed to show for today's hearing
under subpoena, and will be asked to appear by herself, I
understand, at the next hearing, and we will have a hearing
that devotes itself exclusively to her recollection of events.
But the e-mail traffic suggests that Mr. Abramoff expected the
executive director of CREA to do his own bidding with a close
friend of hers a top official at the Department of the Interior
who is testifying today.
According to the former tribal Vice Chairman William
Worfel, the tribe was asked by Abramoff to contribute $50,000
to CREA to pay for a Department of the Interior study on the
national park system that allegedly the department could not
afford. The contribution was made to CREA, which by the way is
not affiliated with the Department of the Interior except by
friendships. We have so far found no evidence that a study was
ever conducted. Later, the tribe gave $100,000 to CREA and
Italia Federici, the head of CREA she thanked Abramoff for the
generosity, saying that without contributions that Abramoff
arranged, CREA would not have been able to pay for the half-
page ad in the Washington Post supporting President Bush's
energy plan.
As Mr. Abramoff had learned with other clients, mobilizing
and manipulating the Christian Coalition was also an effective
way to turn back potential gaming competitors. The e-mail
traffic in previous hearings and this hearing that will be
released shows that with the Coushatta situation, it was no
different than the other tribes that we discussed previously,
but the stakes were even higher.
No surprise then that Mr. Abramoff called his friend at
Century Strategies, Ralph Reed, for assistance. No surprise,
either, that a decision was made to send Mr. Reed's
compensation through a number of entities to hide its origin.
At the request of Mr. Reed, the Coushatta, like the Choctaw
before them, routed their funds to him through a variety of
entities because of his concern about being publicly associated
with gaming money.
The tribe's outside counsel in an interview with committee
staff described how in one instance $400,000 flowed from casino
revenues to Southern Underwriters, a company owned by tribal
contractor Aubrey Temple, to the American International Center,
and then on to Mr. Reed's company, Century Strategies. The
counsel indicated it was no secret about who the intended
ultimate recipient was. She also said the only revenues
available to the Coushatta were from their gaming enterprise,
so anyone paid by the tribe was being paid by gaming revenue.
Mr. Abramoff gained the trust of the Coushattas. He not
only portrayed himself as a friend of some of the most powerful
people in the world, he actually delivered them. Letters from
Members of Congress, many of whom were not from Louisiana,
appeared at the Department of the Interior opposing gaming
expansion in Louisiana, which would have had the practical
effect of protecting the Coushatta gaming turf.
Through Abramoff's connections, the Coushatta were invited
to the White House to have a photo taken with the President.
The Coushatta trusted Abramoff so much that when he asked them
to send $1 million to his firm, they assumed it was a
legitimate business expense.
Abramoff's firm trusted him, too, and when the $1 million
check arrived, they followed his directions and ran it through
their corporate trust account and rewrote it to the Capital
Athletic Foundation. Little did the tribe or the law firm know
this particular $1 million provided the seed money for the
Capital Athletic Fund, which we discovered in the last hearing
was operated as Mr. Abramoff's personal charity, among other
things used to start a school for his children and others and
to pay for sniper education in Israel.
Mr. Chairman, finally, we have a number of witnesses with
us today who can speak to many transactions and schemes that I
have described and you have described. As human beings, we are
often exposed to the same set of facts and circumstances, yet
perceive them differently. The task of this committee is to
sort through the facts and perceptions to gain clarity into
what happened, where clarity sometimes might seem out of reach.
In this case, Mr. Chairman, clarity at least shows me, and I
think shows you, a pretty seamy side of American politics and
influence-peddling.
I look forward today to hearing from the witnesses.
The Chairman. Senator Thomas.
STATEMENT OF HON. CRAIG THOMAS, U.S. SENATOR FROM WYOMING
Senator Thomas. Thank you, Mr. Chairman. I will be very
brief so we can get on with the hearing.
I want to thank you, of course, for all the interest you
have taken in this. It is a tough issue and certainly it is one
that is important to this country and to this committee. We
have heard a great deal about it and the public needs to know
more about it. It is my understanding that the Justice
Department really has the role in doing this, and I think we
ought to limit ourselves to what our role ought to be as a
legislative committee.
I also think, frankly, we are talking about these dollars,
maybe it would be interesting to know that the tribes that are
usually short of money are giving $35 million or $40 million
for lobbying. I think that is kind of an interesting technique
that I have not heard much about. So I think you ought to
expand your scope a little bit on that.
We learn from experience, but I hope pretty soon, Mr.
Chairman, we can wind this up and move on with some of the
other issues that affect the tribes in this country.
I want to welcome my friend Steve Griles here, the Deputy
Interior Secretary in the past, who has done a great job, and
thank you for being able to be here.
The Chairman. Thank you, Senator Thomas.
Our first panel is Kevin Sickey, the chairman of the
Coushatta Tribe of Louisiana; and David Sickey, the council
member of the Coushatta Tribe of Louisiana. Welcome to both
witnesses. We will begin with you, Chairman Kevin Sickey.
Please proceed.
STATEMENT OF KEVIN SICKEY, CHAIRMAN, COUSHATTA TRIBE OF
LOUISIANA
Mr. Kevin Sickey. Good morning, Chairman McCain, Senator
Dorgan, and distinguished members of this committee.
I am Kevin Sickey, chairman of the Coushatta Tribe of
Louisiana. With me at the table is my brother and council
member David Sickey and the tribal attorney Jimmy Faircloth.
I would also like to recognize tribal council member Tee
LaBuff and the members of our tribe who made this trip to
attend this hearing. Many of these tribal members were the
first to suspect that something had gone terribly wrong with
the lobbyist Jack Abramoff and Mike Scanlon, so it is
appropriate that these tribal members are present for this
proceeding. At one time, they were referred to as dissidents
for questioning the lobbyists' actions, a label provided by the
lobbyists to divert suspicion from their own activities.
We are grateful for the opportunity to appear before this
important committee. Your staff has been cooperative and
respectful and we appreciate their hard work.
We will divide our opening statement into two parts. First,
I will provide a brief history of our tribe and I will explain
our government and the political environment that lobbyists
used to their advantage. And I will comment briefly on the harm
caused by their fraud. Obviously, the information the committee
is making public today is both shocking and is deeply
disturbing to me, both as chairman of the tribe and as a tribal
member.
Following my brief comments, Councilman Sickey will provide
a broad overview of some of the things we discovered in our own
review. Before we proceed, however, I must respectfully qualify
our testimony. Neither Councilman Sickey nor I had any direct
dealings with Mr. Abramoff or Mr. Scanlon.
We were not involved in the decision to hire these
lobbyists, nor were we involved in any aspect of coordinating
their work. We are both reluctant to speculate about the
conduct and motives of the lobbyists. I suspect that any such
speculation or conjecture will not aid the work of this
committee.
Finally, because we are currently involved in litigation
about these events, we must be cautious in our comments
concerning the actions of others.
We are descendants of the Creek Confederacy from the
Muskogee family of tribes. Our ancestors were stripped of 22
million acres of land by the United States following the Creek
War in 1814. Approximately 50 years later, a small band of
Coushattas settled in the Calcasieu River area near Kinder, LA.
In 1884, they were forced to move again when homesteaders
began claiming their land. They then purchased a small tract of
land 3 miles north of Elton, LA. In 1898, the United States
placed 160 acres of land into trust for the tribe.
Unfortunately, the trust was revoked in 1953, which began a 20-
year struggle for re-recognition.
In 1973, the Coushatta Tribe of Louisiana was again
recognized, and 7 years later our reservation was again
formally established. In 1985, we held our first election of
leaders by popular vote. We then established our own judicial
system, police department, housing authority and many other
social programs.
Today, our tribe consists of over 850 members,
approximately 400 of whom live in the Coushatta community. We
are proud of our culture and heritage, and we are dedicated to
maintaining the sovereignty that generations of our ancestors
sacrificed and even died to protect.
Our casino and resort opened in January 1995, and since
then we have been blessed with economic prosperity. We employ
approximately 2,800 people, with a total annual payroll in the
range of $80 million. We purchase goods and services from
Louisiana vendors in the range of $40 million per year. And we
contribute approximately $7 million per year to State and local
governments. We are proud to be a vital part of the economy of
southwest Louisiana.
This brief period of prosperity follows hundreds of years
of unjust treatment by outsiders, which resulted in abject
poverty and hardship within the tribe. This is why it is
particularly painful that, after all those terrible years, our
tribe again has been preyed upon by outsiders.
But on this occasion, at least we are in good company.
Certainly within the modern era, no victimization of Native
Americans has received so much attention, no doubt because the
underlying scandal has touched so many influential people.
Nevertheless, we deeply appreciate the actions of this
committee in bringing this matter to light.
Our tribe is governed by an elected council consisting of a
chairman and four council members. None of the current council
members were in office when Mr. Abramoff was hired in early
2001. Councilman Sickey took office in 2003. He had no direct
contact with either Mr. Abramoff or Mr. Scanlon and very little
knowledge of their activities. In fact, he became a vocal
spokesperson against them.
Council members LaBuff, Verlis Williams, and I took office
this past June. One of our council seats is currently vacant.
This wholesale change in leadership was in large part a result
of the mess created by Mr. Abramoff and Mr. Scanlon.
While Indian county has seen so many con-men throughout
history, few, if any, were as skilled as Mr. Abramoff and Mr.
Scanlon at creating and then preying on our insecurities. They
preyed upon our political insecurities, they preyed upon our
economic insecurities, and they preyed upon our insecurities
about each other.
Our political system is no more turbulent than any other.
We, too, have cycles in leadership and influence, and it
occasionally turns partisan. The lobbyists came to our tribe
during one of these transition periods, and they viewed this as
an opportunity for exploitation.
To any decent person, vulnerability in others provides an
opportunity to help, but to con-men like Mr. Abramoff and Mr.
Scanlon, our vulnerability simply provided an opportunity to
steal. And they hit the jackpot with us, a Native American
tribe with a fairly new casino in the midst of a political
transition, and naive to the underworld of governmental
affairs.
They inserted themselves into our internal tribal politics,
excluded and attempted to discredited those who questioned or
opposed them, and deliberately created paranoia on both sides
by exaggerating threats from inside and outside the tribe. They
exaggerated political threats and they exaggerated economic
threats. Then they exaggerated their ability to deal with these
exaggerated threats. And in the midst of this, they incited
political upheaval to provide cover for their scheme to steal
millions of dollars.
We are pleased to report that the political storm within
the tribe has calmed. And we are taking steps to recover the
money that was stolen and to correct our system of checks and
balances to ensure that this will never happen again.
It is important to understand that the harm caused by Mr.
Abramoff and Mr. Scanlon is much greater than the money they
stole. Even though this amount is shockingly large, the scar of
victimization runs even deeper, particularly because it has
touched our leadership.
Moreover, the misconduct of Mr. Abramoff and Mr. Scanlon
has harmed all Native Americans in a way that deserves the
particular attention of this committee. The lobbyists' actions
have created a perception that there is something improper
about officials working closely with Indian tribes. This
stereotype threatens to chill tribal communications with
officials who can profoundly influence the well-being of
tribes.
Even worse, it unfairly shifts the blame from where it
belongs to the victims. Jack Abramoff is not a product of
Indian country. On the contrary, he is the golden boy gone bad
of the American political system. Our tribe and others were
victimized when we attempted to fit into the American political
system and we were led to believe that Mr. Abramoff was the
gatekeeper.
We have begun the process of repairing the political damage
to our tribe's reputation. We have met with several of our
State and Federal officials, and they seem genuinely committed
to providing our tribe with the same access and the same
channels of communication open to all individuals, businesses
and special interest groups, nothing more, nothing less, and
without favors or contributions. That is the way the system
should work, and that is certainly the way we would like to
participate.
There have been a lot of adjectives used to describe Mr.
Abramoff and Mr. Scanlon. Greedy and corrupt come to mind. But
those are common terms, often used to describe people who
forfeit judgment for money. Abramoff's and Scanlon's actions
were hardly common. They set a new high-water mark for greed
and corruption.
I have read that Mr. Abramoff considers himself a religious
man. If that is the case, then I do not understand the basis of
his faith, and it is certainly different than ours. Most
religions promote compassion and concern for others, and it is
clear that Mr. Abramoff and Mr. Scanlon had no concern
whatsoever for the welfare of our people.
Your committee has done a great service for all Americans
by exposing this sad affair. There are lessons here for
everyone. I am grateful for the opportunity to address this
committee on behalf of the Coushatta Tribe of Louisiana.
Council member David Sickey will now provide a brief overview
of our factual findings.
Thank you.
[Prepared Statement of Kevin Sickey appears in appendix.]
STATEMENT OF DAVID SICKEY, COUNCIL MEMBER, COUSHATTA TRIBE OF
LOUISIANA
Mr. David Sickey. Good morning, Chairman McCain, Senator
Dorgan, and distinguished members of this committee.
I am David Sickey, a member of the tribal council of the
Coushatta Tribe of Louisiana. I took office in June 2003.
As Chairman Sickey has noted, I was not in office when Mr.
Abramoff and Mr. Scanlon were hired, and I did not participate
in the decisions by the tribal council to authorize their
projects or pay them. I would respectfully submit that it will
not aid the committee's efforts for me to speculate about the
events at issue.
My brief comments today will therefore be limited to
certain facts established by the documents we have seen. As you
are aware, many of the documents reviewed by this committee
were not available to us. However, my observations today are
also based on information provided by your staff, for which we
are grateful.
My intention is to provide a broad overview of the
environment in which this fraud was committed. As your
investigation must have revealed, while the scheme of Mr.
Abramoff and Mr. Scanlon was reprehensible, it was also very
clever and well-timed. Like Chairman Sickey, I should note that
our tribe is currently involved in litigation about these
lobbying activities, so I am limited in what I can say today.
I have attempted to organize my observations in
chronological order because the way that this scheme evolved
over time was critical to its success.
Mr. Abramoff was hired in March 2001. The tribe entered a
contract with his firm, Greenberg Traurig, to provide lobbying
services related to our tribe's compact negotiation and
important regional gaming issues. According to the contract,
Greenberg Traurig was to receive $125,000 a month plus
reasonable expenses. The contract did not mention Mr. Scanlon
nor any of the entities that he used to charge the tribe an
additional $30 million.
During the first 6 months or so of the lobbyists'
employment, they appeared to deliver on their promises, and so
the lobbying costs appeared justified. During that initial
period, the tribe paid roughly $3.5 million for assistance with
our tribal compact, which was successfully negotiated, and to
achieve several legislative objectives. I say that they
appeared to deliver on their promises because it is difficult
to assess how much impact the lobbyists actually had in
accomplishing these tribal objectives. Of course, they took
credit for everything.
If it had ended at that point, around September 2001, then
this would be nothing more than another story about high-priced
lobbyists taking credit for results that they may or may not
have influenced. But it did not stop there. They leveraged
their initial success as a platform for fraud, and by the
spring of 2002 had extracted another $17 million from our
tribe. By the time it was over in 2004, the tribe had spent
approximately $36 million. Ironically, as the scheme progressed
and the bills and rhetoric increased, the lobbyists' actual
work for the tribe clearly decreased.
The Texas threat. On October 5, 2001, the tribe paid
$870,000 to Mr. Scanlon's company, Capitol Campaign Strategies
to create a ``grassroots political structure'' in Texas. Mr.
Abramoff and Mr. Scanlon were insistent that Texas was on the
verge of legalizing gambling and that this would devastate the
Coushatta casino. The majority of our casino customers travel
from Texas, particularly the Houston area, and we have long
understood that legalized gambling in Texas would erode our
customer base and our casino revenues.
Recognizing this potential threat and our fear of the
consequences, the lobbyists claimed to have critical influence
with the Texas officials who could defeat Texas gambling. This
appears to be the starting point for their most egregious
exaggerations and fabrications. This also appears to be the
timeframe when they committed to gouging the tribe for as much
money as they could and to say or do anything that was
necessary to prolong the payout.
The $1 million payment funneled to one of Abramoff's
causes. On October 30, 2001, the tribe paid $3.17 million for
the ``Louisiana program.'' This payment marks a high point in
the lobbyists' creative billing. They split the bill by
requesting that $2.17 million be sent to Capitol Campaign
Strategies and $1 million to Greenberg Traurig.
According to information shared by the staff, the $1
million payment to Greenberg Traurig was not for any services
provided by the firm. Instead, this $1 million payment was used
to pump the firm's reported lobbying revenues, thereby
maintaining Greenberg Traurig's public status as one of the top
10 providers of legal and lobbying services to Native American
tribes.
E-mails involving Mr. Abramoff, Mr. Scanlon and others at
Greenberg Traurig revealed that this $1 million payment was
funneled through the firm and then used to finance one of Mr.
Abramoff's favorite causes. The suspect nature and purpose of
this payment structure is reflected in an e-mail from Mr.
Scanlon to the tribe's former attorney dated October 25, 2001,
where he wrote, ``we broke this into two invoices, one to be
paid to Greenberg Traurig for $1 million and one paid to
Capitol Campaign Strategies, GT's public affairs entity, for
the balance. We usually just invoice you through Capitol
Campaign Strategies so the lawyers at the firm rest easy while
we are out burning the countryside. In this instance, however,
we plan to do some things through the law firm umbrella due to
their highly sensitive nature and confidentiality reasons. I
hate hiding behind lawyers, but we are going to do some crazy
stuff on this one, so I guess it is okay.''
Mr. Abramoff, who was a partner at Greenberg Traurig,
directed this creating billing arrangement. In my personal
view, this payment reveals the extent of Abramoff's
shamelessness. Not only was he stealing the tribe's money, but
he was also using the theft to improve his professional
reputation and the reputation of the firm.
Hyping the Texas threat. In a memorandum dated November 6,
2001, Mr. Scanlon reports that he had just returned from Texas,
and States, ``We believe now that the Alabama Coushatta will
open soon if we do not intercede. This would like be a small
facility and not the class III facility the council is worried
about, but we believe you should shut it down regardless.''
This exemplifies the lobbyists' strategy of identifying an
exaggerated threat to the tribe's casino revenues, as does the
following assertion in a report from Mr. Scanlon to the tribe
dated December 21, 2001: ``Despite our best efforts, the voting
public in Texas remains very pro-gaming. The State economy is
lagging and with the Enron and Continental Airlines debacles
hitting the Houston area back-to-back, they are desperate for
revenue.
As we said when we came to you with the original Texas
proposal, things are really bad over there. We have never
before seen such a pro-gaming atmosphere in Texas or anywhere
else in the country. In our collective political careers, and
although we have it contained for the time being, this
environment is a very serious threat to the Grand Casino's
future.''
Threats of infiltration. According to a memorandum from Mr.
Scanlon dated January 3, 2002, the company that owned one of
our competitors was ``well known for their ability to
infiltrate the electorates of Indian tribes and this will
undoubtedly happen there, if they get a foothold in your
region.''
After hammering this point and others, Mr. Scanlon states--
--
The Chairman. Mr. Sickey, would you try to summarize as
much as you can, since we have to move forward. Go ahead.
Mr. David Sickey. Okay.
At about this time, perhaps sensing some opposition to
their proposals and programs within the tribe and likely
planning to increase their fees and profits, Mr. Abramoff and
Mr. Scanlon began excluding and attempting to discredit their
political opposition on the council and within the tribe.
On October 31, 2002, the tribal CFO sent an e-mail to Mr.
Abramoff stating the tribal auditors would requesting
confirmation that the tribe had paid a total of $18,559,700 for
``demographic surveys and studies and professional consulting
services.'' Mr. Abramoff worded the e-mail to Mr. Scanlon
asking, ``what should I say, especially about the last part,
the request concerning no contracts?''
