[Senate Hearing 109-135]
[From the U.S. Government Publishing Office]
S. Hrg. 109-135, Pt. 1
TRIBAL LOBBYING MATTERS
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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
__________
JUNE 22, 2005
WASHINGTON, DC
__________
PART 1
__________
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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
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Page
Statements:
Akaka, Hon. Daniel K., U.S. Senator from Hawaii.............. 9
Benn, Charlie, director of administration, Office of the
Chief, Mississippi Band of Choctaw Indians................. 9
Dorgan, Hon. Byron L., U.S. Senator from North Dakota, vice
chairman, Committee on Indian Affairs...................... 6
Grosh, David, former director, American International Center. 33
Halpern, Gail, former tax preparer, adviser to Jack Abramoff. 31
Kilgore, Donald, attorney general, Mississippi Band of
Choctaw Indians............................................ 14
Mann, Brian, former director, American International Center.. 33
McCain, Hon. John, U.S. Senator from Arizona, chairman,
Committee on Indian Affairs................................ 1
Ridnour, Amy, president, National Center for Public Policy
Research................................................... 29
Ring, Kevin, former Abramoff associate....................... 26
Rogers, Nell, planner, Mississippi Band of Choctaw Indians... 11
Stetter, Aaron, former associate, Capitol Campaign Strategies 33
Vasell, Shawn, former Abramoff associate..................... 26
Appendix
Prepared statements:
Halpern, Gail................................................ 51
Martin, Phillip, chief, Mississippi Band of Choctaw Indians.. 52
Ridnour, Amy................................................. 59
Additional material submitted for the record:
Referenced material.......................................... 63
Letter from Chairman McCain to Kevin Ring c/o Richard Hibey.. 355
Letter from Richard Hibey on behalf of Kevin Ring to Chairman
McCain..................................................... 356
Letter from Bryan D. Parker to Richard Hibey................. 357
Letter from Richard Hibey to Bryan D. Parker................. 358
TRIBAL LOBBYING MATTERS
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WEDNESDAY, JUNE 22, 2005
U.S. Senate,
Committee on Indian Affairs,
Washington, DC.
The committee met, pursuant to notice, at 9:44 a.m. in room
216 Senate Hart Building, Hon. John McCain (chairman of the
committee), presiding.
Present: Senators McCain, Akaka, Dorgan, Inouye, and
Thomas.
STATEMENT OF HON. JOHN McCAIN, U.S. SENATOR FROM ARIZONA,
CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS
The Chairman. Good morning.
Last February, the committee launched an investigation in
to allegations of misconduct made by six Indian tribes against
their former lobbyist Jack Abramoff and former political
consultant Michael Scanlon. Later in the year, the committee
held two hearings examining the duo's representation of the
Saginaw Chippewa Indian Tribe of Michigan, the Agua Caliente
Band of Cahuilla Indians of Palm Springs and the Tigua Tribe of
El Paso.
Among other things, the committee determined that Mr.
Scanlon's companies collected at least $66 million from the six
tribes and secretly paid Mr. Abramoff almost $22 million from
that amount.
Today's hearing is the third in this series of hearings.
The committee is pleased to have with us representatives of the
Mississippi Band of Choctaw Indians, Nell Rogers who was the
tribe's primary contact with Jack Abramoff, Michael Scanlon,
and Donald Kilgore, the tribe's attorney general who is
presently examining the full extent of the tribe's injuries.
Also attending is Chief Martin's personal representative,
Charlie Ben, the director of administration in the Office of
the Chief. Chief Martin and I met in my office just weeks ago
to discuss this hearing. Given the knowledge and candor of Ms.
Rogers and Mr. Kilgore, the committee concluded that Chief
Martin's presence would not be necessary. The committee
nevertheless appreciates Chief Martin's graciousness in sending
his personal representative here today.
During our meeting, Chief Martin shared with me the rumors
and misinformation that persists about the committee's
investigation. Let me reiterate the focus of the committee's
investigation and today's hearing. The committee's
investigation is and always has been directed at the
allegations of misconduct made by a number of tribes against
their former lobbyists and political consultants and the
consequent harm to the tribes. This investigation has never
been an attack on tribal sovereignty nor an assault on the
tribe's legitimate participation in our great democracy.
This particular hearing is not aimed at Chief Martin, his
administration or the tribe. There have been no allegations of
wrongdoing made against them, nor have we seen any evidence of
such wrongdoing.
With that in mind, I thank Chief Martin for the Mississippi
Choctaw's complete and continuing cooperation in the
committee's investigation. During our collaborations, the tribe
has raised concerns about public revelation of certain matters
it deems protected by the First Amendment.
Sensitive to the tribe's concern, whether couched in
constitutional terms or not, the committee and the tribe have
successfully worked together to ensure that the committee has
full access to pertinent information, without needlessly
disclosing information potentially damaging to the tribe. This
is a commitment I ask my colleagues to honor and respect, and
one which I intend to uphold as chairman.
From our first hearing emerged the utter contempt that Mr.
Abramoff and Mr. Scanlon held for their tribal clients. In the
second, Mr. Abramoff's and Mr. Scanlon's insatiable greed came
to the fore. Today's hearing is about more than contempt; even
more than greed. It is simply and sadly a tale of betrayal.
When that betrayal began, exactly when and why, we do not and
may not ever know. What we do know is that Mr. Abramoff
betrayed a longstanding client, betrayed his colleagues,
betrayed his friends.
Of all his tribal representations, the Mississippi Choctaw
was Abramoff's longest. As far back as 1995, the Mississippi
Choctaw hired Mr. Abramoff while at Preston Gates to represent
their interests on Capitol Hill. By all accounts, Mr. Abramoff
and his team discharged their duties ably and with great
success.
When Mr. Abramoff and his team left Preston Gates for
Greenberg Traurig at the end of 2000, the tribe moved their
account with him. Over the preceding 5 years, the tribe, and
more particularly Chief Martin and his aides, had grown to
trust Jack Abramoff and his team. Little did they know that
that trust would soon be abused.
Over the next 3 years, it appears that Mr. Abramoff
separately and in concert with Mr. Scanlon and others defrauded
the tribe in three ways. The first is not new to this story.
The previous hearings revealed the secret partnership shared by
Mr. Abramoff and Mr. Scanlon and the artificially inflated
prices they obtained under false pretenses. The second and
third ways have not yet been examined. These are the use of tax
exempt organizations to effect their scheme, and the fraudulent
billing of fees and expenses by Jack Abramoff and his team at
Greenberg Traurig.
According to witnesses, Mr. Abramoff introduced the tribe
to Mr. Scanlon and recommended it hire him in late 2001. The
two presented Mr. Scanlon as an independent operator. Never did
they confess their secret partnership to the tribe. Never did
they reveal that together they set prices to account for Mr.
Abramoff's stake in the profits. Never did they even hint that
the two devoted a small fraction of the payments to the uses
intended by the tribe, pocketing the rest.
Until last year, the tribe had no reason to question the
man that had represented and advised them for years. At all
times the tribe understood and expected that Mr. Abramoff and
Mr. Scanlon were working in their best interests. Even today,
the tribe could not have envisioned the betrayal it suffered at
their hands.
How big was that betrayal? According to a January 8, 2002
e-mail from Mr. Abramoff to Mr. Scanlon, the two had charged
the Mississippi Choctaw $7.7 million for projects in 2001. Of
that amount, Mr. Scanlon spent $1.2 million for the efforts. He
and Mr. Abramoff split an astounding $6.5 million.
Not content with these astronomical sums, Mr. Abramoff and
Mr. Scanlon conspired for more. In a November 4, 2002 e-mail,
Mr. Scanlon asked Mr. Abramoff how he should seek more money
from the tribe's legislative liaison Nell Rogers:
Last time you said to me to just tell her that we are
spending our own money to get it done and we are going deep
into the hole.
Mr. Abramoff replied:
I think you should call her and tell her that we have
turned the corner, but you are pouring it on to make sure we
win. Tell her as of now you are finally willing to say that we
will win this, but laughingly say, I do not know how I am going
to get back all the money I had to dump into this.
This, of course, was untrue.
Since our first hearing, Mr. Abramoff and Mr. Scanlon have
suggested to the tribes that the two were not partners and that
the sums Mr. Scanlon paid Mr. Abramoff were merely referral
fees. That explanation strains credulity. Not only did Mr.
Scanlon pay Mr. Abramoff one-half his company's profits,
conspire with him to set prices and refer to him as a partner,
we now know that Mr. Abramoff was prepared to claim to
prospective financiers on another venture that, ``2000 was a
business transition year where I was building CCS.'' CCS, of
course, was Capitol Campaign Strategies, a company owned and
operated by Mr. Scanlon.
Last year, the committee reported that Mr. Abramoff's and
Mr. Scanlon's partnership apparently commenced in June 2001. It
appears that their scam actually started earlier. It apparently
began with payments to the American International Center, the
self-styled international think tank in Rehoboth Beach, DE that
was Greenberg Traurig's fifth largest lobbying client in 2002,
paying $840,000 in fees to the firm.
With us today are the center's former directors, Brian Mann
and David Grosh. These two gentlemen will hopefully be able to
educate us on the nature and scope of the American
International Center's business. I suspect both men will be
surprised to learn that Mr. Scanlon and Mr. Abramoff used the
center to carryout their allegedly fraudulent scheme.
As an example of this, in a May 2, 2001 e-mail, Mr.
Abramoff informed Mr. Scanlon that the Mississippi Choctaw were
about to pay money into the American International Center.
According to Mr. Abramoff:
I am going to try to get us $175,000, $100,000 to Ralph,
$25,000 to contribution, $5,000 immediately to the Conservative
Caucus, the rest, give me $5,000.
Ultimately in April 2003, the AIC paid Mr. Abramoff's
company, Kaygold, almost $1 million. Their ``gimme five''
scheme seems to have begun with a modest $50,000, as we know.
It would soon rocket into millions.
Based on the evidence thus far, the Mississippi Choctaw
paid approximately $15 million directly to Mr. Scanlon's
companies and Mr. Scanlon paid Mr. Abramoff more than $5
million from those funds.
Unfortunately, the alleged fraud perpetrated against the
tribe does not end there. In 2002, Mr. Abramoff and Mr. Scanlon
successfully employed other vehicles to extract another $2
million from the tribe. Apparently at Mr. Scanlon's direction,
the tribe paid $1 million into the Capital Athletic Foundation,
Jack Abramoff's personal charitable foundation. The tribe
intended and understood that the $1 million would be
distributed to various grassroots organization to advance the
tribe's legislative interests. At all times relevant, the tribe
understood that the foundation's sole function was a conduit of
money, never a legitimate charity.
The tribe neither intended nor authorized its money to be
used as a charitable contribution to the foundation. It
certainly never agreed to the uses that Mr. Abramoff ultimately
put those funds. To what uses did Mr. Abramoff and his
foundation put the money received from the Mississippi Choctaw
and other donors in 2002? According to the foundation's tax and
accounting records, nearly 80 percent of the funds went to the
Eshkol Academy, the all-boys Jewish school established by Jack
Abramoff. The foundation also paid a monthly stipend and Jeep
payments to Mr. Abramoff's high school friend living in the
Israeli West Bank who conducted sniper workshops for members of
the Israeli defense force and others.
As Mr. Abramoff tried to square these payments with the
charitable mission of the foundation, according to Mr.
Abramoff's secretary, his friend suggested that he could write,
``some kind of letter with his sniper workshop logo and
letterhead.'' It is an ``educational'' entity of sorts. Mr.
Abramoff could only respond, ``No, don't do that. I don't want
sniper letterhead.''
Based on evidence examined by the committee, Mr. Abramoff
adjusted the transactional structure on the books to continue,
in the words of his tax planner, ``the Jeep payments, as well
as all the other military expenses that do not look good on the
foundation's books.''
His cohort in Israel did so by establishing a bank account
in the name of a school that apparently existed only on paper.
Whether the substance as opposed to the form of the transaction
comports with our tax laws will likely be of interest to the
IRS.
Interestingly, in 2002 the foundation listed as
beneficiaries of its largest the Alexandria Police Youth Camp
Foundation, Boy Scouts of America, YMCA of Metropolitan
Washington, and other legitimate organizations. Yet
cumulatively, those organizations received only $7,000 in
donations that year, a sum that pales in comparison to what
each of the three largest recipients received individually. In
fact, the listed organizations together received less than 1
percent of the money spent.
Before its website was taken out, Mr. Abramoff's foundation
listed its mission as fostering character development through
sportsmanship, which it defined as:
Ethical behavior both on and off the playing field, both in
athletics and in business, both as a youth and as an adult.
Given what we have learned over the past year and what we
will hear today, that mission statement rings hollow.
More betrayals were to come. In October 2002, Mr. Abramoff
and Mr. Scanlon successfully defrauded the tribe of another $1
million. To accomplish this, Jack Abramoff betrayed not just
the tribe, but also two long-time friends and violated his
fiduciary duty to the non-profit organization on whose board he
sat. The process was two-fold. On the top end, Mr. Abramoff
directed the tribe to pay $1 million into the National Center
for Public Policy Research, upon whose board he sat and whose
executive director he knew for over 20 years.
To induce the tribe in to making the payment, he told them
that the money would be used for their grassroots activities,
activities which he knew the center could not and would not
undertake either on its own or through another. To the center,
Mr. Abramoff explained that part of the money was a donation
ultimately destined for the Capital Athletic Foundation and the
rest was intended for a huge educational effort the tribe was
undertaking to educate the public on the benefits of Indian
gaming and the distinction between Indian and non-Indian
gaming. The center understood it would participate in that
educational effort.
On October 10, 2002, the center provided Mr. Abramoff with
an invoice for $1 million for, ``contribution to the National
Center for Educational and Research Programs and Activities.''
But the tribe never saw that invoice because Mr. Abramoff never
sent it. Instead, he sent an invoice fabricated by Mr.
Scanlon's shop purportedly from the National Center for Public
Policy Research, for ``professional services.'' That was the
invoice the tribe ultimately saw and paid.
Once the money arrived at the center, Mr. Abramoff told the
center to pay $500,000 to Capitol Campaign Strategies, which
Mr. Abramoff claimed was performing the heavy lifting on the
educational effort, and $50,000 to Nurnberger and Associates,
which Mr. Abramoff said would be supervising the effort. He
told the center the remaining $450,000 was intended as a
charitable contribution to the Capital Athletic Foundation.
In fact, the tribe never intended to donate any of that
money to Mr. Abramoff's personal charity. Mr. Nurnberger never
worked on behalf of the center or the Choctaw. He received his
money in repayment of a personal loan he had made to Mr.
Abramoff years earlier. When Mr. Nurnberger raised concerns
about the center repaying the loan, Mr. Abramoff assured him
that the funds were due Mr. Abramoff as director of the center.
To try and give his activities the veneer of legitimacy,
Mr. Abramoff instructed his executive assistant to ``make up
invoices'' from Nurnberger and Associates and the Capital
Athletic Foundation which he then submitted to the center.
According to Mr. Nurnberger, he neither saw nor approved the
invoice submitted in his firm's name. Believing the transaction
in order and relying upon the word and fiduciary duty of their
director, the center disbursed the funds. By abusing the trust
of those involved, Mr. Abramoff and Mr. Scanlon profited by
another $1 million.
I want to thank Amy Ridenour, the president of the National
Center for Public Policy Research, for agreeing to appear here
today to help illuminate what appears to be a $1-million fraud.
The third area of possible fraud identified by the
committee involves the possible fraudulent billing of fees and
expenses by Mr. Abramoff and his team while at Greenberg
Traurig. It ranges from charging non-business meals at Mr.
Abramoff's restaurant, Signatures, to the impermissible
expensing for club dues and other items hidden from the tribe.
It apparently also involves the padding of bills.
As just one example, when Mr. Abramoff learned that the
tribe's bill was nowhere near the $150,000 monthly mark, Mr.
Abramoff instructed one of his associates to ``add 60 hours''
for him, and to ``pump up Scanlon, Todd, and you; give Amy some
hours if you have to.'' Even when Mr. Scanlon began running his
own companies and receiving payments directly from the tribes,
Mr. Abramoff nevertheless tried to bill clients for Mr.
Scanlon's time.
There is other evidence which I believe the Department of
Justice should review if it has not already begun to do so. If
proven true, such activity could well constitute a violation of
the mail and wire fraud statutes.
There is much more to this story than I could possibly
describe in the limited time we have today. Indeed, the
committee has come upon evidence suggesting that Mr. Abramoff
may have perpetrated a similar scam on some of his non-tribal
clients. While we cannot emphasize enough the harm Mr. Abramoff
and Mr. Scanlon inflicted upon the tribe, we should not
overlook the toll their actions took on the men and women they
betrayed.
How that wound can be salved, I cannot say. I leave it to
Mr. Abramoff and Mr. Scanlon to try. I asked the vice chairman
for his concurrence in having documents that I will be asking
questions on, those related to these areas, entered as part of
today's record.
Senator Dorgan. Without objection. I would support that.
[Referenced documents appear in appendix.]
The Chairman Senator Dorgan.
STATEMENT OF HON. BYRON L. DORGAN, U.S. SENATOR FROM NORTH
DAKOTA, VICE CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS
Senator Dorgan. Mr. Chairman, thank you very much. I will
make a similar request that the documents on which I ask
questions be made a part of the record.
The Chairman Without objection.
[Referenced documents appear in appendix.]
Senator Dorgan. Mr. Chairman, this is, as you have
described, a disgusting story of greed unlike any that I have
seen in my service in Congress. I think it is important to
begin, as you did, to point out that there is no evidence of
wrongdoing by the Choctaws, the Indian tribe that will be
discussed here. We have had their full cooperation. We
appreciate the cooperation of Chief Martin and others from that
tribe.
It is important to understand that this tribe has been a
victim of fraud, we believe, and we will describe some of that
in the hearing and learn much more from the witnesses.
The commitment that the chairman has made in this committee
to provide a thorough and exhaustive investigation of how a
number of Indian tribes were deceived and defrauded by Jack
Abramoff and Mr. Scanlon is important. Today, we focus on the
Choctaw Tribe of Mississippi and how they were victimized.
The Choctaw Tribe is a notably successful tribe in its
business operations. It is the second-largest employer in the
State of Mississippi. The tribe has a very substantial annual
payroll. Its businesses are diversified and successful. These
are business-savvy people with a business plan. Part of their
plan was to hire someone who they could trust to advance their
agenda.
The Choctaw Tribe began its relationship with Jack Abramoff
10 years ago. Mr. Abramoff designed a business model for the
tribe, running their money through a variety of people and
entities for grassroots public policy and public relations
purposes. These included Preston Gates, Greenberg Traurig,
Americans for Tax Reform, Capitol Campaign Strategies, Ralph
Reed, and many more. In fact, there were a large number of
characters who became recipients of the tribe's money through
various means.
