Jack Abramoff’s Shell Games and Fall Guys
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Although AIC was set up as a corporation, most of the other groups that Abramoff used as conduits were tax-exempt organizations and charities. In a press conference shortly after Abramoff's plea, Mark Everson, the commissioner of the Internal Revenue Service, underscored the seriousness of the abuses committed by the lobbyist: "One of the most disturbing elements of this whole sordid story is the blatant misuse of charities in a scheme to peddle political influence."
These kinds of entities are typically given special tax status by the IRS because they ostensibly serve a public purpose, but the lobbyist exploited these vehicles for mostly mercenary reasons. Abramoff's influence-peddling schemes with charities and other groups that he used as shells involved financial transactions that could be dizzyingly complex: millions of dollars sometimes went into foundations or think tanks and then were transferred not once, but sometimes twice, before reaching their final destination.
AIC, the Rehoboth Beach-based think tank that Scanlon set up in 2001 shortly after Abramoff had joined the law and lobbying firm of Greenberg Traurig, was just a five-minute walk from the shoreline where the former DeLay aide had spent summers as a teenager. With regard to Malaysia, the think tank acted basically as a conduit to send funds from Kuala Lumpur to Abramoff's firm, Greenberg Traurig. By funneling $1.2 million through AIC, which never disclosed its ties to the Malaysian government, both the think tank and Greenberg Traurig skirted the legal requirement that foreign agents register with the Justice Department's Foreign Agents Registration Unit. Instead, the lobbying firm filed a lobbying registration with Congress to ostensibly represent the American International Center on economic, Southeast Asian, and other matters. For that work, which began in mid-2001, AIC paid Greenberg Traurig $1.5 million.
At the time, Malaysia had a serious image problem in the United States. Malaysian Prime Minister Mahathir Mohamad had a history of making anti-Semitic comments, had a poor human-rights record, and had jailed one key political critic, Finance Minister Anwar Ibrahim, on trumped-up charges of sodomy. Abramoff's mission for Malaysia was twofold: get members of Congress to visit Malaysia and also try to arrange for a much-coveted meeting at the White House with President Bush. In terms of getting members to visit Kuala Lumpur, Abramoff and his team had very limited success. In January of 2002, Tony Rudy and another colleague at Greenberg Traurig escorted a handful of members on a trip to Malaysia, including Republican Reps. Dana Rohrabacher of California (in whose office Rudy used to work) and Pete Sessions of Texas and Democratic Rep. Gregory Meeks of New York.
Arranging for a meeting in Washington or in Asia between Mahathir and Bush initially proved difficult—especially given Mahathir's track record. On September 10, 2001, Abramoff reached out to Ralph Reed for help with the White House. President Bush and Mahathir were both slated to attend an economic summit in October hosted by the Asian-Pacific Economic Cooperation (APEC) forum, and Abramoff wanted Reed to prod Karl Rove, Bush's chief political strategist, to help arrange a meeting between the two leaders at the summit. In his e-mail to Reed, Abramoff wrote, "I have a one month subcontract for you if you can help me. We need to get to Rove to see if we can break through the current posture of State on Malaysia and the PM meeting with Bush at the APEC meeting at the beginning of October.… If it works, there will be a lot more." Reed wrote back, "Sure." It's not clear whether Reed actually did any work on Malaysia.
But after September 11, the situation improved, in part because Malaysia became an early ally in the "war against terrorism." Bush and Mahathir did meet briefly at the APEC summit in October. A former associate of Abramoff's who was familiar with the Malaysia work told me that the lobbyist boasted that he talked to Rove at least once to push for a Washington meeting between Bush and Mahathir. The associate said he was with Abramoff one day when he received a call from someone in the White House indicating that an invitation for Mahathir to meet with Bush "was on its way." An official meeting between the Malaysian leader and Bush took place in the White House on May 14, 2002, and later that day the Malaysian prime minister was the featured guest at a dinner at the Malaysian Embassy in Washington, which Abramoff attended.
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Scanlon's AIC received plenty of attention—some of it quite zany and amusing—when one of the Indian Affairs Committee hearings in mid-2005 called Grosh and Mann to testify. While Mann "took the Fifth" and appeared stolid, Grosh surprised and entertained the audience with some refreshingly candid statements about his work with Scanlon, whom he'd known since they were teenagers. Grosh, whose slightly rumpled appearance and deadpan delivery made him sound a bit like a latter-day Jefferson Smith (of Mr. Smith Goes to Washington), told the panel that Scanlon had called him one day with an intriguing offer. Scanlon asked, "Do you want to be head of an international corporation?" Grosh allowed that the invitation was "a hard one to turn down." When Grosh inquired of Scanlon what the job entailed, Scanlon made the offer even sweeter, answering, "Nothing." "So that sounded pretty good to me," Grosh conceded.
With a twinkle in his eye, Chairman John McCain, who was spearheading the committee probe, asked Grosh if he had attended any meetings. Grosh said he went to one, and McCain zeroed in, asking how long it lasted. "Fifteen minutes," Grosh answered, adding that he couldn't recall any details about what was discussed. Nonetheless, Grosh said he was paid a total of $2,500 for his labors and got some free tickets to a hockey game. But Grosh hastened to add that when it started to smell like a risky deal, he resigned. "I got out of it when I found out it involved the federal government, Indian tribes, and gambling." Looking back at the experience with Scanlon, Grosh added that he was "embarrassed and disgusted to be part of this whole thing."