In response to several frantic comments from Mr. Abramoff,
Mr. Scanlon states, ``f-ing weird, really f-ing weird. I hope
that this is a standard operating procedure.'' He then
recommends that Mr. Abramoff talk to the tribe's vice chairman
before writing anything. There was never a formal reply. The
confirmation requested by the auditors was not provided.
Instead, a decision apparently was made to lay low until the
storm passed.
There is no doubt by this point the lobbyists knew that
questions were being raised about their fees. As is clear from
subsequent events, they obviously did not care. Apparently,
they felt confident that even this type of blatant misconduct
was fair game in the world of big-time lobbying.
At this time, I will go into my closing comments.
The Chairman. Thank you.
Mr. David Sickey. In conclusion, as Chairman Sickey and I
have both noted, since we were not involved in any direct
dealings with Mr. Abramoff or Mr. Scanlon, there is very little
we can say here today about the events at issue that would not
involve speculation and conjecture. Therefore, until our own
investigation is complete, both of us are reluctant to comment
further on the lobbying activities in question. Moreover, any
speculative comments on our part could jeopardize our legal
efforts to recover the tribe's money.
But what we can state with firm conviction, based on our
own review and the findings of this committee, is that our
tribe was defrauded out of most of the money we paid. And no
matter who the lobbyists used or who they try to blame, this
fraud was orchestrated and carried out by Jack Abramoff and
Michael Scanlon. From the tribe's perspective, the fraud was
orchestrated under the banner of Greenberg Traurig.
Your committee has performed an important service by
exposing this fraud and I am grateful for the opportunity to
address the committee today. As Chairman Sickey has noted,
there are lessons in this sad episode for everyone.
Thank you.
[Prepared Statement of David Sickey appears in appendix.]
The Chairman. Thank you very much.
Senator Dorgan.
Senator Dorgan. Mr. Chairman, in the interest of time, I
will not ask questions. I would thank the tribal
representatives for being here to present testimony. I would
also say that my colleague from Wyoming asked an important
question on all of this. I think there was fraud and deception
and so on, but it is also the case that the decision to spend
that quantity of money is quite an extraordinary matter of
strange judgment nonetheless, so I agree with my colleague from
Wyoming about that.
I thank you for at least filling in some pieces of the
puzzle from your perspective and I hope the committee will be
able to fit the rest of the pieces together as well.
The Chairman. Senator Thomas.
Senator Thomas. Thank you, Mr. Chairman.
I had to go to the floor so I did not really hear the
testimony, so I have no questions. Thank you.
The Chairman. Thank you very much.
Councilman Sickey, your complete statement will be made
part of the record. I had a chance to read it last night, and I
thank you.
I thank you both and I wish you luck. I appreciate your
candid testimony today. Thank you very much.
Mr. Kevin Sickey. Thank you, Mr. Chairman.
Mr. David Sickey. Thank you.
The Chairman. Our next panel is William Worfel, who is the
former tribal council member of the Coushatta Tribe of
Louisiana; Kathryn Van Hoof, former outside counsel to the
Coushatta Tribe of Louisiana; and Fred Baggett, the managing
shareholder and chairman of National Governmental Affairs
Practice of Greenberg Traurig, Tallahassee, FL.
Please come forward.
Since we have four panels, I would appreciate your
witnesses keeping their opening statements as brief as
possible. We will begin with Mr. Worfel. Welcome and please
proceed.
STATEMENT OF WILLIAM WORFEL, FORMER TRIBAL COUNCIL MEMBER,
COUSHATTA TRIBE OF LOUISIANA
Mr. Worfel. Good morning, Mr. Chairman and members of the
committee. It is an honor to appear before you today. My name
is William Worfel. I live in Oberlin, LA. I am a former member
of the governing council of the Coushatta Tribe of Louisiana.
My mother is a full-blooded Coushatta member. I am a happily
married man with three daughters that keep me and my wife Tammy
very busy.
I again thank you for the opportunity to address you today
regarding some very important matters that have impacted not
only my tribe, but also Native Americans as a whole.
My first contact with this committee in April 2004, I am
sorry to say, was under much less informed circumstances. My
first contact with this committee was in the form of a letter,
first and foremost. Please understand that the letter does not
in any way reflect how I feel about the honorable members of
this committee or the committee's honorable purpose.
This letter was written for me by Michael Scanlon and
addressed to Senator McCain. Both Abramoff and Scanlon told me
that this committee's investigation would not amount to
anything and that if we sent in the letter he drafted, Jack
would personally deliver the letter to the committee and the
investigation would end.
Since at that time we knew nothing of the rip-off that Mike
Scanlon and Jack Abramoff had undertaken against our tribe and
many other tribes, I trusted Mike Scanlon at his word. I regret
the letter sent to this committee with my signature on it. I
view that letter as the last fraud committed against me and my
tribe by Abramoff and Scanlon.
I sit here today very satisfied that I have since then
fully and actively cooperated with the committee's
investigation into the wrongdoings of Jack Abramoff and Michael
Scanlon. The letter drafted for me by Michael Scanlon to this
committee was addressed to Senator McCain. As this process has
moved forward, I have learned that Senator John McCain is a
national hero. I can assure you that my father, a Vietnam
veteran and a Korean War veteran, would whip my butt if he knew
I had any role in disrespecting Senator McCain. Nothing could
be further from the truth.
Because of the fine work done by this committee and the
Department of Justice, we now know that these two men committed
a consistent pattern of fraud and deception, not only against
our tribe, but against many tribes. I have no friendship for
these men. In my mind they are educated thieves that must be
brought to justice so this will not happen again in Indian
country.
I was first elected to the Coushatta Council in 1999.
Lovelin Poncho was our chairman. When Jack Abramoff and Mike
Scanlon were hired in March 2001, we were involved in a very
vigorous fight over the renewal of our gaming compact with the
Governor of Louisiana and the local governments surrounding our
casino.
Terry Martin, a member of the Chitimacha Tribe of
Louisiana, recommended Jack Abramoff and Mike Scanlon to our
council. Mr. Martin told us that Jack Abramoff and Mike Scanlon
worked for Chief Phillip Martin of the Choctaw Tribe of
Mississippi. As you know, the Choctaw Tribe and Chief Martin
are viewed in Indian country as very respected and as a
sophisticated business-oriented tribe. From following your
investigation, I know that Abramoff and Scanlon also defrauded
the Choctaw Tribe.
Chairman Poncho had delegated the responsibility of
checking out Abramoff and Scanlon to our legal counsel, Kathryn
Van Hoof, and former council member, Bertney Langley. I have no
doubt that these folks looked hard at Jack Abramoff and Michael
Scanlon and their law firm, Greenberg Traurig. That Jack worked
for a Washington, DC mega-law firm like Greenberg Traurig was
very impressive to us all.
As I sit here today, knowing all the real facts, I consider
Greenberg Traurig as guilty as Jack Abramoff and Michael
Scanlon. During 2001, I was not responsible for working with
Jack Abramoff and Michael Scanlon. Our attorney, Kathryn Van
Hoof, council member, Bertney Langley, and Chairman Poncho
worked with them at that time. As council members, we all know
that competitive threats of expanded gaming were happening all
the time. State-sponsored gambling, slot machines at the horse
racetrack, and the possibility of Texas legalizing gaming and
the casinos being built by other tribes were consistent threats
to our market share.
In early 2002, Kathy Van Hoof resigned. After her
resignation, Chairman Poncho assigned me to keep tabs on
competitive threats to our casino and to handle Government
relations efforts for our tribe. I became the contact person
for Jack Abramoff and Michael Scanlon in March 2002.
The most critical issue during this time was a possible
casino by the Jena Band of Choctaw Tribe. The Jena Band had
tried to work with our tribe and Chairman Poncho for many years
to get their own casino. At one point in the negotiations, our
tribe was going to loan the necessary funds to the Jena Band
and we would get a measuring contract in return.
The discussion had always been that the Jena Band would put
their casino in Northern Louisiana, and it would not in any way
compete with our casino. However, when we learned that Jena was
trying to locate a casino on the Louisiana-Texas border off
Interstate 10, we began to work hard to stop them. Michael
Scanlon was working for us to develop a grassroots campaign
against expansion of gambling, including the Jena Band's
efforts. Scanlon's efforts included using Christian groups that
oppose gambling.
Scanlon and Ralph Reed also worked in 2001 on our compact
renewal. We never met with Ralph Reed, nor did we tell Mike
Scanlon to use Ralph Reed. I believe that Jack Abramoff and
Michael Scanlon did assist us during our efforts to renew our
compact and in the fight against the Jena Band. However, there
are other projects that I now believe were not helpful and
never intended to be.
For example, our tribe was billed millions of dollars for
the development of a database of information that Abramoff and
Scanlon said would be a great help in grassroots campaigns and
political lobbying in the future. I have learned from your
investigation that the database that Scanlon supposedly was
using on our behalf was really not something that would cost
the money they said it did. We did not know that Abramoff and
Michael Scanlon had a secret agreement to split the fees that
we paid Michael Scanlon for the products that he pitched to us.
We were told that we were paying for the cost of letter-
writing campaigns, media campaigns, and political research. We
now know that Scanlon was overcharging us and paying out one-
half or more of the money to Jack Abramoff's personal pet
projects. I now know that Abramoff and Scanlon actually did not
do much of the work they took credit for.
Abramoff and Scanlon were always coming to us with the next
project that they thought we should do. It was always one
crisis after another. There were real threats and some not so
real, looking back with hindsight. Texas gaming was one of
those oversold crises.
In 2001, we were told by Abramoff that Texas was one vote
away from allowing casino gambling. I have since learned that
legalized casino gambling was far from being approved by the
Texas Legislature. In addition, we have learned that Jack and
Mike were working for other tribes in Texas that were trying to
get gaming, when they were supposed to be watching out for us.
Once again, these thieves took every opportunity from us
and other tribes. What should you spend to save a $300-million
a year business when the lawyers who work for you tell you that
it could be all gone if we do not act right now? Our tribe has
one and only one business. We made tough decisions and we acted
always in the best interests of our tribe.
I understand and acknowledge that our council's hiring of
Abramoff, Scanlon, and Greenberg Traurig was a mistake. No one
chooses to be defrauded, especially by professionals who you
have been told you could trust. However, the fact that we hired
government relations professionals was not a mistake.
As I know this committee understands, Native American
gaming is highly political. It is an $18-billion industry. Not
only do you have to have your Governor's approval, but also the
Department of the Interior. Congress and State legislatures
passing or not passing gaming laws directly impact the
competitive environment in which you operate. Then there are
the local governments that are always trying to gain something
off your casino revenues.
Let me tell you, there is a lot of redtape that comes along
with gaming. I am not saying that is bad. It is just the way it
is. Successful tribes such as ours must have the help of
qualified, honest professionals that understand the business
and politics of Native American gaming. I hope that your
efforts result in keeping those professionals more honest and
trustworthy in the future.
I again thank this committee for the opportunity to speak
to you today. I applaud you and your efforts. Thank you.
The Chairman. Ms. Van Hoof.
STATEMENT OF KATHRYN VAN HOOF, FORMER OUTSIDE COUNSEL,
COUSHATTA TRIBE OF LOUISIANA
Ms. Van Hoof. Mr. Chairman, I have no prepared statement. I
am former counsel for the tribe and I have been authorized to
speak to the committee today subject to attorney-client
privilege. So long as that privilege is not implicated or the
attorney-client work product doctrine, it is my plan to
cooperate fully with the committee and answer your questions.
The Chairman. Thank you very much.
Mr. Baggett.
STATEMENT OF FRED BAGGETT, MANAGING SHAREHOLDER; CHAIRMN,
NATIONAL GOVERNMENTAL AFFAIRS PRACTICE, GREENBERG TRAURIG,
TALLAHASSEE, FL
Mr. Baggett. Mr. Chairman, Mr. Vice Chairman, Senator
Thomas, thank you for the opportunity to appear before you
today. My name is Fred Baggett. I am a shareholder in the
Tallahassee Florida office of Greenberg Traurig.
I have spent my entire professional career as a lawyer and
lobbyist in the State of Florida. I am currently a managing
shareholder of the Tallahassee office of Greenberg Traurig and
head of its national governmental affairs practice. I also
maintain a full-time administrative law and lobby practice with
the firm. It is comprised almost exclusively of work in Florida
with the State Legislature and executive branch of Government.
Turning to the subject of today's hearing, in 2001-04, Jack
Abramoff worked as a non-attorney lobbyist for the Washington,
DC office of our firm. Up until the end of Mr. Abramoff's
tenure with Greenberg Traurig, we believed that Mr. Abramoff
was rendering high-quality professional services to his
clients. Late in 2003 and early 2004, reports began to emerge
questioning the amounts of money paid by various Indian tribes
to Mr. Abramoff and Mr. Scanlon in connection with services the
two had rendered.
During this timeframe, Mr. Abramoff was questioned about
his financial relationships with Mr. Scanlon. Records available
to the committee, including a February 3, 2004 interview of Mr.
Abramoff conducted by Susan Schmidt of the Washington Post
reflect that in front of firm personnel, Mr. Abramoff denied
having any financial relationship with Mr. Scanlon or engaging
in any improprieties in connection with his lobby work for the
tribes.
Nevertheless, because concerns had been raised, Greenberg
Traurig sought to ensure that there was no impropriety on the
part of Mr. Abramoff. In mid-February we hired Henry F. Schulke
of the Washington, DC firm of Janis, Schulke, and Wexler to
conduct an internal investigation focusing on the existence of
any financial relationship between Mr. Abramoff and Mr.
Scanlon. Mr. Schulke is a former Federal prosecutor who served
as Assistant United States Attorney for the District of
Columbia from 1972-79 and is a highly regarded member of the
District of Columbia Bar.
He and others with his firm have extensive experience in
this type of internal investigation. As Mr. Schulke began his
investigation, the Washington Post published the article, ``A
Jackpot from Indian Gaming Tribes,'' raising questions about
fees charged by Mr. Abramoff and Mr. Scanlon for lobbying and
grassroots work.
Around the same time, this committee announced that it
would be looking into Mr. Abramoff's activities. Facing the
prospect of Mr. Schulke's investigation, Mr. Abramoff for the
first time disclosed to our firm that he had received money
from Mr. Scanlon in connection with the work the two men were
doing on behalf of the Indian tribes. Upon learning of this
arrangement, the firm immediately requested and obtained Mr.
Abramoff's resignation. The firm issued a statement to that
effect on March 2, 2004.
Notwithstanding Mr. Abramoff's departure, Greenberg Traurig
asked Mr. Schulke to continue his investigation. Based on Mr.
Schulke's investigation, the firm has made disclosures to its
clients who were affected by Mr. Abramoff's activities, worked
out resolutions with a number of affected clients, and hopes to
work out resolutions with still other affected parties.
The facts surrounding Mr. Abramoff's employment by our firm
are unhappy ones. We at Greenberg Traurig regret the
improprieties which occurred during Mr. Abramoff's 3 years with
us. We share the chairman's and the rest of the committee's
dismay at Mr. Abramoff's activities and behavior. We appreciate
the work of the committee and its staff in thoroughly
investigating this matter and we continue to cooperate with
you.
Again, I thank you for the opportunity to appear.
[Prepared Statement of Mr. Baggett appears in appendix.]
The Chairman. Thank you, Mr. Baggett.
I would like to note for the record and for Mr. Worfel's
father that William Worfel has been fully cooperating with the
committee and the committee greatly appreciates his
cooperation. Thank you. Please relay that to your father for
me. I thank you.
Ms. Van Hoof, I understand that the tribe became acquainted
with Mr. Abramoff and Mr. Scanlon at a USET conference and then
Mr. Abramoff and Mr. Scanlon met with the tribal council in
Louisiana to make a proposal. Am I correct in understanding
that Mr. Abramoff was clear that Mr. Scanlon was ``part of the
package'' in that briefing?
Ms. Van Hoof. Yes, sir; that was the tribe's understanding.
The Chairman. During what time period were you the primary
point of contact between the tribe, Mr. Abramoff, and Mr.
Scanlon?
Ms. Van Hoof. I believe that would have been from around
March 2001 until the compact was signed in July 2001, and
continuing for some short period after that, perhaps into
October or November, but not beyond that point, I do not
believe.
The Chairman. When did you first learn of the American
International Center? In 2001?
Ms. Van Hoof. It would have had to have been during 2001,
during that period.
The Chairman. Based on your conversations with Mr.
Abramoff, what did you understand the American International
Center to be?
Ms. Van Hoof. I understood it as represented to the tribal
council to be an organization, a conservative organization that
did not support the expansion of gaming in Louisiana. It was an
organization whose cause the tribe could certainly support.
The Chairman. Did Mr. Abramoff recommend that the Coushatta
pay money into the American International Center to support its
anti-gambling activities?
Ms. Van Hoof. Yes; Mr. Abramoff raised that as an
opportunity for a contribution by the tribe to help support any
effort that would not expand gaming in Louisiana.
The Chairman. Did Mr. Abramoff or Mr. Scanlon ever tell you
that the American International Center was owned or operated by
Michael Scanlon?
Ms. Van Hoof. Absolutely not.
The Chairman. Did Mr. Abramoff or Mr. Scanlon ever tell you
that the American International Center was paying money to Mr.
Abramoff from the Coushatta payments it received?
Ms. Van Hoof. No.
The Chairman. Mr. Baggett, when did you first learn of the
American International Center?
Mr. Baggett. It would have been in the fall of 2001.
The Chairman. And it had something to do with Malaysian-
related issues?
Mr. Baggett. Yes, sir; we were asked to represent, Mr.
Abramoff brought to the firm AIC, American International
Center, as a client for the firm to represent on various
Malaysian business interests.
The Chairman. For example, that it was like a think-tank?
Mr. Baggett. We were told by Mr. Abramoff that AIC was an
established think-tank that represented a number of interests
both in the area of public relations and policy advocacy.
The Chairman. And some of the issues that you were supposed
to handle for the AIC were enhanced business and economic
development opportunities for Malaysian business interests?
Mr. Baggett. Yes, sir; we were told AIC represented a group
of Malaysian business interests who were seeking to improve the
economic opportunities of their interests in the United States.
The Chairman. At that time, what was your understanding of
Michael Scanlon's relationship with AIC?
Mr. Baggett. We were told that AIC had retained, or I would
assume retained, Michael Scanlon to assist in the public
relations efforts on behalf of the Malaysian business interests
and would be our contact for working with AIC.
The Chairman. Did either Abramoff of Scanlon ever tell you
that AIC was owned or operated by Michael Scanlon?
Mr. Baggett. No, sir.
The Chairman. Did they ever tell you that American
International Center was paying money to Mr. Abramoff?
Mr. Baggett. No, sir.
The Chairman. What does the firm now understand the
American International Center to be?
Mr. Baggett. A sham. To explain that, it is our
understanding now from information we have received and from
our e-mails of the firm and from other investigative sources
that AIC was a front for Mr. Abramoff and Mr. Scanlon to
collect money.
The Chairman. Ms. Van Hoof, I take it that Mr. Scanlon
proposed constructing a computer program and database for the
tribe.
Ms. Van Hoof. He did.
The Chairman. And how did he describe it and what benefits
did he say the tribe would get from it?
Ms. Van Hoof. Well, at that time the tribe was deeply
involved in negotiations with the State for renewal of the
compact. So as part of its public affairs and grassroots
campaign which would support the tribe's efforts, Mr. Scanlon
proposed the development of a database which would identify
those who would support the tribe's efforts at that time
involving the compact, so that it could be tweaked to support
other efforts on behalf of the tribe as well at later dates.