At some point, it appears to me that around January 2002
Mr. Abramoff and Mr. Scanlon decided they could be making
millions themselves instead of sending money to others,
including Ralph Reed. They referred to him as a bad version of
us; no more money for him, in January 2002. And then they
hatched the scheme whereby Abramoff told the tribe to hire
Scanlon for millions. But he failed to tell the tribe that his
firm would be getting at least one-third of the Scanlon fee as
his reward.
The tribe was accustomed to sending money at Abramoff's
direction to various organizations as a part of its public
relations efforts. It appears they did not raise questions
about the new groups that began to appear at Mr. Abramoff's
recommendation: The American International Center, which is a
Scanlon company; the National Center for Public Policy
Research, whose board membership included Abramoff; the Capital
Athletic Foundation whose sole board members were Abramoff and
his wife; and Scanlon and Gould Public Affairs, also known as
Capitol Campaign Strategies.
As part of its investigation, the committee uncovered a
mind-boggling list of organizations used as financial and
grassroots conduits by both Scanlon and Abramoff. The
organizations provided an alarming picture of how these groups
were used, and in some cases manipulated, sometimes for
personal gain and sometimes for political gain. The goal was
always the same: To hide, to obscure and to mislead where the
money was coming from and where it was going.
The committee did not need a Deep Throat to tell us to
follow the money. The e-mail that you will see today have done
that for us. E-mail show that Mr. Abramoff may have tried to
evade taxes by having earned income sent to his private
charitable foundation which seemed also to serve as his
personal piggy bank, the Capital Athletic Foundation. Quoting
from one of his e-mail:
I have some money due me from CCS, Capitol Campaign
Strategies. If I have them write it to the Capital Athletic
Foundation for services rendered, can the Capital Athletic
Foundation just take it and not pay taxes if the services are
in the realm of what the Capital Athletic Foundation does,
advice on athletics or something like that? That way, the CCS
could expense it and the Capital Athletic Foundation could take
it in tax-free.
E-mails show how Jack Abramoff shopped around for a
501(c)(4) or multiple 501(c)(4)s to use as pass-throughs for
various money transactions. In an e-mail to Ralph Reed, Mr.
Abramoff refers to Amy Ridenour at the National Center for
Public Policy:
She does not have a (c)(4), only a (c)(3). So we are back
to ATR, Americans for Tax Reform, only. Let me know if this
will work. Just do this through ATR until we can find another
group.
That is February 2, 2000.
A few weeks later, Abramoff responds to Reed about how to
continue funding Reed's work:
Thanks, Ralph. I hope to have a decision imminently on
going back up hard. I also have a new (c)(4) to use.
There are numerous memos between Mr. Abramoff, Reed, ATR,
and Mr. Norquist on how to move more money through c(4)s to
obscure or deceive the source of the money. Mr. Chairman, while
it is not in this committee's jurisdiction to determine whether
non-profit organizations were acting legally or not, it
certainly begs the question as to whether they were acting
within their charitable or tax exempt purpose. I hope we will
consider a future hearing perhaps with the Senate Finance
Committee to explore the activities of these 501(c)(3)s and
501(c)(4)s. I suggest that we consult with the Finance
Committee about how to further investigate those activities.
Over the course of the Choctaw's involvement with Mr.
Abramoff and Mr. Scanlon, the tribe spent at least $20 million
on various lobbying and grassroots activities. No one questions
their right to contract for services to grow their business.
Like many groups who work with lobbyists, they put their trust
in these experts from Washington to do the right thing, but
there was a breach of trust and a betrayal.
This tribe was never told about the secret scheme that
allowed Jack Abramoff to skim $5 million from the money that
Michael Scanlon had promised the tribe would be spent on
grassroots and public relations, but was not spent on that
purpose. The tribe was never told that part of the $1 million
they had been told to send to the National Center for Public
Policy Research for grassroots organizing would be used to
repay a personal loan going back to Jack Abramoff's days as a
filmmaker. The tribe was never told that $10,000 of their money
would be sent to Reed for chairman when Ralph Reed was seeking
the chairmanship of the Georgia Republican Party. The tribe was
not told that the $1 million they were directed to send to the
Capital Athletic Fund was basically going to Abramoff's pet
projects. We know that the Capital Athletic Fund, allegedly a
private charitable foundation, was used as Mr. Abramoff's
personal checking account.
Were these thefts or just betrayals? And where is the line
drawn? Mr. Chairman, this investigation has taken twists and
turns that none of us had anticipated. It has uncovered
deceptions and greed that even by Washington standards are
breathtaking. It has raised questions of ethics and legality
that we must pursue.
I thank you especially for your persistence and for your
dogged approach. I look forward today to hearing from the
witnesses.
The Chairman. Thank you very much.
Our first panel is Charlie Benn, a representative of the
Mississippi Band of Choctaw Indians; Donald Kilgore, Esquire,
attorney general for the Mississippi Band of Choctaw Indians;
and Nell Rogers, planner of the Mississippi Band of Choctaw
Indians. Please come forward and welcome to the committee.
I apologize. While the witnesses are seating, Senator Akaka
has an opening statement.
STATEMENT OF HON. DANIEL K. AKAKA, U.S. SENATOR FROM HAWAII
Senator Akaka. Thank you very much, Mr. Chairman. I want to
thank you and Vice Chairman Dorgan for holding this oversight
hearing on tribal lobbying practices.
This is the third, as you know, in a series of hearings
that this committee has conducted already. While I am appalled
by these men, Jack Abramoff and Michael Scanlon, they were able
to conduct a pattern and practice of dealings that took
advantage of native peoples. I am hopeful that through these
hearings, the committee will be able to provide guidance in
resolving these matters to ensure that this type of history is
not repeated again.
I look forward, Mr. Chairman, to hearing the testimony from
the witnesses who are here today. Thank you for holding this
hearing, Mr. Chairman.
The Chairman. Good morning.
Ms. Rogers, who is accompanying you, for the record?
Ms. Rogers. Bryant Rogers who is the tribe's attorney.
The Chairman. Welcome, Mr. Rogers, just for the record.
We will begin with you, Mr. Benn. Thank you for appearing.
Please proceed.
STATEMENT OF CHARLIE BENN, DIRECTOR OF ADMINISTRATION, OFFICE
OF THE CHIEF, MISSISSIPPI BAND OF
CHOCTAW INDIANS
Mr. Benn. Thank you, sir.
Good morning. My name is Charlie Benn and I am the director
of administration for the Office of Chief Phillip Martin,
Mississippi Band of Choctaw Indians. With me today are Nell
Rogers, who works in the tribal planning office in the area of
legislative affairs, who will also offer testimony in a few
moments. Don Kilgore, the tribe's attorney general is here as
well. Mr. Kilgore will also offer brief testimony and assist in
answering questions that you may have. Also present with the
panel is C. Bryant Rogers, outside counsel for the tribe.
We certainly appreciate this opportunity to present the
views of the tribe as regards the committee's ongoing
investigation into the conduct of Jack Abramoff and Michael
Scanlon.
The Mississippi Band of Choctaw Indians is a federally
recognized Indian tribe of nearly 10,000, most of whose members
reside on eight reservation communities located on trust lands
scattered over a five-county area in East-Central Mississippi.
The majority of our tribal members are full-blood Choctaw
language-speaking. We are descendants of those Choctaw people
who resisted repeated efforts by the Federal Government to
force their relocation to Oklahoma. This continued from 1830
through the early 1900's. The tribe's reservation lands are
poor and unproductive and the tribe is without any natural
resources which could be used to generate income.
The Mississippi Choctaws were ignored and abandoned by the
Congress and Federal executive branch for almost a century,
finally securing our initial Indian reservation lands in 1944
and Federal recognition as a separate tribe in 1945. Our
members were then essentially destitute without any resources
and our tribal government was basically powerless to help them.
Unemployment was so prevalent among our tribal members that we
knew we had to find another path and we did.
We made the choice to pursue self-determination as the best
means to meet the growing needs of the tribe and to pursue
manufacturing jobs as the best means of employing large numbers
of our people. Beginning with one tribal employee in 1963, the
Mississippi Choctaws have grown to become the second-largest
employer in Mississippi, employing some 9,200 people. We
operate about 25 different commercial enterprises.
The tribe has developed a strong and stable government
providing the full array of governmental services. This
includes the operation of a large school system, police and
fire protection services, courts, hospitals, clinics, social,
housing, realty, and economic development agencies. These were
key ingredients of our latest success in building a reservation
economy and attracting private investment.
The passage of the Indian Gaming Regulatory Act and the
introduction of class III gaming in 1989 in Mississippi led to
the development of the tribe's current Pearl River Resort. We
have invested over $1 billion in this development, which has
created jobs and generated income. Rather than make large
distribution payments to tribal members, we chose to invest in
our future in a different way.
The success of the resort has allowed the tribe to begin
catching up from generations of poverty. There has been
extraordinary progress which I set forth in more detail in
Chief Martin's written testimony. Still, significant needs
remain particularly in the areas of health, education and
housing. Since all of our enterprise growth has been debt-
financed, we still have a $300-million debt load to retire.
Because of the tribe's government-to-government
relationships with the United States and because of the need to
protect tribal investments and our ability to repay business
debt, the Mississippi Choctaws have engaged in extremely active
and aggressive efforts to monitor and affect the Federal
decisionmaking process and to shape public opinion on matters
affecting the tribe's political and economic interests.
To achieve this, we have long engaged experienced
professionals, including lobbyists with prestigious law firms
who know and understand how Federal lobbying and grassroots
advocacy works. Our effort in this regard has historically been
successful and we have relied upon the professional expertise
and integrity of those law firms and their lobbyists to ensure
that this work is handled for us in a lawful and appropriate
manner.
So when the initial press reports emerged last year
regarding the large fees paid to Jack Abramoff at Greenberg
Traurig or to Michael Scanlon by a number of tribes for
lobbying work and grassroots advocacy, we had no reason to
believe that anything questionable had occurred concerning
those payments or their work for us. We were pleased with the
results that we had achieved.
Later, we have learned, based on the work of the committee
and our attorneys, that Mr. Abramoff, along with Mr. Scanlon,
had engaged in what appears to be a consistent pattern of
kickbacks, misappropriated funds, payment induced under false
pretenses, and padded billings, all orchestrated by Mr.
Abramoff from his position as Senior Director of Governmental
Affairs for Greenberg Traurig, LLP, the law firm which the
tribe had retained to handle its public affairs needs starting
in January 2001.
From the onset of this matter, the tribe has fully
cooperated with the FBI and the Justice Department. Since July
2004, almost 1 year ago, we saw evidence of apparent wrongdoing
on the part of Mr. Abramoff and Mr. Scanlon. We have worked
closely with the committee to further its investigation.
Early on in this process, however, the tribe raised with
the committee its concern that sensitive information regarding
its lobbyists, lawful lobbying and public affairs activities
not be unduly disclosed through the committee's investigation
of Mr. Abramoff and Mr. Scanlon, and of the tribe's First
Amendment right to protect against such involuntary disclosure.
The tribe certainly appreciates that the committee has
respected the tribe's First Amendment rights throughout this.
Consistent with this position, the tribe has shared all
requested documents and information with committee staff, but
has declined to place in the record information regarding the
tribe's First Amendment-protected activities when disclosures
of such information is not required. This remains the tribe's
position today.
I would now like to defer to Ms. Rogers to discuss how the
tribe came to employ Mr. Abramoff and Mr. Scanlon, and further
details on our lobbying activities, and to request that the
committee's questions be deferred until each of us on this
panel has had the opportunity to make our opening statements.
Thank you, sir.
The Chairman Thank you very much, Mr. Benn.
Mr. Kilgore or Ms. Rogers, whichever way. Ms. Rogers is
fine.
STATEMENT OF NELL ROGERS, PLANNER, MISSISSIPPI BAND OF CHOCTAW
INDIANS
Ms. Rogers. Thank you.
Good morning and thank you Senator McCain, Senator Dorgan,
and Senator Inouye for your comments. I would also like to say
that we appreciate the work of your staff in pulling together
our information for the hearing.
Prior to 1994, Chief Martin was the tribe's primary
lobbyist. Partly this was because the tribe had no funds to pay
for these services. Later as the scale and reach of Federal
regulations and legislation affecting Indian tribes expanded,
and as the tribe's businesses and revenues grew, attending to
those enterprises required more and more of the chief's time,
leaving less time to devote to the legislative process.
It became prudent to hire outside lobbyists and legal
counsel to assist in addressing the tribe's Federal advocacy
needs and to assign additional staff in the chief's office to
assist in coordinating the tribe's public affairs efforts.
Before the tribe retained Preston Gates, it had retained
the law firm of Hobbs, Strauss, Dean, and Walker here in
Washington to provide some legal services and public affairs
work, primarily in the area of self-determination, in health,
and in education. The tribe continues to work with Hobbs,
Strauss, and with other law firms, firms who have represented
the tribe for many years such as Wise, Carter and Caraway and
Scott, Sullivan, Streetman and Fox firms in Mississippi, and
Roth, Van Amberg, Rogers, Ortiz and Yepa in New Mexico. All of
them have provided a high caliber of legal representation and
have done so with honesty and scrupulous adherence to their
duties to the tribe as a client. No less was expected from the
other Washington firms hired by the tribe starting in 1995.
In 1994, two simultaneous events occurred which required an
expansion and a change in the direction of the tribe's public
affairs work. First was a change in leadership of the Congress
as a result of the 1994 elections. Second, the opening of the
Silver Star Hotel and Casino by the tribe, also in 1994, gave
rise to an array of new issues and concerns that had to be
tracked and dealt with at the national level.
The tribe also wanted to tell its economic story, how it
was possible to use the tax and regulatory structures unique to
Indian reservations and economies operating under tribal
jurisdiction to achieve on-reservation economic development.
This was not just a theory. The tribe had experienced
successful economic development for 15 years before opening the
first casino. It did so by finding products that could be made
and sold, hiring good managers, setting up a judicial system
that provided fair treatment for outside parties, building a
stable constitutional government with a separation of powers,
and honoring its business contracts.
When the tribe opened its first casino, financed 100
percent with borrowed money, it had to be proactive in
protecting its casino operations and its ability to pay off its
debt. Thus in 1995, the announcement by the then-Ways and Means
Committee Chairman of a plan to subject tribal income to
taxation set off extraordinary alarms with the tribe because
that meant that the tribe's gaming and other business revenue
could be taxed up to 34 percent, threatening the tribe's
ability to pay off its debt and undermining its capacity to
provide essential governmental services to the some-10,000
tribal members.
It was in this climate, then, that the tribe recognized the
need to reach out to the new Republican majority and to
redouble all efforts to outline its long-time unmet needs and
its reservation development experiences with all members of
Congress in a bipartisan way.
Jack Abramoff was identified to us in 1995 as a potential
public affairs specialist in the Washington office of a major
law firm, Preston Gates. This firm, in addition to having ties
to the new majority, also included former Congressman Lloyd
Meeds, who was known to the tribe as someone knowledgeable of
tribal issues, as well as of the government-to-government
relationship that exists between the tribes and the Congress.
At Chief Martin's request, I contacted the firm and
subsequently, following a meeting with Chief Martin with Mr.
Meeds, Mr. Abramoff, and others in the firm, a retainer
agreement was executed and approved by the tribal council. What
followed was a very positive relationship with Preston Gates
from 1995 through 2000. They did very effective work for the
tribe, both at the Federal level and through various grassroots
projects.
Then Mr. Abramoff and most of his team left Preston Gates
to join Greenberg Traurig in 2001. Since the bulk of the work
done by Preston Gates for the tribe was in the area of public
affairs and not ordinary legal work and since Mr. Abramoff and
most of his team who had handled that work at Preston Gates
moved to Greenberg Traurig in 2001, the tribe then retained
Greenberg Traurig. Later, Mr. Abramoff introduced us to Michael
Scanlon as a political consultant who had several companies
which he used for his public affairs, marketing and grassroots
work.
When Mr. Abramoff left Preston Gates to move to Greenberg,
there was no reason to believe that anything improper or
unlawful had occurred in connection with his work. There was no
reason to question the integrity or otherwise doubt that the
representation through Greenberg would be handled in any less
professional way and honest way than we believed had previously
occurred. Unfortunately, those expectations were not met and
misconduct did occur. Details on what that misconduct was and
how it occurred will be addressed by Mr. Kilgore, the tribe's
attorney general in his opening statement.
However, before I turn to Mr. Kilgore, there are some
matters which the tribe wishes to clarify, largely because of
errors by the media and reporting on these events. The first,
the tribe has never authorized any payment for the purpose of
sending any member of Congress on any golf trip anywhere. This
includes the widely reported Scotland trip. Second, the tribe
did not contribute any money to Americans for Tax Reform to buy
the opportunity to attend a White House meeting with President
Bush. In particular, no money was paid to ATR for that purpose
as regards the White House meeting on May 9, 2001 and no tribal
representative attended that meeting as has been reported in
the press.
Third, the tribe decided years ago that its core
governmental operations, including public relations and related
public affairs activities that were administered through the
Office of the Chief, would not be funded with gaming revenue.
In this regard, none of the funds the tribe paid to Americans
for Tax Reform for various purposes in 1999 and 2002 were
generated by the tribe's gaming operation.
Finally, the tribe has been extremely careful to ensure
that its public affairs efforts complied with all the
applicable rules. That remains the case. The behavior of both
Mr. Abramoff and Mr. Scanlon, which is the subject of this
hearing, is not associated with the nature of the work they
were doing for the tribe, but misconduct in the way the tribe
was charged for that work and in the diversion to themselves of
those payments from lawful authorized activities.
In this regard, Senator McCain, the tribe appreciates your
acknowledging that the tribe has not been accused of wrongdoing
at any point in these proceedings and we appreciate that.
Now, if you are agreeable, I will ask Mr. Kilgore if he can
complete the tribe's opening statement.
The Chairman. Mr. Kilgore.
STATEMENT OF DONALD KILGORE, ATTORNEY GENERAL, MISSISSIPPI BAND
OF CHOCTAW INDIANS
Mr. Kilgore. Thank you. Mr. Chairman, members of the
committee, we again thank you for this opportunity to present
the tribe's views with regard to this investigation into the
misconduct of Jack Abramoff and Michael Scanlon.
As previously referenced, I was only appointed to serve as
Choctaw attorney general recently, but since then I have worked
closely with the tribe's outside legal counsel, Mr. Rogers, to
fully acquaint myself with this investigation and review his
analysis and conclusions of the evidence.
Clearly, after my consultation with outside firms and with
your staff, Senator, it has become apparent that Jack Abramoff
and Mike Scanlon engaged in a consistent pattern of kickbacks,
misappropriated funds, payments induced under false pretenses,
and padded billings.
First of all, the kickback scheme. Under the kickback
scheme, we learn that Mr. Abramoff calls Mr. Scanlon, who was
represented to us as an independent contractor, to quote prices
which included undisclosed and exorbitant add-ons in the fee.
