Bloomberg.com: U.S.

Aug. 12 (Bloomberg) -- The U.S. indictment of Jack Abramoff on fraud charges in Florida may reverberate throughout Washington as federal prosecutors increase pressure on the Republican lobbyist to cooperate in other investigations.

A federal grand jury in Fort Lauderdale yesterday charged Abramoff and business partner Adam Kidan with wire fraud and conspiracy to commit wire fraud and mail fraud in connection with the purchase of a casino ship company in 2000. Prosecutors allege that the two provided false information on their loan application and used a counterfeit document to mislead lenders.

With an indictment hanging over his head, Abramoff may be more likely to talk about other dealings, former prosecutors said. Investigators are separately looking into whether Abramoff and another partner defrauded Indian-tribe clients, and watchdog groups have called for probes into trips that Abramoff arranged for lawmakers including House Majority Leader Tom DeLay.

``Those who have worked closely with Abramoff in the past will be looking over their shoulder,'' said Christopher Bebel, a former federal prosecutor who now has a law practice in Houston. ``This is a very dangerous situation for those who have worked hand in hand with Abramoff and have skeletons in their closet.''

Neal Sonnett, Abramoff's lawyer, didn't respond to voice and e-mail messages seeking comment. Sonnett told the Associated Press before the indictments were released that Abramoff did not commit fraud. Kidan issued a statement saying, ``I did nothing wrong, and these allegations are totally unfounded,'' AP said.

More Scrutiny

Abramoff's work has drawn greater scrutiny because of his ties to Republican lawmakers such as DeLay, a Texas Republican. A trip DeLay took in 2000 to Scotland and London was billed to Abramoff's credit card, the Washington Post reported in May. House rules bar lawmakers from accepting travel from lobbyists.

Abramoff joined with his former partner, Michael Scanlon, and Indian tribal clients to give money to a third of the members of Congress between 2001 and 2004, Federal Election Commission records show. At least 171 lawmakers got $1.4 million in campaign donations from the group, mostly from the tribes with casino interests. Republicans took in most of the money, with 110 of the lawmakers receiving $942,275, or 66 percent of the total.

Many lawmakers -- Republicans and Democrats -- got contributions from the tribes for reasons that had nothing to do with Abramoff's activities and say they never met the lobbyist.

No Wrongdoing

DeLay has denied any wrongdoing in taking the U.K. trips and said he believed at the time that a nonprofit group paid the travel expenses, which is allowable under House rules. DeLay spokesman Kevin Madden last night said DeLay currently has no contact with Abramoff.

``There is a cabal on the political left that has targeted Mr. DeLay,'' Madden said. ``They target him because he's effective and he has had enormous success when it comes to crafting and delivering the Republican Party's agenda.''

The U.S. Senate is also investigating Abramoff's billing of Indian tribal clients. Abramoff and partner Scanlon inflated expenses and divided up profits, according to testimony and e- mails released at a June hearing on the matter.

`Buried Skeletons'

``A guy like this may know where a lot of skeletons are buried and could potentially open up all kinds of investigations of prominent political figures, given his associations,'' said Greg Wallance, a former federal prosecutor who now works as a defense attorney in New York. For prosecutors, ``that's always the implication, the subtext,'' Wallance said.

The case in Florida involves Abramoff's and Kidan's purchase of SunCruz Casino Ltd. in 2000. Foothill Capital Corp. and Citadel Equity Fund Ltd. agreed to provide $60 million in loans for the purchase on evidence that the partners had made a cash contribution of at least $23 million, the indictment said. A document asserting the payment was sent to the seller was counterfeit, according to the indictment.

The seller, Konstantinos ``Gus'' Boulis, instead took promissory notes for a total of $20 million, the indictment said. Boulis was shot to death in February 2001 and the case has yet to be solved, according to reports in the Post and the Miami Herald.

Foothill is a unit of San Francisco-based Wells Fargo & Co. Citadel is an affiliate of Citadel Investment Group in Chicago. Officials at both companies declined to comment yesterday.

`Rattle Sabers'

``The prosecutors in the Miami case are going to be working hand in hand with agents and prosecutors in other parts of the country,'' Bebel said. ``Prosecutors will undoubtedly rattle sabers and attempt to threaten him with a conviction and a hefty prison sentence unless he decides to cooperate.''

The story of Abramoff and SunCruz detoured through Washington several times through the years.