The Chairman. Was it your expectation that the actual cost
of the database would be a fraction of what you actually paid?
Ms. Van Hoof. No, Senator; it was not.
The Chairman. Mr. Worfel, I understand you met with Scanlon
and Chris Cathcart in Washington to review the multi-million
dollar database. What did they show you?
Mr. Worfel. Senator, they showed me a computer screen with
names of Coushatta tribal vendors for our casino operations.
They showed me on the screen the people, how many employees
they had, how many people would vote, what parties they were
affiliated with, Republican or Democrat. That was just on a
computer screen right there.
The Chairman. What did Mr. Scanlon say he would do with
this database?
Mr. Worfel. That is a good one. He said this here can help
control the political future of the Coushatta Tribe in
Louisiana. He said you give us a body, we can elect a State
Representative, a State Senator, a Governor, because it had the
precincts of each voter base in the surrounding Parishes
statewide, and he said we had the voting results of the
previous elections for the last 10 or 12 years.
He said you give us a body, and we can elect a Governor, a
Senator, using your vendors, getting your vendors mobilized to
call these people and say, look, we do business with the
Coushatta Tribe; this is vendor business and they need your
support; they need somebody that would help them with their
causes, with a new compact coming up, those kinds of things.
The Chairman. Mr. Baggett, I understand that Greenberg
Traurig has a policy that employees should not receive income
from outside sources. Is that correct?
Mr. Baggett. Yes, sir.
The Chairman. And obviously Mr. Abramoff violated this
prohibition by receiving money from Scanlon?
Mr. Baggett. Yes, sir.
The Chairman. Did anybody else violate the policy?
Mr. Baggett. Our investigation has found, and as we have
informed Federal authorities and I believe this committee, we
found a number of other instances where members of Mr.
Abramoff's team had received compensation outside of the firm.
The Chairman. What names?
Mr. Baggett. Sir?
The Chairman. And they were?
Mr. Baggett. We received, to my knowledge, and my knowledge
is not necessarily conclusive because I do not have Mr.
Schulke's investigation report, Kevin Ring, Jon Van Horn,
Michael Smith, and I believe Stephanie Leger.
The Chairman. Mr. Van Horn was a shareholder in your firm?
Mr. Baggett. Yes, sir.
The Chairman. Mr. Baggett, would you take a look at exhibit
128. Exhibit 128 is an e-mail exchange dated January 17, 2002
between Jack Abramoff and Michael Scanlon, subject ``Van
Horn''. Mr. Abramoff writes, ``I told him,'' meaning Van Horn,
``we would kick him $20,000 from CCS when we score next. Let's
do so.'' Mr. Scanlon replies, ``Cool. No problem here.''
[Exhibit follows:]
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The Chairman. Mr. Baggett, did either Mr. Abramoff or Mr.
Van Horn approach the firm about the legitimacy of this
transaction?
Mr. Baggett. No, sir.
The Chairman. And there is another e-mail, exhibit 220, and
it says, there is an entry for a $20,000-payment to Jon Van
Horn for ``legal work.'' For the record, according to bank
records, that money appears to have been paid out of Coushatta
funds received by Mr. Scanlon on January 18, 2002. Mr. Baggett,
was Mr. Van Horn's receipt of that $20,000 from Scanlon while a
Greenberg Traurig employee a violation of firm policy?
Mr. Baggett. Yes, sir.
The Chairman. Mr. Worfel, I would like you to look at
exhibit 182. Can we show that to Mr. Worfel please? There is a
binder in front of you. Would you look at it, exhibit 182.
Maybe one of the staff can help.
It is an e-mail that we are looking at there, Mr. Worfel.
It is an e-mail exchange between Mr. Abramoff and Mr. Van Horn.
In it, Mr. Abramoff writes, ``Jon, please get me language asap
which includes the Alabama Coushatta in the repeal of the anti-
gaming provisions of the Reorganization Act. I believe we have
come to terms with them through Neil Volz. You and I might be
the only ones who will know about this on our side.''
It appears that Mr. Abramoff and Mr. Van Horn were
preparing to help the Alabama Coushatta get legalized gaming in
Texas. Is that the way you read that?
Mr. Worfel. Yes, sir.
The Chairman. What is your reaction to that?
Mr. Worfel. Another way for these thieves to extort money
from us again. They are supposed to be looking after the best
interests of the Coushatta Tribe, receiving payments from our
tribe to oppose gaming in Texas. Now they are here trying to
help another tribe or any gaming in Texas, which goes against
any ethics that they should stand by.
The Chairman. Ms. Van Hoof and Mr. Baggett, look at 183, if
you would, exhibit 183, an e-mail exchange between Mr. Abramoff
and Mr. Van Horn. If you look at the last page which is
actually the first e-mail in the exchange, Mr. Abramoff tells
Mr. Van Horn, ``the basic deal is that if we get them,''
talking about the Alabama Coushatta, ``legal, they have to pay
into a fund which we control 10 percent of their gaming
revenue, which is the best approach here. What is done with
other percentage deals with tribes and we will use those funds
at our complete discretion.''
Ms. Van Hoof, what is your reaction to Mr. Abramoff's
attempt to represent the Alabama Coushatta to get legalized
gambling?
[Exhibit follows:]
[GRAPHIC] [TIFF OMITTED] T4471.009
[GRAPHIC] [TIFF OMITTED] T4471.010
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Ms. Van Hoof. If this is true, Senator, then this would be
a complete betrayal of the Coushatta Tribe.
The Chairman. Mr. Worfel, as you mentioned in your opening
statement, Mr. Abramoff wanted you to write a letter to the
Louisiana congressional delegation in an attempt to derail this
investigation and also suggested that the tribe not cooperate
with the committee investigation. Is that true?
Mr. Worfel. Very true, sir.
The Chairman. What did he say to you?
Mr. Worfel. He said if we should write a letter to
congressional delegates of Louisiana to stop the committee's
investigation because we had sovereign immunity and First
Amendment rights. He wanted me to do that. I would not do it,
and now I know he wanted me to take the bullet and him sit back
and just relax.
The Chairman. I just have a few more questions.
Ms. Van Hoof, if you look at exhibit 99, it is an e-mail
from Mr. Scanlon to you. Attached are invoices, one purportedly
from Greenberg Traurig for $1 million for ``public affairs
services.'' Ms. Van Hoof, was it your understanding that the $1
million was going to be used for political activities
benefitting the tribe?
Ms. Van Hoof. Yes.
The Chairman. Did the tribe authorize anyone to use that $1
million as a charitable contribution to the Capital Athletic
Foundation?
Ms. Van Hoof. No.
The Chairman. Did the tribe ever intend to make a $1
million-contribution to Jack Abramoff's personal charity?
Ms. Van Hoof. No.
The Chairman. Mr. Baggett, was Capitol Campaign Strategies
a Greenberg Traurig public affairs entity?
Mr. Baggett. No, sir; we had no interest in Capitol
Campaign Strategies.
The Chairman. So Mr. Scanlon's statement is not true.
Mr. Baggett. Yes, sir.
The Chairman. Was Mr. Scanlon authorized to send an invoice
on Greenberg Traurig's behalf?
Mr. Baggett. No, sir; he was not.
Mr. Chairman.
The Chairman. Go ahead please.
Mr. Baggett. If I might point out----
The Chairman. Please go ahead.
Mr. Baggett. ----the invoice exhibit 99 purporting to be
from Greenberg Traurig, ``Greenberg'' is misspelled.
The Chairman. Okay. That is an important point. Thank you
for bringing it up, Mr. Baggett. [Laughter.]
Mr. Baggett. I doubt we would be issuing an invoice with
our name misspelled.
The Chairman. Yes; got you. Thank you.
To be clear, the $1 million was not treated as income by
Greenberg Traurig.
Mr. Baggett. No, sir; it was not.
The Chairman. And it was not treated as a charitable
contribution by Greenberg Traurig.
Mr. Baggett. No, sir; it was not.
The Chairman. One other thing, Mr. Baggett. What did Mr.
Abramoff tell you about his skyboxes?
Mr. Baggett. Mr. Abramoff told us that the skyboxes were
leased by various Indian tribes.
The Chairman. Among other things, for Redskins games?
Mr. Baggett. Yes, sir; for Redskins games. The skyboxes
were leased by the Indian tribes; that he had certain personal
expenses for personal use of them, but that they were not in
his name nor were they ever in the firm's name.
[Exhibit follows:]
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The Chairman. Thank you very much.
Senator Dorgan.
Senator Dorgan. Mr. Chairman, thank you very much.
Mr. Baggett, you just referred to invoice 99, which on the
top says ``Greenberg Traurig, $1 million, payable upon
receipt.'' The word ``Greenberg'' is misspelled, and you called
that to our attention. I assume you feel this is a fraudulent
invoice?
Mr. Baggett. Yes, sir; we had no knowledge, and speaking on
behalf of Greenberg Traurig, we had no knowledge of this
invoice being sent.
Senator Dorgan. You have looked, and no one in the firm has
ever seen this or understands it as part of the firm. So you
believe this is a fraudulent invoice?
Mr. Baggett. Yes, sir.
Senator Dorgan. All right.
Mr. Worfel, let me clarify just for 1 moment. Did Mr.
Abramoff suggest to you that you need not and should not
cooperate with this committee?
Mr. Worfel. Yes, sir; Mr. Dorgan. He said we had sovereign
immunity and First Amendment rights so we should not cooperate
and the letter would go to the congressional delegation to stop
the investigation.
Senator Dorgan. So he was suggesting you should not
cooperate with this committee. You were approached by Mr.
Scanlon, by two attorneys on behalf of Mr. Scanlon, asking you
to sign some documentation after this committee indicated that
the investigation was ongoing. What kind of documents?
Mr. Worfel. It was documents saying that Mike Scanlon did a
good job for us, and at the time, that was before we really
knew of any fraud committed against our tribe. I just assumed
that they were doing the right thing. That was done at Lake
Charles, LA. I picked him up at the airport. We did a couple of
statements and then took him back, and that is the last I have
seen of him until I saw one of them in here this morning.
Senator Dorgan. All right.
Ms. Van Hoof, let me go through a couple of e-mails with
you, if I might, that are part of the record. Number 29 is a
March 28, 2001 cover sheet that refers to an e-mail in which
you wrote that the Coushatta had agreed to pay one-half the
cost of a poll requested by the Secretary of the Interior for
CREA. Can you elaborate on that just a bit, and what your
understanding of this was?
Ms. Van Hoof. This was in March 2001, Senator. I truthfully
do not remember the details, but there would have been normally
some type of written proposal made to the tribal council or
perhaps an in-person visit from the tribal council. There might
have even been an e-mail exchange between myself and Mr.
Abramoff explaining the details of this poll and why the
request was being made to the tribe.
Senator Dorgan. The cover sheet which is on the monitor
says ``attached is an e-mail from Jack Abramoff with the firm
of Greenberg Traurig, recently retained by the tribe for
assistance in government affairs. The Coushatta and the
Mississippi Band of Choctaw have agreed to each pay one-half
the cost of a poll conducted by the council for Republican
Environmental Advocacy, which is being conducted on behalf of
Gale Norton, Secretary of the Interior.''
[Exhibit follows:]
[GRAPHIC] [TIFF OMITTED] T4471.015
Ms. Van Hoof. Yes, sir; the e-mail is not attached as part
of the exhibit, though, and I am assuming the e-mail probably
gave a greater description. Other than this, I do not recall.
Senator Dorgan. All right. Thank you.
Mr. Worfel, are you familiar with any of this?
Mr. Worfel. No; all I am familiar with is the $50,000
donation was supposed to go a national park study. The
Department of the Interior, we were told the Department of the
Interior would look at the Coushatta Tribe as friends if we
would help them, and the Choctaw was to donate 50 percent also.
Senator Dorgan. Ms. Van Hoof, if we can go to exhibit 100,
that describes a strategy. It is a memorandum from Michael
Scanlon in which he proposed a $3.1-million battleground
program to fight off two potential gaming competitors.
For $150,000, Mr. Scanlon in this memo described how the
program would mobilize individuals to unwittingly protect
casino revenues of the Coushatta. He says, ``simply put, we
want to bring out the wackos to vote against something and make
sure the rest of the public lets the whole thing slip past
them. The wackos get their information from the Christian
right, Christian radio and mail, the internet and telephone
trees.''
Do you recall this proposal and, if so, was the proposal
engaged? Was it successful? Who was he referring to as
``wackos''? Do you have any knowledge of this?
[Exhibit follows:]
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Ms. Van Hoof. I recall that the council received this and
many proposals from either Jack Abramoff or Mike Scanlon. I do
not recall whether all or part of it was accepted, but the
council was definitely interested in monitoring and protecting
itself against gaming threats.
Senator Dorgan. In previous hearings and in documents for
this hearing, we have seen all this evidence of moving money
around through, among other, entities 501(c)(3)s and 501(c)(4)s
in order to obscure the identity of the money. Money was paid
to Ralph Reed's organization, which we have seen in document
trails in previous hearings. When the Coushatta Tribe agreed
with Mr. Abramoff to hire Mr. Reed's organization for its
grassroots efforts, what arrangements were made to pay him, Ms.
Van Hoof?
Ms. Van Hoof. As I recall, Mr. Abramoff requested that a
direct payment not be made from the Coushatta Tribe, who would
be recognized as an Indian gaming tribe, to a conservative
group associated with the Christian Coalition or other
conservative groups, even though their interests were aligned
in this instance, which was to oppose the expansion of gaming.
Senator Dorgan. So how did the money flow?
Ms. Van Hoof. If I remember correctly, Mr. Abramoff asked
if the tribe had another entity through which the payment could
be made? The tribe did not. A tribal friend indicated that he
did, and that he would make the payment so long as he was
reimbursed by the tribe, and that is my understanding of how
the payment was made.
Senator Dorgan. Mr. Worfel, is that your understanding as
well?
Mr. Worfel. Yes; the payment was made to Ralph Reed. I
mean, it was going to Ralph Reed. That was done with the whole
council approving it. The council sat there and they approved
it. If they got amnesia, I cannot explain that, but it was done
in a council meeting.
Senator Dorgan. Was Mr. Reed aware of where the money was
coming from?
Mr. Worfel. I cannot say if Mr. Reed did. I do not want to
speculate, but he should know.
Senator Dorgan. Who was the friend? You said someone in the
tribe had a friend and so the money moved through a friend?
Ms. Van Hoof. Members of the tribal council had a friend
whose name was Aubrey Temple. It was through one of his
companies that the payment was made.
Senator Dorgan. Was it made directly, then, through only
one company? There are examples of it moving through two or
three entities.
Ms. Van Hoof. If my memory is correct, I think a wire
transfer was made from the Coushatta Tribe to the entity owned
by Mr. Temple, and then Mr. Temple made the payment.
Senator Dorgan. Excuse me for interrupting. Is that a for-
profit entity or a nonprofit entity?
Ms. Van Hoof. I do not know anything about the entity.
Senator Dorgan. Let me ask about the contributions to CREA.
In e-mail traffic, and Mr. Griles will be testifying later
today in another panel, but there is so much on the record I
will go to exhibits 29, 24 and then 37, and ask you about them.
These are documents that are on the public record now that
describe a relationship alleged by Ms. Federici, with Mr.
Griles, and also by Mr. Abramoff.
Let me read these to you, if I might. Go to 24 if you would
first. In an e-mail on March 22, Mr. Abramoff writes that he
``met with the Interior guys today and they were ecstatic that
the tribe was going to help. If you can get me a check via
Federal Express made out to the Council of Republicans for
Environmental Advocacy for $50,000, that would be great. This
is really going to help.''
[Exhibit follows:]
[GRAPHIC] [TIFF OMITTED] T4471.020
Senator Dorgan. What was your understanding of what this
was going to help with? And who was Mr. Abramoff, do you
believe, claiming to be meeting with at this point?
Ms. Van Hoof. This is in March 2001, and I am not sure if I
have my dates correct. I am not sure if this had to do with the
polling or not. Further e-mails might better reflect what this
actually represented.
Senator Dorgan. There were two checks made to CREA. Is that
correct? Were there two payments or three payments made to
CREA?
Mr. Worfel. I know of one.
Senator Dorgan. For $150,000?
Mr. Worfel. The one I know was $50,000.
Senator Dorgan. I believe the record to show that there
were two payments for a total of $150,000. Ms. Van Hoof, you
are correct, there was an attachment to one of the payments
that it was going to be, helping to pay for a survey that the
Interior Secretary allegedly wanted done.
I think, Mr. Worfel, you answered you were unaware of any
survey ever being done; you never received a survey, right?
Mr. Worfel. Correct. Never have.
Senator Dorgan. Exhibit No. 37. In an e-mail to you, Ms.
Van Hoof, Mr. Abramoff references Deputy Secretary Griles as
the fellow who we helped with the CREA project. What did he
mean by that?
Ms. Van Hoof. No. 37?
Senator Dorgan. I have document No. 37. It is dated April
5, 2001.
[Exhibit Follows:]
[GRAPHIC] [TIFF OMITTED] T4471.021
Ms. Van Hoof. I do not recall, Senator. I have not reviewed
this e-mail in preparation for testimony today. I am sure I
knew at the time.
Senator Dorgan. First, let me go to Mr. Baggett quickly.
Mr. Baggett, the chairman of the committee appropriately, I
think, said at the start of this hearing in his opening
statement that your firm has been cooperative with this
committee, I believe in every way, in our requests for
documents and response to the subpoenas and so on.
So we appreciate that, but I think it is important to ask,
at that period in the firm when this occurred, what kind of
culture existed that it was allowed to occur. Was there a
spectacular lack of management or oversight of particularly Mr.
Abramoff?
Mr. Baggett. Senator, our firm is a large national firm
that makes no excuse for anything. The shareholders and
attorneys of our firm and the non-attorney professionals such
as Mr. Abramoff are all held to a strict code of professional
responsibility that applies to all lawyers and to our own
policies and procedures of the firm.
We expect each shareholder, each director, as Mr. Abramoff
was, to honor those responsibilities. We, and I do not believe
any professional services firm has the ability to micro-manage
the day-to-day activities of their members. What Mr. Abramoff
did was important to us. What he did he did without our
knowledge. He is an amazingly gifted person at having two sides
to him.
When you meet with Mr. Abramoff in a professional
environment, he is a most responsible-sounding person. In fact,
one of the attractions that we had to Mr. Abramoff was his
discipline and organization in the lobby practice. Very few
lobbyists that I have seen in my career have the kind of
accountable discipline that Mr. Abramoff required of his teams.
We were probably more shocked than anyone could be to find
what we found. We have the policies. We have the codes. We have
the responsibilities. This was an intentional act of deception
by Mr. Abramoff on the clients, on us, and on everyone he dealt
with.
Senator Dorgan. Mr. Baggett, we did not see the gifts you
described. When Mr. Abramoff was called before this committee,
he took the Fifth Amendment.
Mr. Baggett. That is true.
Senator Dorgan. So we do not know of that which you
described about the other side of this fellow.
I want to ask about two additional points. This relates to
an Associated Press story of Tuesday, June 21, 2005. It relates
to money that apparently, Ms. Van Hoof, you would have been
aware of, a contribution for activities that were arranged by
Americans for Tax Reform for a White House gathering. Can you
tell us about that $25,000 contribution as described in the
Associated Press in June?
