Guilty Plea in Lobby Case

MARGARET WARNER:

Today's plea by Washington public relations man Michael Scanlon represents the government's biggest break in its 18-month-long lobbying corruption investigation. That's because Scanlon, a former press aide to former House Majority Leader Tom Delay, has agreed to cooperate with prosecutors investigating his former partner, well-connected Republican lobbyist Jack Abramoff.

Today's case involves their dealings on behalf of Indian tribes who paid both men than $80 millions over four years. The government charged that Abramoff, identified as "Lobbyist A," directed the tribes to hire Scanlon's public relations firm without telling them he would get a 50 percent kickback of Scanlon's profits. The government also charged that the two men provided "things of value" to public officials, particularly one Republican congressional committee chairman, in exchange for an agreement to help the two men's clients.

To help us sort all this out are two reporters who've been covering this case: Eamon Javers of Business Week; and James Grimaldi of the Washington Post. Welcome to you both.

Eamon, first of all, just give us at its core, what is this huge investigation about?

EAMON JAVERS:

Well, ultimately what it is about is how business is done in Washington. We're looking at two of the most colorful characters to come across the Washington scene in a long time: Mike Scanlon, the young PR man, and Jack Abramoff, the older lobbyist who had all the connections and generated all of this money, astonishing amounts of money.

MARGARET WARNER:

Where did Abramoff come from, because, I mean, he is not someone we have heard for in years and years here in Washington –

EAMON JAVERS:

Right.

MARGARET WARNER:

— and how did the Feds first, why did they first set their sights on him?

EAMON JAVERS:

Well, Abramoff came from Hollywood, believe it or not. I mean, Abramoff was a Hollywood movie producer and he produced a movie called "Red Scorpion" in the 1980's, one of these sort of Rambo-like movie.

When the Republicans took power in 1994, he through his connections, going way back his days as a college Republican, came to Washington, got involved in lobbying and developed connections on Capitol Hill, especially with Tom Delay, who was the key access point for Abramoff in Washington.

The Feds got interested in this after the Washington Post really broke the story open of exactly how much money was at play and how many millions of dollars both Abramoff and Scanlon were moving around town.

MARGARET WARNER:

All right. Give us a similar thumbnail sketch of Michael Scanlon, all we know is former press aide to Tom Delay How heavily did he get involved with Abramoff?

JAMES GRIMALDI:

Well, when he left Tom DeLay's office he went directly to form a partnership with Jack Abramoff in order to represent these tribes. He also had a separate entity —

MARGARET WARNER:

And these were Indian tribes interested in particularly gambling legislation?

JAMES GRIMALDI:

That's right. Well, there was an enormous amount of money at stake because of all the casinos that were being opened up by Indian tribes throughout the country, and the importance of the regulatory agencies in Washington that could allow them to be recognized so that they could open these casinos.

So Scanlon was this young man, as we have pointed out earlier, of 35, 33 at the time, who quickly began to earn, you know, a seven-figure salary. And one of the things that really triggered all of this was his high-flying lifestyle. He bought a beach front house in Rehoboth Beach; he had a home in Saint Bart's; he had an apartment at the Ritz Carlton in Washington, and he would helicopter back and forth between Washington and the Delaware shore. And even for some of the most well-placed and well-heeled lobbyists in Washington, that was really quite extravagant.

MARGARET WARNER:

Pretty lavish. Well, now, tell us about, you were in the courtroom today. Did anything remarkable happen when he entered his guilty plea?

JAMES GRIMALDI:

Well, I think that you're going to find that the government has really a power house witness quite possibly. I mean, this is someone who was really on top of the facts.

I was surprised when at one point they were reading the plea agreement and he actually corrected the Justice Department in saying that the series of illegal acts that he was confessing to had gone not only from 2001 to 2004 but also 2000.

I think what you're going to see from the defense attorneys in this case, and make no mistake about this, the prosecutors are going after bribery cases and bribery of lawmakers and bribery of government officials — they will try to attack Michael Scanlon's credibility.

But that little moment today indicated to me that they're probably up against a very, a very star witness in this case.

MARGARET WARNER:

So the attempted bribery, which is sort of the marquee charge here, explain, I just very sketchily said there was a Representative A who was named in this indictment; flesh that out for us.

EAMON JAVERS:

Well, these guys were slushing all this money into Washington and the question was, what were they doing with it? Part of it was that they were channeling these rich Indian casino tribes to give contributions on Capitol Hill to various lawmakers through whom they were getting stuff done on the Hill in terms of legislation and bills.

