S. HRG. 109–135, Pt. 1

TRIBAL LOBBYING MATTERS

HEARING

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

ON

OVERSIGHT HEARING REGARDING TRIBAL LOBBYING MATTERS, ET AL

JUNE 22, 2005

WASHINGTON, DC

PART 1

(
TRIBAL LOBBYING MATTERS
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22–150 PDF 2005

S. HRG. 109–135, Pt. 1

TRIBAL LOBBYING MATTERS

HEARING

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

ON

OVERSIGHT HEARING REGARDING TRIBAL LOBBYING MATTERS, ET AL

JUNE 22, 2005

WASHINGTON, DC

PART 1

(
COMMITTEE ON INDIAN AFFAIRS

JOHN McCAIN, Arizona, Chairman

BYRON L. DORGAN, North Dakota, Vice Chairman

PETE V. DOMENICI, New Mexico

CRAIG THOMAS, Wyoming

GORDON SMITH, Oregon

LISA MURKOWSKI, Alaska

MICHAEL D. CRAPO, Idaho

RICHARD BURR, North Carolina

TOM COBURN, M.D., Oklahoma

DANIEL K. INOUYE, Hawaii

KENT CONRAD, North Dakota

DANIEL K. AKAKA, Hawaii

TIM JOHNSON, South Dakota

MARIA CANTWELL, Washington

JEANNE BUMPUS, Majority Staff Director

SARA G. GARLAND, Minority Staff Director

(II)
(III)

C O N T E N T S

Page

Statements:

Akaka, Hon. Daniel K., U.S. Senator from Hawaii ....................................... 9

Benn, Charlie, director of administration, Office of the Chief, Mississippi

Band of Choctaw Indians ............................................................................. 9

Dorgan, Hon. Byron L., U.S. Senator from North Dakota, vice chairman,

Committee on Indian Affairs ....................................................................... 6

Grosh, David, former director, American International Center ................... 33

Halpern, Gail, former tax preparer, adviser to Jack Abramoff .................... 31

Kilgore, Donald, attorney general, Mississippi Band of Choctaw Indians .. 14

Mann, Brian, former director, American International Center .................... 33

McCain, Hon. John, U.S. Senator from Arizona, chairman, Committee

on Indian Affairs ........................................................................................... 1

Ridnour, Amy, president, National Center for Public Policy Research ........ 29

Ring, Kevin, former Abramoff associate ......................................................... 26

Rogers, Nell, planner, Mississippi Band of Choctaw Indians ....................... 11

Stetter, Aaron, former associate, Capitol Campaign Strategies ................... 33

Vasell, Shawn, former Abramoff associate ..................................................... 26

APPENDIX

Prepared statements:

Halpern, Gail .................................................................................................... 51

Martin, Phillip, chief, Mississippi Band of Choctaw Indians ....................... 52

Ridnour, Amy .................................................................................................... 59

Additional material submitted for the record:

Referenced material ......................................................................................... 63

Letter from Chairman McCain to Kevin Ring c/o Richard Hibey ................ 355

Letter from Richard Hibey on behalf of Kevin Ring to Chairman McCain . 356

Letter from Bryan D. Parker to Richard Hibey ............................................. 357

Letter from Richard Hibey to Bryan D. Parker ............................................. 358

(1)

TRIBAL LOBBYING MATTERS

WEDNESDAY, JUNE 22, 2005

U.S. SENATE, COMMITTEE ON INDIAN AFFAIRS, Washington, DC.

The committee met, pursuant to notice, at 9:44 a.m. in room 216

Senate Hart Building, Hon. John McCain (chairman of the committee), presiding.

Present: Senators McCain, Akaka, Dorgan, Inouye, and Thomas.

STATEMENT OF HON. JOHN MCCAIN, U.S. SENATOR FROM

ARIZONA, CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

The CHAIRMAN. Good morning.

Last February, the committee launched an investigation in to allegations of misconduct made by six Indian tribes against their

former lobbyist Jack Abramoff and former political consultant Michael Scanlon. Later in the year, the committee held two hearings

examining the duo’s representation of the Saginaw Chippewa Indian Tribe of Michigan, the Agua Caliente Band of Cahuilla Indians of Palm Springs and the Tigua Tribe of El Paso.

Among other things, the committee determined that Mr. Scanlon’s companies collected at least $66 million from the six tribes

and secretly paid Mr. Abramoff almost $22 million from that

amount.

Today’s hearing is the third in this series of hearings. The committee is pleased to have with us representatives of the Mississippi

Band of Choctaw Indians, Nell Rogers who was the tribe’s primary

contact with Jack Abramoff, Michael Scanlon, and Donald Kilgore,

the tribe’s attorney general who is presently examining the full extent of the tribe’s injuries.

Also attending is Chief Martin’s personal representative, Charlie

Ben, the director of administration in the Office of the Chief. Chief

Martin and I met in my office just weeks ago to discuss this hearing. Given the knowledge and candor of Ms. Rogers and Mr. Kilgore, the committee concluded that Chief Martin’s presence would

not be necessary. The committee nevertheless appreciates Chief

Martin’s graciousness in sending his personal representative here

today.

During our meeting, Chief Martin shared with me the rumors

and misinformation that persists about the committee’s investigation. Let me reiterate the focus of the committee’s investigation

and today’s hearing. The committee’s investigation is and always

has been directed at the allegations of misconduct made by a num-
2

ber of tribes against their former lobbyists and political consultants

and the consequent harm to the tribes. This investigation has

never been an attack on tribal sovereignty nor an assault on the

tribe’s legitimate participation in our great democracy.

This particular hearing is not aimed at Chief Martin, his administration or the tribe. There have been no allegations of wrongdoing

made against them, nor have we seen any evidence of such wrongdoing.

With that in mind, I thank Chief Martin for the Mississippi

Choctaw’s complete and continuing cooperation in the committee’s

investigation. During our collaborations, the tribe has raised concerns about public revelation of certain matters it deems protected

by the First Amendment.

Sensitive to the tribe’s concern, whether couched in constitutional terms or not, the committee and the tribe have successfully

worked together to ensure that the committee has full access to

pertinent information, without needlessly disclosing information

potentially damaging to the tribe. This is a commitment I ask my

colleagues to honor and respect, and one which I intend to uphold

as chairman.

From our first hearing emerged the utter contempt that Mr.

Abramoff and Mr. Scanlon held for their tribal clients. In the second, Mr. Abramoff’s and Mr. Scanlon’s insatiable greed came to the

fore. Today’s hearing is about more than contempt; even more than

greed. It is simply and sadly a tale of betrayal. When that betrayal

began, exactly when and why, we do not and may not ever know.

What we do know is that Mr. Abramoff betrayed a longstanding client, betrayed his colleagues, betrayed his friends.

Of all his tribal representations, the Mississippi Choctaw was

Abramoff’s longest. As far back as 1995, the Mississippi Choctaw

hired Mr. Abramoff while at Preston Gates to represent their interests on Capitol Hill. By all accounts, Mr. Abramoff and his team

discharged their duties ably and with great success.

When Mr. Abramoff and his team left Preston Gates for Greenberg Traurig at the end of 2000, the tribe moved their account with

him. Over the preceding 5 years, the tribe, and more particularly

Chief Martin and his aides, had grown to trust Jack Abramoff and

his team. Little did they know that that trust would soon be

abused.

Over the next 3 years, it appears that Mr. Abramoff separately

and in concert with Mr. Scanlon and others defrauded the tribe in

three ways. The first is not new to this story. The previous hearings revealed the secret partnership shared by Mr. Abramoff and

Mr. Scanlon and the artificially inflated prices they obtained under

false pretenses. The second and third ways have not yet been examined. These are the use of tax exempt organizations to effect

their scheme, and the fraudulent billing of fees and expenses by

Jack Abramoff and his team at Greenberg Traurig.

According to witnesses, Mr. Abramoff introduced the tribe to Mr.

Scanlon and recommended it hire him in late 2001. The two presented Mr. Scanlon as an independent operator. Never did they

confess their secret partnership to the tribe. Never did they reveal

that together they set prices to account for Mr. Abramoff’s stake in

the profits. Never did they even hint that the two devoted a small
3

fraction of the payments to the uses intended by the tribe, pocketing the rest.

Until last year, the tribe had no reason to question the man that

had represented and advised them for years. At all times the tribe

understood and expected that Mr. Abramoff and Mr. Scanlon were

working in their best interests. Even today, the tribe could not

have envisioned the betrayal it suffered at their hands.

How big was that betrayal? According to a January 8, 2002 email from Mr. Abramoff to Mr. Scanlon, the two had charged the

Mississippi Choctaw $7.7 million for projects in 2001. Of that

amount, Mr. Scanlon spent $1.2 million for the efforts. He and Mr.

Abramoff split an astounding $6.5 million.

Not content with these astronomical sums, Mr. Abramoff and Mr.

Scanlon conspired for more. In a November 4, 2002 e-mail, Mr.

Scanlon asked Mr. Abramoff how he should seek more money from

the tribe’s legislative liaison Nell Rogers:

Last time you said to me to just tell her that we are spending our own money

to get it done and we are going deep into the hole.

Mr. Abramoff replied:

I think you should call her and tell her that we have turned the corner, but you

are pouring it on to make sure we win. Tell her as of now you are finally willing

to say that we will win this, but laughingly say, I do not know how I am going to

get back all the money I had to dump into this.

This, of course, was untrue.

Since our first hearing, Mr. Abramoff and Mr. Scanlon have suggested to the tribes that the two were not partners and that the

sums Mr. Scanlon paid Mr. Abramoff were merely referral fees.

That explanation strains credulity. Not only did Mr. Scanlon pay

Mr. Abramoff one-half his company’s profits, conspire with him to

set prices and refer to him as a partner, we now know that Mr.

Abramoff was prepared to claim to prospective financiers on another venture that, ‘‘2000 was a business transition year where I

was building CCS.’’ CCS, of course, was Capitol Campaign Strategies, a company owned and operated by Mr. Scanlon.

Last year, the committee reported that Mr. Abramoff’s and Mr.

Scanlon’s partnership apparently commenced in June 2001. It appears that their scam actually started earlier. It apparently began

with payments to the American International Center, the selfstyled international think tank in Rehoboth Beach, DE that was

Greenberg Traurig’s fifth largest lobbying client in 2002, paying

$840,000 in fees to the firm.

With us today are the center’s former directors, Brian Mann and

David Grosh. These two gentlemen will hopefully be able to educate us on the nature and scope of the American International Center’s business. I suspect both men will be surprised to learn that

Mr. Scanlon and Mr. Abramoff used the center to carryout their allegedly fraudulent scheme.

