Feds: While Corrupting Congress and Cheating Clients, Abramoff Stiffed His BigLaw Firm

Feds: While Corrupting Congress and Cheating Clients, Abramoff Stiffed His BigLaw Firm
The Daily Business Review by John Pacenti - September 10, 2008

MIAMI - It wasn't only American Indians who were ripped off by disgraced Republican lobbyist Jack Abramoff. In a sentencing memorandum filed by the Justice Department, prosecutors claimed Abramoff defrauded his employer, Greenberg Traurig, as well. Abramoff was sentenced last week in Washington to four years in federal prison for fraud, tax evasion and conspiracy to bribe public officials, such as former U.S. Rep. Robert W. Ney, R-Ohio. Abramoff already is two years into a nearly six-year sentence for another fraud case involving the purchase of the Dania Beach-based SunCruz gambling cruise line. U.S. District Judge Ellen Huvelle could have sentenced Abramoff to 11 years, but she gave him credit for helping the FBI investigate a number of politicos caught in the lobbyist's vast influence-peddling scandal. Abramoff's two federal sentences will run concurrently. Greenberg has said much of Abramoff's conduct was unknown to the Miami-based law firm until he pleaded guilty in Washington in 2006. "The acts of Jack Abramoff were illegal and a result of his efforts to deceive his clients and his former firm. He was asked to leave our firm more than four years ago," Greenberg spokeswoman Jill Perry said. "His plea agreement acknowledges that he defrauded Greenberg Traurig, and the restitution order recognizes that our firm was a victim of his illegal acts." Huvelle ordered Abramoff to pay $15 million in restitution. Perry didn't have comment regarding any restitution to Greenberg Traurig.

Abramoff cost his former employer plenty, the memo shows. Abramoff encouraged his lobbying team to conceal the identity of recipients of trips, dinners and other gifts on internal Greenberg Traurig reports to hide the identity of public officials receiving the favors, according to the government sentencing memo. Also noted, but not in detail, was that Abramoff committed private honest services fraud against his employer. "He directed a wireless company to pay lobbying fees due to Greenberg Traurig to Abramoff's nonprofit, the Capital Athletic Foundation," the memo states. A 2005 Senate inquiry found the charity was used to pay for overseas trips for Ney, House Majority Leader Tom DeLay and former Christian Coalition leader Ralph Reed. CAF also was used to funnel large fees from Indian tribes to lawmakers. Prosecutors say Abramoff asked a tribal client to pay the "vast bulk" of his fees through DeLay aide Michael Scanlon's public relations firm, Capital Campaign Strategies, which cut fees meant for Greenberg.

Abramoff also convinced the Pueblo of Sandia Indian tribe in New Mexico to hire Scanlon, reducing Greenberg's proposed fee from $125,000 to $50,000 per month. Because of the Scanlon hire, Greenberg lost its share of the additional fees that might have been paid by the Sandia tribe to Abramoff, depending on the outcome of their negotiations, according to the sentencing memorandum. The tribe hired Abramoff and Scanlon to lobby on its behalf in a legal dispute related to a mountain revered by the tribe as sacred. Other times, Abramoff scammed Greenberg Traurig by simply having his lobbyists pad their hours to get higher bonuses, according to prosecutors. "Lobbyists regularly shifted expenses from one client to another or padded hours in order to make it appear that they performed more work than they actually did, a fact which may have created a false impression about what the lobbyists were actually doing for their nonretainer clients," the memo states. Perry said she couldn't comment on the specifics of the fraud or the restitution owed to Greenberg Traurig. Assistant U.S. Attorney Mary K. Butler outlined the fraud against Greenberg Traurig that first surfaced at a Senate Indian Affairs Committee hearing in 2004. U.S. Sen. Tim Johnson, D-S.D., declared "credible law firms were taken advantage of."

Not all of the costs associated with Abramoff were mentioned in the sentencing memo, though. The firm negotiated settlements with several of Abramoff's tribal clients, such as the Alabama-Coushatta Tribe of Texas, which claimed Abramoff and others took part in a scheme that shut down the tribe's casino. Abramoff would tell the tribes -- such as the Tigua -- that he would work for free if they hired Scanlon. "In fact, Abramoff and Scanlon agreed that Abramoff would receive 50 percent of the net profits," the memo stated. They would often work against interests of the tribes they represented. For instance, Abramoff and Scanlon represented the Louisiana Coushatta in that tribe's efforts to close casinos in Texas -- a direct conflict with the interest of the Tigua, who wanted to reopen a casino in El Paso. The Daily Business Review reported in April that Greenberg Traurig refunded $324,000 in lobbying fees to Guam to get the island territory to drop felony charges against the firm. The firm faced charges of theft by deception, theft and conspiracy. Prosecutors say Greenberg became entangled in Guam's criminal investigation after the fallen lobbyist billed the territory for work on projects he wasn't hired to pursue.