They would then split it, one-half going to Mr. Abramoff as a
kickback and one-half being retained by Mr. Scanlon as moneys
obtained under false pretenses. All of this was in furtherance
of their ``gimme five'' scheme.
It should be noted that while the prices were high, they
were not out of line with other billings from other contractors
for similar work that we have experienced. However, we now know
after reviewing thousands of e-mail exchanges, that before
these quotes were given, Mr. Abramoff and Mr. Scanlon had
already agreed upon the amount of extra money that they were
going to solicit from us under false pretenses and then split
between themselves.
I refer to, as an example of that kickback scheme, an e-
mail, Senator McCain, dated September 2, 2001 which your staff
has. Mr. Abramoff:
So let me see, that is $700,000 each for us and $100,000
for the effort. Seriously, what do you think we can score?
Response:
If you think they are good for it, then I can slide you
$350,000 with no sweat, plus you have $313,000 sitting here. So
if you want, $663,000 is yours on Tuesday. When the clip comes
in, another $350,000, which will put you over $1 million. But
that is not all. There will be more when the dust settles, and
if we get the full $4.6 million, much, much more. I think the
350 strategy is the best way to go. It is good on the gimme
five front.
Response:
Thanks. I am having a great time running the gimme fives.
The Chairman. And who was that?
Mr. Kilgore. That was an exchange between Mike Scanlon and
Jack Abramoff.
The Chairman. Without objection, it will be made part of
the record.
Mr. Kilgore. Thank you.
[Referenced document appears in Phillip Martin's prepared
statement located in appendix.]
Mr. Kilgore. The pass-through scam, the second phase of the
fraud that was perpetrated on the tribe. Regarding grassroots
advocacy projects, some of the actual work was always going to
be performed by various third parties after passing through the
Scanlon companies, for example, American International Center,
Capitol Campaign Strategies, Scanlon Gould Public Affairs or
other entities such as the National Center for Public Policy
Research or the Capital Athletic Foundation.
The tribe never agreed that any of these moneys were to be
retained by Ms. Scanlon or Mr. Abramoff. When the tribe was
quoted a price for a given project, the tribe expected that its
payment to fund that work would be expended for that purpose,
and where there were pass-throughs involved that the money
would be passed through to the appropriate lawful entity for
that purpose.
In this regard, the tribe was also induced in 2002 to send
large sums to NCPPR and CAF. Mr. Abramoff did not, as the
chairman has observed, disclose to us that CAF was Mr.
Abramoff's private charity, nor that he sat on the board of
directors of NCPPR. These payments were made on Mr. Abramoff's
representation that the funds would be used to carryout
previously approved grassroots projects.
Instead, these additional funds were solicited and used to
generate money to complete the financing of unauthorized
kickbacks and fee-sharing arrangements for Mr. Abramoff's and
Mr. Scanlon's ``gimme five'' scheme.
Another e-mail was an e-mail between Mike Scanlon and Jack
Abramoff dated Friday May 31, 2001. In an extraordinarily
candid exchange, Mr. Scanlon says:
Here is the overall plan. We need about $200,000 to run the
operation, leaving $1.3 million to split or $650,000 apiece. To
make you whole, the idea was to get the $500,000 to CAF
directly then have AIC cut Kaygold a check for the remaining
$150,000.
Clearly, perpetrating a fraud on his client.
The last area that we have investigated and looked at
thousands of documents, along with your staff. We have learned
that a number of the bills received by the tribe from Greenberg
Traurig contained fabricated time entries and unauthorized
expense charges. Unlike many or all of the other tribal clients
who retained Greenberg and Jack Abramoff, the Choctaws retainer
agreement with the firm was on a regular hourly billing basis.
The tribe never agreed to pay a flat fee per month.
However, it is now clear that Mr. Abramoff consistently
manipulated the bills at Greenberg in order to have them
approach a minimum billing target of fees and expenses of
between $135,000 and $150,000 a month. When the actual hours of
work completed were insufficient to approach that target, Mr.
Abramoff routinely directed that the bills be padded and pumped
up.
The e-mail that I wanted to refer to, Mr. Chairman, is the
one that you have already referred to about he only had 2
hours, and therefore directed that be pumped up. So I am not
going to repeat that e-mail. But we also note there are
significant amounts of unauthorized expenses charged in those
billings. It was structured in such a way that looking at the
bill, the tribe could not detect those unauthorized expenses
and billings.
After we learned what had happened, we were surprised that
a senior director at a major law firm could and would engage in
misconduct of this type, whether it is the billing fabrication
or the more egregious ``gimme five'' scheme, and he was able to
get away with it for so long. What we have learned regarding
Mr. Abramoff's misconduct at Greenberg has caused us to take a
closer look at his work at Preston Gates. Those inquiries have
just begun.
It presently appears that some similar financial misconduct
also occurred while Mr. Abramoff was at Preston Gates, though
on a vastly smaller scale, both as to billing improprieties and
as to Mr. Abramoff's unlawful diversion of money. We have
initiated discussion with Preston Gates on these matters.
However, those discussions are in a very preliminary stage.
In regard to Greenberg Traurig, we wish to acknowledge that
positive settlement negotiations with that firm are now
underway and that we have been assured that they will take
appropriate action to address and remedy any concerns and
issues which we may identify as to any respect of our
relationship with that firm. They have responded to this
situation in a professional and honorable way, which we very
much appreciate. Thus, we are confident a mutually agreeable
settlement of our claims respecting these issues will be
reached with Greenberg.
In closing, I want to thank the committee for its efforts
in the investigation. We are moving forward with our efforts to
build our reservation economy, which also benefits our non-
Indian neighbors as well, and to strengthen our government-to-
government relationship with the United States to enhance our
capacity to improve health care, education and employment
opportunities for our members.
Mr. Chairman, we consider this a lesson and we will
endeavor to ensure that we will not experience anything like
this in the future.
Thank you.
The Chairman. Thank you very much.
Senator Inouye, do you want to say anything?
Senator Inouye. Mr. Chairman, I have an opening statement.
The Chairman. Without objection, Senator Inouye's opening
statement will be made part of the record.
Ms. Rogers, you said that these funds that were expended
did not come from gaming revenues. Where did they come from?
Ms. Rogers. Revenues from the tribe's other businesses,
manufacturing businesses, printing plants.
The Chairman. I see.
Ms. Rogers, Jack Abramoff recommended the tribe hire
Michael Scanlon at the end of the year 2001, as you have
testified. Did Mr. Abramoff tell you that Mr. Scanlon was an
independent contractor?
Ms. Rogers. He did.
The Chairman. Did Jack Abramoff or Michael Scanlon ever
disclose to you that Mr. Scanlon would pay Mr. Abramoff any of
the money paid to Mr. Scanlon by the tribe?
Ms. Rogers. No, sir.
The Chairman. The tribe never intended the money it paid to
Michael Scanlon and his company be kicked back to Jack
Abramoff?
Ms. Rogers. No.
The Chairman. Ms. Rogers, in 2002 the Capital Athletic
Foundation, Mr. Abramoff's private charitable foundation,
reported on its tax forms that the Mississippi Band of Choctaw
Indians was far and away the single biggest contributor.
According to publicly available tax forms, of the $2.6 million
that the Capital Athletic Foundation raised that year, almost
$1.9 million, 70 percent of it, went to the Maryland Jewish
boys school started by Mr. Abramoff. Michael Scanlon and Jack
Abramoff directed the tribe to make these contributions?
Ms. Rogers. These were not intended as contributions,
Senator. They were intended to be pass-throughs to other groups
doing grassroots public advocacy work for the tribe.
The Chairman. In other words, the tribe did not know that
70 percent of these moneys were going to----
Ms. Rogers. Not at all. They were never intended to be
contributions.
The Chairman. Jack Abramoff and Michael Scanlon never told
you that the Capital Athletic Foundation was Mr. Abramoff's
private charity?
Ms. Rogers. No.
The Chairman. Ms. Rogers, another major beneficiary of the
Capital Athletic Foundation in 2002 was an entity called the
Kollel Ohel Tiferet. I am sure I mispronounced that. It
received almost $100,000 from the Capital Athletic Foundation
that year. Based on this committee's investigation, it appears
this organization was a sham entity designed to funnel payments
from Mr. Abramoff to an Israeli settler who ran a sniper
workshop. Is it fair to say that neither Mr. Abramoff or Mr.
Scanlon ever told anyone at the tribe that the tribe's money
would be used to finance paramilitary activities in Israel?
Ms. Rogers. Oh, no; we only learned that from your staff.
The Chairman. Mr. Kilgore, exhibit 95 is an e-mail exchange
between Jack Abramoff and Michael Scanlon on March 3 and 4,
2002. Basically, it says:
By any chance did you send us a balance? Can you get me a
check to Presidential Kosher Holidays for my Choctaw share? Do
you think we could figure a way to expense this? Any idea?
Thanks.
That is from Mr. Abramoff to Mr. Scanlon. Mr. Scanlon says:
I will think of something on this. I will get back to
you.'' And then Mr. Abramoff says:
You is that man.
Did you intend any of the money you paid to Mr. Scanlon's
companies to be used to cover Jack Abramoff's Passover
vacation?
Mr. Kilgore. Absolutely not, Mr. Chairman.
The Chairman. We could go on and on. Mr. Kilgore, in
October 2002, as you mentioned, the tribe paid $1 million to
the National Center for Public Policy Research at the direction
of Jack Abramoff. Is that correct?
Mr. Kilgore. That is correct.
The Chairman. Jack Abramoff told the tribe that the entire
$1 million would be passed through to the grassroots
organizations working on issues important to the Mississippi
Choctaw Tribe. Is that true?
Mr. Kilgore. That was our understanding.
The Chairman. There are other questions, but the pattern
is clear here. I first of all want to thank the tribe. I know
that this has been a very difficult time for them. There was
concern that somehow the tribe would be blamed for this
exploitation and ripoff that has taken place. I view you as
people who were trying to act in the best interests of your
tribe and recognized that a lot of those interests are affected
here in our Nation's capital. There is no one I have greater
respect for than Chief Martin who I have had the privilege of
knowing for more than 24 years.
I only have one additional question, Senator Dorgan, that I
guess I would ask. Ms. Rogers had the most interface with Mr.
Abramoff and Mr. Scanlon. If they were here right now, Ms.
Rogers, what would you say to them?
Ms. Rogers. Chief Martin asked me that same question. I
told him that I am past anger and bitterness, but it is the act
of betrayal, betrayal of the tribe's trust, betrayal of those
of us who worked with him. It is an extraordinary story of
betrayal, of deliberately building trust and then betraying it.
The Chairman. Would you like to make any additional
comments, Mr. Ben.
Mr. Ben. No, sir; we certainly appreciate the time you have
provided for us, sir.
The Chairman. Mr. Kilgore.
Mr. Kilgore. No, Mr. Chairman; I have no further comments.
The Chairman. How long have you been in office?
Mr. Kilgore. March 1, 2005. That is after 32 years of
private practice.
The Chairman. You have a very large task ahead of you and
we thank you for all of your cooperation.
Mr. Kilgore. Thank you, Mr. Chairman.
The Chairman. We have a vote beginning shortly. I am going
to run over and vote while Senator Dorgan asks his questions. I
am going to try and get right back.
Senator Dorgan. Mr. Chairman, thank you very much. We were
told the vote would begin about 10:45, so if it works the right
way, we will be able to proceed with the hearing without a
brief recess. If that is delayed just a bit, we will have a
very brief recess.
First of all, Ms. Rogers, Mr. Kilgore, and Mr. Ben, thank
you for your cooperation. The staff has indicated to us that
you have been extraordinarily helpful to them and I know based
on your statement, Ms. Rogers, that you used the word
``betrayal'' which I think is an awfully good description of
what has happened here.
There are two tracks here that I want to talk about. One I
think Senator McCain has covered pretty well, and that is the
track of just what appears to be outright fraud--extracting
money for one purpose and then using it for something else and
not disclosing to the tribe who was spending this money as part
of a secret business relationship.
It is pretty clear with the research that our investigators
have done that the trail on that is evident. It is in writing.
We have many, many, many documents that go back and forth that
describe in great detail exactly what has happened.
The other area that I described briefly in my opening
statement is not the kind of fraud that is just up-front fraud.
It is the obscuring of the source of money in order to deceive
where money came from or where it was spent. That also is of
interest. It is kind of a different set of circumstances
because it appears to me that money was run through (C)(3)s or
(c)(4)s, to deliberately to obscure the source of the funds.
That was at the request of Mr. Abramoff, as I understand it,
and others.
I want to ask you just a bit about that, if I might,
whether everybody knew that. There is an exhibit number 33, I
believe. Ms. Rogers, you indicated that the money was spent on
activities that were perfectly legal--grassroots activities and
the money came from non-gaming sources. Is that correct?
Ms. Rogers. Right. That is correct.
Senator Dorgan. What would be the purpose then of the
recipients of that money demanding that it be washed through
organizations in order to obscure and deceive the identity of
the money? If it is in fact non-gaming, what was the purpose of
the deception on behalf of the recipients and those who decided
to run it through (C)(4) organizations?
Ms. Rogers. I may have to consult with the tribe's
attorneys because I am obliged by the tribe to be concerned
about First Amendment issues. I would like to try to answer
your question. We did not have a sense of an effort to obscure
the money. There was simply the use of intermediaries, which is
a common practice in this country by businesses and political
and professional groups, to use intermediaries to get their
message out. Jack Abramoff had structured that.
I am sure there probably were concerns or public perception
concerns about some of the recipients about not being
associated with a gaming tribe. I hope I have answered your
question. I am not trying to be evasive.
Senator Dorgan. I understand.
Ms. Rogers. I am trying to deal with my obligation to the
tribe as well.
Senator Dorgan. Memorandum number 33 is a memorandum I
believe from Mr. Abramoff to Mr. Reed that says:
Thanks, Ralph. The firm has held back all payments pending
receipt of a check from Choctaw which was held up because of a
paperwork glitch.
In this case, because of this e-mail, my expectation would
be the recipient or the expected recipient of the money knew
exactly where the money was coming from. For that reason, I do
not understand the reason to try to move that money through a
(c)(4) organization to obscure the identity of the money. Do
you have any notion of why that was the case?
Ms. Rogers. If I can consult the attorney on that.
Senator Dorgan. Yes; of course.
Ms. Rogers. Yes; the recipient did know where the money was
coming from.
Senator Dorgan. And presumably then wanted it obscured so
that it was not evident to others?
Ms. Rogers. Presumably. We have never had any direct
conversations.
Senator Dorgan. You know, some money to that type of
recipient, Mr. Reed and some others I believe, was passed
through Preston Gates at one point. Did Preston Gates charge
for being a conduit for some of that money?
Ms. Rogers. I do not know the answer to that question. I
would have to ask the attorneys who are looking at all the
billing. It was so long ago.
Senator Dorgan. But there was a charge for the purpose of
obscuring the identity of the source of the money. There was a
charge made by the Americans for Tax Reform. Is that correct?
Ms. Rogers. No, sir; I do not believe there was a charge
made for obscuring the money.
Senator Dorgan. Let me rephrase it then. A certain portion
of the money that was run through the (C)(4), Americans for Tax
Reform, included a fee that was charged by the Americans for
Tax Reform for the purpose of moving the money through that
(C)(4). Is that correct?
Ms. Rogers. There was a small management fee, but we had a
long-term relationship with Americans for Tax Reform and
assumed that that payment would simply be used to support the
overall activity of ATR.
Senator Dorgan. How large was that payment? Do you
remember?
Ms. Rogers. I believe it was $50,000 over a period of time,
but we routinely made contributions to Americans for Tax Reform
because they had allied themselves with the tribe early on in
the tax fight to tax tribal revenues.
Senator Dorgan. Let me ask about, if I might, the issue you
raised in your testimony, the issue of money for the purpose of
a meeting with the President or a White House meeting.
Ms. Rogers. No donation was made for that purpose nor did
anyone attend the meeting.
Senator Dorgan. Are you aware at this point, based on the
evidence, that some of the money went for that purpose?
Ms. Rogers. The attorneys are saying we do not know that.
Senator Dorgan. I believe there are a series of e-mails. I
do not think I have the number for those at the moment. An e-
mail dated April 5, 2001, Abramoff dictated a note to Grover
Norquist.
Ms. Rogers. Do we have that exhibit?
Senator Dorgan. I believe you do. It is exhibit number 38.
Ms. Rogers. Okay.
Senator Dorgan. Abramoff appears to dictate a note to
Grover saying:
Here is the first of the checks for the tax event at the
White House. I will have another $25,000 shortly.
Are you familiar with that? On the top of that memo, I
believe it says Nell approved that.
Ms. Rogers. What we funded, Senator Dorgan, if you look at
the first memo at the bottom of the e-mail, Jack Abramoff sent
an e-mail to me asking us to make a contribution to the new
anti-tax campaign. That is what we approved, a contribution for
that.
Senator Dorgan. So you were making a contribution you
thought for that purpose.
Ms. Rogers. Right. And then he represented to ATR that we
had made the contribution apparently from this e-mail trail.
His representation to ATR was that it was for the White House
dinner.
Senator Dorgan. And then there was another follow-up memo
from ATR about a White House meeting, the second year, I
believe 2002. And that is where I think the confusion was
because in that memorandum it was represented by ATR that the
Choctaws were involved in the White House meeting previously
and had made a contribution for that event. So you are saying
that that representation is inaccurate, right?
Ms. Rogers. That is inaccurate.
Senator Dorgan. These pieces of information are part of the
record and I think hopefully will clarify exactly what was
happening. It appears to me that Mr. Abramoff and others, ATR,
Mr. Norquist and others, were trying to put together events at
the White House. One event apparently must have happened in
2001, and they were seeking $25,000 contributions for the cost
of those events and promising meetings with the President and
so on. It is helpful for us to know because the written
information from Mr. Abramoff and ATR also would suggest that
the Choctaws participated.
Ms. Rogers. The Choctaws did not participate. I remember
those invitations, but normally they were primarily for State
legislators to come in and meet with the President, and then
tribes were extended invitations. But the Choctaws did not
participate, did not respond to any of those invitations.
Senator Dorgan. The money that the tribe paid to the
National Center for Public Policy Research, that money was
expected to go where, in your judgment?
Ms. Rogers. It would have gone to support some of the
activities, grassroots activities with smaller groups, polling,
research, opinion pieces, education pieces. NCPPR had done some
of those for us earlier when Ms. Ridenour visited the
reservation and had expressed a real interest in how the tribe
was using gaming revenue to support tribal culture, language
and that sort of thing.
Senator Dorgan. So sending that money to the National
Center for Public Policy Research and discovering that a
portion of that was used to repay a bill for $75,000 that Mr.
Abramoff owed to someone going back to his days as a filmmaker,
that was something that you would not have been aware of and
would have been an unauthorized use of the funds?
Ms. Rogers. Absolutely.
Senator Dorgan. How about the $10,000 of your money being
sent to ``Reed for Chairman'', when Ralph Reed seeking the
chairmanship of the Georgia Republican Party.