The representative we are talking about here is Bob Nay, the chairman of the House Administration Committee; he's a Republican from Ohio. And in Ney's case over the years he did a number of things that jibed exactly with what Abramoff's clients wanted done; he also got money from Abramoff and his clients over the years.

And the question is: Is that a quid pro quo? You can prove that the gifts happened and the donations happened; you can prove that the actions happened, but proving that one was done for the other is the trick. And that's why Mike Scanlon is the key to this because he was in the room when the deal was made; he can tell you.

MARGARET WARNER:

And give us an example of one of the actions that Bob Ney took that the prosecutors are looking at.

JAMES GRIMALDI:

Well, there were primarily three major actions that are outlined, although there are even additional ones today. One was introducing legislation to help reopen a casino that had been shutdown in Texas. The second was awarding a contract to a telecommunications firm which he was able to do, virtually unilaterally.

MARGARET WARNER:

This was for the wireless phone system in the House Office Building.

JAMES GRIMALDI:

Exactly.

MARGARET WARNER:

Which Bob Ney as head of that committee could essentially designate.

EAMON JAVERS:

Ney is known as mayor of Capitol Hill up there, so he's in charge of all these internal contracts; and this is something that wouldn't normally get looked at by a lot of media folks, so that maybe they thought it was under the radar enough to do this one, but this is one of the key ones to come out.

JAMES GRIMALDI:

The third one involves a cruise line of casino ships down in Florida that Jack Abramoff was trying to purchase. And, just to give you a quick thumbnail on that, these cruise ships to nowhere that he was buying was part of a large empire and they're related to his earlier indictment in August for mail fraud and wire fraud.

To push this deal through, he relied on some statements in the Congressional Record that were added by Congressman Ney that sort of accelerated the sale of that cruise ship, casino cruise line. I do want to add one thing, though that Mr. Ney will say that he was misled –

MARGARET WARNER:

That's what he said in December –

JAMES GRIMALDI:

— by Mike Scanlon and that he was misled by Jack Abramoff, and his defense will be and we've heard from his lawyer that these gifts and meals and golf trips and a golf trip to Scotland were totally unrelated to any legislative action that he may or may not have taken.

MARGARET WARNER:

Now, the other set of charges involves actually defrauding the Indian tribes.

EAMON JAVERS:

Right.

MARGARET WARNER:

And this was this one I briefly described, this scheme of, well, hire Michael Scanlon to run your PR and then he got 50 percent back. Is that so different from what goes on in Washington?

EAMON JAVERS:

Well, that's going to be the question for historians, I think, when they look at this episode in Washington is: How different is what Abramoff and Scanlon were doing from what goes on in this town all the time?

And lobbyists I've talked to say clearly in terms of scale, these numbers are much bigger, much, much bigger than we normally see. But in terms of the tactics and the way business gets done, that's going to be a really interesting question for people to pry open some of the other actions around town.

This is the first time we have got a chance to see every e-mail these guys sent all day long to really lay out exactly how this was done.

MARGARET WARNER:

If they've got every e-mail that's been sent and they've now indicted and gotten – it's not called an indictment — but Scanlon to plead guilty, Jack Abramoff has not been indicted.

EAMON JAVERS:

Jack Abramoff is the next shoe waiting to drop.

JAMES GRIMALDI:

Exactly.

EAMON JAVERS:

One of the key pieces of speculation here is: Why hasn't Jack Abramoff been indicted?

MARGARET WARNER:

That's my question to you.

EAMON JAVERS:

The man sent 400 e-mails a day and the Department of Justice has been looking at them for two years. They clearly have evidence galore for whatever it is that they want to do.

A lot of the speculation right now is centering on lawmakers on Capitol Hill. That is the Department of Justice is more interested, perhaps in bribery against official members of Congress than in finishing up the case against Abramoff right now.

MARGARET WARNER:

How wide a net from your conversations with your sources, how wide a net are the prosecutors casting here in terms of members of Congress?

JAMES GRIMALDI:

Well, the charging papers very specifically refer to multiple or its plural government officials and plural, you know, members, potential members of Congress.

I think the real question here is whether Jack Abramoff will seek a plea agreement like Michael Scanlon. And then the question is: If he does that, will he be able to provide information to the prosecutors that could lead to other bribery charges being leveled against other members of Congress, and, you know federal officials?

MARGARET WARNER:

All right.

EAMON JAVERS:

I have one source who says it could be as many as 60 members of Congress that they are looking at. That's just one —

MARGARET WARNER:

We should say no bribery charges have actually been filed yet against the congressman –

EAMON JAVERS:

That's right.

MARGARET WARNER:

— and we'll have to leave it there. Thank you both very much.