As an example of this, in a May 2, 2001 e-mail, Mr. Abramoff informed Mr. Scanlon that the Mississippi Choctaw were about to

pay money into the American International Center. According to

Mr. Abramoff:

I am going to try to get us $175,000, $100,000 to Ralph, $25,000 to contribution,

$5,000 immediately to the Conservative Caucus, the rest, give me $5,000.
4

Ultimately in April 2003, the AIC paid Mr. Abramoff’s company,

Kaygold, almost $1 million. Their ‘‘gimme five’’ scheme seems to

have begun with a modest $50,000, as we know. It would soon

rocket into millions.

Based on the evidence thus far, the Mississippi Choctaw paid approximately $15 million directly to Mr. Scanlon’s companies and

Mr. Scanlon paid Mr. Abramoff more than $5 million from those

funds.

Unfortunately, the alleged fraud perpetrated against the tribe

does not end there. In 2002, Mr. Abramoff and Mr. Scanlon successfully employed other vehicles to extract another $2 million from

the tribe. Apparently at Mr. Scanlon’s direction, the tribe paid $1

million into the Capital Athletic Foundation, Jack Abramoff’s personal charitable foundation. The tribe intended and understood

that the $1 million would be distributed to various grassroots organization to advance the tribe’s legislative interests. At all times relevant, the tribe understood that the foundation’s sole function was

a conduit of money, never a legitimate charity.

The tribe neither intended nor authorized its money to be used

as a charitable contribution to the foundation. It certainly never

agreed to the uses that Mr. Abramoff ultimately put those funds.

To what uses did Mr. Abramoff and his foundation put the money

received from the Mississippi Choctaw and other donors in 2002?

According to the foundation’s tax and accounting records, nearly 80

percent of the funds went to the Eshkol Academy, the all-boys Jewish school established by Jack Abramoff. The foundation also paid

a monthly stipend and Jeep payments to Mr. Abramoff’s high

school friend living in the Israeli West Bank who conducted sniper

workshops for members of the Israeli defense force and others.

As Mr. Abramoff tried to square these payments with the charitable mission of the foundation, according to Mr. Abramoff’s secretary, his friend suggested that he could write, ‘‘some kind of letter with his sniper workshop logo and letterhead.’’ It is an ‘‘educational’’ entity of sorts. Mr. Abramoff could only respond, ‘‘No,

don’t do that. I don’t want sniper letterhead.’’

Based on evidence examined by the committee, Mr. Abramoff adjusted the transactional structure on the books to continue, in the

words of his tax planner, ‘‘the Jeep payments, as well as all the

other military expenses that do not look good on the foundation’s

books.’’

His cohort in Israel did so by establishing a bank account in the

name of a school that apparently existed only on paper. Whether

the substance as opposed to the form of the transaction comports

with our tax laws will likely be of interest to the IRS.

Interestingly, in 2002 the foundation listed as beneficiaries of its

largest the Alexandria Police Youth Camp Foundation, Boy Scouts

of America, YMCA of Metropolitan Washington, and other legitimate organizations. Yet cumulatively, those organizations received

only $7,000 in donations that year, a sum that pales in comparison

to what each of the three largest recipients received individually.

In fact, the listed organizations together received less than 1 percent of the money spent.
5

Before its website was taken out, Mr. Abramoff’s foundation listed its mission as fostering character development through sportsmanship, which it defined as:

Ethical behavior both on and off the playing field, both in athletics and in business, both as a youth and as an adult.

Given what we have learned over the past year and what we will

hear today, that mission statement rings hollow.

More betrayals were to come. In October 2002, Mr. Abramoff and Mr. Scanlon successfully defrauded the tribe of another $1 million.

To accomplish this, Jack Abramoff betrayed not just the tribe, but

also two long-time friends and violated his fiduciary duty to the

non-profit organization on whose board he sat. The process was

two-fold. On the top end, Mr. Abramoff directed the tribe to pay $1

million into the National Center for Public Policy Research, upon

whose board he sat and whose executive director he knew for over

20 years.

To induce the tribe in to making the payment, he told them that

the money would be used for their grassroots activities, activities

which he knew the center could not and would not undertake either on its own or through another. To the center, Mr. Abramoff

explained that part of the money was a donation ultimately destined for the Capital Athletic Foundation and the rest was intended for a huge educational effort the tribe was undertaking to

educate the public on the benefits of Indian gaming and the distinction between Indian and non-Indian gaming. The center understood it would participate in that educational effort.

On October 10, 2002, the center provided Mr. Abramoff with an invoice for $1 million for, ‘‘contribution to the National Center for

Educational and Research Programs and Activities.’’ But the tribe

never saw that invoice because Mr. Abramoff never sent it. Instead,

he sent an invoice fabricated by Mr. Scanlon’s shop purportedly

from the National Center for Public Policy Research, for ‘‘professional services.’’ That was the invoice the tribe ultimately saw and

paid.

Once the money arrived at the center, Mr. Abramoff told the center to pay $500,000 to Capitol Campaign Strategies, which Mr.

Abramoff claimed was performing the heavy lifting on the educational effort, and $50,000 to Nurnberger and Associates, which

Mr. Abramoff said would be supervising the effort. He told the center the remaining $450,000 was intended as a charitable contribution to the Capital Athletic Foundation.

In fact, the tribe never intended to donate any of that money to

Mr. Abramoff’s personal charity. Mr. Nurnberger never worked on

behalf of the center or the Choctaw. He received his money in repayment of a personal loan he had made to Mr. Abramoff years

earlier. When Mr. Nurnberger raised concerns about the center repaying the loan, Mr. Abramoff assured him that the funds were

due Mr. Abramoff as director of the center.

To try and give his activities the veneer of legitimacy, Mr.

Abramoff instructed his executive assistant to ‘‘make up invoices’’

from Nurnberger and Associates and the Capital Athletic Foundation which he then submitted to the center. According to Mr.

Nurnberger, he neither saw nor approved the invoice submitted in

his firm’s name. Believing the transaction in order and relying
6

upon the word and fiduciary duty of their director, the center disbursed the funds. By abusing the trust of those involved, Mr.

Abramoff and Mr. Scanlon profited by another $1 million.

I want to thank Amy Ridenour, the president of the National

Center for Public Policy Research, for agreeing to appear here

today to help illuminate what appears to be a $1-million fraud.

The third area of possible fraud identified by the committee involves the possible fraudulent billing of fees and expenses by Mr.

Abramoff and his team while at Greenberg Traurig. It ranges from

charging non-business meals at Mr. Abramoff’s restaurant, Signatures, to the impermissible expensing for club dues and other items

hidden from the tribe. It apparently also involves the padding of

bills.

As just one example, when Mr. Abramoff learned that the tribe’s bill was nowhere near the $150,000 monthly mark, Mr. Abramoff

instructed one of his associates to ‘‘add 60 hours’’ for him, and to

‘‘pump up Scanlon, Todd, and you; give Amy some hours if you

have to.’’ Even when Mr. Scanlon began running his own companies and receiving payments directly from the tribes, Mr. Abramoff

nevertheless tried to bill clients for Mr. Scanlon’s time.

There is other evidence which I believe the Department of Justice should review if it has not already begun to do so. If proven

true, such activity could well constitute a violation of the mail and

wire fraud statutes.

There is much more to this story than I could possibly describe

in the limited time we have today. Indeed, the committee has come

upon evidence suggesting that Mr. Abramoff may have perpetrated

a similar scam on some of his non-tribal clients. While we cannot

emphasize enough the harm Mr. Abramoff and Mr. Scanlon inflicted upon the tribe, we should not overlook the toll their actions

took on the men and women they betrayed.

How that wound can be salved, I cannot say. I leave it to Mr.

Abramoff and Mr. Scanlon to try. I asked the vice chairman for his

concurrence in having documents that I will be asking questions

on, those related to these areas, entered as part of today’s record.

Senator DORGAN. Without objection. I would support that.

[Referenced documents appear in appendix.]

The CHAIRMAN Senator Dorgan.

STATEMENT OF HON. BYRON L. DORGAN, U.S. SENATOR FROM

NORTH DAKOTA, VICE CHAIRMAN, COMMITTEE ON INDIAN

AFFAIRS

Senator DORGAN. Mr. Chairman, thank you very much. I will

make a similar request that the documents on which I ask questions be made a part of the record.

The CHAIRMAN Without objection.

[Referenced documents appear in appendix.]

Senator DORGAN. Mr. Chairman, this is, as you have described,

a disgusting story of greed unlike any that I have seen in my service in Congress. I think it is important to begin, as you did, to point

out that there is no evidence of wrongdoing by the Choctaws, the

Indian tribe that will be discussed here. We have had their full cooperation. We appreciate the cooperation of Chief Martin and others from that tribe.
7

It is important to understand that this tribe has been a victim

of fraud, we believe, and we will describe some of that in the hearing and learn much more from the witnesses.

The commitment that the chairman has made in this committee

to provide a thorough and exhaustive investigation of how a number of Indian tribes were deceived and defrauded by Jack Abramoff

and Mr. Scanlon is important. Today, we focus on the Choctaw

Tribe of Mississippi and how they were victimized.

The Choctaw Tribe is a notably successful tribe in its business

operations. It is the second-largest employer in the State of Mississippi. The tribe has a very substantial annual payroll. Its businesses are diversified and successful. These are business-savvy people with a business plan. Part of their plan was to hire someone

who they could trust to advance their agenda.

The Choctaw Tribe began its relationship with Jack Abramoff 10

years ago. Mr. Abramoff designed a business model for the tribe,

running their money through a variety of people and entities for

grassroots public policy and public relations purposes. These included Preston Gates, Greenberg Traurig, Americans for Tax Reform, Capitol Campaign Strategies, Ralph Reed, and many more.

In fact, there were a large number of characters who became recipients of the tribe’s money through various means.

At some point, it appears to me that around January 2002 Mr.

Abramoff and Mr. Scanlon decided they could be making millions

themselves instead of sending money to others, including Ralph

Reed. They referred to him as a bad version of us; no more money

for him, in January 2002. And then they hatched the scheme

whereby Abramoff told the tribe to hire Scanlon for millions. But

he failed to tell the tribe that his firm would be getting at least

one-third of the Scanlon fee as his reward.

The tribe was accustomed to sending money at Abramoff’s direction to various organizations as a part of its public relations efforts.

It appears they did not raise questions about the new groups that

began to appear at Mr. Abramoff’s recommendation: The American

International Center, which is a Scanlon company; the National

Center for Public Policy Research, whose board membership included Abramoff; the Capital Athletic Foundation whose sole board

members were Abramoff and his wife; and Scanlon and Gould Public Affairs, also known as Capitol Campaign Strategies.