Ms. Rogers. We did not know that or certainly did not
authorize it.
Senator Dorgan. So what you have, it seems to me, is a
substantial amount of money going from the tribe with the
expectation it is going for a normal business purpose, the
business relationship with Mr. Abramoff. When in fact, a
substantial portion of that money was being skimmed off to a
secret partnership established by Mr. Abramoff and Mr. Scanlon.
That represents what appears to us to be a fraud committed on
the tribe. Of course that is a judgment that I am sure the
Department of Justice and others will make in the criminal
arena.
And then on the other side, money that is moved through
(c)(4) and perhaps a (c)(3) organization, part of which appears
to have been, I was going to say misdirected, but that is too
soft a word, part of which appears to have also been
fraudulent, particularly the expenditure of the money to the
National Center for Public Policy Research. I am not suggesting
that they are the ones that spent that money. In fact, they are
going to testify today and we appreciate their cooperation. But
I am suggesting the money was diverted by Mr. Abramoff and Mr.
Scanlon.
Then the other question that I mentioned is whether there
was misuse of (c)(3) and/or especially (c)(4) organizations to
be a conduit to receive funds in order to obscure its identity
for the purposes of others. I do not know the answer to that. I
suggested to the chairman that we hold open that question and
perhaps meet with the Senate Finance Committee.
I think it does warrant additional inspection because in
addition to the information we have, we have references in e-
mails to other (c)(4) organizations that have been used. So I
do not know what the entire inventory of (c)(4) organizations
would be here, but it appears to me that the (c)(4)
organizations were used as a convenient buddy system to move
money around in order to obscure its identity.
Sometimes that is called laundering, but that has a
criminal connotation. I do not know that this is criminal at
all, but I know that it is laundered from the standpoint of the
recipient so that it comes out clean for the recipient. That
appears to be what the e-mail trail suggests, and not from the
standpoint of the tribe, but from the standpoint of the
recipient.
So I think all of these raise an enormous number of
questions. We have, as I said, e-mail trails and e-mail tracks
on it which I think will be helpful.
Let me ask Senator Inouye if you have some questions at
this point, Senator.
Senator Inouye. Thank you.
During this period of relationship with Mr. Scanlon and Mr.
Abramoff, how much did the tribe provide these two men and
their organizations?
Mr. Kilgore. Senator Inouye, in both Senator Dorgan's
opening comments and Senator McCain's opening comments, they
referred to those amounts. They got those from the staff. We
have provided that detailed financial information to the staff.
They have cumulated those figures. Yesterday we met with the
staff and in anticipation of that question, those figures that
were given are what are records showed.
Senator Inouye. I am sorry I was not here, but what is the
number?
Mr. Kilgore. I believe that on payments to Capitol Campaign
Strategies, d/b/a Scanlon-Gould and his groups was
approximately $15,855,000. And then Mr. Abramoff's receipt out
of those funds was in the range of $5 million to $7 million. We
have not been able to pin those down exactly, but we are
working on that and we would be glad to supplement the record
at a later date once we get an agreement with the staff as to
exactly what the figure is going to be.
Senator Inouye. As a general rule, organizations and law
firms who are doing business would provide periodic reports in
writing to their clients telling them, giving them a progress
report on projects and such. Did you ever receive any report
from Mr. Abramoff or Mr. Scanlon?
Ms. Rogers. Yes, sir; we received detailed reports. We know
that the work was done. We met once a year or twice a year. We
also had independent means of determining that work was done.
Senator Inouye. And this was not fraudulent work?
Ms. Rogers. No, sir.
Senator Inouye. Did you also receive receipts from these
organizations?
Ms. Rogers. We received bills from the law firm. Yes, sir,
we received receipts.
Senator Inouye. From the law firms.
Ms. Rogers. We always had a budget and cost from Mr.
Scanlon's companies as well and from the grassroots companies.
Senator Inouye. These reports would advise you that certain
things had occurred?
Ms. Rogers. Yes, sir.
Senator Inouye. Did you take the time to see if they did
actually occur?
Ms. Rogers. We know that the work was done.
Senator Inouye. So you are saying that a certain portion
was not fraudulent?
Ms. Rogers. The work was done. What appears to be
fraudulent was the overcharges and the conspiracy (I probably
should not use that word because I am not a lawyer) between the
two to plan to overcharge.
Senator Inouye. Setting aside the work that was done, the
legitimate work, how much of the amount that you mentioned
would you attribute to fraud or overpayment or padding of
books, et cetera?
Mr. Kilgore. Senator Inouye, may I inject here? The
circumstances that we are faced with here, we are not able to
give you the amount of harm in money terms. The reason is this.
We are in very sensitive settlement negotiations with various
parties. If we go into much detail on that, Senator Inouye, I
think you can appreciate it will jeopardize our ability to
settle that civil matter with those parties.
We have already mentioned two of the firms that we have
either made an inquiry in or are in serious negotiations. What
we will do is once we conclude that, we would be glad to get
with the staff and supplement this record. We would even agree
to an in camera meeting with you and your staff to detail those
monies. It is just that this is a very sensitive time for us in
those negotiations.
Senator Inouye. When did the tribe realize that it was
being defrauded or conned?
Ms. Rogers. I believe it was in June 2004 when Chief Martin
and Mr. Rogers met with the law firm that was conducting the
internal investigation for Greenberg Traurig. They were shown
evidence.
Senator Inouye. What step did you take at that point?
Ms. Rogers. The tribe immediately terminated its
relationship with Mr. Abramoff. The lawyers began working with
that internal investigative group. We were contacted by the
committee and of course we have been cooperating with the
committee. We have cooperated fully with the Justice Department
and the FBI. We have provided them documents and details.
Senator Inouye. When did the Justice Department and FBI
participate in this investigation?
Ms. Rogers. They began last summer. We had our first
contact with them last summer. They came to Mississippi for
interviews and records review and we have had a subsequent
meeting with them, also in Mississippi.
Senator Inouye. Are you satisfied that the investigation is
moving along properly?
Ms. Rogers. I have not had any contact with them, but the
tribe's attorneys have had, so they may be able to address
that.
Mr. Kilgore. Senator Inouye, we are aware that the
investigation is moving forward. Frankly, my personal opinion
is that they are inundated with records. We have looked at
probably 60,000 e-mails and that is a lot of paperwork, a lot
of paper trail. Your staff has done a terrific job in putting
that in some semblance of order. I think Senator Dorgan
mentioned that every time that you take another look at this,
it takes a twist or turn that is unexpected. I think that is
true for the criminal side, too. I think that every time they
look at something, another avenue opens up. So that is my take
on where the Justice investigation is.
Senator Inouye. My last question, since you severed your
relationship officially with the two men, did they ever contact
you?
Ms. Rogers. They have not.
Senator Inouye. Thank you very much.
Ms. Rogers. Thank you.
Senator Dorgan. Just one additional point, it is exhibit
102 that I was looking for when we talked about the White House
issue. I think just for the record, you do not need to refer to
it, but for the record I wanted to make clear what it was I was
referring to. I think it is important that it be cleared up
because it is the one that indicates, as you say, inaccurately
that the Choctaws were at the White House.
The vote has just started. I am sure Senator McCain will be
back momentarily. Let me ask you, Ms. Rogers, as I said in my
opening statement, this is a very successful tribe, with
substantial business skills evidenced by the success that they
have had with their business enterprises. They hire many people
and I think are one of the largest employers in Mississippi. So
a very successful tribe.
We understand from the outset that you have legitimate
business interests, that you would contract with people to
engage in legitimate business activities. So we understand all
that. The assumption with all these questions is not that you
yourself, although your name is on some of these memos, but the
implication is not that you did something wrong; it is that the
tribe was deceived. It appears to me that the tribe was
defrauded. Obviously, that is a matter for perhaps the Justice
Department or someone else.
I think what Senator McCain and I and others on the
committee are trying to do is just understand the story, what
has happened here, and how can we prevent this from happening
again. You were asked by my colleague Senator McCain how you
would address Mr. Scanlon and Mr. Abramoff. I understand the
passion of the answer. When Mr. Abramoff began to hand-off a
business relationship to Mr. Scanlon, what kind of relationship
did the tribal representatives have with Mr. Scanlon? Was their
frequent contact?
Ms. Rogers. There would be frequent contact, frequent
reports.
Senator Dorgan. At that point, did you still continue to
have a relationship with Mr. Abramoff as well?
Ms. Rogers. Not as much. There were times when we contacted
Mr. Scanlon to do something independently. The unanswered
question is whether or not Mr. Abramoff got a portion of that.
I do not know. We do not know that, knowing what we know now.
From looking at the e-mails, it appears that Mr. Abramoff was
driving, and you have probably seen the same e-mails, the call
up, do this, do that. Many of the e-mails where Mr. Abramoff
was directing Mr. Scanlon to do that, I did not get a call or I
did not get an e-mail.
Senator Dorgan. Mr. Kilgore referred to this, but I know
that you are aware of it as well, we now know what ``gimme
five'' means. You have had a chance to review the e-mails. Mr.
Kilgore, you have as well. Your reaction to ``gimme five''?
Mr. Kilgore. Senator, it is a blatant calculated scheme to
defraud a client. We have been surprised, you understand. We
dealt with reputable law firms all these years, and we relied
on those law firms' internal ability to audit what goes on
among its members and its shareholders. We have been surprised
at the lack of institutional oversight on Mr. Abramoff. It
never occurred to us.
As a practitioner for 32 years, when I bill a client, that
client can be assured that I am billing actual time and my
actual expenses. If I were in a firm, there would be somebody
that would have some oversight. We assumed that oversight was
in place. Apparently if it was in place, it was insufficient.
Senator Dorgan. Let me refer finally, and the chairman has
just returned and I will then run and vote, let me refer to
exhibit number 45 just for the purpose of saying, as it occurs
in a number of memos, the last two words are ``gimme five.''
Obviously, we know what that means now. It means ``I am taking
a cut of this; we are going to slice away a part of this for my
bank account.''
Mr. Chairman, I have finished with these witnesses. I do
again want to say that we very much appreciate their
cooperation. Ms. Rogers, you especially perhaps were
uncomfortable coming to a committee, your name is on some of
these memoranda, but from all that we know, you are a victim
and the tribe was victimized by what appears to be grand theft
and fraud. Your willingness to help us try to understand this,
Mr. Kilgore and Mr. Benn and others, your willingness to help
us is very much appreciated. We appreciate your being here
today.
The Chairman. I thank the witnesses. Thank you for being
here. Hopefully, you will never see anything like this again.
Our next panel is Kevin Ring who is a former member of Jack
Abramoff's lobbying team who has information about Mr.
Abramoff's practice pertinent to the investigation, and Shawn
Vasell, who is a former member of Jack Abramoff's lobbying team
who has information about Mr. Abramoff's practice pertinent to
the investigation.
Mr. Ring, we will begin with you.
STATEMENT OF KEVIN RING, FORMER ABRAMOFF ASSOCIATE
Mr. Ring. Mr. Chairman, members of the committee, I am
sorry to be here today under these circumstances. As I informed
the committee a few weeks ago on the advice of counsel, I
regretfully must decline to answer any questions concerning the
subject matter of this hearing. I am sorry that clients for
whom I worked have had to endure the enormous emotional and
financial burden associated with this matter, as well as the
multiple investigations that prompt it.
As the committee knows and as my counsel has advised me, my
constitutional right to remain silent at this time would be
forfeited should I try to answer any questions. Therefore, I
must abide by that advice and would like to truly apologize for
not being able to answer the committee members' questions at
this time.
The Chairman. Let me make it clear, Mr. Ring. You are
asserting your rights under the 5th amendment of the
Constitution. Is that correct?
Mr. Ring. That is correct, Senator.
The Chairman. Mr. Vasell.
STATEMENT OF SHAWN VASELL, FORMER ABRAMOFF ASSOCIATE
Mr. Vasell. Thank you, Mr. Chairman.
Mr. Chairman, honorable members of the committee, I am here
today at the committee's request with the greatest respect for
the important work of this committee and the Senate itself. I
have been called to testify because of my past association with
Jack Abramoff, whose activities are the focus of this
committee's current inquiry.
The committee staff reached out to me earlier this year and
assured me they sought my information solely as a witness to
the conduct of others. Given the range of pending
investigations and inquiries relating to the work of Mr.
Abramoff's government affairs practice, I engaged outside
counsel to guide me toward my goal of providing meaningful and
complete cooperation to such efforts. I now feel constrained to
follow that guidance.
Accordingly, I assert my privilege under the 5th amendment
to the Constitution and decline to respond to questions related
to my employment in Mr. Abramoff's group. I reach that decision
reluctantly and with no purpose of impeding the committee's
inquiry. I am persuaded that this is the right decision,
however, and I will maintain it in response to any and all
questions from the committee today.
In advance of this hearing, my counsel confirmed my
position in writing to the committee, yet I was not excused
from this appearance. Therefore, I yield to questions of the
committee.
Thank you, Mr. Chairman.
The Chairman. Both of you have the right, obviously, to
assert your 5th amendment rights and the committee obviously
will respect it.
Mr. Ring, what is KAR Consulting? You can respond if you
wish to or assert your 5th amendment privileges under your
previous statement if you choose.
Mr. Ring. I respectfully invoke my constitutional right.
The Chairman. According to the information we have, KAR
Consulting is a Maryland limited liability company formed on
April 25, 2002 and registered to your home address. We have
attached corporate registration from the Maryland Department of
Assessments and Taxation. In February 2004, KAR Consulting,
which is listed to your home address, Mr. Ring, received a
$25,000-payment from a company called Grassroots Interactive.
We have an exhibit which I will enter into the record, without
objection, exhibit 183 of December 15, 2003 check for $25,000
from Grassroots Interactive LLC to KAR Consulting.
[Referenced document appears in Phillip Martin's prepared
statement located in appendix.]
The Chairman. Do you know who KAR Consulting is, Mr. Ring?
Mr. Ring. I respectfully invoke my constitutional right
under the 5th amendment.
The Chairman. At the time of the payment, did you know that
Jack Abramoff controlled Grassroots Interactive?
Mr. Ring. Mr. Chairman, I respectfully invoke my
constitutional right under the 5th amendment.
The Chairman. In March and April 2002, did you receive a
total of $125,000 from Michael Scanlon's company Capitol
Campaign Strategies?
Mr. Ring. Mr. Chairman, I respectfully invoke my
constitutional right under the 5th amendment.
The Chairman. Did that money come from payments made by
Pueblo Sandia Tribe of New Mexico to Capitol Campaign
Strategies?
Mr. Ring. Mr. Chairman, I respectfully invoke my
constitutional right under the 5th amendment.
The Chairman. What services benefiting the Pueblo Sandia
did you provide for that $125,000? In fact, you did not provide
any services, according to the information that we have.
Let's take a look at exhibit 43. It is an e-mail exchange
between you, Mr. Ring, and Jack Abramoff dated April 24, 2001.
In that e-mail, you asked Mr. Abramoff whether there is any way
to ``bury'' your University Club dues in the Choctaw or SGMA
bill. What did you mean when you asked Mr. Abramoff where you
could ``bury'' your University Club dues in the Choctaw bill?
Mr. Ring. Regretfully, Mr. Chairman, I must respectfully
invoke my constitutional right under the 5th amendment.
The Chairman..Did you ever seek to expense your University
Club dues to the Mississippi Choctaw or to any other clients of
Greenberg Traurig?
Mr. Ring. I respectfully invoke my constitutional right
under the 5th amendment.
The Chairman. I now refer to exhibit 136, which is Mr.
Ring's expense report for September 27, 2002 in which he
apportions his club dues to the Choctaw Indian Tribe.
Mr. Vasell, please review exhibit 47, an e-mail exchange
between you, Mr. Vasell, and Mr. Abramoff dated June 19, 2001.
It begins with you asking Mr. Abramoff why Michael Scanlon was
billing time to Greenberg Traurig clients. Did Mr. Scanlon bill
time through Greenberg Traurig to the Choctaw in 2001?
Mr. Vasell. Mr. Chairman, I respectfully decline to answer
that question on the basis of my privilege under the 5th
amendment to the Constitution not to be made a witness against
myself. It is my intention to respond to all of the committee's
questions in this same manner.
The Chairman. Were you concerned that Mr. Scanlon was
billing Greenberg Traurig clients through the law firm?
Mr. Vassel. Mr. Chairman, I respectfully decline to answer
that question on the basis of my privilege under the 5th
amendment to the Constitution.
The Chairman. You were the tribe's client manager. You were
aware, weren't you, of Mr. Abramoff billing the tribe for fees
and expenses unrelated to the services that Greenberg Traurig
provided the tribe.
Mr. Vassel. Mr. Chairman, I respectfully decline to answer
the question on the basis of my constitutional right.
The Chairman. I refer both to Mr. Ring and Mr. Vasell to
exhibit 37, which is on the screen. I will have to quote from
it, which is a March 14, 2001 e-mail exchange between Jack
Abramoff and his executive assistant. In it, Mr. Abramoff
indicates he will ask the client managers to tell him how many
hours they want him to bill. Either one of you, both of you, do
you know if Mr. Abramoff ever fabricated time for himself or
any associate to bill the Choctaw? You can just say, ``I give
you the same answer.''
Mr. Ring. The same answer.
Mr. Vassel. The same answer, Mr. Chairman.
The Chairman. Let's take a look at exhibit 53, an e-mail
between Abramoff and his assistant dated August 29, 2001. In
it, the assistant indicates that he is ``creatively'' entering
Mr. Abramoff's July and August time for the Choctaw account,
quote, ``with the help of some great language Shawn and Kevin
have provided.'' What kind of language did you provide Mr.
Abramoff for billing purposes?
Mr. Ring. Again Mr. Chairman, the same answer.
Mr. Vassel. The same answer.
The Chairman. Mr. Vasell, I would like you to take a look
at exhibit 42 which is an April 18, 2001 e-mail from Mr.
Abramoff to you. In that e-mail, Mr. Abramoff instructs you to
add 60 hours to the Choctaw bill to pump up Scanlon, Todd, and
you. Was this done?
Mr. Vassel. Again, Mr. Chairman, I have to invoke my
constitutional right.
The Chairman. The March 2001 bill to the Choctaw totaled
$147,340.50 in fees and the April 2001 bill totaled
$146,963.97.
Well, the list goes on. I am sorry that young men like
yourself are engaged in such activities that you come before
this committee and invoke your constitutional rights under the
5th amendment. We had hoped that you would cooperate with the
committee. Obviously, you have chosen not to do so, which again
is your right.
Senator Dorgan, I do not think there are any additional
questions for the witnesses. They have invoked their 5th
amendment rights.
Senator Dorgan. Mr. Chairman, they certainly have a right
to invoke that privilege, but I share your disappointment. I
believe that justice would be better served by being
forthcoming about what has happened here, but I think you have
asked a series of questions that are questions that I would
have asked as well. I have no further questions.