Ms. Van Hoof. I do not remember that particular article,
but I can tell you about the contribution made and why it was
made. When Mr. Abramoff and Mr. Scanlon were hired by the
tribal council, the extreme focus at that point was on renewal
of the compact with the State of Louisiana and establishing a
strong PR campaign and grassroots campaign that would support
that effort. It was a very concentrated, focused effort for
that reason.
The tribe had had successful lobbying relationships in
years past with prior Administrations with great success, but
did not have, as we understood it, the same type of
relationship with the new Administration. So one of the things
that Mr. Abramoff offered was opportunities to meet and greet,
establish name recognition for the tribe, provide a photo
opportunity, make political contributions, and this was one of
those occasions.
We were in the midst of a very heated compact negotiation
process. It was a great press release to be able to say that
the chairman had met with the President during that period of
time. This particular organization was also a conservative
organization, and at the meeting they really did meet and
discuss tax reform issues. I think the tribal council in
support of that effort did perhaps after that pass a resolution
in support of tax reform initiatives.
Senator Dorgan. Ms. Van Hoof, there is actually, I think,
an activity on the part of the tribe to do so, as a result of
being asked to go to the meeting. The $25,000 contribution,
where did that go?
Ms. Van Hoof. As they usually did, Jack Abramoff presented
this as an opportunity for the tribe to contribute. I do not
recall if it was called sponsoring or hosting the event, but it
was a contribution made to that organization.
Senator Dorgan. Which organization?
Ms. Van Hoof. To Americans for Tax Reform.
Senator Dorgan. And one final point. We have talked a lot
about the political contributions that have been made and the
money that was described here. I want to correct the record.
The Associated Press article I was referring to about that
particular issue was a June 8 Associated Press story.
There is a June 21 Fox Newsstory that talks about, $55,000
in contributions that had been written and then returned to a
member of the leadership in the House, and had been requested
to be diverted to other organizations. Can you describe that?
Ms. Van Hoof. No, sir; I cannot. At that time, the tribal
council was following the advice of Mr. Abramoff and if Mr.
Abramoff made a suggestion, they trusted his advice and
followed it.
Senator Dorgan. Mr. Worfel.
Mr. Worfel. Sir.
Senator Dorgan. Are you aware of that?
Mr. Worfel. I cannot recall that, sir.
Senator Dorgan. I will submit written questions on that to
the witnesses.
Mr. Chairman, I think that is all I have for these
witnesses at this time. I would like to ask if we could submit
written questions.
The Chairman. Without objection. Maybe soon you will
receive some written questions. I thank the witnesses and I
appreciate your testimony. It has been very helpful and you are
dismissed.
The next panel is B.R. McConnon, president, Democracy Data
and Communications; Christopher Cathcart, former associate,
Capitol Campaign Strategies; and Gail Halpern, Jack Abramoff's
former tax adviser. Welcome.
We will begin with you, Mr. McConnon.
STATEMENT OF B.R. McCONNON, PRESIDENT, DEMOCRACY DATA AND
COMMUNICATIONS
Mr. McConnon. Thank you and good morning, Mr. Chairman and
honorable members of this committee.
My name is Bernard R. McConnon, III. I am the founder and
CEO of Democracy Data and Communications, commonly referred to
as DDC. Before I begin, I wish to note for the record that I am
appearing here voluntarily at the request of this committee.
DDC is a leading provider of grassroots impact database
management services, and website and communications programs to
the public affairs market. Among our products is Democracy
Direct, a proprietary relational database management
application which we offer under an application service
provider model. The Democracy Direct system allows clients to
catalog an immense amount of information about their
stakeholders and other assets, and then search, sort and
segment that information in complex ways to facilitate more
effective and efficient communication efforts on legislative
and regulatory issues.
Our client list includes a majority of the Fortune 100,
many of the largest trade and professional associations, and
several of the country's largest membership organizations as
well. In 2001, DDC was hired by Capitol Campaign Strategies and
later by Scanlon Gould to first provide data warehousing and
then online database management services for several Indian
tribes, including the Louisiana Coushatta.
I understand from your staff that the committee has some
questions regarding our contract with CCS and I am happy to
answer them at this time.
The Chairman. Thank you very much.
Mr. Cathcart.
STATEMENT OF CHRISTOPHER CATHCART, FORMER ASSOCIATE, CAPITOL
CAMPAIGN STRATEGIES, ACCOMPANIED BY CHARLIE LEEPER, ESQ.
Mr. Cathcart. Good morning, Mr. Chairman, Senator Dorgan. I
am joined here today by Charlie Leeper, an attorney with
Spriggs and Hollingsworth.
Since at least as early as September 2004, I have been
cooperating with the committee staff investigators by answering
questions and responding to inquiries regarding work performed
by my former employer, Capitol Campaign Strategies and its
affiliated companies collectively, CCS, for and on behalf of
various tribal clients.
For example, on September 21, 2004 I was interviewed by
committee investigators Pablo Carrillo and Katherine Rossi. On
that occasion, I responded to each and every question posed by
Mr. Carrillo and Ms. Rossi. Those questions pertained to
numerous aspects of the work performed by CCS for its tribal
clients, including the Saginaw Chippewa Indian Tribe of
Michigan, the Agua Caliente Band of Cahuilla Indians, and the
Tigua Indians of Ysleta del Sur Pueblo, as well as various
other matters.
Similarly, on November 4, 2004, I was interviewed by
committee investigators Pablo Carrillo, Bryan Parker, and
Katherine Rossi. On that occasion, I responded to each and
every question posed by Messrs. Carrillo and Parker and by Ms.
Rossi. Those questions pertained to numerous aspects of the
work performed by CCS for its tribal clients, principally the
Tigua Indians of Ysleta del Sur Pueblo, as well as to various
other matters.
On May 5, 2005, I was once again interviewed by committee
investigators Pablo Carrillo, Bryan Parker and Katherine Rossi.
On that occasion, I responded to each and every question posed
by Messrs. Carrillo and Parker and by Ms. Rossi. Those
questions pertained to numerous aspects of the work performed
by CCS for its tribal clients, including the Mississippi Band
of Choctaw Indians and the Saginaw Chippewa Indian Tribe of
Michigan, as well as to various other matters.
In all, I estimate that I have submitted to approximately
15 hours of questioning. Furthermore, I responded verbally and
in writing through counsel to all follow-up inquiries posed by
committee counsel. I have done this as a result of my respect
for this committee and its objectives.
Recently, I was made aware of a request from the committee
investigators to make myself available to answer inquiries
regarding work that CCS performed for the Coushatta Tribe of
Louisiana. Even though I no longer reside in the Washington, DC
metropolitan area, I offered, through my counsel, to
accommodate this request by traveling to Washington at my own
expense to appear for a further interview on Saturday, October
15, 2005, and at that time to answer any and all questions the
committee investigators may have regarding the Coushatta Tribe
of Louisiana.
I am informed that the committee investigators rejected my
offer to appear for an interview and instead insisted that I
give a deposition where the questions and answers would be then
transcribed by a court reporter. Through my counsel, I declined
to provide a deposition, but I am appearing voluntarily at this
hearing today.
I am aware that the U.S. Department of Justice is
conducting a criminal investigation of events relating to
lobbying and other professional services rendered on behalf of
various Native American groups, including certain services
provided by CCS for and on behalf of the tribal clients
identified above. I understand that as a former CCS employee, I
am a witness to certain events within the scope of the DOJ
investigation and I am in possession of information that could
further the objectives of that investigation.
I further understand that it may be inconsistent with those
objectives for me to submit at this time to a deposition or
transcribed questioning conducted by individuals other than DOJ
investigators.
With all respect, such a deposition or transcribed
questioning by the committee investigators may give rise to
ambiguous circumstances that could jeopardize my position as a
witness in that ongoing investigation.
Given these circumstances and having considered the U.S.
Supreme Court ruling in Ohio v. Reiner that the fifth amendment
of the U.S. Constitution protects the innocent who might be
ensnared by ambiguous circumstances, I accept the advice of my
legal counsel and respectfully and regretfully will decline to
answer questions at any hearing, deposition or transcribed
interview conducted by the committee and/or its staff on the
basis of the rights guaranteed to me by the fifth amendment.
The Chairman. Thank you.
Mr. Cathcart, my understanding is that your response to any
question from the committee at this time would be an assertion
of your legitimate fifth amendment rights. Is that correct?
Mr. Cathcart. That is correct.
The Chairman. Thank you.
Ms. Halpern.
STATEMENT OF GAIL HALPERN, JACK ABRAMOFF'S FORMER TAX ADVISOR
Ms. Halpern. Thank you, Mr. Chairman, Mr. Vice Chairman,
and members of the committee.
My name is Gail Halpern. I am a part-time accountant. I am
a certified public accountant and a personal financial planner.
Mr. and Mrs. Abramoff were my clients from early 1997 until
September 2004. I knew Mrs. Abramoff on a social basis and she
asked me sometime in early 1997 to be her and Mr. Abramoff's
accountant and prepare their personal income tax returns. The
following is a general description of the services I performed
for the Abramoffs.
I prepared Mr. and Mrs. Abramoff's personal income tax
returns from the 1996 tax year until the 2002 tax year,
inclusive. I prepared gift tax returns for Mr. and Mrs.
Abramoff when required during this time as well. I prepared
their children's income tax returns and I prepared trust income
tax returns for the Jack and Pamela Abramoff family, up to and
including the 2003 tax year as required.
I prepared personal and trust tax returns based on
information provided by Mr. and Mrs. Abramoff or by those
authorized to provide such information on their behalf, namely
Mr. Abramoff's office at Preston Gates or later at Greenberg
Traurig, or Mr. Abramoff's business office. I did not prepare
any corporate, partnership or tax exempt entity returns, as I
am not an expert in those areas of the law. Those returns were
prepared by other competent accountants. Upon their request, I
provided some tax planning advice to Mr. and Mrs. Abramoff
within my limited areas of expertise.
I also provided some estate planning advice and some
financial planning advice to Mr. and Mrs. Abramoff as requested
by them. I also answered general accounting and tax questions
from the Abramoffs or from other authorized people in Mr.
Abramoff's offices as mentioned earlier. Any questions that I
was not able to answer, such as questions that were specific to
a certain area of accounting or law, I referred to attorneys or
accountants who practiced in that area of accounting or law.
Mr. or Mrs. Abramoff made all of the decisions. For Mr.
Abramoff's daily checking account and for some of his business
entities, I worked with Mr. Abramoff's business office to help
implement a bookkeeping software package that required them to
input all the information required for me or for others to
prepare tax returns. I did not keep the books or prepare the
books for Mr. Abramoff's daily checking account, business
entities, or for any of the non-profit entities that he
started.
Rather, my role was to answer questions or refer him to
specialists who could answer questions when such questions were
posed by Mr. Abramoff or by the bookkeeping personnel or staff.
The day to day bookkeeping work was done by others. I was not
an employee, officer, director or member of any of Mr.
Abramoff's entities. Instead, I am an independent accountant
and I serve other clients besides the Abramoffs.
The tax returns that I prepared and any tax, estate and
financial planning services that I rendered were based on
information provided to me by Mr. or Mrs. Abramoff or by
personnel in Mr. Abramoff's offices mentioned earlier. To the
best of my knowledge, and based upon the information that they
provided to me, all income received by the Abramoffs or their
children or their family trust for which I prepared income tax
returns was reported and included in the relevant tax returns.
Thank you.
The Chairman. Thank you very much.
Mr. McConnon, your business, as you mention, is to build
databases so that people can send out e-mails, communicate with
voters, et cetera. Right?
Mr. McConnon. That is correct.
The Chairman. Mr. Scanlon apparently told the Louisiana
Coushatta Tribe and other tribes that his company built your
database. Is that correct? Is that your understanding?
Mr. McConnon. That is my understanding, yes.
The Chairman. And ended up charging the Coushatta Tribe and
other tribes millions of dollars for it. Too bad you did not
get in on that, huh Mr. McConnon?
In fact, there was not a lot of activity on the account,
was there?
Mr. McConnon. After an initial period of time when we set
the system up, which was in 2001, the contract lasted through
2000 and ended in 2003, and there was substantial drop-off in
activity after the initial set up of it.
The Chairman. Your company built, updated, and maintained
the database. Is that right?
Mr. McConnon. Yes; it is important to note that when
talking about the database, that there are two ways that that
term can be used. One is to describe the system itself, the
Democracy Direct system in this case that I am talking about,
which is the application. There is also the data that goes into
the application that is derived from a lot of different
sources.
The Chairman. The work you did paid you about $104,000? Is
that roughly correct?
Mr. McConnon. That is right.
The Chairman. They created a database basically that was
less capable than yours?
Mr. McConnon. At some point, I believe what you are
referring to is at some point with tribes other than those that
we were working for through CCS and Scanlon Gould, apparently
at some point CCS or Scanlon Gould began to offer their own
version of a similar system to other tribes.
The Chairman. That was less capable than yours?
Mr. McConnon. From what I have been shown, yes, far less.
The Chairman. Mr. Scanlon charged the Pueblo Sandia Tribe
$1 million for that database. Are you aware of that?
Mr. McConnon. I was not, no.
The Chairman. Do you think the database was worth anything
near $1 million?
Mr. McConnon. From what I have seen, no.
The Chairman. We are told by other witnesses it was really
worth about $20,000. Is that a good estimate?
Mr. McConnon. That is probably in the neighborhood.
The Chairman. Do you have a theory as to how those
databases were probably designed?
Mr. McConnon. From what I have seen, the databases that
were offered to the other tribes, the part that is visible to
the tribes, the screen as was described earlier, is strikingly
similar to a portion of our system that was being licensed for
the first set of tribes.
The Chairman. Like reverse engineering?
Mr. McConnon. Like reverse engineering.
The Chairman. Mr. Cathcart negotiated the contract with
your company on Mr. Scanlon's behalf. Is that correct?
Mr. McConnon. That is correct. Well, the initial contract
involved Mr. Cathcart, Mr. Scanlon, myself, and other people on
my staff. There were subsequent contracts that were negotiated
by Chris with other people on my staff.
The Chairman. Mr. Cathcart seemed to be the one who was
running operations for Mr. Scanlon. Is that correct?
Mr. McConnon. From interaction with our firm, yes.
The Chairman. Mr. McConnon, you have conducted business
with lots of lobbying shops and other similar organizations.
How common is it for a grassroots firm to pay referral fees for
businesses brought to it by a lobbyist?
Mr. McConnon. In my experience, it is not done. My
understanding is that lobbyists cannot receive referral fees
for business that their clients are doing.
The Chairman. Mr. Cathcart, while working for Mr. Scanlon,
I understand you were very handsomely compensated. In fact, you
started off with a salary of $44,000 plus an additional $35,000
bonus in 2001. By 2003, you received a salary of $105,000 and a
bonus of $390,000. Do you wish to comment on how you merited
such generous compensation from Mr. Scanlon?
Mr. Cathcart. Mr. Chairman, regrettably I have to stand by
my statement.
The Chairman. Ms. Halpern, while working for Mr. Abramoff
as his tax advisor, you provided, when asked, tax advice on the
Capital Athletic Foundation. Correct?
Ms. Halpern. Correct, sir.
The Chairman. In the course of your employment with Mr.
Abramoff, did you ever observe the Capital Athletic Foundation
engaging in activity inconsistent with its own tax exempt
mission?
Ms. Halpern. Based on my limited knowledge of the tax law
in the tax exempt areas, and based on the limited knowledge
that I have of the Capital Athletic Foundation, I am not aware
of any activities that it engaged in that would negate the tax
law.
The Chairman. In 2001, the Capital Athletic Foundation
claimed that the Louisiana Coushatta Tribe was the single
largest contributor with a payment of $1 million. As has
already been testified, the tribe never intended to make a
contribution to the Capital Athletic Foundation. Mr. Scanlon
told the tribe its $1 million was going to go to Greenberg
Traurig for grassroots activities. Did Mr. Abramoff tell you
anything about that purported $1 million donation?
Ms. Halpern. I found out about the $1-million donation
after the fact, that is, after it occurred sometime. In trying
to recollect what happened, Mr. Abramoff has an internal
accountant who kept the books of the Capital Athletic
Foundation and he booked this contribution income.
The Chairman. Do you know the name of that accountant?
Ms. Halpern. David Pierce. I believe he was preparing the
2001 books at some time in 2002. Okay? In other words, let me
give you a little bit more background to give you a better
understanding. Mr. Abramoff had a business office. This
business office did not startup, did not have employees running
it until sometime early in 2002. During 2001, Mr. Abramoff had
a very close associate at Greenberg who maintained, to the best
of my knowledge at least, maintained these types of
transactions for him.
The Chairman. Who was that?
Ms. Halpern. That person's name is Mr. Rodney Lane.
Therefore, when I am saying I found out after the fact, it
is not like someone lifted up the telephone and said to me, you
know, Gail, we just got $1 million in. I was looking at the
QuickBooks that Mr. Pierce had prepared. First, the QuickBooks
did not have that donation recorded, and then it had it
recorded, I believe, as a donation from Mr. Abramoff.
I said to Mr. Pierce, you know, I think Mr. Abramoff would
tell me if he made a $1-million donation and I do not see it
coming out of his personal account. So can you please research
this and tell me if you have it correct. He went back and
researched this entry that he did, and he said, I apologize; I
made a mistake. It came from a Coushatta Tribe. That is, the $1
million came from a Coushatta Tribe.
At that point, trying to recollect what happened, I said,
okay, you know, correct the books to properly show whatever it
is you are saying it did. And I would say it was approximately
November 2002 when the 2001 tax return was being prepared by
the tax accountants. I said to Mr. Abramoff, I believe it is an
e-mail which I have submitted to your committee, I just want to
touch base with you again about this $1 million. I say,
``again'', because of whenever it was that I initially found
out about the contribution and Mr. Pierce said, no, it is not
from Mr. Abramoff, it is from Coushatta.
At that point, I said to Mr. Abramoff, I just want to make
sure that this is correct information and that this income is
not your income nor can it be construed as your income, because
if it can be construed as your income, it is not a charitable
donation. It is your earned income. And Mr. Abramoff assured me
that this was a donation from a tribe.
Just to back up to where I started off, in November 2002,
just before he signed the tax return, I repeated my information
to him again, saying I just wanted to make sure because this is
what you told me back when I found out about the contribution.
I just want to make sure that all this information in the tax
return is correct, and I am faxing to you that page of the tax
return that lists contributors.
Private foundations list contributors of $5,000 or greater.
This document is a public document. It is displayed on the
Internet. You or I could go on the Internet and look and see
who contributed to what foundation. It is not hidden
information. It is totally disclosed.
In addition, the private foundation also maintained a
disclosure copy of the tax return in their business office.
They maintain a copy of this tax return at their business
office. So I faxed the form to Mr. Abramoff that shows the
contributors and he looked at it, and he got back to me and,
apparently the forms listed a different Coushatta Tribe. There
is another Coushatta Tribe that is not from Louisiana;
Mississippi perhaps. The form had Mississippi Coushatta, and
Mr. Abramoff said this is wrong. This contribution is from
Louisiana Coushatta.
So I said, okay, and I went back to Mr. Pierce, the
internal accountant, and I told him what Mr. Abramoff said. I
said, you know, how can this happen? How are you documenting
what took place here? Where are you getting your information
from? He apologized. He made a mistake. He saw Coushatta Tribe
on whatever paper trail came into the office and he just
assumed it was another Coushatta Tribe, not Louisiana.
It certainly to me seemed like he just made an innocent
mistake. I informed the tax accountants what Mr. Abramoff said
that it was Louisiana Coushatta and please correct the
information on the return. And that page was corrected, and
when Mr. Abramoff signed the return, it documented that
Louisiana Coushatta contributed $1 million.