As part of its investigation, the committee uncovered a mind-boggling list of organizations used as financial and grassroots conduits

by both Scanlon and Abramoff. The organizations provided an

alarming picture of how these groups were used, and in some cases

manipulated, sometimes for personal gain and sometimes for political gain. The goal was always the same: To hide, to obscure and

to mislead where the money was coming from and where it was

going.

The committee did not need a Deep Throat to tell us to follow

the money. The e-mail that you will see today have done that for

us. E-mail show that Mr. Abramoff may have tried to evade taxes

by having earned income sent to his private charitable foundation

which seemed also to serve as his personal piggy bank, the Capital

Athletic Foundation. Quoting from one of his e-mail:
8

I have some money due me from CCS, Capitol Campaign Strategies. If I have

them write it to the Capital Athletic Foundation for services rendered, can the Capital Athletic Foundation just take it and not pay taxes if the services are in the

realm of what the Capital Athletic Foundation does, advice on athletics or something like that? That way, the CCS could expense it and the Capital Athletic Foundation could take it in tax-free.

E-mails show how Jack Abramoff shopped around for a 501(c)(4)

or multiple 501(c)(4)s to use as pass-throughs for various money

transactions. In an e-mail to Ralph Reed, Mr. Abramoff refers to

Amy Ridenour at the National Center for Public Policy:

She does not have a (c)(4), only a (c)(3). So we are back to ATR, Americans for

Tax Reform, only. Let me know if this will work. Just do this through ATR until

we can find another group.

That is February 2, 2000.

A few weeks later, Abramoff responds to Reed about how to continue funding Reed’s work:

Thanks, Ralph. I hope to have a decision imminently on going back up hard. I

also have a new (c)(4) to use.

There are numerous memos between Mr. Abramoff, Reed, ATR,

and Mr. Norquist on how to move more money through c(4)s to obscure or deceive the source of the money. Mr. Chairman, while it

is not in this committee’s jurisdiction to determine whether nonprofit organizations were acting legally or not, it certainly begs the

question as to whether they were acting within their charitable or

tax exempt purpose. I hope we will consider a future hearing perhaps with the Senate Finance Committee to explore the activities

of these 501(c)(3)s and 501(c)(4)s. I suggest that we consult with

the Finance Committee about how to further investigate those activities.

Over the course of the Choctaw’s involvement with Mr. Abramoff

and Mr. Scanlon, the tribe spent at least $20 million on various

lobbying and grassroots activities. No one questions their right to

contract for services to grow their business. Like many groups who

work with lobbyists, they put their trust in these experts from

Washington to do the right thing, but there was a breach of trust

and a betrayal.

This tribe was never told about the secret scheme that allowed

Jack Abramoff to skim $5 million from the money that Michael

Scanlon had promised the tribe would be spent on grassroots and

public relations, but was not spent on that purpose. The tribe was

never told that part of the $1 million they had been told to send

to the National Center for Public Policy Research for grassroots organizing would be used to repay a personal loan going back to Jack

Abramoff’s days as a filmmaker. The tribe was never told that

$10,000 of their money would be sent to Reed for chairman when

Ralph Reed was seeking the chairmanship of the Georgia Republican Party. The tribe was not told that the $1 million they were

directed to send to the Capital Athletic Fund was basically going

to Abramoff’s pet projects. We know that the Capital Athletic Fund,

allegedly a private charitable foundation, was used as Mr.

Abramoff’s personal checking account.

Were these thefts or just betrayals? And where is the line

drawn? Mr. Chairman, this investigation has taken twists and

turns that none of us had anticipated. It has uncovered deceptions
9

and greed that even by Washington standards are breathtaking. It

has raised questions of ethics and legality that we must pursue.

I thank you especially for your persistence and for your dogged

approach. I look forward today to hearing from the witnesses.

The CHAIRMAN. Thank you very much.

Our first panel is Charlie Benn, a representative of the Mississippi Band of Choctaw Indians; Donald Kilgore, Esquire, attorney general for the Mississippi Band of Choctaw Indians; and Nell

Rogers, planner of the Mississippi Band of Choctaw Indians. Please

come forward and welcome to the committee.

I apologize. While the witnesses are seating, Senator Akaka has

an opening statement.

STATEMENT OF HON. DANIEL K. AKAKA, U.S. SENATOR FROM

HAWAII

Senator AKAKA. Thank you very much, Mr. Chairman. I want to

thank you and Vice Chairman Dorgan for holding this oversight

hearing on tribal lobbying practices.

This is the third, as you know, in a series of hearings that this

committee has conducted already. While I am appalled by these

men, Jack Abramoff and Michael Scanlon, they were able to conduct a pattern and practice of dealings that took advantage of native peoples. I am hopeful that through these hearings, the committee will be able to provide guidance in resolving these matters to

ensure that this type of history is not repeated again.

I look forward, Mr. Chairman, to hearing the testimony from the

witnesses who are here today. Thank you for holding this hearing,

Mr. Chairman.

The CHAIRMAN. Good morning.

Ms. Rogers, who is accompanying you, for the record?

Ms. ROGERS. Bryant Rogers who is the tribe’s attorney.

The CHAIRMAN. Welcome, Mr. Rogers, just for the record.

We will begin with you, Mr. Benn. Thank you for appearing.

Please proceed.

STATEMENT OF CHARLIE BENN, DIRECTOR OF ADMINISTRATION, OFFICE OF THE CHIEF, MISSISSIPPI BAND OF

CHOCTAW INDIANS

Mr. BENN. Thank you, sir.

Good morning. My name is Charlie Benn and I am the director

of administration for the Office of Chief Phillip Martin, Mississippi

Band of Choctaw Indians. With me today are Nell Rogers, who

works in the tribal planning office in the area of legislative affairs,

who will also offer testimony in a few moments. Don Kilgore, the

tribe’s attorney general is here as well. Mr. Kilgore will also offer

brief testimony and assist in answering questions that you may

have. Also present with the panel is C. Bryant Rogers, outside

counsel for the tribe.

We certainly appreciate this opportunity to present the views of

the tribe as regards the committee’s ongoing investigation into the

conduct of Jack Abramoff and Michael Scanlon.

The Mississippi Band of Choctaw Indians is a federally recognized Indian tribe of nearly 10,000, most of whose members reside

on eight reservation communities located on trust lands scattered
10

over a five-county area in East-Central Mississippi. The majority of

our tribal members are full-blood Choctaw language-speaking. We

are descendants of those Choctaw people who resisted repeated efforts by the Federal Government to force their relocation to Oklahoma. This continued from 1830 through the early 1900’s. The

tribe’s reservation lands are poor and unproductive and the tribe

is without any natural resources which could be used to generate

income.

The Mississippi Choctaws were ignored and abandoned by the

Congress and Federal executive branch for almost a century, finally

securing our initial Indian reservation lands in 1944 and Federal

recognition as a separate tribe in 1945. Our members were then essentially destitute without any resources and our tribal government was basically powerless to help them. Unemployment was so

prevalent among our tribal members that we knew we had to find

another path and we did.

We made the choice to pursue self-determination as the best

means to meet the growing needs of the tribe and to pursue manufacturing jobs as the best means of employing large numbers of our

people. Beginning with one tribal employee in 1963, the Mississippi

Choctaws have grown to become the second-largest employer in

Mississippi, employing some 9,200 people. We operate about 25 different commercial enterprises.

The tribe has developed a strong and stable government providing the full array of governmental services. This includes the operation of a large school system, police and fire protection services,

courts, hospitals, clinics, social, housing, realty, and economic development agencies. These were key ingredients of our latest success in building a reservation economy and attracting private investment.

The passage of the Indian Gaming Regulatory Act and the introduction of class III gaming in 1989 in Mississippi led to the development of the tribe’s current Pearl River Resort. We have invested

over $1 billion in this development, which has created jobs and

generated income. Rather than make large distribution payments

to tribal members, we chose to invest in our future in a different

way.

The success of the resort has allowed the tribe to begin catching

up from generations of poverty. There has been extraordinary

progress which I set forth in more detail in Chief Martin’s written

testimony. Still, significant needs remain particularly in the areas

of health, education and housing. Since all of our enterprise growth

has been debt-financed, we still have a $300-million debt load to

retire.

Because of the tribe’s government-to-government relationships

with the United States and because of the need to protect tribal investments and our ability to repay business debt, the Mississippi

Choctaws have engaged in extremely active and aggressive efforts

to monitor and affect the Federal decisionmaking process and to

shape public opinion on matters affecting the tribe’s political and

economic interests.

To achieve this, we have long engaged experienced professionals,

including lobbyists with prestigious law firms who know and understand how Federal lobbying and grassroots advocacy works. Our
11

effort in this regard has historically been successful and we have

relied upon the professional expertise and integrity of those law

firms and their lobbyists to ensure that this work is handled for

us in a lawful and appropriate manner.

So when the initial press reports emerged last year regarding the

large fees paid to Jack Abramoff at Greenberg Traurig or to Michael Scanlon by a number of tribes for lobbying work and grassroots advocacy, we had no reason to believe that anything questionable had occurred concerning those payments or their work for us.

We were pleased with the results that we had achieved.

Later, we have learned, based on the work of the committee and

our attorneys, that Mr. Abramoff, along with Mr. Scanlon, had engaged in what appears to be a consistent pattern of kickbacks, misappropriated funds, payment induced under false pretenses, and

padded billings, all orchestrated by Mr. Abramoff from his position

as Senior Director of Governmental Affairs for Greenberg Traurig,

LLP, the law firm which the tribe had retained to handle its public

affairs needs starting in January 2001.

From the onset of this matter, the tribe has fully cooperated with

the FBI and the Justice Department. Since July 2004, almost 1

year ago, we saw evidence of apparent wrongdoing on the part of

Mr. Abramoff and Mr. Scanlon. We have worked closely with the

committee to further its investigation.

Early on in this process, however, the tribe raised with the committee its concern that sensitive information regarding its lobbyists, lawful lobbying and public affairs activities not be unduly disclosed through the committee’s investigation of Mr. Abramoff and

Mr. Scanlon, and of the tribe’s First Amendment right to protect

against such involuntary disclosure.

The tribe certainly appreciates that the committee has respected

the tribe’s First Amendment rights throughout this. Consistent

with this position, the tribe has shared all requested documents

and information with committee staff, but has declined to place in

the record information regarding the tribe’s First Amendment-protected activities when disclosures of such information is not required. This remains the tribe’s position today.

I would now like to defer to Ms. Rogers to discuss how the tribe

came to employ Mr. Abramoff and Mr. Scanlon, and further details

on our lobbying activities, and to request that the committee’s

questions be deferred until each of us on this panel has had the

opportunity to make our opening statements.

Thank you, sir.