The Chairman. The witnesses are dismissed.
The next panel is Amy Ridenour, who is the president of the
National Center for Public Policy Research, a non-profit
foundation on whose board Mr. Abramoff sat, who has information
pertinent to the investigation; Gail Halpern, Jack Abramoff's
tax adviser, who has information about Mr. Abramoff's
businesses pertinent to the investigation; Brian Mann, a yoga
instructor who served as a director one of Michael Scanlon's
companies who has information about Mr. Scanlon's businesses
pertinent to the investigation; David Grosh, a lifeguard who
served as a director for one of Michael Scanlon's companies who
has information about Mr. Scanlon's businesses pertinent to the
investigation; and Aaron Stetter, a former employee of Michael
Scanlon who has information about Mr. Scanlon's business
pertinent to the investigation.
Ms. Ridenour, we will begin with you.
STATEMENT OF AMY RIDENOUR, PRESIDENT, NATIONAL CENTER FOR
PUBLIC POLICY RESEARCH
Ms. Ridenour. Thank you, Mr. Chairman and committee for
inviting me to appear before the committee.
In the interest of brevity, I am summarizing my remarks,
but I do refer the committee to my written testimony for
additional details.
The Chairman. Without objection, your entire written
statement will be made part of the record.
Ms.Ridenour. Thank you.
The National Center is a 23-year-old conservative free
market non-profit institution. I am the chief executive
officer. One of the National Center's programs is project 21,
which highlights the views of conservative and moderate African
Americans. Another activity examines the extent to which low-
income and minority populations disproportionately bear the
cost of some government regulations.
Jack Abramoff joined our board in 1997 when we increased
the number of board members from three to seven for the purpose
of improving oversight. At that time, I had known Jack for
nearly 17 years. He was a dedicated conservative, a successful
lobbyist and businessman, and his managerial skills it seemed
to me at the time exceeded my own.
In 2000, the National Center adopted a conflict of interest
policy requiring directors to reveal to the board all financial
interests in any entity with which the National Center is
negotiating a transaction. We required every member of the
board to sign the resolution so that no one could later claim
they were unaware of the policy. Every director did so.
It was through Jack Abramoff that I had the honor in
February 1997 of meeting Chief Phillip Martin and learning the
Choctaw success story. From 1997 through 1999, the National
Center received contributions of $7,500 in total from the
Mississippi Choctaws. In 2000, we received $65,000. I
understood all of these funds to be general support
contributions.
I am, of course, aware of news media coverage connecting
part of these contributions to a trip we sponsored by a member
of Congress. At the time I extended an invitation to this
member of Congress through his chief of staff, I did not know
we would be receiving contributions from the Mississippi
Choctaws that year. At no time did I convey to the Congressman
or to his staff that we had received these contributions and I
was never told nor was I under the impression that the
Mississippi Choctaws even knew we had sponsored a congressional
trip.
In 2002, the Mississippi Band of Choctaw Indians donated $1
million to the National Center. Approximately 4 months before
we received this contribution, my husband, who is vice
president of the National Center, and I had lunch with Jack.
The lunch was social, but we briefed him on information
pertinent to the board, including the fact that the negative
financial impact of 9-11 had reduced our ability to expand
program services as we previously had planned for 2002. I told
him that new donors would be especially valued that year, as
would the opportunity to sponsor projects consistent with our
mission for which funding was available.
Jack then shared with us details of his work doing what he
called ``a new kind of lobbying.'' He said he and his
colleagues working with the Mississippi Choctaws had noted that
for-profit non-Indian gaming establishments were pushing to
establish themselves in areas of the Country not noted for
their admiration of gaming. They believed that a public
backlash against gaming was brewing and that before things came
to a head, perhaps 4 to 5 years down the road, they would
educate the public about the Choctaw success story.
I was very interested in what I was hearing. I noted that
his new kind of lobbying was not lobbying at all, but
educational work and I expressed an interest in the National
Center sponsoring it. Jack seemed mildly agreeable, but
noncommittal. I did not press the matter, assuming the Choctaws
were financing the project and would have to approve our
involvement.
Approximately four months later, Jack asked me if the
National Center was still interested. For reasons I describe
more fully in the written testimony, we were. Jack instructed
me to send a $1-million invoice to the Mississippi Choctaws,
which I did. When the funds arrived, he told me how they should
be disbursed: $450,000 to the Capital Athletic Foundation as a
grant; $500,000 to Capitol Campaign Strategies; and $50,000 to
a company called Nurnberger and Associates.
I believe Capitol Campaign Strategies was to be paid for
educational program services, while Ralph Nurnberger was going
to help coordinate the project. Jack referred to his receiving
``instructions'' for the disbursements, which I took to mean
recommendations from the donor, which was consistent with my
belief that the Mississippi Choctaws were actively involved.
Believing I was joining a project in progress, knowing that
Jack was the legal representative of the Mississippi Choctaws,
was part of a major law firm, and as a member of the National
Center's board of directors, had a fiduciary responsibility to
the welfare of the National Center, I disbursed the funds in
accordance with Jack's instructions. At the time, I also
requested and received Jack's repeated assurances, both by e-
mail and verbally, that he in assuming managerial authority for
the project on the National Center's behalf, would adhere to
the laws governing public charities.
I often requested from Jack that he provide documentation
about the educational activities we were supporting. He always
said it would be no problem and I believed him--so much so that
I agreed to continue the project in May and June 2003 when
Greenberg Traurig sent the National Center $1.5 million. Jack
told me $250,000 had been designated for the Capital Athletic
Foundation as a grant and $1,250,000 was to be paid to Kaygold,
a company I believed was owned by Michael Scanlon.
I had resolved by then that if I did not promptly receive
sufficient proof of good solid work performance, I would
withdraw the National Center from the project. I did not get
this proof, so I told Jack in July 2003 that we would cease
participation. He did not object. I continued asking him for
documentation for work performed on the payments we already had
made.
I always trusted Jack and I believed we would ultimately
receive this documentation. Of the various theories I had in my
mind as to why we were not receiving the funds, none of them
involved a suspicion of misuse of funds. I still trusted him,
frankly, after the negative press stories began in 2004. But
when the Washington Post published, and that is in September
2004, that Jack owned Kaygold, I knew that something was very
seriously wrong. At that point, I telephoned our board of
directors and we agreed simply on the strength of the violation
of our conflict of interest policy alone that we had absolutely
no choice but to accept Jack's offer to resign, which he had
made in March 2004 and again made in October 2004.
Consequently in October 2004, I accepted Jack's resignation
from the board and I have not spoken with him since.
[Prepared statement of Ms. Ridenour appears in appendix.]
The Chairman. Thank you very much.
Ms. Halpern.
STATEMENT OF GAIL HALPERN, FORMER TAX PREPARER, ADVISER TO JACK
ABRAMOFF
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
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 tax
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 book 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 service 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 trusts for which I prepared
income tax returns, was reported and included in the relevant
tax returns.
Thank you.
[Prepared statement of Ms. Halpern appears in appendix.]
The Chairman. Thank you.
Mr. Mann.
STATEMENT OF BRIAN MANN, FORMER DIRECTOR, AMERICAN
INTERNATIONAL CENTER
Mr. Mann. Mr. Chairman, I have no opening statement.
The Chairman. Mr. Grosh.
STATEMENT OF DAVID GROSH, FORMER DIRECTOR, AMERICAN
INTERNATIONAL CENTER
Mr. Grosh. I am embarrassed and disgusted to be part of
this whole thing. The Lakota Indians have a word, ``wasichu,''
which aptly describes all of us right now.
The Chairman. Thank you.
Mr. Stetter.
STATEMENT OF AARON STETTER, FORMER ASSOCIATE, CAPITOL CAMPAIGN
STRATEGIES
Mr. Stetter. Mr. Chairman, I have no opening statement.
The Chairman. Thank you.
Mr. Grosh and Mr. Mann, I thank you for being here today. I
know of no problem that we have with you personally. It is a
situation that we are trying to get to the bottom of and we
thank you for appearing here today.
Mr. Grosh, you and Mr. Mann were designated as directors of
the AIC, which was described in its own website as an
``international think tank.'' It is very interesting on its
website. It is described as, the American International Center
is a public policy research foundation founded in 2001 under
the high-powered directorship of David A. Grosh and Brian J.
Mann.
While only recently incorporated, the AIC has been striving
to advance the cause of greater international empowerment for
many years. Based on sunny Rehoboth Beach, DE, the AIC staff is
using 21st century technology and decades of experience to make
the world a smaller place. In summary, the AIC is bringing
great minds together from all over the globe.
It goes on in that vein.
Mr. Grosh, I will begin with you. What did the AIC do?
Mr. Grosh. I was only involved maybe 5 months, 4 or 5
months. The whole time I was involved, we rented the first
floor of a house and installed some computers.
The Chairman. Mr. Mann, do you know what AIC did?
Mr. Mann. Mr. Chairman, upon the advice of counsel I must
respectfully decline to answer your questions based on my
rights under the 5th amendment to the U.S. Constitution.
The Chairman. Mr. Mann, did you know that you were
designated a director until you recently interviewed with the
Justice Department?
Mr. Mann. Again, I must respectfully decline to answer your
question based on my rights under the 5th amendment.
The Chairman. Mr. Grosh, did you give Mr. Scanlon
permission to put your name up on the AIC website?
Mr. Grosh. On the website, no.
The Chairman. Did you give Mr. Scanlon permission to hold
you out as a director for the AIC?
Mr. Grosh. Yes.
The Chairman. Mr. Grosh, I would like to show you an
exhibit which is 195. Can you provide that to the witness? Look
in there at 195. It is a letter from the AIC that is under your
signature. Here we are. This letter signed by David Grosh as
president:
Thank you very much for your recent contribution to the
American International Center. Your donation of $200,000 will
go a long way in assisting the AIC in its efforts to carry out
its public policy agenda. As you know, the AIC is committed to
influencing key policymakers on issues important to you and
your constituents.
On and on.
The American International Center is a non-profit
corporation dedicated to educating the public on important
issues such as our national relationship with commonwealths,
foreign governments and sovereign territories. As we discussed,
we are not a tax-exempt organization, as your contribution is
subject to tax. Again, we appreciate your generous support.
Do you recall writing that letter, Mr. Grosh?
Mr. Grosh. No; I do not.
The Chairman. Do you ever remember seeing it?
Mr. Grosh. No; I do not.
The Chairman. Mr. Grosh, did the AIC conduct any board
meetings?
Mr. Grosh. I recall one.
The Chairman. And how long did that last?
Mr. Grosh. 15 minutes.
The Chairman. Do you recall any business that was discussed
at these board meetings?
Mr. Grosh. Off the top of my head, no. I am sure we
discussed something, not to be glib.
The Chairman. Mr. Mann, I think it says when these meetings
took place, the extent of your role in the AIC at that time was
cleaning the downstairs office space. Is that correct?
Oh, Mr. Mann does not want to answer.
As far as you were concerned, Mr. Grosh, was this basically
another Scanlon entity?
Mr. Grosh. Well, legally, no. It was Mr. Mann and I, but he
was calling the shots, sure.
The Chairman. So were you a little surprised when all this
information started coming out that you were a director of an
internationally respected think tank?
Mr. Grosh. Surprised, not really. The reason I got out of
it when I found out it involved the Federal Government, Indian
tribes and gambling, I knew that was a tad down the wrong road.
The Chairman. I want to point out again, Mr. Grosh. I
appreciate your cooperation. I am disappointed in your lack of
it, Mr. Mann, but this committee holds no brief against you on
this issue. We are trying to get to the bottom of things. We
know of no allegation of wrongdoing on your part, at least that
I know of.
Tell me how this all began, Mr. Grosh. Were you friends
with Mr. Scanlon?
Mr. Grosh. Yes; I have known Mr. Scanlon since I was about
14.
The Chairman. And what happened? He approached you in some
way?
Mr. Grosh. A phone call.
The Chairman. And said?
Mr. Grosh. Do you want to be head of an international
corporation. [Laughter.]
It is a hard one to turn down. [Laughter.]
The Chairman. And at the time were you living in Rehoboth
Beach?
Mr. Grosh. Yes, sir.
The Chairman. And Mr. Scanlon then informed you that your
home would be the headquarters?
Mr. Grosh. Actually, at that point, no. There were no
headquarters.
The Chairman. Could you tell me just the sequence of events
that took place after that?
Mr. Grosh. I asked him what I had to do, and he said
nothing. So that sounded pretty good to me. [Laughter.]
I am trying to think how it all happened. He came by; we
spoke about it. At the time, I was, like, yes, sure, but not
really taking it seriously. And then he had me sign some
papers. I met him here in Washington, DC and we took over the
bottom of the house I was living in.
The Chairman. Did you receive compensation for this role?
Mr. Grosh. Yes.
The Chairman. And your background is a very honorable one,
I understand, as a lifeguard. Is that correct?
Mr. Grosh. Among other things. I am not a lifeguard
anymore, no.
The Chairman. And could you give us a little resume of some
of your background?
Mr. Grosh. Right now, I am an excavator, a machine
operator, construction workers, mentor in preschools,
bartender. Typical beach employment.
The Chairman. Thank you. Do you remember the extent of the
compensation that you received from Mr. Scanlon, roughly?
Mr. Grosh. No more than $2,000 or $2,500.
The Chairman. A month?
Mr. Grosh. No; total.
The Chairman. Total.
Did Mr. Scanlon promise you any fringe benefits?
Mr. Grosh. Well, I do not know if this is related to the
AIC, but we went to a Washington Capitals-Pittsburgh Penguins
hockey game.
The Chairman. Did you go to St. Bart's with him?
Mr. Grosh. No; by that time I was no longer.
The Chairman. I see.
Well, I want to be very clear, Mr. Mann, and I am not
asking you to change your position, but we view this as just a
gigantic scam and you two individuals were used clearly by Mr.
Scanlon. We feel very strongly that your testimony could help
us. I hope you will maybe reconsider that or get a new lawyer,
Mr. Mann, but I hope you will reconsider it.
You obviously had nothing to do with posting this
description of AID on the Web site, did you, Mr. Grosh?
Mr. Grosh. No, sir; if I may?
The Chairman. Please.
Mr. Grosh. I am an adult. He did not use me. I have sense.
The Chairman. It was a pretty good deal, huh?
Mr. Grosh. Well, obviously not.
The Chairman. At the time, it seemed like a good deal.
Mr. Grosh. Well, you know, I didn't just crawl out of a
cotton patch. Anything that sounds too good to be true usually
is.
The Chairman. And they used the bottom floor of your house?
Mr. Grosh. Yes.
The Chairman. Thank you very much.
Mr. Grosh. We did.
The Chairman. They did. I see. Thank you.
Ms. Ridenour, since 1982 you have served as president of
the National Center for Public Policy Research. Is that true?
Ms. Ridenour. Yes.
The Chairman. In October 2002 in your capacity as president
of the NCPPR, as you testified, you received $1 million from
the Mississippi Band of Choctaw Indians. Correct?
Ms. Ridenour. Yes.
The Chairman. Let's talk about how you came to receive the
$1 million from the Choctaw Tribe. In June and July 2002, you
told Mr. Abramoff that the NCPPR wanted to keep its ``program
numbers'' up for marketing purposes. That is according to e-
mails that we have.
Ms. Ridenour. In general, yes, sir.
The Chairman. So you told Mr. Abramoff NCPPR would be
willing to participate in any program consistent with the
NCPPR's tax-exempt purpose that Mr. Abramoff was working on.
Ms. Ridenour. In general, yes, sir.
The Chairman. Mr. Abramoff told you he and his firm
invented for the Choctaw Tribe a ``new kind of lobbying,'' as
you have testified. And you concluded such an educational
purpose was consistent with NCPPR's charitable mission?
Ms. Ridenour. Yes, sir.
The Chairman. In October 2002, Mr. Abramoff told you the
Choctaw Tribe had $1 million to do this educational project, as
you have testified. Ms. Ridenour, before you allowed Mr.
Abramoff to use the NCPPR as a pass-through, you repeatedly
warned him that whatever the $1 million was used for needed to
be appropriate for a non-profit charitable foundation.
Ms. Ridenour. I certainly did.
The Chairman. After you received the $1 million, Mr.
Abramoff instructed you to cut three checks: one $450,000 to
Mr. Abramoff's private charity, the Capital Athletic
Foundation; $500,000 to Mr. Scanlon's outfit, Capitol Campaign
Strategies; and $50,000 to a small lobbying firm called
Nurnberger and Associates. Correct?
Ms. Ridenour. Yes; except that in some cases, they were
wire transfers.
The Chairman. Thank you.
What, if anything, did Mr. Abramoff tell you about the
$450,000 payment to Capital Athletic Foundation?
Ms. Ridenour. It was to be a grant to the Capital Athletic
Foundation for its purposes, consistent with the wishes of the
ultimate donor, the Mississippi Choctaw.
The Chairman. As you testified, you did not know that the
Capital Athletic Foundation was Mr. Abramoff's private charity.
Ms. Ridenour. Actually, I did not know Kaygold was owned by
Mr. Abramoff. I did know that he had an association with the
Capital Athletic Foundation. I simply found it consistent with
what I knew to be a warm relationship between him and the
Choctaws.
The Chairman. Did you know the primary beneficiary of the
Capital Athletic Foundation was first and foremost a Jewish
boys school in Maryland founded by Mr. Abramoff?
Ms. Ridenour. No; I was aware of the school, but I
believed, based on private conversations I had with Jack, that
it was financed through tuition from the parents.
The Chairman. We heard testimony that Mr. Abramoff told the
Choctaw Tribe that this $1 million would be used for
``grassroots activities to influence legislation.'' Did he tell
you this?
Ms. Ridenour. Not only did he not tell me that, he
repeatedly told me that legislation would not be involved. I
would not have approved our participation at all had I even
known there was legislation. I had several things that needed
to be specified before I went okay with it. The absence of
legislation was something he had to assure me about.
The Chairman. What, if anything, did Mr. Abramoff tell you
about the $500,000 payment to Mr. Scanlon's business, CCS?
Ms. Ridenour. That it was to be used for educational
program services, particularly polling and telephone banks, but
not necessarily exclusively; research, potentially paid
advertising; I was told later petition drives, that sort of
thing, but 100 percent educational program services.
The Chairman. What, if anything, did Mr. Abramoff tell you
about the $50,000 payment to Nurnberger and Associates?
Ms. Ridenour. At first he told me nothing, meaning in the
conversation, so I immediately inquired. He told me then that
Mr. Nurnberger was going to coordinate the project.
The Chairman. In the invoices that you received from CCS,
CAF and Nurnberger and Associates, the Capital Athletic
Foundation was seeking payment for ``sports and politics
projects.''
Ms. Ridenour. That is what they wrote, yes.
The Chairman. Do you believe that happened?
Ms. Ridenour. Looking at the tax returns, it apparently did
not.