In March 2000, before the sale to Abramoff and Kidan, Ohio Republican Representative Bob Ney criticized SunCruz and Boulis in the Congressional Record for allegations that they were cheating passengers. In October of the same year, Ney inserted another statement into the record, saying he had learned that SunCruz had new management. He offered praise for Kidan.

``While Mr. Kidan certainly has his hands full in his efforts to clean up SunCruz's reputation, his track record as a businessman and as a citizen lead me to believe that he will easily transform SunCruz from a questionable enterprise to an upstanding establishment that the gaming community can be proud of,'' Ney said on Oct. 26, 2000.

Scanlon's Urging

According to the Post, both of Ney's statements were at the urging of Scanlon, the former DeLay spokesman who later worked with Abramoff. Ney spokesman Brian Walsh said he didn't have any further comment on the remarks other than to say that Ney hasn't been contacted by federal investigators.

Abramoff also took advantage of his Washington connections in completing the transaction, the Post reported. In September, as the parties were closing the deal, a Foothill representative joined Abramoff and Kidan in a skybox at FedEx Field just outside Washington and got an introduction to DeLay, according to the Post. A DeLay spokesman told the Post at the time that the congressman didn't recall meeting the Foothill official.

``Even if Washington politicians aren't directly guilty, certainly there are going to be new questions raised about their associations with this now-indicted individual,'' said Allan Lichtman, a political historian at American University in Washington. Democrats will try to create a sense that ``there's just so much sleaze going on, the grease spreads to everybody involved,'' he said.

Watchdog group opposes Cunningham's request North County Times - North San Diego and Southwest Riverside County News

By: MARK WALKER - Staff Writer

A group that pushes for improvements in ethical government conduct wants the Federal Election Commission to reject U.S. Rep. Randy Cunningham's request to use campaign money to pay legal bills arising from an ongoing federal grand jury investigation.

Citizens for Responsibility and Ethics in Washington also wants the six-member election commission to postpone any decision until the grand jury that is meeting in San Diego completes its work.

Cunningham wants to use the more than $672,000 donated for what was to have been a 2006 re-election bid to help pay the more than $1 million he expects to incur in legal bills to fight allegations of wrongdoing related to dealings with a defense contractor.


In its letter sent to the commission's Washington office Thursday, Citizens for Responsibility and Ethics argued that the commission shouldn't take any action until the panel knows if Cunningham will be indicted.

The group also argued that the allegations of potential wrongdoing do not appear related to campaign activities. Because of that, those monies should not be available for his defense, it argues in the letter.

By waiting until the federal probe is done, the commission could determine whether Cunningham's actions involving defense contractor MZM Inc. and its founder, Mitchell J. Wade, "stem from campaign activities or his status as a federal officeholder," the letter states.

The 63-year-old Cunningham, an Escondido Republican, is under scrutiny by the U.S. attorney's office, the FBI, the IRS and the Pentagon's Defense Criminal Investigative Service over dealings with Wade.

Cunningham sold his Del Mar Heights home to Wade in late 2003 without listing the residence for sale. Wade paid Cunningham $1.675 million, and then sold the home 11 months later for $700,000 less than he paid the 50th District congressman.

While in Washington, Cunningham also stayed aboard a 42-foot boat named the "Duke-Stir" ---- what the name means is not clear ---- owned by Wade, starting in April 2004 and continuing until this spring. In the same time period, MZM reported a tripling of its revenues from Defense Department contracts.

The grand jury is believed to be examining whether Cunningham improperly influenced the awarding of contracts to MZM through his position on the House Appropriations Committee and that panel's Defense Subcommittee.

Cunningham has denied any wrongdoing, but has acknowledged "poor judgment" in selling his home to Wade. Cunningham described Wade as a personal friend.

Melanie Sloan, executive director of Citizens for Responsibility and Ethics, said Thursday she isn't optimistic about the commission agreeing with her group's request.

"The odds are pretty high," said Sloan, whose organization maintains it is nonpartisan and works on ethics issues involving Democrats as well as Republicans. "The commission has allowed use of campaign funds in past cases, and that shows there is a problem with the law."

The commission will not comment on pending cases. An agency spokesman said this week that the panel will rule on Cunningham's request by early October.

Campaign donors have been told that Cunningham will give their money to the National Republican Congressional Committee if they object to its being spent on the lawmaker's defense.

The attorneys he hired in June are expected to cost up to $1.5 million, according to Harmony Allen, chief of staff in Cunningham's Washington office.