The CHAIRMAN Thank you very much, Mr. Benn.

Mr. KILGORE OR MS. Rogers, whichever way. Ms. Rogers is fine.

STATEMENT OF NELL ROGERS, PLANNER, MISSISSIPPI BAND

OF CHOCTAW INDIANS

Ms. ROGERS. Thank you.

Good morning and thank you Senator McCain, Senator Dorgan,

and Senator Inouye for your comments. I would also like to say

that we appreciate the work of your staff in pulling together our

information for the hearing.

Prior to 1994, Chief Martin was the tribe’s primary lobbyist.

Partly this was because the tribe had no funds to pay for these
12

services. Later as the scale and reach of Federal regulations and

legislation affecting Indian tribes expanded, and as the tribe’s businesses and revenues grew, attending to those enterprises required

more and more of the chief’s time, leaving less time to devote to

the legislative process.

It became prudent to hire outside lobbyists and legal counsel to

assist in addressing the tribe’s Federal advocacy needs and to assign additional staff in the chief’s office to assist in coordinating

the tribe’s public affairs efforts.

Before the tribe retained Preston Gates, it had retained the law

firm of Hobbs, Strauss, Dean, and Walker here in Washington to

provide some legal services and public affairs work, primarily in

the area of self-determination, in health, and in education. The

tribe continues to work with Hobbs, Strauss, and with other law

firms, firms who have represented the tribe for many years such

as Wise, Carter and Caraway and Scott, Sullivan, Streetman and

Fox firms in Mississippi, and Roth, Van Amberg, Rogers, Ortiz and

Yepa in New Mexico. All of them have provided a high caliber of

legal representation and have done so with honesty and scrupulous

adherence to their duties to the tribe as a client. No less was expected from the other Washington firms hired by the tribe starting

in 1995.

In 1994, two simultaneous events occurred which required an expansion and a change in the direction of the tribe’s public affairs

work. First was a change in leadership of the Congress as a result

of the 1994 elections. Second, the opening of the Silver Star Hotel

and Casino by the tribe, also in 1994, gave rise to an array of new

issues and concerns that had to be tracked and dealt with at the

national level.

The tribe also wanted to tell its economic story, how it was possible to use the tax and regulatory structures unique to Indian reservations and economies operating under tribal jurisdiction to

achieve on-reservation economic development. This was not just a

theory. The tribe had experienced successful economic development

for 15 years before opening the first casino. It did so by finding

products that could be made and sold, hiring good managers, setting up a judicial system that provided fair treatment for outside

parties, building a stable constitutional government with a separation of powers, and honoring its business contracts.

When the tribe opened its first casino, financed 100 percent with

borrowed money, it had to be proactive in protecting its casino operations and its ability to pay off its debt. Thus in 1995, the announcement by the then-Ways and Means Committee Chairman of

a plan to subject tribal income to taxation set off extraordinary

alarms with the tribe because that meant that the tribe’s gaming

and other business revenue could be taxed up to 34 percent, threatening the tribe’s ability to pay off its debt and undermining its capacity to provide essential governmental services to the some10,000 tribal members.

It was in this climate, then, that the tribe recognized the need

to reach out to the new Republican majority and to redouble all efforts to outline its long-time unmet needs and its reservation development experiences with all members of Congress in a bipartisan

way.
13

Jack Abramoff was identified to us in 1995 as a potential public

affairs specialist in the Washington office of a major law firm, Preston Gates. This firm, in addition to having ties to the new majority,

also included former Congressman Lloyd Meeds, who was known to

the tribe as someone knowledgeable of tribal issues, as well as of

the government-to-government relationship that exists between the

tribes and the Congress.

At Chief Martin’s request, I contacted the firm and subsequently,

following a meeting with Chief Martin with Mr. Meeds, Mr.

Abramoff, and others in the firm, a retainer agreement was executed and approved by the tribal council. What followed was a very

positive relationship with Preston Gates from 1995 through 2000.

They did very effective work for the tribe, both at the Federal level

and through various grassroots projects.

Then Mr. Abramoff and most of his team left Preston Gates to

join Greenberg Traurig in 2001. Since the bulk of the work done

by Preston Gates for the tribe was in the area of public affairs and

not ordinary legal work and since Mr. Abramoff and most of his

team who had handled that work at Preston Gates moved to

Greenberg Traurig in 2001, the tribe then retained Greenberg

Traurig. Later, Mr. Abramoff introduced us to Michael Scanlon as

a political consultant who had several companies which he used for

his public affairs, marketing and grassroots work.

When Mr. Abramoff left Preston Gates to move to Greenberg,

there was no reason to believe that anything improper or unlawful

had occurred in connection with his work. There was no reason to

question the integrity or otherwise doubt that the representation

through Greenberg would be handled in any less professional way

and honest way than we believed had previously occurred. Unfortunately, those expectations were not met and misconduct did occur.

Details on what that misconduct was and how it occurred will be

addressed by Mr. Kilgore, the tribe’s attorney general in his opening statement.

However, before I turn to Mr. Kilgore, there are some matters

which the tribe wishes to clarify, largely because of errors by the

media and reporting on these events. The first, the tribe has never

authorized any payment for the purpose of sending any member of

Congress on any golf trip anywhere. This includes the widely reported Scotland trip. Second, the tribe did not contribute any

money to Americans for Tax Reform to buy the opportunity to attend a White House meeting with President Bush. In particular, no

money was paid to ATR for that purpose as regards the White

House meeting on May 9, 2001 and no tribal representative attended that meeting as has been reported in the press.

Third, the tribe decided years ago that its core governmental operations, including public relations and related public affairs activities that were administered through the Office of the Chief, would

not be funded with gaming revenue. In this regard, none of the

funds the tribe paid to Americans for Tax Reform for various purposes in 1999 and 2002 were generated by the tribe’s gaming operation.

Finally, the tribe has been extremely careful to ensure that its

public affairs efforts complied with all the applicable rules. That remains the case. The behavior of both Mr. Abramoff and Mr. Scan-
14

lon, which is the subject of this hearing, is not associated with the

nature of the work they were doing for the tribe, but misconduct

in the way the tribe was charged for that work and in the diversion

to themselves of those payments from lawful authorized activities.

In this regard, Senator McCain, the tribe appreciates your acknowledging that the tribe has not been accused of wrongdoing at

any point in these proceedings and we appreciate that.

Now, if you are agreeable, I will ask Mr. Kilgore if he can complete the tribe’s opening statement.

The CHAIRMAN. Mr. Kilgore.

STATEMENT OF DONALD KILGORE, ATTORNEY GENERAL,

MISSISSIPPI BAND OF CHOCTAW INDIANS

Mr. KILGORE. Thank you. Mr. Chairman, members of the committee, we again thank you for this opportunity to present the

tribe’s views with regard to this investigation into the misconduct

of Jack Abramoff and Michael Scanlon.

As previously referenced, I was only appointed to serve as Choctaw attorney general recently, but since then I have worked closely

with the tribe’s outside legal counsel, Mr. Rogers, to fully acquaint

myself with this investigation and review his analysis and conclusions of the evidence.

Clearly, after my consultation with outside firms and with your

staff, Senator, it has become apparent that Jack Abramoff and

Mike Scanlon engaged in a consistent pattern of kickbacks, misappropriated funds, payments induced under false pretenses, and

padded billings.

First of all, the kickback scheme. Under the kickback scheme, we

learn that Mr. Abramoff calls Mr. Scanlon, who was represented to

us as an independent contractor, to quote prices which included undisclosed and exorbitant add-ons in the fee. They would then split

it, one-half going to Mr. Abramoff as a kickback and one-half being

retained by Mr. Scanlon as moneys obtained under false pretenses.

All of this was in furtherance of their ‘‘gimme five’’ scheme.

It should be noted that while the prices were high, they were not

out of line with other billings from other contractors for similar

work that we have experienced. However, we now know after reviewing thousands of e-mail exchanges, that before these quotes

were given, Mr. Abramoff and Mr. Scanlon had already agreed

upon the amount of extra money that they were going to solicit

from us under false pretenses and then split between themselves.

I refer to, as an example of that kickback scheme, an e-mail, Senator McCain, dated September 2, 2001 which your staff has. Mr.

Abramoff:

So let me see, that is $700,000 each for us and $100,000 for the effort. Seriously,

what do you think we can score?

Response:

If you think they are good for it, then I can slide you $350,000 with no sweat,

plus you have $313,000 sitting here. So if you want, $663,000 is yours on Tuesday.

When the clip comes in, another $350,000, which will put you over $1 million. But

that is not all. There will be more when the dust settles, and if we get the full $4.6

million, much, much more. I think the 350 strategy is the best way to go. It is good

on the gimme five front.

Response:
15

Thanks. I am having a great time running the gimme fives.

The CHAIRMAN. And who was that?

Mr. KILGORE. That was an exchange between Mike Scanlon and

Jack Abramoff.

The CHAIRMAN. Without objection, it will be made part of the

record.

Mr. KILGORE. Thank you.

[Referenced document appears in Phillip Martin’s prepared statement located in appendix.]

Mr. KILGORE. The pass-through scam, the second phase of the

fraud that was perpetrated on the tribe. Regarding grassroots advocacy projects, some of the actual work was always going to be

performed by various third parties after passing through the Scanlon companies, for example, American International Center, Capitol

Campaign Strategies, Scanlon Gould Public Affairs or other entities

such as the National Center for Public Policy Research or the Capital Athletic Foundation.

The tribe never agreed that any of these moneys were to be retained by Ms. Scanlon or Mr. Abramoff. When the tribe was quoted

a price for a given project, the tribe expected that its payment to

fund that work would be expended for that purpose, and where

there were pass-throughs involved that the money would be passed

through to the appropriate lawful entity for that purpose.

In this regard, the tribe was also induced in 2002 to send large

sums to NCPPR and CAF. Mr. Abramoff did not, as the chairman

has observed, disclose to us that CAF was Mr. Abramoff’s private

charity, nor that he sat on the board of directors of NCPPR. These

payments were made on Mr. Abramoff’s representation that the

funds would be used to carryout previously approved grassroots

projects.

Instead, these additional funds were solicited and used to generate money to complete the financing of unauthorized kickbacks

and fee-sharing arrangements for Mr. Abramoff’s and Mr. Scanlon’s

‘‘gimme five’’ scheme.

Another e-mail was an e-mail between Mike Scanlon and Jack

Abramoff dated Friday May 31, 2001. In an extraordinarily candid

exchange, Mr. Scanlon says:

Here is the overall plan. We need about $200,000 to run the operation, leaving

$1.3 million to split or $650,000 apiece. To make you whole, the idea was to get the

$500,000 to CAF directly then have AIC cut Kaygold a check for the remaining

$150,000.