The Chairman. For a second, the invoice reportedly issued
by Nurnberger and Associates for $45,000 was for a supposed
research grant. In an interview with the committee staff, Mr.
Nurnberger, senior partner of the lobbying firm Nurnberger and
Associates, stated that neither he nor his firm issued this
invoice to the NCPPR. In fact, the firm never issued an invoice
regarding the $50,000 it received from the NCPPR. In addition,
Mr. Nurnberger attested that Mr. Abramoff told him that the
$50,000 he was having the NCPPR pay him was repayment on a
personal loan that Mr. Nurnberger had made to Mr. Abramoff some
years ago.
Did Mr. Abramoff ever tell you that the $50,000 you were
sending to Nurnberger and Associates was in fact repayment to
Mr. Nurnberger on a personal loan?
Ms. Ridenour. Absolutely not.
The Chairman. I think I know your response if he had told
you that.
Ms. Ridenour. Yes, Senator.
The Chairman. What, if anything, did you do to try to
verify that the $1 million was being put to use in the manner
Mr. Abramoff stated?
Ms. Ridenour. Unfortunately, I mostly asked Jack Abramoff
for documentation. One of the things that we are now doing at
the National Center is putting into place a series of checks
and balances so that in the future this sort of thing will not
happen to us again. I trusted Jack. I believed not only that he
had the fiduciary responsibility to us, but in fact was
attempting to serve his clients, the Choctaws, a non-profit
entity, to the best of his ability as well.
So what I did do was talk to him; not enough.
The Chairman. Thank you, Ms. Ridenour. I want to thank you
for your candor and your willingness to appear here. I do
believe that your organization has done excellent work over the
years. I have been familiar with much of it. I thank you for
your testimony today.
Ms. Ridenour, with respect to the $1 million transaction,
do you believe Mr. Abramoff lied to you?
Ms. Ridenour. Certainly. I do not know how I could reach
any other conclusion at this point in time.
The Chairman. Do you believe that he may have defrauded the
tribe?
Ms. Ridenour. Certainly I do.
The Chairman. Do you think he may have defrauded the NCPPR?
Ms. Ridenour. Certainly I do.
The Chairman. Thank you, Ms. Ridenour. I thank you for
being here today. Your involvement has been sad, but helpful to
us, and I thank you.
Mr. Stetter, could you take the microphone please from Ms.
Ridenour? You are a former employee of CCS. Right?
Mr. Stetter. Yes.
The Chairman. One of the things that you do is set up
groups that Mr. Scanlon or Mr. Cathcart used to have you
conduct grassroots activities. Is that correct?
Mr. Stetter. I would not say set up groups, no. I would not
say that.
The Chairman. What would you say?
Mr. Stetter. I wrote phone scripts with groups that were
already provided to me, but I have never set up a group before,
never.
The Chairman. I see. Is the Christian Research Network a
real organization, to your knowledge?
Mr. Stetter. To my knowledge, no.
The Chairman. How about the Global Christian Outreach
Network?
Mr. Stetter. To my knowledge, no.
The Chairman. And the Concerned Citizens Against Gaming
Expansion?
Mr. Stetter. To my knowledge, no.
The Chairman. And the Citizens Against Gaming, Michiganders
Against Gaming? In other words, these organizations were used
when your organization made phone calls, right, to various
constituents on issues?
Mr. Stetter. Yes.
The Chairman. Particularly gaming.
Mr. Stetter. Yes, sir.
The Chairman. And these names of these organizations were
just provided to you?
Mr. Stetter. Yes.
The Chairman. And again, Mr. Scanlon or Mr. Cathcart would
instruct you to draft a phone script opposing some gaming
initiative that might harm one of CCS's tribal clients. Is that
correct?
Mr. Stetter. That is correct.
The Chairman. And they would give you some guidance on what
the draft should actually say?
Mr. Stetter. Yes; I would follow along from old drafts.
The Chairman. And you returned the draft for their approval
with the name of the organization left out. Is that correct?
Mr. Stetter. It would be left out or provided later. It
would be put in later.
The Chairman. And usually that would be Chris Cathcart, Mr.
Scanlon's primary assistant would plug in the name of a
grassroots group.
Mr. Stetter. I believe so, yes.
The Chairman. For example, the Christian Research Network.
In fact, an example of one such script that was drafted under
that very name, it is number 124. This is a phone script and it
says:
Hello, my name is John. I am calling from the Christian
Research Network. We need your help to stop the spread of
gambling in Louisiana. The situation is very critical.
Do you consider yourself pro-gaming or anti-gaming? Record
response. If pro, disconnect. As you have seen in the
newspaper, the Jena Band of Choctaw Indians is trying to bring
yet another casino to Louisiana, this time to DeSoto Parish,
about 70 miles from where they are based. What is more is that
the people of this Parish have never been given a say in this
matter. As a concerned citizen who opposes gambling, would you
be willing to call Senators Breaux/Landrieu and tell him or her
to stop the spread of gambling in Louisiana. If no, disconnect;
if yes, we can connect you to the Senator's office. When they
pick up, tell them to take a stand against gaming in Louisiana.
Tell them to oppose the new Indian casino, patch through and
collect data.
Are you familiar with that one?
Mr. Stetter. Yes; I am.
The Chairman. And to your knowledge, you do not know who
the Christian Research Network is?
Mr. Stetter. To my knowledge, no, sir.
The Chairman. As a Senator, personally I am interested in
this ability to patch right through to the Senator's office,
something I always suspected, but it is certainly an effective
tool.
I guess what I am trying to get at, Mr. Stetter, and I
understand the business that you are in, but should somebody
have maybe checked to see whether these organizations were
legitimate organizations? Or was it just your job to plug in
the script?
Mr. Stetter. Mr. Chairman, as an entry-level employee, I
did not have particular questions about what these groups were.
I was just provided the names and then I provided the scripts.
The Chairman. I see. All right, sir. We have more
questions. I have another round, but I would like to yield to
Senator Dorgan at this time and then I will come back for the
others.
Thank you. I thank the witnesses.
Senator Dorgan. Mr. Chairman, thank you very much.
It is hard to know where to start with all of this
material. I know that you were asking Mr. Grosh about his
employment and his opportunity to become a part of that
organization. Some found it funny. There is very little that is
funny about this issue. Going through the e-mails, I might just
observe that this was not only fraud on a pretty grand scale,
but let me just describe the smaller fraud here.
Exhibit 31 has a memorandum from Mr. Abramoff to a Rabbi
Lapin. He said:
I hate to ask you for your help with something so silly,
but I have been nominated for membership in the Cosmos Club,
which is a very distinguished club composed of Nobel Prize
winners and so on. The problem for me is most prospective
members have received awards and I have received none. I was
wondering if you thought it possible that I could receive an
award from your organization. Probably you could call it
something like scholar of Talmudic studies or distinguished
biblical scholar award. It would even be better if it were
possible that I received these in the years past, if you know
what I mean.
[Laughter.]
The Chairman. That is to whom?
Senator Dorgan. It is exhibit 31. It is from Mr. Abramoff
to a Rabbi Daniel Lapin.
My point is that this was not just cheating on a grand
scale. In fact, I believe that goes on and on and actually they
describe the type of----
The Chairman. And Rabbi Lapin's response is?
Senator Dorgan. Abramoff said I am trying to do here, it
would only be used for this situation at the Cosmos Club, but
there is a chance they would have to call someone to verify;
probably just a few clever titles, awards and dates, as long as
you can be the person to verify them.
The response from the recipient, Mr. Lapin, is yes, I just
need to know what needs to be produced--letters? Plaques?
Neither? Anyway, the memorandum goes on.
Look, the point of all of this, there is a lot of deception
going on and there are victims of this deception. Let me go
through a couple of areas, if I might.
Mr. Stetter, if I might ask you first, it appears that what
we had was the establishment of a good many bogus groups isn't
that correct? Bogus organizations?
Mr. Stetter. Yes; if that is the term you want to use for
it, yes.
Senator Dorgan. Was it a case where these organizations, in
many cases, actually just had a telephone. Those telephones
were all in a drawer and when the telephone would ring, you
would just go to the drawer and pick out which telephone it was
for whichever organization?
Mr. Stetter. To my knowledge, there was that drawer. It was
not my job to pick up the phones, but to my knowledge that is
how it worked.
Senator Dorgan. These were organizations that were created
with names, some of which perhaps my colleague, Senator McCain
just read, and it was not as if they did not have any
connection to anything. They obviously had a telephone line
with a telephone number, but you could just put all those
organizations in a little drawer and when the phone rings, you
open up the drawer and figure out which phone rang and then
answer with the name of that organization. So that is what I
refer to when I talk about bogus organizations. I believe there
is a trail with respect to some memoranda on that as well.
I would like to ask a couple of questions, Mr. Stetter,
about Mr. Cathcart, because his name was just used a moment ago
and I will go through this very quickly. You took a position
with Michael Scanlon and his companies, Scanlon-Gould and
Campaign Strategies, correct?
Mr. Stetter. Scanlon Gould Public Affairs or Capitol
Campaign Strategies.
Senator Dorgan. And you did some administrative duties and
some research for clients?
Mr. Stetter. Yes, sir.
Senator Dorgan. You always maintained a support role behind
the scenes, you told us?
Mr. Stetter. Yes.
Senator Dorgan. After you left the Scanlon companies, you
were hired by the National Restaurant Association as manager of
a grassroots program. Is that right?
Mr. Setter. Yes, sir.
Senator Dorgan. Given your background prior to working for
Mr. Scanlon, exactly what did you do at the Scanlon companies
that qualify you for a job as manager of grassroots programs at
this point?
Mr. Setter. I would say the main qualification was actually
working on some of the phone scripts and working on some of the
campaigns. I actually went to some of the gaming facilities and
assisted with letter-writing campaigns. So I did do some
grassroots functions.
Senator Dorgan. Every organization has a kind of right-hand
man, somebody that is in charge. Who was Mr. Scanlon's right-
hand man?
Mr. Setter. From my experience, it would be Chris Cathcart.
Senator Dorgan. Did he run the Washington, DC office?
Mr. Setter. When Mike was out of town, without him having a
title or anything, it was understood that Mr. Cathcart ran the
Washington, DC office.
Senator Dorgan. I believe Mr. Cathcart has asserted
publicly that he was just a mere gofer in the operation. Do you
disagree with that?
Mr. Setter. I guess in some degree we were all gofers for
Mr. Scanlon. I was probably described as a gofer for probably
everyone in the operation.
Senator Dorgan. Who was in charge when Mr. Scanlon was not
there in the Washington, DC office?
Mr. Setter. I answered directly to Mr. Cathcart.
Senator Dorgan. So Mr. Cathcart was in charge. Thank you.
Let me ask Ms. Ridenour a couple of questions about the
pass-through. We know of the $1 million that has been
discussed. Is this the first time money in that quantity has
been passed through your organization in order to obscure its
identity?
Ms. Ridenour. Well, I do not believe it was. Well, from our
perspective, it was not being done to obscure its identity. The
grant to Capital Athletic Foundation we perceived to be a
legitimate grant, and the rest of it we perceived to be ongoing
program work that we intended at some point to brag about on
our Web site. So obscurity was never a goal.
Senator Dorgan. Except that, and you may be right with
respect to that. You have heard me describe the other attempts
to deceive and obscure. But when Mr. Abramoff told your
organization, which is a research organization, is it a (c)(4)?
Ms. Ridenour. It is a (c)(3).
Senator Dorgan. When he told your organization that he
wanted a $500,000 check written for a grant, was there actually
a grant request that came in for the grant that described what
the grant money will be used for, the purpose of the grant, and
on what basis the grant will be awarded?
Ms. Ridenour. What happened was we received an invoice
through Greenberg Traurig in October 2002 and I discussed with
Jack on the telephone the activities of the Capital Athletic
Foundation. I was aware of his affiliation with it. I also had
had a prior knowledge of what the Capital Athletic Foundation
at least officially was supposedly doing. One of the things
that I worked to do at that time was ascertain that the Capital
Athletic Foundation's mission not only was as a legitimate
501(c)(3), which it apparently was, but also that its mission
was consistent with our own in terms of educational program
services. Those tests seemed to be met, so I agreed to do the
grant, believing that that was the wish of the Choctaws.
I also said, however, specifically to Jack at that time
that if I am not convinced that all of the legal tests are met,
and in this case I was thinking of (c)(3) regulations, I was
not even thinking about larceny or anything of that sort, that
I would simply make the offer to the Choctaws to return their
money.
Senator Dorgan. This is the first time that $1 million has
been moved through your organization for the purpose of moving
it elsewhere?
Ms. Ridenour. Certainly, yes. It is the largest grant we
had ever received.
Senator Dorgan. Okay. And you did not receive a grant
request from the Capital Athletic Foundation saying we are
requesting a $500,000 grant with a 1-page or 2-page or 10-page
description of what we want to do.
Ms. Ridenour. Correct. We did not receive the formal grant
proposal, and I assure you in the future we certainly will.
Senator Dorgan. That is highly unusual, right?
Ms. Ridenour. Well, since I had never done it before,
``unusual'' would not be the term. Let's put it this way: It
will never be anything we ever do again.
Senator Dorgan. My understanding is that the small bit of
trail that exists here described it as the sports and politics
project.
Ms. Ridenour. That is what Greenberg Traurig wrote on the
invoice, or whoever wrote that invoice, frankly. Frankly, what
I was told, and this is consistent with what was on the Capital
Athletic Foundation's tax returns and also their website, was
that they were doing actual educational programs, creating
programs through which teachers and mentors could teach young
people about the importance of good citizenship values. So this
was exceedingly consistent with an educational mission.
Senator Dorgan. I understand. Let me just say, as Senator
McCain has, I appreciate your appearing here and your speaking
about this issue. It is probably not comfortable for you to do
it because you, too, were likely deceived. But what I am trying
to get at is if in fact Greenberg Traurig's memorandum
correctly describes the $500,000 grant to the Capital Athletic
Foundation as a sports and politics project, the ``politics''
part would probably run afoul of your (c)(3), would it not?
Ms. Ridenour. Well, yes, if I thought that was what they
meant. I just thought it was a person who does not understand
and wrote that, and because I had had conversations directly
with Jack Abramoff representing the foundation and had looked
into the foundation enough to know what it really did, I just
thought it was an error by the copywriter or whoever actually
created it.
Certainly, if I had thought ``politics'' in the sense that
we usually use it had anything to do with that foundation,
there is no way I would have approved it.
Senator Dorgan. Do you have some sense or do you
understand, I hope you do, why those of us who look at this
trail, take a look at this movement of substantial money
through organizations, and then say wait a second; there is
something fundamentally wrong with (c)(3)s or (c)(4)s being
used as conduits to move tribal money through your organization
to benefit Mr. Abramoff. And so we look at that and say how can
this happen so easily with money that just slides through a
(c)(3) or (c)(4) without even a 2- or 3-page grant request.
Ms. Ridenour. It is not so easily, though. One of the
things you have to keep in mind, Senator, is the relationship
that we had going back by that time was just sort of 22 years.
When you have worked with someone for 22 years; when they have
been a member of your board of directors by October 2002 for 5
years; when you have worked on projects together; when you know
someone personally; when you believe, even though technically
it is irrelevant, that you are close personal friends; when you
believe all of these things and you also know that it is in,
and I still believe to this day it is in a person's best
interest to do a job right, your natural assumption is that the
things they say to you are correct and true.
In my future career, I will never make pretty much
assumptions on anything again. But up until that time,
believing that it was in Jack Abramoff's personal as well as
professional interests to be honest, to serve his client the
Choctaws as well as he possibly could, and in our interest as
an educational institution to participate in bona fide
educational activities that educate the national audience about
important issues, it seemed perfectly consistent with our
mission and it seemed like good, solid work.
As you know from my testimony, by July 2003, even though I
did not suspect anything resembling larceny, I pulled us out
simply because we were not seeing documentation. So we did have
what we felt at the time were fairly high standards for
documentation. They were not high enough. They are higher now,
but we did pull out long before there was any news media
coverage of Jack Abramoff.
Senator Dorgan. Do you feel this happened because he lied
to you? Mr. Abramoff lied to you?
Ms. Ridenour. Unless he walks into this room today and
shows a heck of a lot of program service work, I would have to
say yes.
Senator Dorgan. Let me ask you for a moment about the 2000
golf trip to Scotland for which, I believe, an amount of money
came from your organization to help defray the costs of that
golf trip. Is that correct?
Ms. Ridenour. Yes.
Senator Dorgan. Can you describe how that happened, because
again you might well imagine when we take a look at money
moving through (c)(3)s or (c)(4)s, we say wait 1 second; what
is going on here. The same would be the case with respect to
what has been described in some e-mails as the golf trip.
Actually, there have been two golf trips, and on the 2000 golf
trip was Congressman DeLay and a group of others, with Mr.
Abramoff.
So tell me if you will and tell the committee how your
organization got involved in putting some money up for that
golf trip.
Ms. Ridenour. Certainly. First of all, while I am aware
that is referred to as the golf trip, almost universally that
is not a term that I use. We were contacted by Jack Abramoff in
his capacity, I believed, as a member of our board of directors
in approximately March 2000. I say ``approximately.'' It might
have been February. It could have been April 1, but frankly
about that time.
He suggested to me in his capacity I believed as a director
that it might be a nice project to have an educational trip to
Britain, not Scotland, but Britain to meet with
Parliamentarians. My mind went to London because to the best of
my knowledge, Parliament is in London. I thought that is not a
bad idea. I further thought that given what we expected to be
at that time either Mr. Gore, with apologies Mr. Chairman, or
Mr. Bush would be elected President, that in coming years, and
this of course is pre-9-11, we would either be looking at
additional expansions of health care reform, meaning
Government-controlled health care reform, or potential
privatization of Social Security.
This is literally what was going through my head. I thought
given that both of these roads are places that Britain has
gone, one to good effect, in my opinion, one to the other, it
is not a bad idea for a congressional leader to go over, make
some acquaintances with members of Parliament and come home.
The trip I believed I was approving, and indeed the trip
that I invited the member of Congress on through his chief of
staff, was simply to be a trip to London, meet with some
members of Parliament, and fly home.
I will say unfortunately, except I do not mean this except
in the sense of this controversy, at the time I was pregnant
with twins and we had recently adopted a newborn baby. I was
not prepared to go to London myself. So I expressed to Jack
that I like the idea of this project for educational reasons,
but I was not going to be prepared to go myself, and frankly
quite selfishly, I was not going to let, and this is in the
husband-wife sense, my husband go with him.
So I said we cannot do this unless there is someone
responsible who can handle logistics. We then discussed it. He
volunteered. We then discussed the propriety of the ethics
laws, which I was assured, and I know this is a point, too, of
media coverage, that it was perfectly appropriate for him based
on his knowledge of the law to lay out some expenditures as
long as he was promptly reimbursed by us. We discussed that in
some further detail.