The Chairman. Does that change the underlying problem here?
Ms. Halpern. Sir, I am just telling you the events that
took place. I am not changing any problem.
The Chairman. As a tax advisor you would advise him about
CAF. It was established by Mr. Abramoff in 1999. Is that
correct?
Ms. Halpern. Yes, sir.
The Chairman. All decisions were made by Mr. Abramoff and
possibly his wife. Is that correct?
Ms. Halpern. To the best of my knowledge, the decisions I
remember were made by him. I cannot recall his wife making any
decisions on it.
The Chairman. Being familiar with the profit-loss
statements and e-mails associated with CAF, you can confirm
that from 2001 to 2003, the Eshkol Academy, the all-boys
Yeshiva started by Abramoff in 2001, was the primary
beneficiary of the CAF. Is that correct?
Ms. Halpern. It was a substantial beneficiary. Yes, sir.
The Chairman. And from 2001-03, many of the top recipients
of distributions made by the CAF at Mr. Abramoff's direction
had significant ties to Mr. Abramoff. For example, in 2002 Mr.
Abramoff had a personal connection to Pitach, a special Jewish
school, Kollel Ohel Tiferet, which appears to be a sham
organization designed to funnel, in your own words, Ms.
Halpern, ``spy equipment and other military expenses'' totaling
$97,000 to a sniper workshop in Israel.
Ms. Halpern, the person who apparently ran the sniper
workshop, Shmuel Ben Zvi, is a close friend of Mr. Abramoff. Is
that correct?
Ms. Halpern. I believe they are friends. I do not know the
extent of that relationship.
The Chairman. Toward Tradition a non-profit educational
organization received $10,000 from the CAF and the president of
this organization, Rabbi Daniel Lapin, is a close friend and
business associate of Mr. Abramoff. Isn't he?
Ms. Halpern. I believe they are associates. I am not sure
of the relationship.
The Chairman. Let's go back to the Eshkol Academy, the
CAF's top beneficiary from 2001-03. For 1 year, Mr. Abramoff
instructed you to reduce the amount of his charitable
contribution to the CAF, instead of paying tuition for at least
one of his children. Is that correct?
Ms. Halpern. Yes; and that occurred after, every year I
looked at Mr. Abramoff's personal checkbooks and if it ever
came to my attention that he did not pay tuition for his
children, I told the assistants that were responsible at that
time, and 1 year Mr. Lane was responsible and another year it
was the other people in the business office, which was Mr.
Pierce. I specifically said that Mr. Abramoff must pay tuition
like everybody else and please make sure that you do so from
his personal account.
Now, 1 year when I found out after the fact that the
tuition was not paid, it was apparently an oversight by his
business office, at least that is what I am told. And Mr.
Abramoff instead of taking a full deduction on his personal tax
return for what he contributed to the foundation, he reduced
his deduction on his personal tax return by that amount that is
allocated to tuition. So that way, it was made sure that he
paid tuition for his children just like everybody else.
The Chairman. Would you refer to exhibit 219 for me please?
It is an e-mail from you to Jack Abramoff.
Ms. Halpern. Yes, sir.
The Chairman. Part of the e-mail says, ``but let's try to
square it out in a way where we do not screw up the foundation.
We need to get the money to a 501(c)(3) or an educational
institution, not directly to him. Can you ask him if he can
work something out within kollel so the money goes from the
kollel,'' I am not sure I am pronouncing that word right, ``to
him.'' ``Him'' I think, is referring to Mr. Zvi. Is that right?
Ms. Halpern. I would have to review this whole e-mail in
context, but it appears from where you are reading, I did not
see where you are reading from, but it appears that what you
are saying is correct, sir.
The Chairman. And you go on to say in your e-mail, ``if he
can't, then I need to sit down and have him make amendments in
grant procedures and all kinds of other stuff to make this
legit from a tax point of view. I already need to talk with Mac
about the skating rink, so let me know what Shmuel says about
getting money to a kollel, and if it will not work, then I will
add this to the list.''
It seems to me, Ms. Halpern, from your e-mail here that you
must have known that some of this money was going to purchase
paramilitary equipment.
[Exhibit follows:]
[GRAPHIC] [TIFF OMITTED] T4471.022
[GRAPHIC] [TIFF OMITTED] T4471.023
[GRAPHIC] [TIFF OMITTED] T4471.024
Ms. Halpern. Mr. Chairman, I realize you are picking out
one e-mail in a series of many correspondences and
conversations that were had. So if you don't mind, I would like
to explain to you in context when this e-mail came up.
In approximately May 2002, I learned from looking at the
foundation books that Mr. Abramoff wanted to support a school
in Israel, a kollel. A kollel is a Jewish school of higher
learning, kind of similar to a post-graduate type program in a
way. When I learned of this, like I told you in my opening
statement, I do not practice in the area of not-for-profits.
So I said to Mr. Abramoff, I do not know if this is
something that a foundation is permitted to do. I would
recommend to you that you ask the foundation attorneys. The
Capital Athletic Foundation has expert attorneys who practice
in the area of not-for-profits. He said, fine; go ask them on
my behalf.
I contacted the attorneys and I said, there is a school in
Israel that Mr. Abramoff would like to support, and he would
like to support it for security and self-defense. Is that a
permissible activity of the foundation? And they came back to
me and they said it is permitted. Because it is in Israel a
grant follow-up procedure needs to be done. I do not see where
you are reading from, but I heard you mention that when you
were reading the e-mail. That is what the grant follow-up
procedure is. To the best of my knowledge, the Capital Athletic
Foundation did comply with that requirement.
Now, I would also like to express to you that when I
learned about the school in May 2002 and immediately sought
expert advice from the Capital Athletic Foundation attorneys,
it was not something, you might think, gee, well this sounds
like an odd request. Why would he want to do something like
that?
Just to put it in context, 2 months earlier, in March 2002,
a terrorist infiltrated a Jewish school in Israel and randomly
went shooting off with his gun in the study hall of the Jewish
school. Five young men, 5 innocent young men were killed and 23
innocent young men were injured. So when I learned of this 2
months later, in May, it was not something that stood out in my
mind that it was a rare request.
The Chairman. It is not a rare request to ask money for a
sniper workshop? You were aware that it was a sniper workshop,
right?
Ms. Halpern. Sir, if you are listening to what I am telling
you.
The Chairman. I am listening to what you are telling me.
For you to say that it is not unusual to give money to a sniper
workshop, which there was an exchange of e-mails that says Mr.
Abramoff's assistant did suggest he could write some kind of
letter with his ``sniper workshop logo and letterhead''. ``It
is an educational entity of sorts''.
Ms. Halpern, it does not pass the smell test.
Ms. Halpern. I am sitting here today, sir, so I can tell
you what I knew at that time. At that time what was presented
to me, information that was given to me----
The Chairman. Did you know it was a sniper workshop?
Ms. Halpern. I did not know. I am not aware of a sniper
workshop. Now, as you know from the thousands and thousands of
documents that I have given to your committee, sir, I got a lot
of e-mails from Mr. Abramoff or his associates. I cannot say I
read every attachment or every forward. It would have been very
time consuming.
So I do not recall ever hearing something about a logo in
an e-mail that you just referred to. I am telling you, sir,
that to the best of my knowledge, Mr. Abramoff was funding a
school for security and self-defense.
The Chairman. Were you aware that it was a sniper workshop
at the time?
Ms. Halpern. At the time, I was not aware that Mr. Abramoff
was funding a sniper workshop.
The Chairman. Senator Dorgan.
Senator Dorgan. Ms. Halpern, are you upset that you are
here having to answer these questions for the committee?
Ms. Halpern. No; actually I am not upset, sir. I have been
very helpful with your committee. I have met with your staff
for several days. I am here to answer whatever I can.
Senator Dorgan. Senator McCain asked the question about the
e-mail. I want to just read it again because it is hard for me
to believe that with all that was going on, substantial amounts
of money coming into all kinds of different organizations, that
you did not perhaps understand that there were some real
problems here. You say, let's try to square it in a way where
we do not screw up the foundation.
Ms. Halpern. Yes.
Senator Dorgan. We need to get the money to a 501(c)(3) or
an educational institution.
[Exhibit follows:]
[GRAPHIC] [TIFF OMITTED] T4471.025
[GRAPHIC] [TIFF OMITTED] T4471.026
[GRAPHIC] [TIFF OMITTED] T4471.027
Ms. Halpern. Can I explain that, sir?
Senator Dorgan. Of course.
Ms. Halpern. Because I think you raise a good point, when
you read out of context, you can think of a lot of things. As a
matter of fact, whenever someone takes tax advice or looks at
tax advice, they cannot look at that one e-mail. They need to
see what came before, the e-mail that came after and before,
and the conversations that took place.
So let me just explain to you, and maybe this will clarify
things for you. Mr. Abramoff asked his office to make
purchases, security purchases for this institution in Israel.
What I could not understand at that point was why he was doing
that. If you want to fund a school, just give them the money,
ask them for a receipt, and get on with life. Let them worry
about what they are going to do with it.
And then when I learned that Mr. Abramoff was actually, he
said fine; we are not going to purchase any equipment; we will
just give him the money. Then I learned that he gave him the
money directly and not to the school.
Now, this is kind of similar to if there is a school next
door that had a broken elevator, and you wanted their broken
elevator to get fixed, you would not go and give the money to
the elevator man to repair the elevator. You would give money
to the school and the school would arrange for the elevator man
to come to fix the elevator.
This is similar. What I was saying here is do not take the
money and give it to the agent for the school, and that is what
Mr. Abramoff told me he was, the agent for the school. Give it
directly to the school. Have them give you their wire
information, wire the money to them, whatever means you need to
do to get it to the school.
Senator Dorgan. Because if he would give to the agent
directly, it would ``screw up the foundation''?
Ms. Halpern. No, sir; again to the extent of my knowledge
of not-for-profit laws, I do not think it would screw up the
foundation. It would be, to the extent of my knowledge, still a
permitted distribution. However, I kind of like things simple
and to the point. And why bother with having to do grant
follow-up work.
Mr. Abramoff had a limited staff and I did not want
something falling through the cracks. I wanted him to do the
simplest thing possible. He presented information to me where
he wanted to support a school in Israel and my answer was, you
want to do it, fine, just have the money go directly to the
school.
Senator Dorgan. Ms. Halpern, it does not seem to me like
there was much that was not permitted in all these
transactions. You talk about ``permitted issues.'' I mean, as
you go through these e-mails and take a look at these
transactions, it looks like the sky was the limit in terms of
transactions.
Let me ask you about a number of entities. In addition to
the Capital Athletic Foundation and Kaygold, Mr. Abramoff had a
number of other companies. In an e-mail from you to him and
several of his associates on February 16, 2003, you mentioned
the following entities. Could you just tell us what each of
them are?
[Exhibit follows:]
[GRAPHIC] [TIFF OMITTED] T4471.028
Ms. Halpern. Is there an exhibit I should look at?
Senator Dorgan. I do not have an exhibit on this, but it is
an e-mail.
Archives, LLC? Do you remember what that was?
Ms. Halpern. Archives LLC, is that as opposed to Archives
Fine Dining, LLC?
Senator Dorgan. I will write that down. That is a new one.
Ms. Halpern. I want to differentiate them for tax purposes.
Senator Dorgan. Archives, LLC, you have about seven of
them. I was just curious. These are in addition to the Capital
Athletic Foundation and also in addition to Kaygold.
Archives, LLC, what is that?
Ms. Halpern. Archives, LLC to the best of my knowledge is
dormant and did not do anything. The way it came about is Mr.
Abramoff said, I want to open a restaurant. Can you please do
the filings. It is going to be called Archives, LLC.
Senator Dorgan. And I did not have it on the list, but
there is an Archives Fine Dining, LLC as well?
Ms. Halpern. Let me explain, sir. I will be happy to
explain it.
Senator Dorgan. All right.
Ms. Halpern. And then after I went ahead and did the
paperwork to apply for a tax ID number, et cetera, all that is
required, the person in Mr. Abramoff's business office said;
``Oh, what is this all about, Archives, LLC?'' He already
opened an entity for his restaurant, called Archives Fine
Dining, LLC. So basically, his partner in the restaurant opened
Archives Fine Dining, LLC and either it slipped Mr. Abramoff's
mind or he did not know, and he asked me to open it.
Senator Dorgan. DL/JA, LLC?
Ms. Halpern. That is an entity, to the best of my
knowledge, that owns his personal residence.
Senator Dorgan. Entity that owns his personal residence?
Ms. Halpern. Yes, sir.
Senator Dorgan. So his personal residence is not in his
name?
Ms. Halpern. It is in the name you just read.
Senator Dorgan. His home is owned by DL/JA, LLC?
Ms. Halpern. To the best of my knowledge, sir. I did not
set that up. You are going to have to ask the people involved
who set that up.
Senator Dorgan. Did you do the accounting for that?
Ms. Halpern. No, sir; it was not a for-profit entity. It
did not have tax returns, et cetera.
Senator Dorgan. I understand.
Ms. Halpern. It owns his house.
Senator Dorgan. It is a separate company to own his home?
Ms. Halpern. It is an LLC that owns his home. It was based
on advice he received from attorneys.
Senator Dorgan. Sounds a bit Byzantine to me.
Livsar Enterprises, LLC?
Ms. Halpern. Yes, sir; that is an entity that is owned
together with him and Rodney Lane. It controlled and operated
his restaurant, Signatures.
Senator Dorgan. SVJA, LLC?
Ms. Halpern. To the best of my knowledge, that entity was
dormant. I am not aware of any income or losses passing through
it that I knew about. It was apparently an entity that he and
another associate founded. Apparently, whatever deal it was for
fell through.
Senator Dorgan. International Political Management, Inc.?
Ms. Halpern. That is a corporation that he founded, and let
me try to recall what it was for. It was not a very active
entity. I did not do the tax return for it, so you are kind of
asking me something that I have not seen in many years, which
is a little bit difficult for me, but I do not recall it as
something that was very active.
Senator Dorgan. Sports Suites, LLC, Mt. Vernon Studios,
Inc. I will not go through the rest. These are a lot of
enterprises. Are there additional enterprises?
Ms. Halpern. I would be happy to answer each and every one
if you would like. It is no problem.
Senator Dorgan. I wonder if I could do this, ask you to
submit a list that would be an exhaustive list of the
enterprises that you know Mr. Abramoff controlled.
Ms. Halpern. Sure. No problem.
Senator Dorgan. That would be helpful to the committee.
Let me ask Mr. McConnon, on page 6 of the Coushatta
political program, that is exhibit 64, Capitol Campaign
Strategies makes a claim they completed 16,500 direct contacts
with individual calls to the Governor. Any evidence in the
Coushatta database that suggests this occurred?
[Exhibit follows:]
[GRAPHIC] [TIFF OMITTED] T4471.029
[GRAPHIC] [TIFF OMITTED] T4471.030
[GRAPHIC] [TIFF OMITTED] T4471.031
Mr. McConnon. Sir, what is the exhibit number?
Senator Dorgan. It is exhibit 64. In that same exhibit on
page 2, it claims that Capital Campaign Strategies custom built
a computer program. I think the chairman has already asked
about that. Let's start with that. On page 2, are you aware
that the Capitol Campaign Strategies custom built a computer
program?
Mr. McConnon. No; to the best of my knowledge, they were
using ours that we had licensed to them.
Senator Dorgan. On page 6, where they make the claim they
completed 16,500 direct individual contacts to the Governor,
any evidence in the database that suggests this occurred?
Mr. McConnon. The only thing that I could find in looking
back at a series of e-mails and records was a file that we
received that is called Mississippi Gaming: Yes Activists. It
was approximately 15,500 records in the file that we received
in October 2001. How that was derived is not clear at all from
the data, but it is possible that those are accurate.
Senator Dorgan. Mr. Cathcart, I understand that you had
interviews with the staff of the Committee on Indian Affairs.
My understanding is that you answered the questions asked in
all three interviews. Although you certainly have a right to
assert your fifth amendment rights here, I am wondering, if you
were willing to answer the questions in all three of our
interviews, what persuades you not to answer the questions in
public that you previously answered in private?
Mr. Cathcart. Frankly, I took the advice of my counsel and
maybe it is more appropriate for him to answer than I.
Senator Dorgan. Perhaps we could hear from your counsel.
Mr. Leeper. Thank you, Mr. Vice Chairman.
As you know, in a court of law counsel representing a party
has the right to object to a question that is compound,
argumentative, loaded with an unfounded assumption, and counsel
can obtain a ruling from an impartial arbiter, usually a judge,
as to whether or not the witness needs to answer the question
as stated or whether the question needs to be restated.
In this venue, as you know, counsel has no such ability to
protect his or her client from such objectionable questions,
and a record of answers to such questions, questions that are
compound or based on unfounded assumptions, is an ambiguous and
unreliable record, which gives rise to a hazard to a witness,
in particular the witness' liberty interest. The right
recognized in Ohio v. Reiner is intended to protect that very
right and interest, including the interest of innocent persons.
So for that reason, we are exercising that right here.
Senator Dorgan. Counsel, I do not contest the right and the
chairman indicated that your client certainly has that right.
My only point was that he did come as he described, at his own
expense, came for three interviews, answered the questions, and
I would have thought that that which he answered in private, he
would answer in public. I understand he has the right to assert
it and has so asserted.
One final question, if I might, Mr. Chairman. Ms. Halpern,
you indicated a David Pierce was involved in some of the tax
preparation issues and tax advice with respect to things like
the Capital Athletic Foundation. Is that right?
Ms. Halpern. No, sir; I said that to the best of my
knowledge, Mr. Pierce, who was an internal accountant for Mr.
Abramoff, hired by Mr. Lane, kept the books of several of Mr.
Abramoff's entities. To the best of my knowledge, he did not
prepare tax returns that I know about. And if he rendered tax
advice to Mr. Abramoff, I would have no way of knowing that and
I do not recall him telling me he did.
Senator Dorgan. The final point. I think the chairman asked
you a good number of questions about this, but with respect to
the Capital Athletic Foundation, the establishment of an
academy in suburban Maryland, sniper training operation in
Israel, payments to Mr. Abramoff's cousin, and other things.
Ms. Halpern. I am sorry. Which payments?
Senator Dorgan. There are payments to Mr. Abramoff's cousin
Steve?
Ms. Halpern. From where? From the Capital Athletic
Foundation?
Senator Dorgan. Yes; is that not accurate?
Ms. Halpern. Would you show me what exhibit that would be
in, sir?
Senator Dorgan. I do not have that exhibit in front of me.
Ms. Halpern. I am not familiar with the fact that the
foundation made those kind of payments.
Senator Dorgan. Why don't we then, I am going to submit
questions for Ms. Halpern, and I will attempt to get that
reference for you, and I want to visit it.
Ms. Halpern. Okay. Thank you. As you know, there were
thousands of transactions in the CAF books and I cannot
remember all of them.
Senator Dorgan. I understand it is here.
Ms. Halpern. Okay.
Senator Dorgan. Exhibit 204, on the second page, ``can we
cut the spy equipment and monthly stipend at $3,560; can we do
without Steve Abramoff's monthly stipend of $2,000? Can we hold
off on any other charitable contributions for a while'', and so
on.
[Exhibit follows:]
[GRAPHIC] [TIFF OMITTED] T4471.032
[GRAPHIC] [TIFF OMITTED] T4471.033
Ms. Halpern. To the best of my knowledge, sir, and correct
me if I am wrong, but I think if your staff looks in the books
and records, Mr. Steven Abramoff was receiving payment from
Kaygold, which is Mr. Abramoff's consulting practice, not from
the foundation.