Clearly, perpetrating a fraud on his client.

The last area that we have investigated and looked at thousands

of documents, along with your staff. We have learned that a number of the bills received by the tribe from Greenberg Traurig contained fabricated time entries and unauthorized expense charges.

Unlike many or all of the other tribal clients who retained Greenberg and Jack Abramoff, the Choctaws retainer agreement with the

firm was on a regular hourly billing basis. The tribe never agreed

to pay a flat fee per month.

However, it is now clear that Mr. Abramoff consistently manipulated the bills at Greenberg in order to have them approach a minimum billing target of fees and expenses of between $135,000 and

$150,000 a month. When the actual hours of work completed were
16

insufficient to approach that target, Mr. Abramoff routinely directed that the bills be padded and pumped up.

The e-mail that I wanted to refer to, Mr. Chairman, is the one

that you have already referred to about he only had 2 hours, and

therefore directed that be pumped up. So I am not going to repeat

that e-mail. But we also note there are significant amounts of unauthorized expenses charged in those billings. It was structured in

such a way that looking at the bill, the tribe could not detect those

unauthorized expenses and billings.

After we learned what had happened, we were surprised that a

senior director at a major law firm could and would engage in misconduct of this type, whether it is the billing fabrication or the

more egregious ‘‘gimme five’’ scheme, and he was able to get away

with it for so long. What we have learned regarding Mr. Abramoff’s

misconduct at Greenberg has caused us to take a closer look at his

work at Preston Gates. Those inquiries have just begun.

It presently appears that some similar financial misconduct also

occurred while Mr. Abramoff was at Preston Gates, though on a

vastly smaller scale, both as to billing improprieties and as to Mr.

Abramoff’s unlawful diversion of money. We have initiated discussion with Preston Gates on these matters. However, those discussions are in a very preliminary stage.

In regard to Greenberg Traurig, we wish to acknowledge that

positive settlement negotiations with that firm are now underway

and that we have been assured that they will take appropriate action to address and remedy any concerns and issues which we may

identify as to any respect of our relationship with that firm. They

have responded to this situation in a professional and honorable

way, which we very much appreciate. Thus, we are confident a mutually agreeable settlement of our claims respecting these issues

will be reached with Greenberg.

In closing, I want to thank the committee for its efforts in the

investigation. We are moving forward with our efforts to build our

reservation economy, which also benefits our non-Indian neighbors

as well, and to strengthen our government-to-government relationship with the United States to enhance our capacity to improve

health care, education and employment opportunities for our members.

Mr. Chairman, we consider this a lesson and we will endeavor

to ensure that we will not experience anything like this in the future.

Thank you.

The CHAIRMAN. Thank you very much.

Senator Inouye, do you want to say anything?

Senator INOUYE. Mr. Chairman, I have an opening statement.

The CHAIRMAN. Without objection, Senator Inouye’s opening

statement will be made part of the record.

Ms. Rogers, you said that these funds that were expended did

not come from gaming revenues. Where did they come from?

Ms. ROGERS. Revenues from the tribe’s other businesses, manufacturing businesses, printing plants.

The CHAIRMAN. I see.
17

Ms. Rogers, Jack Abramoff recommended the tribe hire Michael

Scanlon at the end of the year 2001, as you have testified. Did Mr.

Abramoff tell you that Mr. Scanlon was an independent contractor?

Ms. ROGERS. He did.

The CHAIRMAN. Did Jack Abramoff or Michael Scanlon ever disclose to you that Mr. Scanlon would pay Mr. Abramoff any of the

money paid to Mr. Scanlon by the tribe?

Ms. ROGERS. No, sir.

The CHAIRMAN. The tribe never intended the money it paid to

Michael Scanlon and his company be kicked back to Jack

Abramoff?

Ms. ROGERS. No.

The CHAIRMAN. Ms. Rogers, in 2002 the Capital Athletic Foundation, Mr. Abramoff’s private charitable foundation, reported on its

tax forms that the Mississippi Band of Choctaw Indians was far

and away the single biggest contributor. According to publicly

available tax forms, of the $2.6 million that the Capital Athletic

Foundation raised that year, almost $1.9 million, 70 percent of it,

went to the Maryland Jewish boys school started by Mr. Abramoff.

Michael Scanlon and Jack Abramoff directed the tribe to make

these contributions?

Ms. ROGERS. These were not intended as contributions, Senator.

They were intended to be pass-throughs to other groups doing

grassroots public advocacy work for the tribe.

The CHAIRMAN. In other words, the tribe did not know that 70

percent of these moneys were going to——

Ms. ROGERS. Not at all. They were never intended to be contributions.

The CHAIRMAN. Jack Abramoff and Michael Scanlon never told

you that the Capital Athletic Foundation was Mr. Abramoff’s private charity?

Ms. ROGERS. No.

The CHAIRMAN. Ms. Rogers, another major beneficiary of the

Capital Athletic Foundation in 2002 was an entity called the Kollel

Ohel Tiferet. I am sure I mispronounced that. It received almost

$100,000 from the Capital Athletic Foundation that year. Based on

this committee’s investigation, it appears this organization was a

sham entity designed to funnel payments from Mr. Abramoff to an

Israeli settler who ran a sniper workshop. Is it fair to say that neither Mr. Abramoff or Mr. Scanlon ever told anyone at the tribe

that the tribe’s money would be used to finance paramilitary activities in Israel?

Ms. ROGERS. Oh, no; we only learned that from your staff.

The CHAIRMAN. Mr. Kilgore, exhibit 95 is an e-mail exchange between Jack Abramoff and Michael Scanlon on March 3 and 4, 2002.

Basically, it says:

By any chance did you send us a balance? Can you get me a check to Presidential

Kosher Holidays for my Choctaw share? Do you think we could figure a way to expense this? Any idea? Thanks.

That is from Mr. Abramoff to Mr. Scanlon. Mr. Scanlon says:

I will think of something on this. I will get back to you.’’ And then Mr. Abramoff

says:

You is that man.
18

Did you intend any of the money you paid to Mr. Scanlon’s companies to be used to cover Jack Abramoff’s Passover vacation?

Mr. KILGORE. Absolutely not, Mr. Chairman.

The CHAIRMAN. We could go on and on. Mr. Kilgore, in October

2002, as you mentioned, the tribe paid $1 million to the National

Center for Public Policy Research at the direction of Jack Abramoff.

Is that correct?

Mr. KILGORE. That is correct.

The CHAIRMAN. Jack Abramoff told the tribe that the entire $1

million would be passed through to the grassroots organizations

working on issues important to the Mississippi Choctaw Tribe. Is

that true?

Mr. KILGORE. That was our understanding.

The CHAIRMAN. There are other questions, but the pattern is

clear here. I first of all want to thank the tribe. I know that this

has been a very difficult time for them. There was concern that

somehow the tribe would be blamed for this exploitation and ripoff

that has taken place. I view you as people who were trying to act

in the best interests of your tribe and recognized that a lot of those

interests are affected here in our Nation’s capital. There is no one

I have greater respect for than Chief Martin who I have had the

privilege of knowing for more than 24 years.

I only have one additional question, Senator Dorgan, that I guess

I would ask. Ms. Rogers had the most interface with Mr. Abramoff

and Mr. Scanlon. If they were here right now, Ms. Rogers, what

would you say to them?

Ms. ROGERS. Chief Martin asked me that same question. I told

him that I am past anger and bitterness, but it is the act of betrayal, betrayal of the tribe’s trust, betrayal of those of us who

worked with him. It is an extraordinary story of betrayal, of deliberately building trust and then betraying it.

The CHAIRMAN. Would you like to make any additional comments, Mr. Ben.

Mr. BEN. No, sir; we certainly appreciate the time you have provided for us, sir.

The CHAIRMAN. Mr. Kilgore.

Mr. KILGORE. No, Mr. Chairman; I have no further comments.

The CHAIRMAN. How long have you been in office?

Mr. KILGORE. March 1, 2005. That is after 32 years of private

practice.

The CHAIRMAN. You have a very large task ahead of you and we

thank you for all of your cooperation.

Mr. KILGORE. Thank you, Mr. Chairman.

The CHAIRMAN. We have a vote beginning shortly. I am going to

run over and vote while Senator Dorgan asks his questions. I am

going to try and get right back.

Senator DORGAN. Mr. Chairman, thank you very much. We were

told the vote would begin about 10:45, so if it works the right way,

we will be able to proceed with the hearing without a brief recess.

If that is delayed just a bit, we will have a very brief recess.

First of all, Ms. Rogers, Mr. Kilgore, and Mr. Ben, thank you for

your cooperation. The staff has indicated to us that you have been

extraordinarily helpful to them and I know based on your state-
19

ment, Ms. Rogers, that you used the word ‘‘betrayal’’ which I think

is an awfully good description of what has happened here.

There are two tracks here that I want to talk about. One I think

Senator McCain has covered pretty well, and that is the track of

just what appears to be outright fraud—extracting money for one

purpose and then using it for something else and not disclosing to

the tribe who was spending this money as part of a secret business

relationship.

It is pretty clear with the research that our investigators have

done that the trail on that is evident. It is in writing. We have

many, many, many documents that go back and forth that describe

in great detail exactly what has happened.

The other area that I described briefly in my opening statement

is not the kind of fraud that is just up-front fraud. It is the obscuring of the source of money in order to deceive where money came

from or where it was spent. That also is of interest. It is kind of

a different set of circumstances because it appears to me that

money was run through (C)(3)s or (c)(4)s, to deliberately to obscure

the source of the funds. That was at the request of Mr. Abramoff,

as I understand it, and others.

I want to ask you just a bit about that, if I might, whether everybody knew that. There is an exhibit number 33, I believe. Ms. Rogers, you indicated that the money was spent on activities that were

perfectly legal—grassroots activities and the money came from nongaming sources. Is that correct?

Ms. ROGERS. Right. That is correct.

Senator DORGAN. What would be the purpose then of the recipients of that money demanding that it be washed through organizations in order to obscure and deceive the identity of the money? If

it is in fact non-gaming, what was the purpose of the deception on

behalf of the recipients and those who decided to run it through

(C)(4) organizations?

Ms. ROGERS. I may have to consult with the tribe’s attorneys because I am obliged by the tribe to be concerned about First Amendment issues. I would like to try to answer your question. We did

not have a sense of an effort to obscure the money. There was simply the use of intermediaries, which is a common practice in this

country by businesses and political and professional groups, to use

intermediaries to get their message out. Jack Abramoff had structured that.

I am sure there probably were concerns or public perception concerns about some of the recipients about not being associated with

a gaming tribe. I hope I have answered your question. I am not trying to be evasive.