I then approved him handling the project as a director of
the National Center. I also said, make sure on your invoices,
they come through your home address because I do not want there
to be any question in anyone's mind should anyone ever look
into this, not actually expecting anyone would, that you are
operating as a member of the board of directors of a think tank
and not as a lobbyist, which he agreed and in fact did.
At that point, then, the invitation was expressed to the
Congressman's office and I primarily bowed out of the project
believing it to be in secure hands.
Senator Dorgan. Did the project turn out differently than
you have described it to us? You have just described to us the
type of project that you approved. Obviously, the descriptions
of that trip are very different. So tell me about that.
Ms. Ridenour. I did become aware at approximately that same
time of the trip, and I do not know exactly when Scotland was
also included in the itinerary. I believed that, however, to be
to meet with some additional members of Parliament in that
area.
Since then, and I refer primarily to things that happened
in the news media in 2005 and some things we have been told by
others, the trip seems to be very different from what I
expected. I wish to state, however, that although the news
media has an interest in this particular Congressman's personal
behavior, the fact is that I know of nothing that the
congressional office did that was inappropriate.
Now, I was not on the trip. I do not want to expand beyond
my knowledge, but from what I know, and I actually should
volunteer, but when I extended the offer, the invitation to the
Congressman's office, his chief of staff said to me that they
were interested, but their concern would be would the trip be
substantive enough. That is an exact quote. So I had no sense
from them that they thought they were being invited on anything
other than a bona fide educational opportunity.
Senator Dorgan. I will not go further into this because it
is not part of the Choctaw issue itself, although I think
Choctaw money was actually used to pay for a portion of the
second golf trip. I might say I believe that in some e-mails
that these are both just referred to as the golf outings and
how much fun they are.
Ms. Ridenour. May I interject?
Senator Dorgan. Yes.
Ms. Ridenour. Senator, the second golf trip is something
which I will be able to provide no information other than the
fact that we do not know anything about it.
Senator Dorgan. You are correct. Again, let me say that our
committee is appreciative of the fact that you come here and
visit with us. I still remain hopeful, and it is not for the
purpose of suggesting that anything you have told us today is
not accurate. Our investigators have visited with you. I have
no basis for in any way suggesting that you have not been
completely open in your responses.
I think it is quite clear from what you have said, not you
feel as do many others who have reached this witness table, you
feel deceived by people who used money in a manner completely
inconsistent with what you had felt you had approved.
But I do think, because we have a number of (c)(3)s and
(c)(4)s, and you have actually described, Ms. Ridenour, the
importance of making sure that you are well within the bounds.
We have certain guidelines of what the use of (c)(3)s and
(c)(4)s are for. So my hope remains, and the chairman and I
will talk about this, that we will consider talking to the
Finance Committee about looking into that portion of it.
Having said all that, I think that the contribution of this
panel is to describe further the root of the money, the use of
the money, in some cases with respect to a couple of the
organizations here, what appears to be almost complete obvious
fraud to everyone. Again, that is not part of what this
committee will be deciding. This committee is about following
the money and getting the facts. If you dyed that money purple,
there would be a lot of purple pants pockets around this town
and the country because they were moving it into so many
different organizations.
Mr. Stetter, when the chairman and I were asking you about
organizations that are only names this is part of what is wrong
with American politics today. This is probably not the only
circumstance where that happens. We get calls, Mr. Chairman,
you were referring to this, we get in our office from with
people who have been contacted by a grassroots organization,
apparently one that actually exists. These organization get
somebody from back home on the phone and say, okay, now we are
going to connect you with Senator Dorgan's office or perhaps
Senator McCain's office.
In most cases, they do not want to be connected because
they are not interested in the subject and they do not know why
they are connected. They are not on-message, certainly. So I do
not think that approach works in any event.
But let me thank all of these witnesses for being with us
and for cooperating. Mr. Mann, I regret you have not. You
certainly have the right to exercise your constitutional
protections.
The Chairman. Thank you, Senator Dorgan.
Ms. Halpern, where did Kaygold operate from?
Ms. Halpern. To the best of my knowledge, Kaygold operated
from Mr. Abramoff's home.
The Chairman. Exactly what is it?
Ms. Halpern. Kaygold is a sole member LLC. Mr. Abramoff is
the sole member. For tax purposes, it is reported on Mr.
Abramoff's Form 1040, Schedule C, Self Employment Income
Schedule.
The Chairman. In 2002, Kaygold's sole source of income was
$13.5 million in supposed ``referral fees.'' It came in from
Mr. Scanlon's company, Capitol Campaign Strategies. Is that
correct?
Ms. Halpern. Sir, I would need to go back to check the tax
records, but in general it sounds correct. Kaygold had income
from Capitol Campaign Strategies.
The Chairman. If you are the tax consultant and you see an
organization based in an individual's home that receives $13.5
million in 1 year from one source, does that ring any alarm
bells with you as a tax consultant?
Ms. Halpern. Mr. Chairman, Kaygold's business as indicated
on the schedule C of the tax return was political consulting. I
am not aware of what kind of revenues a political consulting
practice is supposed to generate.
The Chairman. You had access to records that showed that
$13.5 million came in from one organization, that was Mr.
Scanlon's company, Capitol Campaign Strategies.
Ms. Halpern. Yes; a 1099 was received, two 1099's I believe
that year were received.
The Chairman. That did not raise any red flags with you?
Ms. Halpern. Sir, again, my job was to prepare his tax
return and in my engagement letter with Mr. and Mrs. Abramoff,
I state in the engagement letter it is the client's
responsibility to provide all the information to me so that I
can prepare the tax return.
The Chairman. Well, you had the information that $13.5
million came in 1 year from one source, Mr. Scanlon's
organization, Capitol Campaign Strategies. Now, I ask you
again, yes or no, did this raise a red flag with you that this
was certainly highly unusual?
Ms. Halpern. Again, Mr. Chairman, I do not know if a
political consulting practice, if that would be highly unusual
in a political consulting practice. I cannot answer that. I was
not involved in Mr. Abramoff's inner workings.
The Chairman. I do not care if it came from the moon. If it
is $13.5 million into an organization the only amount of money
that they get in supposed referral fees, wouldn't anybody
upholding their oath of office say wait 1 minute, it is 13.5
million bucks coming in from one source in 1 year; what is
going on here?
Ms. Halpern. Sir, to the best of my knowledge, all
information that Mr. Abramoff gave me was reported on his
income tax return. Let me just state further, if you do not
mind, sir.
The Chairman. Sure.
Ms. Halpern. Mr. Abramoff in no way at any time tried to
hide this income. Now, if you tell me, did he try to hide the
income, would that raise a red flag kind of question, that is a
different question. You are asking me if $13 million came in
from one entity, I am telling you that is what he presented to
me and that was reported on his tax return.
The Chairman. And obviously it did not arouse any curiosity
on your part. Most people it would, Ms. Halpern.
Senator Dorgan. Mr. Chairman, would you just yield on that
point?
The Chairman. Yes.
Senator Dorgan. Ms. Halpern, were you in the room when I
read the e-mail earlier today about moving money in order to
avoid paying taxes?
Ms. Halpern. I went out of the room for some time. It is
possible. I am not sure. I do not recall.
The Chairman. Ms. Ridenour, you had discussions with Mr.
Abramoff that obviously as we have discussed induced you into
passing on to Kaygold two payments, $500,000 and $750,000 in
May and June 2003. Do you recall that?
Ms. Ridenour. Yes.
The Chairman. From those conversations with Mr. Abramoff,
what were you led to believe that Kaygold was?
Ms. Ridenour. I believed it was a public affairs firm run
by Michael Scanlon that was very similar to Capitol Campaign
Strategies. They simply had different companies to do different
functions.
The Chairman. And these two payments originally came from
the International Interactive Alliance?
Ms. Ridenour. They came from Greenberg Traurig. Jack
Abramoff later told me the original source was the Interactive
Alliance, yes.
The Chairman. Did you know what was actually done with
those payments?
Ms. Ridenour. No.
The Chairman. No; you did not.
Ms. Ridenour. I mean, I thought they were going to be used
for educational program work. To this day, I do not know.
The Chairman. According to Kaygold's general ledger, the
$500,000 payment by NCPPR to Kaygold was credited on May 18,
2003, but within 3 weeks of arriving in to Mr. Abramoff's
Kaygold account, it appears that what was not tucked away for
taxes went straight to Mr. Abramoff's personal account. It
seems to have occurred with the $750,000 that the NCPPR paid to
Kaygold on May 30, 2003. I think your reaction to that from
your previous testimony is fairly predictable.
Ms. Ridenour. It is predictable and frankly I am appalled.
The Chairman. Ms. Halpern, you look like you want to say
something else.
Ms. Halpern. No, sir.
The Chairman. I am sorry.
Well, I want to thank the witnesses for being here. The
story speaks for itself. I hope that we will get this unraveled
sooner rather than later, and this committee can issue a full
report. We will have one more hearing dealing with another
tribe, then we will issue a report. This committee expects to
come up with recommendations to do whatever is necessary from
the Committee on Indian Affairs standpoint to see that this
kind of gross injustice is not inflicted on any more Native
American tribes.
Senator Dorgan, do you have anything to say?
Senator Dorgan. Mr. Chairman, I do not. You indicated
another hearing. Let me again suggest at least that we hold
open the prospect of visiting about the issue of (c)(3)s and
(c)(4)s, perhaps with the folks on the Finance Committee
because I think additional questions are raised there.
Again, let me thank the witnesses and let me thank also the
investigators who have put in a substantial quantity of time.
This has not been easy to piece all this together, and we
appreciate very much their work as well.
The Chairman. I thank the witnesses.
This hearing is adjourned.
[Whereupon, at 12:25 p.m., the committee was adjourned, to
reconvene at the call of the Chair.]
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A P P E N D I X
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Additional Material Submitted for the Record
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Prepared Statement of Gail Halpern, Part-time Accountant
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 tax 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 service 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 trusts for which I prepared
income tax returns, was reported and included in the relevant tax
returns.
Thank you.
______
Prepared Statement of Phillip Martin, Chief, Mississippi Band of
Choctaw Indians
Thank you for this opportunity to present the views of the
Mississippi Band of Choctaw Indians through written testimony as
regards the committee's ongoing investigation into the misconduct of
Jack Abramoff and Michael Scanlon.
The Mississippi Band of Choctaw Indians is a federally recognized
Indian tribe of nearly 10,000, most of whose members reside in eight
reservation communities located on trust lands scattered over a five-
county area in east central Mississippi. The majority of our tribal
members are full-blood, Choctaw language speaking. We are descendants
of those Choctaw people who resisted repeated efforts by the Federal
Government to force their relocation to Oklahoma. This continued from
1830 through the early 1900's. The tribe's reservation lands are poor
and unproductive and the tribe is without any natural resources which
could be used to generate income. The Mississippi Choctaws were ignored
and abandoned by the Congress and the Federal Executive branch for
almost a century, finally securing our initial Indian reservation lands
in, 1944 and Federal recognition as a separate tribe in 1945. Our
members were then essentially destitute and without any resources and
our tribal government was basically powerless to help them.
Unemployment was so prevalent among our tribal members that we knew we
had to find another path and we did. We made the choice to pursue self-
determination as the best means to meet the growing needs of the tribe
and to pursue manufacturing jobs as the best means of employing large
numbers of our people.
Beginning with one tribal employee in 1963, the Mississippi
Choctaws have grown to become the 3d largest employer in Mississippi,
employing some 9,200 people. We operate about 25 different commercial
enterprises. The tribe has developed a strong and stable government
providing the full array of governmental services. This includes the
operation of a large school system, police and fire protection
services, courts, a hospital and clinics, social, housing, realty, and
economic development agencies. These were key ingredients of our later
success in building a reservation economy and attracting private
investment which led to commercial developments, at first primarily in
manufacturing, which created reservation-based jobs.
The passage of the Indian Gaming Regulatory Act and the
introduction of class III gaming in 1989 in Mississippi led to the
development of the tribe's current Pearl River Resort comprised of two
high rise hotel casinos, a nationally acclaimed 36 hole golf club, a
12-acre water theme park, South Sea island beach, the soon to be opened
300 acre Lake Pushmataha and its large entertainment and fitness
facility. We have invested over $1 billion in this development which
has created jobs and generated income. Rather than make large
distribution payments to tribal members, we chose to invest in their
future in a different way.
The success of the resort has allowed the tribe to begin catching
up from generations of poverty and neglect. There has been
extraordinary progress: Our unemployment rate has dropped from nearly
80 percent to less than 5; our life expectancy has risen from under 50
to 70; we have been able to provide long overdue healthcare to our
members through-the construction of-new clinics, the employment of
medical specialists, and the provision of such basics as hearing aids
and eyeglasses. In education, our gains have been great as well: We
operate a system of six elementary schools and boarding middle and high
schools; for the first time in our history, any Choctaw student who
wants to attend college can do so through our scholarship program
which, to date, has provided scholarships totaling over $17 million to
1,387 tribal members. We have replaced frame school buildings built in
the 1920's and we have built roads, water and sewer lines, wastewater
treatment plants, and day care centers. Still, significant needs remain
particularly in the areas of health, education, and housing; and, since
all of our enterprise growth has been debt-financed, we still have a
$300-million debt load to retire.
Because of the tribe's government-to-government relationship with
the United States and because of the need to protect tribal investments
(and our ability to repay business debt), the Mississippi Choctaw have
engaged in extremely active and aggressive efforts to monitor and
affect the Federal decisionmaking process and to shape public opinion
on matters affecting the tribe's political and economic interests. To
achieve this we have long engaged experienced professionals including
lobbyists with prestigious law firms who know and understand how
Federal lobbying and grassroots advocacy works. Our efforts in this
regard have historically been successful and we have relied upon the
professional expertise and integrity of those law firms and their
lobbyists, to ensure that this work is handled for us in a lawful and
appropriate manner.
So, when the initial press reports emerged last year regarding the
large fees paid to Jack Abramoff at Greenberg Traurig or to Michael
Scanlon by a number of tribes for lobbying work and grassroots
advocacy, we had no reason to believe that anything questionable had
occurred concerning those payments or their work for us and we were
pleased with the results they had achieved. Later, we did come to learn
that Mr. Abramoff, along with Mr. Scanlon, had engaged in what appears
to be a consistent pattern of kickbacks, misappropriated funds,
payments induced under false pretenses, and padded billings, all
orchestrated by Mr. Abramoff from his position as Senior Director of
Governmental Affairs for Greenberg Traurig, LLP, the law firm which the
tribe had retained to handle its public affairs needs starting in
January 2001. Most of this misconduct occurred in furtherance of what
we now refer to as their ``gimme five'' scheme.
In pursuing this matter over the past 1\1/2\ years, the tribe has
worked hard through outside counsel and the tribe's attorney general's
office to identify the full extent of this misconduct, the full extent
of financial injury we have suffered as a result and to seek
appropriate civil and criminal remedies. Although we have made
substantial progress in pinning this down, we still don't have final
numbers for all that occurred. At this time, however, I want to repeat
what I said in my letter of August 5, 2004 to Senator McCain, ``Without
your efforts it is unlike that this misconduct would ever have come to
light. Thus, despite my prior concerns, I appreciate your committee's
work on this matter.''
From the outset of this matter, the tribe has fully cooperated with
the FBI and the Justice Department. And since July 2004--almost 1 year
ago, shortly after we first saw real evidence of wrongdoing on the part
of Mr. Abramoff and Mr. Scanlon, we have worked closely with the
committee to further its investigation.
Early on in this process, however, the tribe raised with the
committee its concern that sensitive information regarding its lawful
lobbying and public affairs activities not be unduly disclosed through
the committee's investigation of Mr. Abramoff and Mr. Scanlon and of
the tribe's 1st amendment right to protect against such involuntary
disclosure. The tribe appreciates that the committee has respected the
tribe's 1st amendment rights throughout this process and I want to
personally thank Senator McCain for that. Consistent with this
position, the tribe has shared all requested documents and information
with committee staff, but has declined to place in the record
information regarding the tribe's 1st amendment protected activities
when disclosure of such information is not required in furtherance of a
``compelling governmental interest,'' for example, to expose criminal
conduct or other financial wrongdoing. That remains the tribe's
position today.
In anticipation of this hearing, the tribe has worked with the
committee staff and has identified in consultation with Senator McCain
[three] witnesses who will speak on behalf of the tribe in person at
the June 22 hearing.
The first is Charlie Benn, director of administration in my office.
Mr. Benn has served in that capacity since 1998 and is a member of the
tribe. Charlie previously worked for the U.S. Department of Housing and
Urban Development for approximately 20 years and in his present
capacity oversees the daily operation of numerous administrative
functions of the tribal government. The second, witness is Nell Rogers,
a member of the tribe's planning staff who handles legislative affairs
for my office. She has worked in that capacity for the past 20 years.
Ms. Rogers has worked for the tribe (with the exception of 5 years)
since 1971. Finally, Donald Kilgore, the tribe's attorney general, will
participate on the panel. Don was only recently appointed to his
position as tribal attorney general but has a life long association
with the tribe and has practiced law in the tribal courts for many
years. He has over 30 years experience in the private practice of law.
I have authorized Mr. Kilgore to provide testimony at the hearing
summarizing what we have learned about the misconduct of Jack Abramoff
and Mike Scanlon which has given rise to this proceeding.
Prior to 1994, I [as Chief] was the tribe's primary lobbyist.
Partly, this was because we had no tribal funds to pay for any
lobbyists. Later, as the scale and reach of the Federal regulatory and
legislative process affecting Indian tribes expanded and as our tribal
businesses and revenues grew, attending to those enterprises required
more and more of my time, leaving less time to devote to the
legislative process. It became prudent to hire outside legal counsel to
assist in addressing the tribe's Federal advocacy needs both with the
Federal agencies and with the Congress.
As the tribe grew, tribal staff with program and legislative
experience began to do much of this work. Prior to this, the law firm
of Hobbs, Straus, Dean, and Walker had provided some legal services and
public affairs work on our behalf, primarily on self-determination,
health and education issues. We continue to work with Hobbs Straus and
with other law firms--firms who have represented us for many years--
Wise, Carter and Caroway, and the Scott, Sullivan, Streetman and Fox
firms in Mississippi and Roth, VanAmberg, Rogers, Ortiz & Yepa in New
Mexico. All have provided a high caliber of legal representation for
the tribe and have done so with honesty and scrupulous adherence to
their duties to us as a client. We expected no less from the other
firms and their lobbyists we hired in Washington, DC, starting in 1995.
In 1994, two simultaneous events occurred which required an
expansion and a change in direction in the tribe's public affairs work.
First, of course, was a total change in the leadership of the Congress
as a result of Republicans gaining majority control in the House
through the 1994 elections. Second, was the opening of the Silver Star
Hotel and Casino in July 1994 giving rise to an array of new issues and
concerns that had to be tracked and dealt with at the national level.