Senator Dorgan. All right.
Mr. Chairman, I will submit some additional questions. I
thank all three of the witnesses for being here.
The Chairman. I have just one more question.
Ms. Halpern, please refer to exhibit 206 in the book
please. Now, you have stated that you, in a previous question,
that you had no knowledge of a sniper workshop. Well, in
exhibit 206, November 11, 2002 e-mail between you and Mr.
Abramoff, Mr. Abramoff forwards to you an e-mail from Ben Zvi,
in which he writes, ``last night, one of the guys from the
emergency response team in Israel City of Ashdod, who was in
the Army when I did the workshop for snipers in his unit, said
they need the workshop badly and anything else I can do to
help.''
Mr. Ben Zvi continues, ``I am now writing out a program for
patrolling and dealing with ambushes and containment and
neutralization of terrorists, both in and out of the Ishuv.''
In forwarding this e-mail to you, Mr. Abramoff writes,
``This is why it so hard for me to cut off funding. Who else
would fund this? He has no one else.''
In response, you write, ``I actually had chills reading the
two e-mails you forwarded to me. However, we need to work this
into the tax exempt purposes of the foundation. More to come on
this subject in an e-mail tomorrow or so. Mr. Abramoff's
outside accountant is finishing the 2001 return, and read me
the riot act on some of the stuff that we are doing. We need to
fix the holes.''
[Exhibit follows:]
[GRAPHIC] [TIFF OMITTED] T4471.034
[GRAPHIC] [TIFF OMITTED] T4471.035
The Chairman. Now, you continuously stated that there are
thousands of e-mails. I would think you would remember
something that caused you to have chills reading two e-mails.
That specifically refers to this individual who, ``did the
workshop for snipers in his unit,'' which obviously, according
to the e-mail, Mr. Abramoff said he was funding.
Ms. Halpern. Mr. Chairman, I am not up on what is required
for security enhancements. Okay? That is certainly not one of
my areas of expertise. If Mr. Abramoff, who is running the
foundation, presented to me that he is funding the school for
security enhancements, for security and defense, that is what I
believed and that is what I took. What was required in order to
provide security enhancements, I do not know. It was not my job
to investigate. I was not running the foundation. And I was
basing any information that I said to him, was based on what he
told me.
Now, you mention about the other firm, the tax accountants,
the specialists who prepared the returns. What that is
referring to is, I believe it was, Mr. Vice Chairman had
mentioned in an e-mail that he read, it was referring to a
relationship that the foundation had with an ice rink that the
school was using. That is the reference where specialist tax
accountants consulted the tax attorneys and made a
recommendation specifically about the ice rink. That is what
that line is referring to, sir.
The Chairman. Ms. Halpern, it was forwarded to you, the e-
mail that says ``last night, one of the guys who was in the
Army when I did the workshop for snipers and said they needed
the workshop badly,'' and you are saying that you had no
knowledge of a sniper workshop.
Ms. Halpern. Sir, if you recall another e-mail which I
believe you put in your exhibit last time, it talked about
terrorists cutting through the fence. I do not know what is
required to defend against a terrorist coming through a fence.
The Chairman. I am not asking that, Ms. Halpern. I was
asking if you knew money was being sent for a workshop for
snipers, and it is specifically referred to in an e-mail that
was sent to you, that you said in response, ``it gives you
chills.''
Ms. Halpern. Yes, sir; and I reiterate that the knowledge
that I had was that Mr. Abramoff was funding a school in Israel
for security enhancements. Now, what that school required,
depending on their geographical location, I cannot answer that,
sir, this very specific question.
The Chairman. It was a very specific response to you from
Mr. Abramoff, who said, ``this is why it is so hard for me to
cut off funding.'' Clearly, that indicates he was funding.
I have no further questions.
Do you have any further questions?
Senator Dorgan. One further question.
Ms. Halpern, you have heard the testimony now at two
separate hearings about Mr. Abramoff, testimony that I think
pretty clearly describes deception, lying, perhaps fraud,
including substantial evidence of that this morning. Give me
your analysis of what you have heard.
Ms. Halpern. It is a lot of information. It is all very
overwhelming. As you know your committee has shown me some e-
mails that were written either relating to me or relating to e-
mails that people wrote about me, it is a very overwhelming
massive amount of information.
What I can tell you, though, is that I believe in our
Justice Department and I have full confidence that they will
make a thorough investigation and get to the bottom of this.
Senator Dorgan. Mr. Chairman, I have no questions.
The Chairman. Thank you very much.
I thank the witnesses.
Our last panel is Steven Griles, former deputy secretary of
the Interior; Michael Rossetti, former counsel to the Secretary
of the Interior; and Italia Federici, the president of the
Council of Republicans for Environmental Advocacy.
Mr. Griles, we will begin with you, sir.
STATEMENT OF J. STEVEN GRILES, FORMER DEPUTY SECRETARY,
DEPARTMENT OF THE INTERIOR
Mr. Griles. Mr. Chairman and members of the committee, my
name is J. Steven Griles. I am appearing today voluntarily. I
believe the committee's work is very, very important.
What I have heard today is extremely disheartening. This
committee knows I have been a public servant for almost 24
years, first with the Commonwealth of Virginia from 1968 to
1981, and then with the United States Department of the
Interior from 1981-89, and again from 2001 through January of
this year.
In my most recent position, I served as deputy secretary of
the Interior. I considered it a privilege to work for President
Bush, Secretary Norton, and many of you and your colleagues on
the issues of importance to this country and its environment.
Two weeks ago, I spent over 4 hours answering questions
from this committee staff. I was shown documents that I had
never seen before and told things about Mr. Abramoff that I did
not know, and today I learned more. We have heard that Mr.
Abramoff has taken an unbelievable amount of money from some of
the most vulnerable people in our society. He also apparently
has claimed to have special access to my office on behalf of
his Indian gaming clients. That is outrageous and it is not
true.
If he got this money in part by misrepresenting his
relationships with me, I am extremely pleased that you are
investigating this. Before answering your questions, I want to
make one important point. From the time I became deputy
secretary, I had no responsibilities for Indian gaming issues.
Authority over those issues was assigned to others who reported
directly to the Secretary, like Michael Rossetti. The Secretary
made all decisions relating to Indian gaming compacts. I want
you to know this so that you can judge the credibility of any
special access to my office on this issue.
Thank you so much, Mr. Chairman, and I want to thank the
staff for the way they treated me when we went through the
interview.
The Chairman. Thank you very much.
Mr. Rossetti.
STATEMENT OF MICHAEL ROSSETTI, FORMER COUNSEL TO THE SECRETARY
OF THE INTERIOR, DEPARTMENT OF THE INTERIOR
Mr. Rossetti. Thank you, Mr. Chairman.
I have no prepared remarks, but I am happy, of course, to
answer any questions that you have, Mr. Chairman, or that the
Vice Chairman has of me at this time.
The Chairman. Thank you very much.
Mr. Griles, according to documents in the committee's
possession, Mr. Abramoff directly and indirectly contacted you
while you served as deputy secretary of the Department of the
Interior about tribal issues that were pending before the
department. I would like to explore those communications with
you now.
First, could you describe your relationship with Mr.
Abramoff?
Mr. Griles. My relationship with Mr. Abramoff was, as with
other lobbyists, nothing more, nothing less, just as it would
be with Senators and other interest groups. I returned calls
directly. If people called, I had those calls returned by
others who had direct responsibilities.
The Chairman. At your deposition, you testified that you
could only vaguely recall a couple of conversations you had
with Ms. Federici about matters relating to Mr. Abramoff's
clients pending at the department, and that was it, and that
these were only requests by Ms. Federici to have you call Mr.
Abramoff back. Is that correct?
Mr. Griles. Yes, Senator; I told your investigators that I
recalled several conversations in which she had asked me to
call Mr. Abramoff. She had just been talking to him and wanted
to know if I would call him. I know of one instance that I
think, this has been a long time ago, that I made a return call
to him.
The Chairman. So with the benefit of time, you have been
unable to remember anything further?
Mr. Griles. And I have not seen any other documents,
Senator, either to help with that.
The Chairman. At your deposition, you said you never had
any reason to get involved in tribal gaming issues, and that
you ``didn't do gaming.'' At your deposition, you testified
that as the COO at Interior, you did not intervene or get
involved in gaming issues, except to the extent that the
counselor asked you for advice. But to what extent did you try
to intervene in gaming issues that related to Mr. Abramoff's
clients?
Mr. Griles. Senator, I do not recall intervening on behalf
of Mr. Abramoff's clients ever.
The Chairman. Mr. Rossetti, are you aware of any incidents
where Mr. Griles tried to intervene in gaming issues relating
to Mr. Abramoff's clients?
Mr. Rossetti. I am aware, Senator, Mr. Chairman, that Mr.
Griles at some point late in 2003, I believe it was, became
very interested in participating in the decisionmaking process
and indicated to me on many occasions a desire to be in
attendance at the Secretary's decisionmaking meeting with
respect to the two-part determination that was before her or
would be before her with respect to the Jena Band in Louisiana.
The Chairman. Mr. Griles, with the benefit of Mr.
Rossetti's recollection, why did you try to intervene in the
Jena issue?
Mr. Griles. Mr. Rossetti has a different memory than I
have, Senator, of that issue.
The Chairman. Go ahead, please.
Mr. Griles. I have, and to my recollection, never went to a
decisionmaking meeting on the Jena Band with the Secretary. My
recollection, and I believe if you were to check with the
Secretary, she would indicate that also. I do not recall,
Senator, going to any meeting with the career staff, and I
believe if you were to check with the career staff that would
be true.
The Chairman. Did you try to intervene in the Jena issue?
Mr. Griles. Senator, I was the chief operating officer. If
I had wanted to intervene in those issues, I could have. That
was not what I was doing at Interior. I did not do Indian
gaming, sir.
The Chairman. What conversations do you recall that you had
with Mr. Abramoff regarding the Jena issue or with Ms. Federici
concerning the Jena issue?
Mr. Griles. Senator, I do not recall having a discussion
with Ms. Federici about the Jena Band issue at all.
The Chairman. Do you have a recollection of any
conversations you had with Ms. Federici about a leadership
dispute in the Louisiana Coushatta Tribe?
Mr. Griles. Senator, as I told your investigators, I
recall, as I indicated a few moments ago, that I had a call
from Italia Federici in which she discussed something, and I do
not recall the nature of that conversation. At the end of that
conversation, she asked me, she said I was talking to Mr.
Abramoff; he wondered if you could give him a call. That is my
recollection. I called Mr. Abramoff.
I was not in the office when he returned the call. I think
I was on my way home or whatever. And he indicated there was a
dispute, a mutiny dispute, a lockout or whatever it was, with
one of the tribes in the Southeast. I then took that
information and asked the acting assistant secretary for Indian
Affairs, would she please look at that. I may have asked her to
talk to him, and determine what if any appropriate action we
should take.
The Chairman. Did you ever talk with Mr. Abramoff about a
potential strategy to block the Gun Lake application?
Mr. Griles. Senator, I did not know what Gun Lake was until
the Washington Post ran an article. I did not even know what
the term was. I had never been involved in Gun Lake. Once I saw
the article, it ran in the paper, I realized that at a senior
policy meeting with the Secretary, the Solicitor's office
informed the Secretary that the Justice Department had
indicated they were not going to process or defend, as I
understood it, applications for lands into trust for gaming
unless there had been an EIS performed. It was not until those
two things were connected that I understood that I had
overheard the conversation, but until that point, I had no
knowledge of it.
The Chairman. In November 2003, you gave Michael Rossetti,
the former counselor to the Secretary of the Department of the
Interior a binder that contained information critical of the
Louisiana Jena Band's application for placing land into trust.
Did that indeed happen? Did you give him a binder?
Mr. Griles. Yes, Senator.
The Chairman. You did?
Mr. Rossetti, did Mr. Griles tell you where the binder came
from?
Mr. Rossetti. Yes, sir.
The Chairman. And where was that?
Mr. Rossetti. The conversation, it took some time to get to
the ultimate point to where the binder came from. At first, Mr.
Griles indicated that he got it from someone on the Hill, a
staff member to a member of either the Senate or the House. I
have to say I do not recall which.
I have two names that I recall and have not been able to
refresh my recollection adequately. This took the course of a
series of questions that I had to ask to figure out where it
came from because it did not have a transmittal letter on it,
an e-mail cover, or any other readily identifiable information
as to what its genesis was or what its meaning was intended to
be.
But on the cover memo was, I think it was addressed to the
department. It was addressed to somebody, but was not from
anybody. So in our extensive conversation about where it came
from ultimately, I learned from Mr. Griles that it came from a
member by way of a chief of staff by way of a lobbyist who
turned out to be Mr. Abramoff. But it was during the course of
a series of questions that took much longer to get to that
answer than I would have thought was necessary.
The Chairman. Mr. Griles, binders show up in your office
and then you just pass them on to the most important people in
the Department of the Interior?
Mr. Griles. Senator, if I could put this in context. First
of all, I would like to respond to Mr. Rossetti's recollection
of a conversation. He says a series of questions and answers.
My recollection of it, it was less than 2 minutes, if it was
that long. So I do not want to dispute a former friend of mine
and a former colleague. I have a great deal of respect for him.
He did a great job when he served the Secretary.
So I guess I would just like to explain what actually
happened. I was in a meeting. I came back to my office. There
was a binder. There was no transmission on it. There was no
envelope. There was nothing. I opened it up, and there were
letters from Congressmen and it may have been Senators. I just
do not recall the content of it. It was clearly something
related to the Jena Band application.
In Interior, we had huge litigation going on in the Cobell
litigation, Senator, as you well know. One of the allegations
there was records, the maintaining of records and what we
needed to do with records if we got something, and how we
should manage them. This binder was in the minds of the
Solicitor's office and everyone, was a record of the Department
of the Interior once it landed on my desk.
My objective was three-fold: Get it to the right person;
avoid a record-keeping issue with the litigation issue; and I
asked, and since Mr. Rossetti, as I said before, was in fact
the Counselor that was managing the Indian gaming issues, I
took it to Mr. Rossetti. There was speculation, there is no
question, there was speculation about where it came from.
I did not say it came from Mr. Abramoff. I did not say it
came from Congress. I speculated that it could have come from
any of those sources. I did not know and I do not know today
where it came from, but it was a record, Senator, that was
laying on my desk.
I asked my secretary, where did this come from? Her name is
Doris Johnson. She is one of the nicest, sweetest ladies in the
world. She said, it was delivered to the front desk and I went
down and picked it up. I assume she meant she went down and
picked it up from a messenger. She brought it back and I said,
where is the envelope? She said it had your name on it, and
nothing else.
As I repeat myself, I went, I consulted, I was told that it
had to be given to the people who were managing this because it
was a record of the department, and I gave it to Mr. Rossetti.
I asked Mr. Rossetti when he was giving the briefing to the
Secretary on this issue, which I did not attend, and I would
not have asked him this if I was going to attend the briefing
and interfere in this issue, to please make sure the Secretary
knew that there were all sides of this issue, and please brief
her on that. I think I put him off when I said that, to be
honest.
I think in doing that, I think he thought I questioned his
integrity about fully informing the Secretary. If I did that, I
apologize to him today. But Senator, I did not know then and I
do not know today where it came from.
The Chairman. Mr. Rossetti testifies that on two occasions,
you insisted on being in the meetings concerning the Jena Band.
Is that not true?
Mr. Griles. Senator, I have no recollection of attending
any meetings at which the Jena Band issue was discussed. There
were thousands and thousands of meetings in the Department of
the Interior. My schedule has them all on it. I have looked
through every meeting, every calendar that I have since I got
those calendars several days ago. I spent nights reading them.
I see nothing on there that would indicate that I went to a
Jena Band briefing.
The Chairman. I think Mr. Rossetti's testimony is that you
did not go, but you insisted on going and were not able to do
so.
Mr. Griles. Can I comment?
The Chairman. Yes; go ahead.
Mr. Griles. Senator, as the deputy secretary and chief
operating officer, if I wanted to go to a meeting, I would have
gone. I was the number two. It didn't happen. I did not want to
go. I did not want to be involved in Indian gaming. That is the
truth. I am telling you the truth. I want you to know that,
from my heart. This is not something that I was interested in
and I have no recollection, absolutely no recollection of going
to any meeting when any of that issue was discussed.
The Chairman. Senator Dorgan.
Senator Dorgan. Mr. Chairman, I am trying to understand
this a bit. Mr. Rossetti and Mr. Griles, your statements about
this are in direct conflict. Let me go through some of the e-
mails.
Mr. Griles, the point of this inquiry from the committee is
that we have a large body of e-mails, and the e-mails come from
Italia Federici. They come from Mr. Abramoff. So they are on
the record. I am going to go through some, and you can perhaps
react to them, but it is what is part of the public record at
this point.
Exhibit 4----
Mr. Griles. Would you like me to refer to them, Senator?
Senator Dorgan. Yes; I will have it up on the screen in a
moment. Exhibit 4, and I will just read it, most of these are
very short. It is from Italia Federici to Jack Abramoff: ``Hi,
Jack. After I retrieved my coat, I ended up sharing a cab with
Steve. He really enjoyed meeting you and was grateful for the
strategic advice on BIA and insular affairs. You definitely
made another friend.''
That kind of starts a whole series of e-mails from Ms.
Federici. And so that begins a long process. Exhibit 277: ``Hi,
Jack'', again from Ms. Federici to Mr. Abramoff, ``I am talking
with Steve in about 30 minutes. We will call you right after. I
know he said they do not want her for the job so I do not know
what the thought was here, but I will find out. He is calling
back about another issue''.
This is about ``Secretary Norton names Martin to Indian
Affairs post''. Abramoff had written to her saying, ``I cannot
believe they named her'', and then she wrote back and said, ``I
am talking with Steve in about 30 minutes''.
Exhibit 37 is an exhibit in which Abramoff describes you to
Van Hoof as ``the fellow who we helped with the CREA project''.
So throughout the entire set of records that came from our
subpoenas, Mr. Griles, we have probably dozens of e-mails, 3 or
4 or 5 dozen e-mails from both Mr. Abramoff and Ms. Federici
describing meetings with you, discussions with you, telephone
calls with you, and describing those meetings, discussions and
telephone calls specifically in the context of issues, Jena
Band issues and other Indian issues before the Interior
Committee.
What are we to make of that? It is certainly at odds with
your opening statement, at great odds with it.
[Exhibit follows:]
[GRAPHIC] [TIFF OMITTED] T4471.036
[GRAPHIC] [TIFF OMITTED] T4471.037
[GRAPHIC] [TIFF OMITTED] T4471.038
Mr. Griles. Senator, I have not seen those e-mails. I hear
you saying they are in the public record. They are not in any
record that has been presented to me, unless they were
presented to me by your staff at the time we did our interview.
So I have not seen those.
Senator, I cannot really comment on or know what one person
says to another or what their intent or meaning is. As I said,
my relationship with Mr. Abramoff is no different than any
other lobbyist. Italia Federici was a friend, for a long time.
Gale Norton introduced me to her.
Senator Dorgan. Is Ms. Federici lying to the committee? We
have had her in and she has been interviewed. She apparently
did not accept a subpoena. We were not able to subpoena her, so
apparently we will have her here as a separate witness, perhaps
next week, before this committee.
But we have extensive testimony from her. Is she not
telling us the truth, because that testimony is a substantial
body of evidence of her telling Mr. Abramoff of many
discussions she had with you, specifically about tribal issues?