Senator DORGAN. I understand.

Ms. ROGERS. I am trying to deal with my obligation to the tribe

as well.

Senator DORGAN. Memorandum number 33 is a memorandum I

believe from Mr. Abramoff to Mr. Reed that says:

Thanks, Ralph. The firm has held back all payments pending receipt of a check

from Choctaw which was held up because of a paperwork glitch.

In this case, because of this e-mail, my expectation would be the

recipient or the expected recipient of the money knew exactly

where the money was coming from. For that reason, I do not un-
20

derstand the reason to try to move that money through a (c)(4) organization to obscure the identity of the money. Do you have any

notion of why that was the case?

Ms. ROGERS. If I can consult the attorney on that.

Senator DORGAN. Yes; of course.

Ms. ROGERS. Yes; the recipient did know where the money was

coming from.

Senator DORGAN. And presumably then wanted it obscured so

that it was not evident to others?

Ms. ROGERS. Presumably. We have never had any direct conversations.

Senator DORGAN. You know, some money to that type of recipient, Mr. Reed and some others I believe, was passed through Preston Gates at one point. Did Preston Gates charge for being a conduit for some of that money?

Ms. ROGERS. I do not know the answer to that question. I would

have to ask the attorneys who are looking at all the billing. It was

so long ago.

Senator DORGAN. But there was a charge for the purpose of obscuring the identity of the source of the money. There was a charge

made by the Americans for Tax Reform. Is that correct?

Ms. ROGERS. No, sir; I do not believe there was a charge made

for obscuring the money.

Senator DORGAN. Let me rephrase it then. A certain portion of

the money that was run through the (C)(4), Americans for Tax Reform, included a fee that was charged by the Americans for Tax Reform for the purpose of moving the money through that (C)(4). Is

that correct?

Ms. ROGERS. There was a small management fee, but we had a

long-term relationship with Americans for Tax Reform and assumed that that payment would simply be used to support the

overall activity of ATR.

Senator DORGAN. How large was that payment? Do you remember?

Ms. ROGERS. I believe it was $50,000 over a period of time, but

we routinely made contributions to Americans for Tax Reform because they had allied themselves with the tribe early on in the tax

fight to tax tribal revenues.

Senator DORGAN. Let me ask about, if I might, the issue you

raised in your testimony, the issue of money for the purpose of a

meeting with the President or a White House meeting.

Ms. ROGERS. No donation was made for that purpose nor did

anyone attend the meeting.

Senator DORGAN. Are you aware at this point, based on the evidence, that some of the money went for that purpose?

Ms. ROGERS. The attorneys are saying we do not know that.

Senator DORGAN. I believe there are a series of e-mails. I do not

think I have the number for those at the moment. An e-mail dated

April 5, 2001, Abramoff dictated a note to Grover Norquist.

Ms. ROGERS. Do we have that exhibit?

Senator DORGAN. I believe you do. It is exhibit number 38.

Ms. ROGERS. Okay.

Senator DORGAN. Abramoff appears to dictate a note to Grover

saying:
21

Here is the first of the checks for the tax event at the White House. I will have

another $25,000 shortly.

Are you familiar with that? On the top of that memo, I believe

it says Nell approved that.

Ms. ROGERS. What we funded, Senator Dorgan, if you look at the

first memo at the bottom of the e-mail, Jack Abramoff sent an email to me asking us to make a contribution to the new anti-tax

campaign. That is what we approved, a contribution for that.

Senator DORGAN. So you were making a contribution you thought

for that purpose.

Ms. ROGERS. Right. And then he represented to ATR that we had

made the contribution apparently from this e-mail trail. His representation to ATR was that it was for the White House dinner.

Senator DORGAN. And then there was another follow-up memo

from ATR about a White House meeting, the second year, I believe

2002. And that is where I think the confusion was because in that

memorandum it was represented by ATR that the Choctaws were

involved in the White House meeting previously and had made a

contribution for that event. So you are saying that that representation is inaccurate, right?

Ms. ROGERS. That is inaccurate.

Senator DORGAN. These pieces of information are part of the

record and I think hopefully will clarify exactly what was happening. It appears to me that Mr. Abramoff and others, ATR, Mr.

Norquist and others, were trying to put together events at the

White House. One event apparently must have happened in 2001,

and they were seeking $25,000 contributions for the cost of those

events and promising meetings with the President and so on. It is

helpful for us to know because the written information from Mr.

Abramoff and ATR also would suggest that the Choctaws participated.

Ms. ROGERS. The Choctaws did not participate. I remember those

invitations, but normally they were primarily for State legislators

to come in and meet with the President, and then tribes were extended invitations. But the Choctaws did not participate, did not

respond to any of those invitations.

Senator DORGAN. The money that the tribe paid to the National

Center for Public Policy Research, that money was expected to go

where, in your judgment?

Ms. ROGERS. It would have gone to support some of the activities,

grassroots activities with smaller groups, polling, research, opinion

pieces, education pieces. NCPPR had done some of those for us earlier when Ms. Ridenour visited the reservation and had expressed

a real interest in how the tribe was using gaming revenue to support tribal culture, language and that sort of thing.

Senator DORGAN. So sending that money to the National Center

for Public Policy Research and discovering that a portion of that

was used to repay a bill for $75,000 that Mr. Abramoff owed to

someone going back to his days as a filmmaker, that was something that you would not have been aware of and would have been

an unauthorized use of the funds?

Ms. ROGERS. Absolutely.
22

Senator DORGAN. How about the $10,000 of your money being

sent to ‘‘Reed for Chairman’’, when Ralph Reed seeking the chairmanship of the Georgia Republican Party.

Ms. ROGERS. We did not know that or certainly did not authorize

it.

Senator DORGAN. So what you have, it seems to me, is a substantial amount of money going from the tribe with the expectation it

is going for a normal business purpose, the business relationship

with Mr. Abramoff. When in fact, a substantial portion of that

money was being skimmed off to a secret partnership established

by Mr. Abramoff and Mr. Scanlon. That represents what appears

to us to be a fraud committed on the tribe. Of course that is a judgment that I am sure the Department of Justice and others will

make in the criminal arena.

And then on the other side, money that is moved through (c)(4)

and perhaps a (c)(3) organization, part of which appears to have

been, I was going to say misdirected, but that is too soft a word,

part of which appears to have also been fraudulent, particularly

the expenditure of the money to the National Center for Public Policy Research. I am not suggesting that they are the ones that spent

that money. In fact, they are going to testify today and we appreciate their cooperation. But I am suggesting the money was diverted by Mr. Abramoff and Mr. Scanlon.

Then the other question that I mentioned is whether there was

misuse of (c)(3) and/or especially (c)(4) organizations to be a conduit

to receive funds in order to obscure its identity for the purposes of

others. I do not know the answer to that. I suggested to the chairman that we hold open that question and perhaps meet with the

Senate Finance Committee.

I think it does warrant additional inspection because in addition

to the information we have, we have references in e-mails to other

(c)(4) organizations that have been used. So I do not know what the

entire inventory of (c)(4) organizations would be here, but it appears to me that the (c)(4) organizations were used as a convenient

buddy system to move money around in order to obscure its identity.

Sometimes that is called laundering, but that has a criminal connotation. I do not know that this is criminal at all, but I know that

it is laundered from the standpoint of the recipient so that it comes

out clean for the recipient. That appears to be what the e-mail trail

suggests, and not from the standpoint of the tribe, but from the

standpoint of the recipient.

So I think all of these raise an enormous number of questions.

We have, as I said, e-mail trails and e-mail tracks on it which I

think will be helpful.

Let me ask Senator Inouye if you have some questions at this

point, Senator.

Senator INOUYE. Thank you.

During this period of relationship with Mr. Scanlon and Mr.

Abramoff, how much did the tribe provide these two men and their

organizations?

Mr. KILGORE. Senator Inouye, in both Senator Dorgan’s opening

comments and Senator McCain’s opening comments, they referred

to those amounts. They got those from the staff. We have provided
23

that detailed financial information to the staff. They have cumulated those figures. Yesterday we met with the staff and in anticipation of that question, those figures that were given are what are

records showed.

Senator INOUYE. I am sorry I was not here, but what is the number?

Mr. KILGORE. I believe that on payments to Capitol Campaign

Strategies, d/b/a Scanlon-Gould and his groups was approximately

$15,855,000. And then Mr. Abramoff’s receipt out of those funds

was in the range of $5 million to $7 million. We have not been able

to pin those down exactly, but we are working on that and we

would be glad to supplement the record at a later date once we get

an agreement with the staff as to exactly what the figure is going

to be.

Senator INOUYE. As a general rule, organizations and law firms

who are doing business would provide periodic reports in writing

to their clients telling them, giving them a progress report on

projects and such. Did you ever receive any report from Mr.

Abramoff or Mr. Scanlon?

Ms. ROGERS. Yes, sir; we received detailed reports. We know that

the work was done. We met once a year or twice a year. We also

had independent means of determining that work was done.

Senator INOUYE. And this was not fraudulent work?

Ms. ROGERS. No, sir.

Senator INOUYE. Did you also receive receipts from these organizations?

Ms. ROGERS. We received bills from the law firm. Yes, sir, we received receipts.

Senator INOUYE. From the law firms.

Ms. ROGERS. We always had a budget and cost from Mr. Scanlon’s companies as well and from the grassroots companies.

Senator INOUYE. These reports would advise you that certain

things had occurred?

Ms. ROGERS. Yes, sir.

Senator INOUYE. Did you take the time to see if they did actually

occur?

Ms. ROGERS. We know that the work was done.

Senator INOUYE. So you are saying that a certain portion was not

fraudulent?

Ms. ROGERS. The work was done. What appears to be fraudulent

was the overcharges and the conspiracy (I probably should not use

that word because I am not a lawyer) between the two to plan to

overcharge.

Senator INOUYE. Setting aside the work that was done, the legitimate work, how much of the amount that you mentioned would you

attribute to fraud or overpayment or padding of books, et cetera?

Mr. KILGORE. Senator Inouye, may I inject here? The circumstances that we are faced with here, we are not able to give

you the amount of harm in money terms. The reason is this. We

are in very sensitive settlement negotiations with various parties.

If we go into much detail on that, Senator Inouye, I think you can

appreciate it will jeopardize our ability to settle that civil matter

with those parties.
24

We have already mentioned two of the firms that we have either

made an inquiry in or are in serious negotiations. What we will do

is once we conclude that, we would be glad to get with the staff

and supplement this record. We would even agree to an in camera

meeting with you and your staff to detail those monies. It is just

that this is a very sensitive time for us in those negotiations.

Senator INOUYE. When did the tribe realize that it was being defrauded or conned?