The tribe also wanted to tell its economic story--of how it was
possible to use the tax and regulatory structures unique to Indian
reservations and economies operating under tribal jurisdiction to
achieve on-reservation economic development. This was not just a
theory, the tribe had successfully done this for 15 years before
opening our first casino. We did this by finding products that we could
make and sell, hiring good managers, setting up a judicial system that
provided fair treatment for outside parties, building a stable,
constitutional tribal government involving a separation of powers, and
honoring our business contracts. When we opened our first casino
[financed with 100 percent borrowed money] we realized we had to be
proactive in protecting our casino operations and our ability to pay
off our casino financing debt. Thus, in 1995, the announcement by the
then Ways and Means Committee Chairman of a plan to subject tribal
income to Federal income taxes set off extraordinary alarms because
that meant that the tribe's gaming and other business revenue could be
taxed at 34 percent--threatening the tribe's ability to pay off its
debt, and undermining its capacity to provide essential governmental
services to our 10,000 tribal members, and putting us at risk of losing
everything. It was in this climate that the Tribe recognized the need
to reach out to the new Republican majority and to redouble our efforts
to share our tribal needs and our reservation development experiences
with all Members of Congress.
Jack Abramoff was identified to us in 1995 as a lobbyist in the
Washington, DC office of a major law firm [then known as Preston Gates
Ellis & Rouvelas Meed] who was said to have strong relationships to
leadership in the House. I arranged a meeting with former Congressman
Lloyd Meeds of Preston Gates, with Mr. Abramoff and others in the firm,
from which followed a retainer agreement. What followed was a very
positive relationship with Preston Gates from 1995 through 2000. They
did very effective lobbying work for us, both at the Federal level and
through various grassroots projects. Then, Mr. Abramoff and most of his
team left Preston Gates to join Greenberg Traurig in 2001. Since the
bulk of the work done by Preston Gates for the tribe was in the area of
public affairs and not ordinary legal work, and since Mr. Abramoff and
most of his team which had handled that work at Preston Gates moved
over to Greenberg Traurig in 2001, the tribe then retained Greenberg
Traurig. Later, Mr. Abramoff introduced us to Mike Scanlon and his
various companies.
When Mr. Abramoff left Preston Gates to move to Greenberg Traurig,
we had no reason to believe that anything improper or unlawful had
occurred in connection with his prior work for us. So, when the team
moved to Greenberg Traurig, there was no reason to question his
integrity or otherwise doubt that the representation we would receive
through Greenberg Traurig would be handled in any less professional and
honest a way than we believed had occurred at Preston Gates or through
the other law firms we had retained. Unfortunately, those expectations
were not met.
The kickback scheme, we have learned that Mr. Abramoff caused Mr.
Scanlon, represented to us to be an independent contractor, to quote
prices for the services of his several companies which, built in an
undisclosed and exorbitant add-on amount which they then would split,
one-half coming back to Mr. Abramoff as a kickback, one-half being
retained by Mr. Scanlon as moneys obtained under false pretenses. We
did not know of this and we did not approve it.
Regarding grass roots advocacy projects, some of the actual work
was always going to be performed by various third parties after passing
through the Scanlon companies, for example, American International
Center, Capitol Campaign Strategies, Scanlon Gould Public Affairs or
through other entities, such as the National Center for Public Policy
Research [NCPPW] or the Capitol Athletic Foundation [CAF], and some was
to be performed by Capitol Campaign Strategies or its subcontractors.
The tribe never agreed that any of those moneys were to be retained by
Mr. Scanlon personally or kicked back to Mr. Abramoff. When the tribe
was quoted a price for a given project the tribe expected that its
payments to fund that work would be expended for that purpose and
[where pass throughs were involved], that the money would be passed
through to the appropriate entity for that purpose.
Unlike many or all of the other tribal clients who retained
Greenberg Traurig [and Jack Abramoff], Choctaw's retainer agreement
with the firm was on a regular hourly billing basis. The tribe never
agreed to pay a ``flat fee'' per month. However, our outside counsel,
C. Bryant Rogers has now confirmed that Mr. Abramoff consistently
manipulated the bills at Greenberg Traurig in order to have them
approach a minimum billing target of fees and expenses of between
$135,000 and $150,000 per month, and included unauthorized expense
charges. When the actual hours of work completed were insufficient to
approach that target; Mr. Abramoff routinely directed that the bills be
padded with ``pumped-up'' time entries or made up hours to increase the
monthly bill. Neither those unauthorized expense charges, nor the
padded time entries, were detectable from the billings we received.
After we learned what happened, we were astounded that a senior
director at a major law firm would or could engage in misconduct of
this sort--whether as regards billing fabrication or as regards the
more egregious ``gimme five'' scheme--and that he was able to get away
with it for so long.
What we have learned regarding Mr. Abramoff's misconduct at
Greenberg Traurig has caused us to take a closer look at his work for
us at Preston Gates. Those inquiries have just begun. It presently
appears that some similar financial misconduct also occurred while Mr.
Abramoff was at Preston Gates, though on a vastly smaller scale, both
as to billing improprieties and as to Mr. Abramoff's unlawful diversion
of money we paid for one purpose which was used to pay for other things
we had not authorized. We have initiated discussion with Preston Gates
on these matters; however, those discussions are in a very preliminary
stage.
In regard to Greenberg Traurig, we wish to acknowledge that
positive settlement discussions with that firm are now underway and we
have been assured that Greenberg Traurig will take appropriate action
``to address and remedy any concerns and issues'' we may identify ``as
to any aspect of our relationship.'' They have responded to this
situation in a professional and honorable way, which we very much
appreciate. Thus, we are confident that a mutually agreeable settlement
of our claims respecting these issues will be reached with Greenberg
Traurig.
In closing, we want to thank the committee for its efforts in this
investigation. We are, however, ready to move forward with our on-going
efforts to build our reservation economy [this also benefits our non-
Indian neighbors as well] and to strengthen our government-to-
government relationship with the United States to enhance our capacity
to improve health care, education and employment opportunities for our
members. We will take the lessons learned from this experience and will
endeavor to ensure that we not experience anything like this in the
future.
Thank you, this concludes my written testimony.
Prepared Statement of Amy Moritz Ridenour
Thank you for inviting me to appear before the committee and for
giving me the opportunity to discuss the funds the National Center for
Public Policy Research received from the Mississippi Band of Choctaw
Indians. Specifically, I wish to discuss the large sums we received
during the period of October 2002 through June 2003. I intend to share
what I believed were the reasons why the National Center received these
funds and how and why we dispersed these funds to for-profit entities
we subsequently learned were associated with or owned by Jack Abramoff.
Before addressing these particular points, I believe that it will
be helpful to the committee if I share some background on the National
Center.
The National Center is a conservative/free market non-profit public
charity that opened in February 1982. I have had the privilege to be
the first and only chief executive officer of the National Center and
have made it my life's work.
The National Center's focus during approximately its first decade
was on issues related to the Soviet Union. However, with the fall of
the Iron Curtain, the National Center's focus turned to other
conservative programs and issues.
One such program is project 21, which highlights the views of
conservative and moderate African-Americans by helping them get op-eds
published in newspapers, arranging interviews on talk radio and other
media, and issuing press releases based on information provided by this
previously under-represented group. Since project 21's inception in
1992, the news media has quoted its members approximately 10,000 times.
Researching environmental issues and educating the public regarding
them is another National Center program. One research project includes
the publication of several editions of a book that highlights 100
personal stories of Americans, who are neither wealthy nor powerful,
who have been harmed by regulations that are excessive or improperly
applied. In addition, the National Center has begun to examine the
extent to which low-income and minority populations disproportionately
bear the cost of some Government regulations.
As the years went on, in an effort to make the National Center a
better non-profit organization, we implemented several changes,
including, in 1997, an increase of the number of board members from
three to seven to improve oversight. When we began our search, we
decided to bring in individuals who we believed would improve the
National Center. One of the individuals we chose was Jack Abramoff. At
that time, I had known Jack for nearly 17 years, he was a dedicated
free-market conservative, a successful lobbyist and businessman, he had
connections to corporate America and his managerial skills; it seemed
to me at the time, exceeded my own. We believed we could learn from his
experience. He seemed like the perfect choice. Consequently, we
extended an offer to him and, in October 1997, he joined the National
Center's board of directors.
Our desire to improve the National Center did not stop in 1997 and
over the years we made additional policy changes. In 2000, the National
Center adopted a formal conflict of interest policy. This policy
requires standing directors to reveal to the board all direct or
indirect financial interests in any entity with which The National
Center is negotiating a transaction or arrangement. We required every
member of the board to sip the resolution so that no one could later
claim that they were unaware of the policy. Every director, including
Jack, did so.
It was through Jack Abramoff that I first had the honor of meeting
Chief Philip Martin of the Mississippi Band of Choctaw Indians. In
February 1997, I participated in a trip to the reservation where I saw
first-hand the benefits that casino gambling had for the Mississippi
Choctaw Tribe.
Through Chief Martin, I learned that the Mississippi Choctaw had
once relied substantially on government handouts and that, in the past,
members of the tribe typically had to leave the reservation in order to
be financially successful. Thanks in significant part to the capital
inflow made possible by their Silver Star casino, they were able to
revitalize the tribe and better convince their young members that they
did not need to move away in order to pursue and enjoy challenging and
satisfying careers.
Chief Martin struck me as one of the most impressive people I have
met in my life. After I returned from that trip, I recall telling my
husband that had Chief Martin not dedicated his life and his career to
his tribe, he might well have become famous as a CEO of a top Fortune
500 corporation.
Approximately 1 month after my trip to the Choctaw Indian
Reservation, the National Center received a $2,500-donation from the
tribe. This donation was unsolicited and the National Center used this
money for general support.
In 1999, the National Center began soliciting funds for a program,
which included a study commissioned from an econometrics firm, to
determine the impact of so-called ``smart growth'' policies on minority
home ownership rates. The National Center undertook this study in
furtherance of our burgeoning interest in the economic prosperity of
minorities in the United States.
The program was to cost $50,000. We found ourselves $5,000 short. I
turned to Jack for help. He told me he would get us a donation and even
offered to get a donation in excess of $5,000, if we needed it. We,
told him we only needed $5,000. Soon thereafter, we received a
contribution for that amount from the Mississippi Band of Choctaw
Indians and were able to fund the program. In 2000, we received a total
of $65,000 in contributions from the Mississippi Choctaws. These
contributions were not solicited by me or The National Center's staff,
but were arranged by Jack Abramoff. I understood them to be general
support contributions. We recorded them accordingly and, as part of the
independent annual audit we have had conducted every year of our
operation, confirmed this understanding with the Mississippi Choctaws
through an audit letter.
I am, of course, aware of news media coverage connecting part of
these contributions to a trip we sponsored in 2000 for a Member of
Congress. At the time I extended an invitation to this Member of
Congress, through his chief of staff, I did not know we would be
receiving contributions from the Mississippi Choctaws that year. At no
time did I convey to the Congressman or his staff that we had received
these contributions, and I was never told, nor I was I under the
impression, that the Mississippi Choctaws even knew we had sponsored a
Congressional trip to Britain.
In October 2002, the Mississippi Band of Choctaw Indians donated $1
million to the National Center. At that time, I believed that the
Choctaws gave the National Center this donation to support an
educational project related to the Mississippi Band of Choctaw Indians
and casinos. In particular, to educate the public on the positive
impact casino gaming had for the Mississippi Choctaws, both
economically and culturally. In order to tell the story fully, however,
some background information is necessary.
Approximately 4 months before we received this donation, my
husband, who is vice president of The National Center, and I had lunch
with Jack Abramoff, The lunch was social but, as was our habit when
meeting with members of the board of directors, we briefed him on
information pertinent to members of the board, including such mundane
things as the fact that we were current in meeting our payroll tax and
other financial obligations and the status of projects undertaken by
the National Center. I also described the negative financial impact of
9-11 and stock market contractions on the philanthropic community. I
told him that new donors would be especially valued that year, as would
the opportunity to sponsor projects consistent with our mission for
which funding was available.
Once our report was over, Jack shared with us details of his
professional career. I remember him telling us that he was doing ``a
new kind of lobbying.'' He said he and his colleagues, working with the
Mississippi Choctaws, had noted that for-profit, non-Indian gaining
establishments were pushing to establish themselves in areas of the
country not noted for their admiration of gaming. They believed that a
public backlash against gaming was brewing and that before things came
to a head, perhaps 4-5 years down the road, they would protect the
Choctaw by educating the public in the surrounding States about the
benefits of Casino gaming for the Mississippi Choctaws. To educate the
public, they relied on phone banks and other tools to tell the Choctaw
success story.
I was very interested in what I was hearing. Although my visit to
the Choctaw reservation had been more than 5 years earlier, I retained
my enthusiasm for what the tribe had been able to accomplish. I noted
that this ``new kind of lobbying'' was not lobbying at all, but
educational work and I expressed an interest in the National Center
sponsoring it. Jack seemed mildly agreeable but noncommittal. I did not
press the matter, assuming the Choctaws were financing the project and
would have to approve our involvement.
Approximately 4 months later, Jack contacted me to see if the
National Center was still interested in the project. We were because it
was consistent with our longstanding interest in promoting minority
economic opportunity and was especially welcome because we had
postponed the launch of a Hispanic counterpart to project 21 because of
a lack of funding. There were also other benefits, including an
expansion of our program expenditures and the opportunity to gain
experience with educational tools, such as telephone campaigns, with
which I had no experience.
There was also one particular opportunity that I was excited about
on a personal level. I was excited by the prospect of working with Jack
on a large project because I admired him for what I believed to be his
amazing managerial skills. At that time, he not only had a lobbying
practice successful enough to earn rave reviews in the mainstream
press, but he was opening restaurants and starting a school. I believed
that he could only accomplish these feats with a superb ability to
delegate authority and manage people, and I hoped to make myself a
better manager by seeing him in action.
Jack seemed enthusiastic about having The National-Center on board
with the project, and instructed me to send a $1-million invoice to the
Mississippi Choctaws, which I did. When the funds arrived, he told me
how they should be disbursed: $450,000 to the Capital Athletic
Foundation, $500,000 to Capital Campaign Strategies and $50,000 to a
company called Numberger and Associates, run by a Ralph Numberger. I
believed Capital Campaign Strategies was to be paid for educational
program services, such as polling, telephone calls and printing
brochures and petitions while Mr. Numberger was going to help
coordinate the project. In an e-mail, Jack referred to his receiving
``instructions'' for the disbursements, which I took to mean
recommendations from the donor. This was consistent with my belief that
the Mississippi Choctaws were actively involved in the project.
Believing I was joining a project-in-progress, knowing that Jack
was the legal representative of the Mississippi Choctaw, was part of a
major law firm and, as a member of The National Center's board, had a
fiduciary responsibility to the welfare of The National Center, I
disbursed the funds in accordance with Jack's instructions. As excited
as I was, I still had some concerns about inadvertently violating
501(c)(3) regulations governing organizations such as The National
Center. Consequently, I reviewed the laws governing charities with
Jack, including, restrictions on lobbying for or against legislation
and those banning expenditures relating to elections. I received Jack's
repeated assurances, both by e-mail and verbally, that he, in assuming
managerial authority for the project on The National Center's behalf,
would adhere to them. In addition, prior to transferring funds to the
Capital Athletic Foundation as a grant in accordance with what I
believed was the donor's recommendation, I reviewed with Jack the laws
governing grants between 501(c)(3) organizations, and told him that if
the test could not be met we would simply return the money to the
donor. The proposed grant, however, seemed to be appropriate and, as
such, I made the grant.
It was about this time that a staff member at Greenberg Traurig,
other than Jack, sent the National Center a fax of three invoices
matching Jack's instructions. It all seemed very official. My only
concern at that time was the possibility that Jack, being a lobbyist,
would forget to strictly adhere to the laws governing tax-exempt
charities. Nevertheless, as nearly one-half of the funds were being
sent to the tax-exempt Capital Athletic Foundation as a grant, the
remainder was to be used for a program for which there was no related
legislation, and because I had received repeated assurances from Jack
that he took the tax laws seriously, I believed everything was
legitimate and legal.
At the time, I expected that I would personally become involved
with the project. That did not happen. Various explanations, all of
which seemed reasonable at the time, occurred to me. In addition, in
the few months following our involvement in the program my time and
attention were diverted to other unrelated, business and personal
events that prevented me from aggressively injecting myself into the
management of a project I believed was in good hands.
I often requested from Jack that he provide documentation about the
educational activities we were supporting. He always said it would be
no problem, and I believed him; so much so, that I agreed to continue
the program in May and June 2003 when Greenberg Traurig sent $1.5
million to the National Center. At that time, Jack told me this money
was part of the program, which I believed was the educational program
about the progress being made by the Choctaw Tribe.
Jack told me $250,000 had been designated for the Capital Athletic
Foundation as a grant and $1,250,000 was to be paid to Kaygold, a
company I believed was owned by Mike Scanlon. It was not until 2004
that I learned that this money did not come from the Choctaw, but
rather from an Internet gambling company apparently unrelated to the
Choctaw Tribe.
As these events were transpiring, I resolved that if I did not
promptly receive sufficient proof of good solid work performance, I
would withdraw the National Center from the project. I discussed the
matter with the CPA firm we used and, at far greater length, with our
tax attorney. I then requested specific pieces of documentation from
Jack related to these transactions. When I did not get them, I told
Jack, in July 2003, that we would cease participation and he did not
object. I did not, however, stop asking him for documentation for work
performed for the payments we already had made.
I always trusted Jack and believed that we would ultimately receive
the documentation that we requested. Of the various theories I had in
my mind as to why we were not receiving the documentation, such, as
Jack was simply too busy, none. of them involved a suspicion of the
misuse of lands. I completely trusted Jack. So much so, that I still
trusted him after the negative press stories appeared in 2004. For
months after 5 the stories appeared, I continued to believe him. It was
not until September 2004, when the Washington Post published that Jack
owned Kaygold, that I knew in my heart that something was seriously
wrong.
You see, the entire time these transactions were going on I
believed that Mike Scanlon owned Kaygold. I know that Jack knew I
believed this because I made statements pertaining to this issue and he
did not dispute them. I would have never issued any money to Kaygold if
I had known that Jack was the owner because this was a clear violation
of the National Center's conflict of interest policy, which Jack had
signed.
I also will note that as I was absorbing the news that Jack owned
Kaygold I read the e-mails written by Jack that this committee
published last September. These e-mails revealed a side of Jack I did
not recognize as the friend and associate I had known for almost a
quarter century. It has been over 2 years since we received the $1
million and began what I believed was an educational project to tell
the American people what I still believe is the very impressive story
of the Mississippi Band of Choctaw Indians. We have continuously
requested documentation about the work done on the project and have
never received any proof that work was completed or even started.
As for Jack Abramoff, I telephoned the rest of our board and we
agreed on strength of the violation of the conflict of interest policy
alone that we had no choice but to accept his offer to resign that he
had made in March 2004 and then again in October of that same year.
Consequently, in October 2004; I accepted Jack's resignation from the
board and I have not spoken with him since.