Mr. Griles. Senator, I can tell you that I am telling you
the truth to the best of my ability here today. For me to
speculate on what somebody else said to Mr. Abramoff, and if it
was the truth, it is something you really have to ask them,
Senator. There was no special relationship for Mr. Abramoff in
my office. It never did exist.
Senator Dorgan. Exhibit 138 is an exhibit that is an e-
mail. It is from Jack Abramoff. It says, ``I have just returned
from a meeting with the Deputy Secretary. The Jena compact is
moving fast. There is a land-in-trust application with it from
the Governor''.
Do you recall a meeting with Mr. Abramoff as deputy
secretary?
Mr. Griles. I am sorry, Senator. What e-mail is that?
Senator Dorgan. It is an e-mail from Jack Abramoff to one
of his staff, ``I have just returned from meeting with the
Deputy Secretary. The Jena compact is moving fast and there is
a land-in-trust application with it from the Governor''.
It is exhibit 138. It is up on the screen at the moment.
[Exhibit follows:]
[GRAPHIC] [TIFF OMITTED] T4471.039
Mr. Griles. What is the date of that, sir?
Senator Dorgan. That date was February 5, 2002. Do you
recall a time when Mr. Abramoff met with you either in your
office or outside of your office and discussed the Jena Band
compact?
Mr. Griles. Senator, around this date, which could have
been the photo-op that occurred with the Secretary, was around
February 5 of 2002, I believe. That is the only time that I
have any recollection of Mr. Abramoff ever being in my office.
So you know, this may be something that occurred during the
discussion over the photo-op. I do not know the context of it,
but that is the only date that I believe that Mr. Abramoff ever
came into my part of the Department of the Interior.
Senator Dorgan. Mr. Rossetti, tell me the position you had
in the Department of the Interior?
Mr. Rossetti. I was counselor to Secretary Norton. I
reported directly to her and was in the immediate office of the
Secretary on her hallway and the hallway shared also by Steve
Griles.
Senator Dorgan. Mr. Rossetti, Senator McCain asked you
about Mr. Griles, whether he had an interest in the Jena Band.
You indicated that the answer was yes. Did Mr. Griles to your
knowledge have interest in other Indian issues, and if so, how
was that manifested and how do you have knowledge of it?
Mr. Rossetti. Well, I know that there was an interest in
the Jena Band two-part determination because of Steve's
constant requests to be involved in meetings that stood in
stark contrast to the way that we had constructed a process to
handle these, so that the Secretary would have preserved unto
herself the full prerogatives of the decision before her in a
way that also protected her from allegations that would have
been unfounded by persons outside of the department, that there
was a process that was not as sound as we tried to construct
it.
So in Jena, for instance, Mr. Vice Chairman, the contrast
in my mind was between the first Jena decision, which was a
gaming compact decision that came in in 2002, which I have no
recollection of Mr. Griles participating in the discussions
with career folks and political folks on that decision, and a
very keen interest in being involved in a meeting which, as he
says, would have been on the Secretary's schedule anyway, and
it is her prerogative exclusively to exclude anybody from such
a meeting, a prerogative I would not have presumed to exercise
myself. However, I would have given my counsel to her if I was
concerned about a voice being in a room, so long as she was
able to determine who the voice is and on whose behalf the
voice is being raised.
I am sorry, sir. The last part of your question was other
issues, other Indian issues? There were a couple of other
issues, Indian gaming issues now we are talking about, because
of course, the portfolio of the deputy secretary is in many
ways a member-at-large or an official-at-large of the
department, involved on any day in numerous issues as duty
dictates and requires. I have no quibble with that at all, and
accept that as the appropriate role of the deputy secretary.
However, here there were a couple of instances, this was
one that I was worried about and I wanted Mr. Griles to know
that I had my eye on him on this one because I was worried
about it, whether founded or not, I was worried about it. There
was a California example where I thought it was odd that Steve
was involved, the Auburn Rancheria, which was a decision that
the Secretary was making on a gaming parcel, and all of a
sudden there were meetings that Steve Griles was chairing which
had as its constituent members people from adjacent communities
in this California area, I believe it was Placer County.
I thought that was odd. I did not know on whose behalf he
had interceded precisely and on whose behalf Mr. Griles was
exercising that inquiry, but he exercised an inquiry. The
Secretary made a decision. That, too, stood in contrast to an
insistent voice, I am sorry, an insistent request at being a
part of this decision for reasons that I could not in my mind
understand.
Senator Dorgan. Mr. Griles, I referenced an earlier
Abramoff e-mail, and the reason I am asking you about these is
they are on the record and you, while you are on the record,
should be aware of them. There is another September 9, 2002
Jack Abramoff e-mail to Marc Schwartz: ``Just finished meeting
with the Deputy Secretary. He is supposed to get his people to
report to him tomorrow on this issue so he can help us''.
December 12, 2002, that is number 212 is the reference, it was
195 on the first one, number 212 on the second, Jack Abramoff
to Chris: ``Thanks, Chris. The meeting with Griles went well.
We have a lot to do''.
[Exhibit follows:]
[GRAPHIC] [TIFF OMITTED] T4471.040
Senator Dorgan. So my point is, there are e-mails, e-mails,
e-mails, and e-mails about Mr. Abramoff saying he is meeting
with you. There are many others in which Ms. Federici is saying
she is talking to you. I mean, how do you reconcile all that?
Mr. Griles. Senator, I cannot reconcile what Mr. Abramoff
put in e-mails to anyone. Today, based on what I heard, I do
not know if anybody can. I do not know the nature of those e-
mails and what the subject was right now. They are out of
context for me. I do not believe your staff showed them to me.
If they did, I apologize. But they asked me a question about I
think September 12, this guy's name. I have absolutely no
recollection of who that is or what that was.
So what is the e-mail about? I do not know. I stated
earlier that I recall Mr. Abramoff being in my office one time,
one time, and that was that February meeting for the photo-op.
You know, Senator, if I could, Mr. Rossetti has made a
couple of comments. I do not know the Auburn Rancheria issue.
Whenever I was asked by the congressional office of Interior to
meet with certain members of Congress, I would do that. And out
of that, they would ask me to meet with certain constituents.
This is me having a very vague recollection, Senator, of that
issue, of when one of the California Congressmen was interested
in this and asked me to meet.
This was early on, probably, in the Administration. But I
do not have facts. I do not have calendars here. So I am really
guessing, which is not fair to you and it is really not fair to
the public record.
But I did not do gaming. I did not, did not ask Mr.
Rossetti to let me participate in anything, ever, particularly
on the Jena Band. Now, he has a different recollection of this.
It is completely at odds with mine. I had no reason to. I
appreciate Mr. Rossetti, he is known to me as someone that I
have worked with, but I do not know why he would have that
recollection, Senator.
The Chairman. Mr. Griles, can I just follow-up about this
relationship that Senator Dorgan is talking about. I would like
you to look at exhibit 280. It is in that book there, exhibit
280. It is an e-mail dated September 9, 2003 from Mr. Abramoff
to members of his team. Do you see it? It is entitled,
``Griles.'' Mr. Abramoff writes----
[Exhibit follows:
[GRAPHIC] [TIFF OMITTED] T4471.041
Mr. Griles. Senator, excuse me. What is it?
The Chairman. Exhibit 280. Do you see it?
Mr. Griles. I do not see anything that say, oh, it says
``Griles''. Okay. I think I do see it, Senator.
The Chairman. The e-mail is dated September 9, 2003 from
Mr. Abramoff to members of his team entitled, ``Griles.'' Mr.
Abramoff writes, ``This cannot be shared with anyone not on the
distribution list. I met with him tonight. He is ready to leave
Interior and will most likely be coming to join us. I expect
that he will be with us in 90 to 120 days.'' First of all, do
you recall meeting with Mr. Abramoff on the night of September
9, 2003?
Mr. Griles. I do not have a calendar.
The Chairman. But you do not recall it without a calendar?
Mr. Griles. That is right, Senator, and I would have a way
to do that. If I had seen this e-mail, I would be able to
respond to that.
The Chairman. And you have no recollection of Mr. Abramoff
discussing employment with you? I am only asking this question
because Mr. Abramoff states so in an e-mail.
Mr. Griles. And I appreciate your asking this question
because unbeknownst to me that he had written anything of that
nature, and of course the papers have written that. So I am
pleased you are asking this question.
I met with Mr. Abramoff and one of the former witnesses
that was sitting here earlier, Mr. Baggett, one night. Mr.
Abramoff says, I have a managing partner; if you would come by
and have a drink, I would like for you to meet him.
Now, that happens quite often, Senator, as you know. People
bring people to town and ask, would you take a few minutes and
say hello to them.
When I sat down with them for a few minutes, the managing
partner, Mr. Baggett, this is the second time I have ever seen
him today, described his firm. It sounds like a very nice firm.
At the end of it, they said, we would like for you to join our
firm, and I said, gentlemen, I am not leaving the Federal
Government. I had made no plans to leave the Federal
Government. In fact, I had made a determination I was going to
serve through the 4 years of the President before I left.
As a result of that conversation, it raised alarms with me,
because I am going, what was that about. I went back
immediately and talked to the ethics officers at the Department
of the Interior, both the deputy ethics officer and the ethics
officer and told them that conversation had occurred.
I said, do I need to do something? Do I need to document
this? Do I need to recuse myself on anything here? And their
response was, no, that if somebody in this town wanted you to
get recused and they knew you were involved in something, they
could come up to you in a casual conversation and say, we would
like for you to come to our firm and company, and then you
would be recused. And that is not how the ethics laws work,
Senator.
So this e-mail, as you I think know, I had not seen before.
I had read about something like that in the Washington Post,
and I am really happy you finally asked this question. It
simply is not true.
The Chairman. There was no other discussion you ever had
about a job? Thank you.
Mr. Griles. No, sir; not at all.
The Chairman. Thank you.
Senator Dorgan.
Senator Dorgan. Mr. Rossetti, you said you were worried
about Mr. Griles. Tell me about that.
Mr. Rossetti. Well, I was alarmed that Mr. Griles all of a
sudden had an inexplicable desire to be involved in this
particular issue. I was not so much alarmed that a binder would
appear at the department or letters collated by somebody to try
to persuade decisionmakers, but I could not reconcile in my own
mind why it was we had to have such a tussle over where the
binder came from in the first instance, and then in the second
instance, why it was repeatedly on at least one-half-dozen
occasions, Mr. Griles insisted on being a part of a
decisionmaking meeting with the Secretary.
Now, ultimately he did not attend that meeting, but that
was a by-product of one final exchange that he and I had in
front of witnesses on this score, that ended in my open
challenge to him as to what it was that he was doing by
pressing this issue. Whose water was he carrying on this issue?
And that was the end of that. The Secretary made her
determination based on the counsel from staff, both career and
politicals alike, who had been reviewing the materials that had
been submitted by the State and the tribal government at the
time.
Senator Dorgan. Mr. Rossetti, who were those witnesses?
Mr. Rossetti. To the best of my recollection, there were
two. If there was a third one, I do not recall, but David
Barnhardt and Brian Weidmann, I believe, were in the room.
After this pointed exchange between Steve Griles and myself.
Whether it was in that exact same room, that exact same moment,
or later that day, but it happened within that day, I asked
David Barnhardt what happened, in my own flowery language, and
he indicated to me that I scared Mr. Griles from participating
in the meeting.
Later that day, that same day, Steve showed up in my office
and indicated that there was no reason to include him in the
decisionmaking meeting with the Secretary. He knew I had it
covered and handled. As I said earlier, that was the end of
that, so that I knew the Secretary would have at least a
process that allowed her to do her secretarial decisionmaking
exercise with all the up-sides and down-sides being laid for
her in painful detail as much as she wanted from the people
that she had come to hear from on these matters typically.
Senator Dorgan. Mr. Griles, did you have discussions with
the Secretary about the Jena Band issue?
Mr. Griles. No, sir; Senator, I do not recall any
discussion with the Secretary on Jena Band. Both as Mr.
Rossetti indicated, there were two different decisions that
went on, one the first time, and then one the second time. I do
not recall ever being in a meeting with the Secretary when she
had the decision meeting.
Now, Senator, the way the Department works is every week
the Assistant Secretaries and bureau heads meet with the
Secretary and with me, if my schedule allowed, to talk about
pending issues. In those meetings, people would update the
Secretary on what was occurring. Senator, I do not ever recall
having a discussion at all with the Secretary about the Jena
Band. I had total access to her, anytime I needed it and
anytime I wanted it. If I had wanted that access, I could have
exercised it.
I am confused by Mr. Rossetti's rendition.
Senator Dorgan. Mr. Griles, on that point, I think Mr.
Rossetti talks about two witnesses to the pointed conversation.
What will be the witnesses' recollection, in your judgment? Do
you remember that pointed conversation?
Mr. Griles. Senator, I do not. I would say that Mr.
Barnhardt and Mr. Weideman are also very fine public servants,
and if that conversation occurred, sir, then we would have to
understand the nature and the context of it.
Senator Dorgan. Regrettably, Mr. Chairman, the amendment
that Senator Grassley and I are offering, a very controversial,
significant amendment on the floor of the Senate, had a 2-hour
time limit. There are about 30 to 40 minutes left, so I have to
go to speak on the floor on that amendment. I regret that I
have to leave before this hearing is completed.
I want to submit some questions, Mr. Griles, on a dinner
that was held at Signatures restaurant, which was apparently,
if not a fundraiser, nonetheless a dinner for an organization
called CREA. Ms. Federici indicated that you were personally
inviting everyone from Interior and talking with them about the
dinner. And then I have the guest list for the dinner. I want
to ask some questions about that dinner, because that also
plays a role in a range of things that Ms. Federici claims in
the interviews she has had with this committee.
We are trying to find the truth here, and it seems more and
more difficult in a number of these issues. The issues are
significant and very important. Mr. Chairman, I will leave the
remainder of the hearing to you, and thank you very much for
doing that.
The Chairman. Thank you very much.
Mr. Griles, I only have one more question. When you served
as Deputy----
Mr. Griles. Mr. Chairman, may I just say something to
Senator Dorgan?
The Chairman. Go ahead.
Mr. Griles. I, too, seek what you just said. I learned so
much today. I have not seen these things. I do not know why
people would make those kind of comments. I am really
disappointed in what I have learned about some people today,
and I know you are. We have struggled to help Indian country
the 4 years I was there. We made a difference, and the things
that went on here were not right.
The Chairman. Thank you very much.
When you served as deputy secretary, were you aware of any
polling or survey project done by Interior that was funded by
or through CREA?
Mr. Griles. Senator, I was listening to the reading of that
e-mail. As I recall from staff, that was March 2001. Is that
correct, Senator?
The Chairman. I think so.
Mr. Griles. Senator, I was not even confirmed by the
Senate until July 2001. I think I assumed office on July 17. So
first of all, I do not know anything about it. I do not have
any recollection of that today at all. At some point back in my
background, somebody may have told me something, but I was not
at Interior, and I cannot imagine anybody conducting a poll for
Interior, Senator.
The Chairman. Thank you very much.
Mr. Rossetti, I am sure this was not your most happy day,
and I thank you for coming forward to the committee.
Mr. Griles, I thank you for appearing and giving us your
best view of the situation.
I thank you both for appearing.
This hearing is adjourned.
[Whereupon at 1 p.m., the committee was adjourned, to
reconvene at the call of the Chair.]
=======================================================================
A P P E N D I X
----------
Additional Material Submitted for the Record
=======================================================================
Prepared Statement of Fred W. Baggett, Greenberg Traurig LLP
Mr. Chairman and honorable members of the committee:
My name is Fred Baggett, and I am a shareholder with the
Tallahassee, Florida office of Greenberg Traurig, LLP (``Greenberg
Traurig'' or the ``Firm''). I appreciate this opportunity to testify
before the Senate Committee on Indian Affairs (the ``committee'') today
concerning the committee's ongoing investigation in to the misconduct
of Jack Abramoff.
I have spent my entire professional career of 35 years as a lawyer
and lobbyist in the State of Florida. After graduating from the Florida
State University College of Law in 1970, I spent 2 years working as an
executive assistant to the Chief Justice of the Florida State Supreme
Court. I then started a law practice in Tallahassee, FL, which the
Chief Justice joined in 1975. The lawyers in our office joined
Greenberg Traurig in 1991, and I have been there ever since. I am
currently the managing shareholder of the Tallahassee office of
Greenberg Traurig, chair of the Firm finance committee and head of the
national governmental affairs practice. I also maintain a full-time
administrative law and lobbying practice with the Firm, which is
comprised almost exclusively of work at the Florida State legislative
and executive level.
Greenberg Traurig is an international law firm that prides itself
on providing high quality professional services to its clients. The
Firm is comprised of over 30 offices, with a governmental affairs
component in 16 of those offices.
Turning to the subject of today's hearing, from 2001 through early
2004, Jack Abramoff worked as a lobbyist in the Washington, DC office
of our Firm. Up until the end of Mr. Abramoff's tenure at Greenberg
Traurig, the Firm believed that Mr. Abramoff was rendering high-quality
professional services to his clients.
In late 2003 and early 2004, reports began to emerge questioning
the amount of money paid by various Indian tribes to Mr. Abramoff and
Michael Scanlon in connection with professional services the two had
rendered. During this timeframe, Mr. Abramoff was questioned about his
financial relationship with Mr. Scanlon. Records available to the
committee, including a February 3, 2004 interview of Mr. Abramoff
conducted by Susan Schmidt of The Washington Post, reflect that, in
front of Firm personnel, Mr. Abramoff denied having any financial
relationship with Mr. Scanlon or engaging in any improprieties in
connection with his lobbying work for tribal clients.
Nevertheless, because concerns had been raised, Greenberg Traurig
wanted to ensure that there was no impropriety on the part of Mr.
Abramoff. In mid-February, the Firm hired Henry F. Schuelke, III of the
Washington, DC law firm Janis, Schuelke & Wechsler to conduct an
internal investigation focusing on the existence of a financial
arrangement between Mr. Abramoff and Mr. Scanlon. Mr. Schuelke is a
former Federal prosecutor, who served as an assistant U.S. attorney in
the District of Columbia from 1972-79, and is a highly regarded member
of the District of Columbia Bar. Both he and the other members of his
firm have extensive experience in conducting internal investigations of
this type.
As Mr. Schuelke began his investigation, The Washington Post
published the article ``A Jackpot From Indian Gaming Tribes,'' raising
questions about the fees charged by Mr. Abramoff and Mr. Scanlon for
lobbying and grassroots work. At around the same time, this committee
also announced that it would be looking into Mr. Ahramoff's activity.
Facing the prospect of being subjected to W. Schuelke's investigation,
Mr. Abramoff for the first time disclosed to our Firm that be had
received money from Mr. Scanlon in connection with the work that the
two men were doing on behalf of Indian tribes. Upon learning of this
arrangement, the Firm immediately requested and obtained Mr. Abramoff's
resignation. The Firm issued a statement to that effect on March 2,
2004.
Notwithstanding Mr. Abramoff's departure, Greenberg Traurig asked
Mr. Schuelke to continue his investigation. Based on Mr. Schuelke's
investigation, the Firm has made disclosures to clients affected by Mr.
Abramoff's activities, worked out resolutions with a number of affected
clients and hopes to work out resolutions with still other affected
clients.
The facts surrounding Mr. Abramoff's employment by our Firm have
been unhappy ones. We at Greenberg Traurig regret the improprieties
that transpired during Mr. Abramoff's 3 years of employment with us. We
share the chairman's and the rest of the committee's dismay at Mr.
Abramoff's activities and behavior.