Ms. ROGERS. I believe it was in June 2004 when Chief Martin

and Mr. Rogers met with the law firm that was conducting the internal investigation for Greenberg Traurig. They were shown evidence.

Senator INOUYE. What step did you take at that point?

Ms. ROGERS. The tribe immediately terminated its relationship

with Mr. Abramoff. The lawyers began working with that internal

investigative group. We were contacted by the committee and of

course we have been cooperating with the committee. We have cooperated fully with the Justice Department and the FBI. We have

provided them documents and details.

Senator INOUYE. When did the Justice Department and FBI participate in this investigation?

Ms. ROGERS. They began last summer. We had our first contact

with them last summer. They came to Mississippi for interviews

and records review and we have had a subsequent meeting with

them, also in Mississippi.

Senator INOUYE. Are you satisfied that the investigation is moving along properly?

Ms. ROGERS. I have not had any contact with them, but the

tribe’s attorneys have had, so they may be able to address that.

Mr. KILGORE. Senator Inouye, we are aware that the investigation is moving forward. Frankly, my personal opinion is that they

are inundated with records. We have looked at probably 60,000 emails and that is a lot of paperwork, a lot of paper trail. Your staff

has done a terrific job in putting that in some semblance of order.

I think Senator Dorgan mentioned that every time that you take

another look at this, it takes a twist or turn that is unexpected. I

think that is true for the criminal side, too. I think that every time

they look at something, another avenue opens up. So that is my

take on where the Justice investigation is.

Senator INOUYE. My last question, since you severed your relationship officially with the two men, did they ever contact you?

Ms. ROGERS. They have not.

Senator INOUYE. Thank you very much.

Ms. ROGERS. Thank you.

Senator DORGAN. Just one additional point, it is exhibit 102 that

I was looking for when we talked about the White House issue. I

think just for the record, you do not need to refer to it, but for the

record I wanted to make clear what it was I was referring to. I

think it is important that it be cleared up because it is the one that

indicates, as you say, inaccurately that the Choctaws were at the

White House.

The vote has just started. I am sure Senator McCain will be back

momentarily. Let me ask you, Ms. Rogers, as I said in my opening

statement, this is a very successful tribe, with substantial business
25

skills evidenced by the success that they have had with their business enterprises. They hire many people and I think are one of the

largest employers in Mississippi. So a very successful tribe.

We understand from the outset that you have legitimate business

interests, that you would contract with people to engage in legitimate business activities. So we understand all that. The assumption with all these questions is not that you yourself, although your

name is on some of these memos, but the implication is not that

you did something wrong; it is that the tribe was deceived. It appears to me that the tribe was defrauded. Obviously, that is a matter for perhaps the Justice Department or someone else.

I think what Senator McCain and I and others on the committee

are trying to do is just understand the story, what has happened

here, and how can we prevent this from happening again. You were

asked by my colleague Senator McCain how you would address Mr.

Scanlon and Mr. Abramoff. I understand the passion of the answer.

When Mr. Abramoff began to hand-off a business relationship to

Mr. Scanlon, what kind of relationship did the tribal representatives have with Mr. Scanlon? Was their frequent contact?

Ms. ROGERS. There would be frequent contact, frequent reports.

Senator DORGAN. At that point, did you still continue to have a

relationship with Mr. Abramoff as well?

Ms. ROGERS. Not as much. There were times when we contacted

Mr. Scanlon to do something independently. The unanswered question is whether or not Mr. Abramoff got a portion of that. I do not

know. We do not know that, knowing what we know now. From

looking at the e-mails, it appears that Mr. Abramoff was driving,

and you have probably seen the same e-mails, the call up, do this,

do that. Many of the e-mails where Mr. Abramoff was directing Mr.

Scanlon to do that, I did not get a call or I did not get an e-mail.

Senator DORGAN. Mr. Kilgore referred to this, but I know that

you are aware of it as well, we now know what ‘‘gimme five’’

means. You have had a chance to review the e-mails. Mr. Kilgore,

you have as well. Your reaction to ‘‘gimme five’’?

Mr. KILGORE. Senator, it is a blatant calculated scheme to defraud a client. We have been surprised, you understand. We dealt

with reputable law firms all these years, and we relied on those

law firms’ internal ability to audit what goes on among its members and its shareholders. We have been surprised at the lack of

institutional oversight on Mr. Abramoff. It never occurred to us.

As a practitioner for 32 years, when I bill a client, that client can

be assured that I am billing actual time and my actual expenses.

If I were in a firm, there would be somebody that would have some

oversight. We assumed that oversight was in place. Apparently if

it was in place, it was insufficient.

Senator DORGAN. Let me refer finally, and the chairman has just

returned and I will then run and vote, let me refer to exhibit number 45 just for the purpose of saying, as it occurs in a number of

memos, the last two words are ‘‘gimme five.’’ Obviously, we know

what that means now. It means ‘‘I am taking a cut of this; we are

going to slice away a part of this for my bank account.’’

Mr. Chairman, I have finished with these witnesses. I do again

want to say that we very much appreciate their cooperation. Ms.

Rogers, you especially perhaps were uncomfortable coming to a
26

committee, your name is on some of these memoranda, but from all

that we know, you are a victim and the tribe was victimized by

what appears to be grand theft and fraud. Your willingness to help

us try to understand this, Mr. Kilgore and Mr. Benn and others,

your willingness to help us is very much appreciated. We appreciate your being here today.

The CHAIRMAN. I thank the witnesses. Thank you for being here.

Hopefully, you will never see anything like this again.

Our next panel is Kevin Ring who is a former member of Jack

Abramoff’s lobbying team who has information about Mr.

Abramoff’s practice pertinent to the investigation, and Shawn

Vasell, who is a former member of Jack Abramoff’s lobbying team

who has information about Mr. Abramoff’s practice pertinent to the

investigation.

Mr. Ring, we will begin with you.

STATEMENT OF KEVIN RING, FORMER ABRAMOFF ASSOCIATE

Mr. RING. Mr. Chairman, members of the committee, I am sorry

to be here today under these circumstances. As I informed the committee a few weeks ago on the advice of counsel, I regretfully must

decline to answer any questions concerning the subject matter of

this hearing. I am sorry that clients for whom I worked have had

to endure the enormous emotional and financial burden associated

with this matter, as well as the multiple investigations that prompt

it.

As the committee knows and as my counsel has advised me, my

constitutional right to remain silent at this time would be forfeited

should I try to answer any questions. Therefore, I must abide by

that advice and would like to truly apologize for not being able to

answer the committee members’ questions at this time.

The CHAIRMAN. Let me make it clear, Mr. Ring. You are asserting your rights under the 5th amendment of the Constitution. Is

that correct?

Mr. RING. That is correct, Senator.

The CHAIRMAN. Mr. Vasell.

STATEMENT OF SHAWN VASELL, FORMER ABRAMOFF

ASSOCIATE

Mr. VASELL. Thank you, Mr. Chairman.

Mr. Chairman, honorable members of the committee, I am here

today at the committee’s request with the greatest respect for the

important work of this committee and the Senate itself. I have

been called to testify because of my past association with Jack

Abramoff, whose activities are the focus of this committee’s current

inquiry.

The committee staff reached out to me earlier this year and assured me they sought my information solely as a witness to the

conduct of others. Given the range of pending investigations and

inquiries relating to the work of Mr. Abramoff’s government affairs

practice, I engaged outside counsel to guide me toward my goal of

providing meaningful and complete cooperation to such efforts. I

now feel constrained to follow that guidance.

Accordingly, I assert my privilege under the 5th amendment to

the Constitution and decline to respond to questions related to my
27

employment in Mr. Abramoff’s group. I reach that decision reluctantly and with no purpose of impeding the committee’s inquiry. I

am persuaded that this is the right decision, however, and I will

maintain it in response to any and all questions from the committee today.

In advance of this hearing, my counsel confirmed my position in

writing to the committee, yet I was not excused from this appearance. Therefore, I yield to questions of the committee.

Thank you, Mr. Chairman.

The CHAIRMAN. Both of you have the right, obviously, to assert

your 5th amendment rights and the committee obviously will respect it.

Mr. Ring, what is KAR Consulting? You can respond if you wish

to or assert your 5th amendment privileges under your previous

statement if you choose.

Mr. RING. I respectfully invoke my constitutional right.

The CHAIRMAN. According to the information we have, KAR Consulting is a Maryland limited liability company formed on April 25,

2002 and registered to your home address. We have attached corporate registration from the Maryland Department of Assessments

and Taxation. In February 2004, KAR Consulting, which is listed

to your home address, Mr. Ring, received a $25,000-payment from

a company called Grassroots Interactive. We have an exhibit which

I will enter into the record, without objection, exhibit 183 of December 15, 2003 check for $25,000 from Grassroots Interactive LLC

to KAR Consulting.

[Referenced document appears in Phillip Martin’s prepared statement located in appendix.]

The CHAIRMAN. Do you know who KAR Consulting is, Mr. Ring?

Mr. RING. I respectfully invoke my constitutional right under the

5th amendment.

The CHAIRMAN. At the time of the payment, did you know that

Jack Abramoff controlled Grassroots Interactive?

Mr. RING. Mr. Chairman, I respectfully invoke my constitutional

right under the 5th amendment.

The CHAIRMAN. In March and April 2002, did you receive a total of $125,000 from Michael Scanlon’s company Capitol Campaign

Strategies?

Mr. RING. Mr. Chairman, I respectfully invoke my constitutional

right under the 5th amendment.

The CHAIRMAN. Did that money come from payments made by

Pueblo Sandia Tribe of New Mexico to Capitol Campaign Strategies?

Mr. RING. Mr. Chairman, I respectfully invoke my constitutional

right under the 5th amendment.

The CHAIRMAN. What services benefiting the Pueblo Sandia did

you provide for that $125,000? In fact, you did not provide any

services, according to the information that we have.

Let’s take a look at exhibit 43. It is an e-mail exchange between

you, Mr. Ring, and Jack Abramoff dated April 24, 2001. In that email, you asked Mr. Abramoff whether there is any way to ‘‘bury’’

your University Club dues in the Choctaw or SGMA bill. What did

you mean when you asked Mr. Abramoff where you could ‘‘bury’’

your University Club dues in the Choctaw bill?
28

Mr. RING. Regretfully, Mr. Chairman, I must respectfully invoke

my constitutional right under the 5th amendment.

The CHAIRMAN..Did you ever seek to expense your University

Club dues to the Mississippi Choctaw or to any other clients of

Greenberg Traurig?

Mr. RING. I respectfully invoke my constitutional right under the

5th amendment.

The CHAIRMAN. I now refer to exhibit 136, which is Mr. Ring’s

expense report for September 27, 2002 in which he apportions his

club dues to the Choctaw Indian Tribe.

