A stream of political money currently under U.S. Senate investigation quietly meandered south from D.C. in 1999–2000, but its headwaters turn out to have been in Seattle. A $121,000 expenditure—the initial funds used for a deceptive Deep South antigambling campaign run by religious right leader Ralph Reed—was authorized by top officers at Seattle's Preston Gates Ellis law and lobbying firm, for whom Reed worked as a subcontractor, according to new Senate documents. Eventually, as much as $1.3 million— apparently supplied by an Indian casino client—may have gushed through Preston Gates accounts in one month to kick start the campaign. That campaign and other Reed-managed antigambling drives are now part of a U.S. probe into the allegedly fraudulent practices of former Preston Gates D.C. lobbyist Jack Abramoff, who arranged the secret money flow, investigators say. Documents indicate Abramoff, during and after his Preston Gates years, steered more than $4 million in tribal gaming money to gambling foe Reed, former head of the Christian Coalition.
The effect was to wash the money, disguising gambling funds as antigambling support. On behalf of the Choctaw Indian tribe of Mississippi and other tribal clients of Abramoff, Reed drummed up support against proposed state lotteries and rival Indian casinos that would compete with existing tribal gambling operations.
Documents, including billings and e-mails subpoenaed or turned over to a Senate committee that is reviewing Abramoff's and Preston Gates' conduct, show that a onetime Preston Gates client, the Choctaw tribe, supplied much of Reed's antigambling money through the back channel. He ran campaigns first in Alabama, then Texas and other states from 1999 through 2003. Some funds initially passed through Preston Gates' accounts and then took other indirect routes, including a winding trip through the coffers of Americans for Tax Reform (ATR), headed by Bush administration confidant Grover Norquist, then on to antigambling groups that turned the checks over to Reed. Norquist has publicly confirmed that the ATR pass-through plan was arranged by Abramoff.
In an April 1999 e-mail that signals the beginning of the antigambling campaigns, Abramoff wrote to Reed: "Ralph, I spoke with our [Preston Gates] managing partner and he has approved the subcontractor arrangement, but does not want the firm to be out big bucks on this, even as a cash flow, for long. So, it would be really helpful if you could get me invoices [on proposed campaign costs] as soon as possible so I can get Choctaw to get us checks ASAP . . . " (Reed earlier requested the startup money be "fronted" to him). A few days later, an e-mail from the Seattle headquarters to its D.C. offices said: "We have been requested to pay a $121,000 invoice [to Reed] on behalf of the Choctaw Indians. . . . [Name deleted] has approved this unusually large disbursement."
A subsequent 1999 Preston Gates e-mail, responding to Abramoff's request to know how much "we" have sent Reed, shows $1.3 million was sent from April through May 6 that year. Preston Gates last week would not explain the expenditures or say how much tribal money may have passed through its accounts to subcontractor Reed. "The firm is unable to discuss the work it performed on behalf of clients," said D.C. managing partner Jonathan Blank.
Congress and the Justice Department are reviewing as much as $82 million in fees paid by six Indian tribes to Abramoff and another former Preston Gates lobbyist-turned-consultant Mike Scanlon using a scheme Scanlon dubbed "Gimme Five," which kicked back inflated fees to pal Abramoff. Senate Indian Affairs Committee Chair John McCain, R-Ariz., said the scam included, for example, a fabricated $1 million invoice Abramoff sent the Choctaw from Scanlon's consulting company. Abramoff split some proceeds with Scanlon and kept a portion for his own private charity. The story of Gimme Five, McCain said, is about "more than contempt, even more than greed. It is simply and sadly a tale of betrayal."
New Senate documents show Seattle radio host Rabbi Daniel Lapin was more than just a friend and fellow religious conservative to embattled D.C. lobbyist Jack Abramoff (see: "Meet the Lapin Brothers," May 11). Lapin was also on the payroll of Abramoff's D.C. charity, Capital Athletic Foundation. According to Abramoff's e-mails, CAF was sometimes used as a money conduit to avoid paying higher income taxes.
At one point, the e-mails state, Abramoff proposed using Lapin and another person on CAF's payroll to create a "research" project as a tax write-off, but Abramoff's accountant worried the IRS would see it as a "sham transaction," and the idea was apparently dropped. Abramoff also proposed using Lapin's Mercer Island charity, Toward Tradition, as an apparent money pass-through to help fund Ralph Reed's antigambling drives (see main story), then learned the charity didn't have the correct IRS status.
There is no indication Lapin, who would not comment last week, was aware of the schemes. Abramoff is a board member of Lapin's charity, and Lapin was one of four people who collectively earned $20,000 a month at Abramoff's D.C. charity, according to Senate documents.