I assure you that we will continue to work with you and other
investigators to ensure that, consistent with our obligations to
clients, all information that can be shared is shared with the proper
authorities.
We appreciate the work of this committee and its staff in
thoroughly investigating and responding to this matter.
Again, thank you for this opportunity.
______
Prepared Statement of Kevin Sickey, Chairman, Coushatta Tribe of
Louisiana
Good morning Chairman McCain, Senator Dorgan, and distinguished
members of this committee.
I am Kevin Sickey, chairman of the Coushatta Tribe of Louisiana.
With me at the table is my brother and council member, David Sickey,
and our tribal attorney, Jimmy Faircloth. I would also like to
recognize Council Member Tee LaBulf, and the members of our tribe who
made the trip to attend this hearing.
Many of these tribal members were the first to suspect that
something had gone terribly wrong with the lobbyists, Jack Abramoff and
Mike Scanlon, so it is appropriate that these tribal members are
present for this proceeding. At one time they were referred to as
``dissidents'' for questioning the lobbyists' actions--a label provided
by the lobbyists to divert suspicion from their own activities.
We are grateful for the opportunity to appear before this important
committee. Your staff has been cooperative and respectful, and we
appreciate their hard work.
We will divide our opening statement into two parts. First, I will
provide a brief history of our tribe. I will explain our government and
the political environment that the lobbyists used to their advantage.
And, I will comment briefly on the harm caused by their fraud,
Obviously, the information your committee is making public today is
both shocking and deeply disturbing to me both as chairman of the tribe
and as a tribal member.
Following my brief comments, Councilman Sickey will provide a broad
overview of some of the things we discovered in our own review.
Before we proceed, however, we must respectfully qualify our
testimony. Neither Councilman Sickey nor I had any direct dealings with
Abramoff or Mr. Scanlon. We were not involved in the decision to hire
these lobbyists, nor were we involved in any aspect of coordinating
their work. We are both reluctant to speculate about the conduct and
motives of the lobbyists, and I suspect that any such speculation or
conjecture will-not aid the work of this committee. Finally, because we
are currently involved in litigation about these events, we must be
cautious in our comments concerning the actions of others.
I. The History of Our Tribe
We are descendants of the Creek Confederacy, from the Muskogee
family of tribes. Our ancestors were stripped of 22 million acres of
land by the United States following the Creek War in 1814.
Approximately 50 years later, a small band of Coushattas settled in the
Calcasieu River area, near Kinder, LA.
In 1884, they were forced to move again when homesteaders began
claiming their land. They then purchased a small tract of land 3 miles,
north of Elton, LA.
In 1898, the United States placed 160 acres of land into trust for
the tribe. Unfortunately, the trust was revoked in 1953, which began a
20-year struggle for re-recognition.
In 1973, the Coushatta Tribe of Louisiana was again recognized. And
7 years later, our reservation was again formally established.
In 1985, we held our first election of leaders by popular vote. We
then established our own judicial system, police department, housing
authority, and many other social programs.
Today, our tribe consists of over 850 members, approximately 400 of
whom live in the Coushatta Community. We are proud of our culture and
heritage, and we are dedicated to maintaining the sovereignty that
generations of our ancestors sacrificed and even died to protect.
Our casino and resort opened in January 1995, and since then we
have been blessed with economic prosperity. We employ approximately
2,800 people, with a total annual payroll in, the range of $80 million.
We purchase goods and services from Louisiana vendors in the range, of
$40 million per year. And we contribute approximately $7 million per
year to State and local governments. We are proud to be a vital part of
the economy of southwest Louisiana.
This brief period of prosperity follows hundreds of years of unjust
treatment by outsiders, which resulted in abject poverty and hardship
within the tribe. This is why it is particularly painful that, after
all those terrible years, our tribe again has been preyed upon by
outsiders. But on this occasion, at least we are in good company.
Certainly within the modern era, no victimization of Native Americans
has received so much attention no doubt because the underlying scandal
has touched so many influential people.
Nevertheless, we deeply appreciate the actions of this committee in
bringing this matter to light.
II. Our Tribal Government and the Political Environment that Was
Manipulated by the Lobbyists
Our tribe is governed by an elected council consisting of a
chairman and four council members. None of the current council members
were in office when Mr. Abramoff was hired in early 2001. Councilman
Sickey took office in 2003. He had no direct contact with either Mr.
Abramoff or Mr. Scanlon and very little knowledge of their activities.
In fact he became a vocal spokesperson against them.
Council Members LaBuff, Verlis Williams, and I took office this
past June. One of our council seats is currently vacant.
This wholesale change in leadership was in large part a result of
the mess created by Mr. Abramoff and Mr. Scanlon.
While Indian Country has seen many con-men throughout history, few,
if any, were as skilled as Mr. Abramoff and Mr. Scanlon at creating and
then preying on insecurities. They preyed upon our political
insecurities, they preyed upon our economic insecurities, and they
preyed upon our insecurities about each other.
Our political system is no more turbulent than any other. We, too,
have cycles in leadership and influence, and it occasionally turns
partisan. The lobbyists came to our tribe during one of these
transition periods. And they viewed this as an opportunity for
exploitation.
To any decent person, vulnerability in others provides an
opportunity to help. But to con-men, like Mr. Abramoff and Mr. Scanlon,
our vulnerability simply provided an opportunity to steal. And they hit
the jackpot with us: A Native American tribe with a fairly new casino,
in the midst of a political transition, and naive to the underworld of
governmental affairs.
They inserted themselves into our internal tribal politics,
excluded and attempted to discredit those who questioned or opposed
them, and deliberately created paranoia on both sides by exaggerating
threats from inside and outside the tribe.
They exaggerated political threats and they exaggerated economic
threats. Then, they exaggerated their ability to deal with these
exaggerated threats. And in the midst of this, they incited political
upheaval to provide cover for their scheme to steal millions of
dollars.
We are pleased to report that the political storm within the tribe
has calmed. And we are taking steps to recover the money that was
stolen to correct our system of checks and balances to ensure that this
will never happen again.
III. The Harm to Our Tribe
It is important to understand that the harm caused by Mr. Abramoff
and Mr. Scanlon is much greater than the money they stole. Even though
this amount is shockingly large, the scar of victimization runs even
deeper, particularly because it has touched our leadership.
Moreover, the misconduct of Mr. Abramoff and Mr. Scanlon has harmed
all Native Americans in a way that deserves the particular attention of
this committee. The lobbyists actions have created a perception that
there is something improper about officials working closely with Indian
tribes.
This stereotype threatens to chill tribal communications with
officials who can profoundly influence the well-being of all tribes.
Even worse, it unfairly shifts the unfairly from where it belongs
to the victims. Jack Abramoff is not a product of Indian Country. On
the contrary, he is the golden boy gone bad of the American political
system. Our tribe and others were victimized when we attempted to fit
into the American political system and we were led to believe that Mr.
Abramoff was the gatekeeper.
We have begun the process of repairing the political damage to our
tribe's reputation. We have met with several of our State and Federal
officials, and they seem genuinely committed to providing our tribe
with the same access and the same channels of communication open to all
individuals, businesses, and special interest group--nothing more,
nothing less, and without favors or contributions. That is the way the
system should work, and that is certainly the way we would like to
participate.
There have been a lot of adjectives used to describe Mr. Abramoff
and Mr. Scanlon; greedy and corrupt come to mind. But those are common
terms, often used to describe people who forfeit judgment for money.
Abramoff's and Scanlon's actions were hardly common. They set a new
high water mark for greed and corruption.
I have read that Mr. Abramoff considers himself a religious man. If
that is the case, then I do not understand, the basis of his faith, and
it is certainly different than ours. Most religions promote compassion
and concern for others, and it is clear that Mr. Abramoff and Mr.
Scanlon had no concern whatsoever for the welfare of our people.
Your committee has done a great service for all Americans by
exposing this sad affair. There are lessons here for everyone.
I am grateful for the opportunity to address this committee on
behalf of the Coushatta Tribe of Louisiana. Council member David Sickey
will now provide a brief overview of our factual findings.
______
Prepared Statement of David Sickey, councilman, Coushatta Tribe of
Louisiana
Good morning Chairman McCain, Senator Dorgan and distinguished
members of this committee.
I am David Sickey, a member of the tribal council of the Coushatta
Tribe of Louisiana. I took office in June 2003.
As Chairman Sickey has noted, I was not in office when Mr. Abramoff
and Mr. Scanlon were hired, and I did not participate in the decisions
by the tribal council to authorize their projects or pay them. I would
respectfully submit that it will not aid the committee's efforts for me
to speculate about the events at issue. My brief comments today will
therefore be limited to certain facts established by the documents we
have seen. As you are aware, many of the documents reviewed by this
committee were not available to us. However, my observations today are
also based on information provided by your staff, for which we are
grateful.
My intention is to provide a broad overview of the environment in
which this fraud was committed. As your investigation must have
revealed, while the scheme of Mr. Abramoff and Mr. Scanlon was
reprehensible, it was also very clever and well-timed. Like Chairman
Sickey, I should note that our tribe is currently involved in
litigation about these lobbying activities, so I am limited in what I
can say today.
I have attempted to organize my observations in chronological
order, because the way that this scheme evolved over time was critical
to its success.
1. The First Six Months
Mr. Abramoff was hired in March 2001. The tribe entered a contract
with his firm, Greenberg Traurig, to provide lobbying services related
to our tribe's compact negotiation and important regional gaming
issues. According to the contract, Greenberg Traurig was to receive
$125,000 per month plus reasonable expenses. The contract did not
mention Mr. Scanlon nor any of the entities that he used to charge the
tribe, an additional $30 million.
During the first 6 months or so of the lobbyists' employment, they
appeared to deliver on their promises, and so the lobbying costs
appeared justified. During that initial period, the tribe paid roughly
$3.5 million for assistance with our tribal compact, which was
successfully negotiated, and to achieve several legislative objectives.
I say that they appeared to deliver on their promises because it is
difficult to assess how much impact the lobbyists actually had in
accomplishing these tribal objectives. Of course, they took credit for
everything.
If it had ended at that point, around September 2001, then this
would be nothing more than another story about high priced lobbyists
taking credit for results that they may or may not have influenced.
But, it did not stop there. They leveraged their initial success as a
platform for fraud, and by the spring of 2002 had extracted another $17
million from our tribe. By the time it was over in 2004, the tribe had
spent approximately $36 million. Ironically, as the scheme progressed
and the bills and rhetoric increased, the lobbyists' actual work for
the tribe clearly decreased.
2. The Texas Threat
On October 5, 2001, the tribe paid $870,000 to Mr. Scanlon's
company, Capital Campaign Strategies, to create a ``Grassroots
Political Structure'' in Texas. Mr. Abramoff and Mr. Scanlon were
insistent that Texas was on the verge of legalizing gambling, and that
this would devastate the Coushatta casino. The majority of our casino
customers travel from Texas particularly the Houston area--and we have
long understood that legalized gambling in Texas would erode our
customer base and our casino revenues. Recognizing this potential
threat and our fear of the consequences, the lobbyists claimed to have
critical influence with the Texas officials who could defeat Texas
gambling.
This appears to be the starting point for their most egregious
exaggerations and fabrications. This also appears to be the timeframe
when they committed to gouging the tribe for as much money as they
could, and to say or do anything that was necessary to prolong the
payout.
3. $1 Million Payment Funneled to One of Abramoff's Causes
On October 30, 2001, the tribe paid $3.17 million for the
``Louisiana Program.'' This payment marks a high point in the
lobbyists' creative billing. They split the bill by requesting that
$2.17 million be sent to Capitol Campaign Strategies and $1 million to
Greenberg Traurig. According to information shared by the staff, the $1
million payment to Greenberg Traurig was not for any services provided
by the law firm. Instead, this $1 million payment was used to ``pump''
the firm's reported lobbying revenues, thereby maintaining Greenberg
Traurig's public status as one of the ``top ten'' providers of legal
and lobbying services to Native American tribes. E-mails involving Mr.
Abramoff, Mr. Scanlon, and others at Greenberg Traurig reveal that this
$1 million payment was funneled through the firm and then used to
finance one of Mr. Abramoff's favorite causes.
The suspect nature and purpose of this payment structure is
reflected in an e-mail from Mr. Scanlon to the tribe's former attorney,
dated October 25, 2001, where he writes:
``We broke this into two invoices--one to be paid to Greenberg
Traurig for 1m, and one paid to Capitol Campaign Strategies--GT's
public affairs entity for the balance. We usually just invoice you
through Capitol Campaign Strategies so the Lawyers at the firm rest
easy while we are out burning the country side. In this instance
however we plan to do some things through the law firm umbrella due to
their highly sensitive nature and confidentiality reasons. I hate
hiding behind lawyers--but we are going to do some crazy stuff on this
one--so I guess it's ok.''
Mr. Abramoff, who was a partner at Greenberg Traurig, directed this
creative billing arrangement. In my personal view, this payment reveals
the extent of Mr. Abramoff's shamelessness. Not only was he stealing
the tribe's money, but he was using the theft to improve his
professional reputation and the reputation of the firm.
4. Hyping the Texas Threat
In a memorandum dated November 6, 2001, Mr. Scanlon reports that he
had just returned from Texas, and states:
``We believe now that the Alabama Coushatta will open soon, if we
do not intercede. This will likely be a small facility and not the
class III facility the council is worried about, but we believe you
should shut it down regardless.''
This exemplifies the lobbyists' strategy of identifying an
exaggerated threat to the tribe's casino revenues, as does the
following assertion in a report from Mr. Scanlon to the tribe dated
December 21, 2001:
``Despite our best efforts, the voting public in Texas remains VERY
pro-gaming. The State economy is lagging, and with the Enron and
Continental Airlines debacles hitting the Houston area back to back,
they are desperate for revenue. As we said when we came to you with the
original Texas, proposal, things are really bad over there. We have
never before seen such a pro-gaming atmosphere in Texas, or anywhere
else in the country, in our collective political careers, and although
we have it contained for the time being, this environment is a very
serious threat to the Grand Casino's future.''
5. Threats of Infiltration
According to a memorandum from Mr. Scanlon dated January 3, 2002,
the company that owned one of our competitors was ``well known for
their ability to infiltrate the electorates of Indian tribes and this
will undoubtedly happen there, if they get a foothold in your region.''
After hammering this point and others, Mr. Scanlon states:
``We have identified a strategy to deal with this, and we would
like to propose this strategy and request a budget for it. Both the
strategy and the budget are somewhat large. However, we cannot stress
the importance of eliminating this concern. It is a threat to not only
the casino, but also the tribe itself.''
6. Increasing the Threat Level
In a report to the tribe dated February 25, 2002, Mr. Scanlon
stated, that:
``It may seem like the walls are closing in with three very real
threats on your radar screen . . . . If we handle each threat
individually, our chances of eliminating ALL OF THEM are very good. If
we panic, the very existence of the grand casino could be
jeopardized.''
At about this time, perhaps sensing some opposition to their
proposals and programs within the tribe--and likely planning to
increase their fees and profits--Mr. Abramoff and Mr. Scanlon began
excluding and attempting to discredit their political opposition on the
Council and within the tribe.
7. Going on the Offensive to Counter Criticism
In a report dated May 8, 2002, Mr. Scanlon states:
``Sorry for the confusion on the funding front, but as I mentioned
I believe that your opponents will use such payments against you and
until such time as we deal with that issue, it's best we lay low.''
He then recommended that the former chairman send a letter to
tribal members attempting to justify hiring what he refers to as the
``Washington team.''
He also spoke negatively about another council member, and stated
that ``we can't let [that person] run around banging on you and the
chairman much longer or it will take hold.''
And he recommended sending a letter to tribal members accusing the
council member of doing something wrong to ``put the focus back on the
people who deserve it.''
8. Lying Low to Avoid Exposure
On October 31, 2002, the tribal CFO sent an e-mail to Mr. Abramoff
stating that tribal auditors were requesting confirmation that the
tribe had paid a total of $18,559,700 for ``demographic surveys and
studies and other professional campaign consulting fees,'' and that
there were ``no contracts in place with Capitol Campaign Strategies and
the American International Center.''
Mr. Abramoff forwarded the e-mail to Mr. Scanlon, asking ``what
should I say, especially about the last part (the request concerning no
contracts)?''
In response to several frantic comments from Mr. Abramoff, Mr.
Scanlon states ``f--ing weird, really f--ing weird--I hope that this is
standard operating procedure.'' He then recommends that Mr. Abramoff
talk to the tribe's vice chairman before writing anything.
There was never a formal reply. The confirmation requested by the
auditors was not provided. Instead, a decision apparently was made to
lay low until the storm passed.
There is no doubt that, by this point, the lobbyists knew that
questions were being raised about their fees. As is clear from
subsequent events, they obviously did not care. Apparently, they felt
confident that even this type of blatant misconduct was fair game in
the world of big time lobbying.
9. Back in Business and Full Steam Ahead
In a report date January 21, 2003, Mr. Scanlon stated:
``As we outlined in our overall strategy, this year's political
circumstances, if not addressed correctly, will literally cost the
tribe hundreds of millions of dollars.''
He asked for a budget of $9.3 million on the bottom end and $11.3
million the top end,'' and added that ``when you look at the fact that
the tribe stands to lose several hundreds of millions of dollars, the
program costs are well worth the risk.''
In this report, Mr. Scanlon also proposes a way to dodge concerns
within the tribe about the lobbying fees by routing money through
different entities, He wrote:
``We have attached invoices that direct the funds to several
different entities that will play different roles in this campaign
along with a letter from me/CCS informing the tribe that I will no
longer be providing the political services to the tribe as I have in
the past.''
But, in the next paragraph, he makes it clear that this was all a
shell game, when he states:
``We want to assure you that you will receive the same level of
service we have provided in the past. We understand that what you are
paying for is Jack and myself and we will deliver the same way we have
in the past.
That said, the entities we are using will technically execute
operations of the campaign or will contract with other companies to
cover costs associated with the campaign--with Jack and I doing the
work. In other words, the tribe will be invoiced by an entity and once
funded that entity will in turn hire firms such as CCS or (Jack and I
for example) to execute the program.''
He also enclosed a bill from Greenberg Traurig for $2 million, and
stated:
``GT will simply serve as another funding entity to ease budgetary
issues. GT will turn that funding around to cover costs associated with
the campaign.''
In total, the tribe routed $11.3 million through the following maze
of entities:
$2 million to Greenberg Traurig.
$5 million to Scanlon Gould Public Affairs.
$2.3 million to American International Center
$2 million to American Research & Analysis.
And this does not include the $125,000 per month the tribe was
paying Greenberg Traurig.
Closing Comment
In conclusion, as Chairman Sickey and I have both noted, since we
were not involved in any direct dealings with Mr. Abramoff or Mr.
Scanlon, there is very little that we can say here today about the
events at issue that would not involve speculation and conjecture.
Therefore, until our own investigation is complete, both of us are very
reluctant to comment further on the lobbying activities in question.
Moreover, any speculative comments on our part could jeopardize our
legal efforts to recover the tribe's money.
But, what we can state with firm conviction based on our own review
and the findings of this committee is that our tribe was defrauded out
of most of the money we paid. And no matter who the lobbyists used or
who they try to blame, this fraud was orchestrated and carried out by
Jack Abramoff and Michael Scanlon and--from the tribe's perspective--
the fraud was orchestrated under the banner of Greenberg Traurig.
Your committee has performed an important service by exposing this
fraud, and I am grateful for the opportunity to address the committee
today. As Chairman Sickey noted, there are lessons in this sad episode
for everyone.
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<all>