Mr. Vasell, please review exhibit 47, an e-mail exchange between

you, Mr. Vasell, and Mr. Abramoff dated June 19, 2001. It begins

with you asking Mr. Abramoff why Michael Scanlon was billing

time to Greenberg Traurig clients. Did Mr. Scanlon bill time

through Greenberg Traurig to the Choctaw in 2001?

Mr. VASELL. Mr. Chairman, I respectfully decline to answer that

question on the basis of my privilege under the 5th amendment to

the Constitution not to be made a witness against myself. It is my

intention to respond to all of the committee’s questions in this

same manner.

The CHAIRMAN. Were you concerned that Mr. Scanlon was billing

Greenberg Traurig clients through the law firm?

Mr. VASSEL. Mr. Chairman, I respectfully decline to answer that

question on the basis of my privilege under the 5th amendment to

the Constitution.

The CHAIRMAN. You were the tribe’s client manager. You were

aware, weren’t you, of Mr. Abramoff billing the tribe for fees and

expenses unrelated to the services that Greenberg Traurig provided

the tribe.

Mr. VASSEL. Mr. Chairman, I respectfully decline to answer the

question on the basis of my constitutional right.

The CHAIRMAN. I refer both to Mr. Ring and Mr. Vasell to exhibit

37, which is on the screen. I will have to quote from it, which is

a March 14, 2001 e-mail exchange between Jack Abramoff and his

executive assistant. In it, Mr. Abramoff indicates he will ask the

client managers to tell him how many hours they want him to bill.

Either one of you, both of you, do you know if Mr. Abramoff ever

fabricated time for himself or any associate to bill the Choctaw?

You can just say, ‘‘I give you the same answer.’’

Mr. RING. The same answer.

Mr. VASSEL. The same answer, Mr. Chairman.

The CHAIRMAN. Let’s take a look at exhibit 53, an e-mail between

Abramoff and his assistant dated August 29, 2001. In it, the assistant indicates that he is ‘‘creatively’’ entering Mr. Abramoff’s July

and August time for the Choctaw account, quote, ‘‘with the help of

some great language Shawn and Kevin have provided.’’ What kind

of language did you provide Mr. Abramoff for billing purposes?

Mr. RING. Again Mr. Chairman, the same answer.

Mr. VASSEL. The same answer.

The CHAIRMAN. Mr. Vasell, I would like you to take a look at exhibit 42 which is an April 18, 2001 e-mail from Mr. Abramoff to

you. In that e-mail, Mr. Abramoff instructs you to add 60 hours to

the Choctaw bill to pump up Scanlon, Todd, and you. Was this

done?
29

Mr. VASSEL. Again, Mr. Chairman, I have to invoke my constitutional right.

The CHAIRMAN. The March 2001 bill to the Choctaw totaled

$147,340.50 in fees and the April 2001 bill totaled $146,963.97.

Well, the list goes on. I am sorry that young men like yourself

are engaged in such activities that you come before this committee

and invoke your constitutional rights under the 5th amendment.

We had hoped that you would cooperate with the committee. Obviously, you have chosen not to do so, which again is your right.

Senator Dorgan, I do not think there are any additional questions for the witnesses. They have invoked their 5th amendment

rights.

Senator DORGAN. Mr. Chairman, they certainly have a right to

invoke that privilege, but I share your disappointment. I believe

that justice would be better served by being forthcoming about

what has happened here, but I think you have asked a series of

questions that are questions that I would have asked as well. I

have no further questions.

The CHAIRMAN. The witnesses are dismissed.

The next panel is Amy Ridenour, who is the president of the National Center for Public Policy Research, a non-profit foundation on

whose board Mr. Abramoff sat, who has information pertinent to

the investigation; Gail Halpern, Jack Abramoff’s tax adviser, who

has information about Mr. Abramoff’s businesses pertinent to the

investigation; Brian Mann, a yoga instructor who served as a director one of Michael Scanlon’s companies who has information about

Mr. Scanlon’s businesses pertinent to the investigation; David

Grosh, a lifeguard who served as a director for one of Michael

Scanlon’s companies who has information about Mr. Scanlon’s businesses pertinent to the investigation; and Aaron Stetter, a former

employee of Michael Scanlon who has information about Mr. Scanlon’s business pertinent to the investigation.

Ms. Ridenour, we will begin with you.

STATEMENT OF AMY RIDENOUR, PRESIDENT, NATIONAL

CENTER FOR PUBLIC POLICY RESEARCH

Ms. RIDENOUR. Thank you, Mr. Chairman and committee for inviting me to appear before the committee.

In the interest of brevity, I am summarizing my remarks, but I

do refer the committee to my written testimony for additional details.

The CHAIRMAN. Without objection, your entire written statement

will be made part of the record.

Ms.RIDENOUR. Thank you.

The National Center is a 23-year-old conservative free market

non-profit institution. I am the chief executive officer. One of the

National Center’s programs is project 21, which highlights the

views of conservative and moderate African Americans. Another activity examines the extent to which low-income and minority populations disproportionately bear the cost of some government regulations.

Jack Abramoff joined our board in 1997 when we increased the

number of board members from three to seven for the purpose of

improving oversight. At that time, I had known Jack for nearly 17
30

years. He was a dedicated conservative, a successful lobbyist and

businessman, and his managerial skills it seemed to me at the time

exceeded my own.

In 2000, the National Center adopted a conflict of interest policy

requiring directors to reveal to the board all financial interests in

any entity with which the National Center is negotiating a transaction. We required every member of the board to sign the resolution so that no one could later claim they were unaware of the policy. Every director did so.

It was through Jack Abramoff that I had the honor in February

1997 of meeting Chief Phillip Martin and learning the Choctaw

success story. From 1997 through 1999, the National Center received contributions of $7,500 in total from the Mississippi Choctaws. In 2000, we received $65,000. I understood all of these funds

to be general support contributions.

I am, of course, aware of news media coverage connecting part

of these contributions to a trip we sponsored by a member of Congress. At the time I extended an invitation to this member of Congress through his chief of staff, I did not know we would be receiving contributions from the Mississippi Choctaws that year. At no

time did I convey to the Congressman or to his staff that we had

received these contributions and I was never told nor was I under

the impression that the Mississippi Choctaws even knew we had

sponsored a congressional trip. In 2002, the Mississippi Band of Choctaw Indians donated $1

million to the National Center. Approximately 4 months before we

received this contribution, my husband, who is vice president of the

National Center, and I had lunch with Jack. The lunch was social,

but we briefed him on information pertinent to the board, including

the fact that the negative financial impact of 9–11 had reduced our

ability to expand program services as we previously had planned

for 2002. I told him that new donors would be especially valued

that year, as would the opportunity to sponsor projects consistent

with our mission for which funding was available.

Jack then shared with us details of his work doing what he

called ‘‘a new kind of lobbying.’’ He said he and his colleagues

working with the Mississippi Choctaws had noted that for-profit

non-Indian gaming establishments were pushing to establish themselves in areas of the Country not noted for their admiration of

gaming. They believed that a public backlash against gaming was

brewing and that before things came to a head, perhaps 4 to 5

years down the road, they would educate the public about the

Choctaw success story.

I was very interested in what I was hearing. I noted that his new

kind of lobbying was not lobbying at all, but educational work and

I expressed an interest in the National Center sponsoring it. Jack

seemed mildly agreeable, but noncommittal. I did not press the

matter, assuming the Choctaws were financing the project and

would have to approve our involvement.

Approximately four months later, Jack asked me if the National

Center was still interested. For reasons I describe more fully in the

written testimony, we were. Jack instructed me to send a $1-million invoice to the Mississippi Choctaws, which I did. When the

funds arrived, he told me how they should be disbursed: $450,000
31

to the Capital Athletic Foundation as a grant; $500,000 to Capitol

Campaign Strategies; and $50,000 to a company called Nurnberger

and Associates.

I believe Capitol Campaign Strategies was to be paid for educational program services, while Ralph Nurnberger was going to

help coordinate the project. Jack referred to his receiving ‘‘instructions’’ for the disbursements, which I took to mean recommendations from the donor, which was consistent with my belief that the

Mississippi Choctaws were actively involved.

Believing I was joining a project in progress, knowing that Jack

was the legal representative of the Mississippi Choctaws, was part

of a major law firm, and as a member of the National Center’s

board of directors, had a fiduciary responsibility to the welfare of

the National Center, I disbursed the funds in accordance with

Jack’s instructions. At the time, I also requested and received

Jack’s repeated assurances, both by e-mail and verbally, that he in

assuming managerial authority for the project on the National Center’s behalf, would adhere to the laws governing public charities.

I often requested from Jack that he provide documentation about

the educational activities we were supporting. He always said it

would be no problem and I believed him—so much so that I agreed

to continue the project in May and June 2003 when Greenberg

Traurig sent the National Center $1.5 million. Jack told me

$250,000 had been designated for the Capital Athletic Foundation

as a grant and $1,250,000 was to be paid to Kaygold, a company

I believed was owned by Michael Scanlon.

I had resolved by then that if I did not promptly receive sufficient proof of good solid work performance, I would withdraw the

National Center from the project. I did not get this proof, so I told

Jack in July 2003 that we would cease participation. He did not object. I continued asking him for documentation for work performed

on the payments we already had made.

I always trusted Jack and I believed we would ultimately receive

this documentation. Of the various theories I had in my mind as

to why we were not receiving the funds, none of them involved a

suspicion of misuse of funds. I still trusted him, frankly, after the

negative press stories began in 2004. But when the Washington

Post published, and that is in September 2004, that Jack owned

Kaygold, I knew that something was very seriously wrong. At that

point, I telephoned our board of directors and we agreed simply on

the strength of the violation of our conflict of interest policy alone

that we had absolutely no choice but to accept Jack’s offer to resign, which he had made in March 2004 and again made in October 2004.

Consequently in October 2004, I accepted Jack’s resignation from

the board and I have not spoken with him since.

[Prepared statement of Ms. Ridenour appears in appendix.]

The CHAIRMAN. Thank you very much.

Ms. Halpern.

STATEMENT OF GAIL HALPERN, FORMER TAX PREPARER,

ADVISER TO JACK ABRAMOFF

Ms. HALPERN. Thank you, Mr. Chairman, Mr. Vice Chairman

and members of the committee. My name is Gail Halpern. I am a
32

part-time accountant. I am a certified public accountant and personal financial planner.

Mr. and Mrs. Abramoff were my clients from early 1997 until

September 2004. I knew Mrs. Abramoff on a social basis and she

asked me sometime in early 1997 to be her and Mr. Abramoff’s accountant and prepare their personal income tax returns.

The following is a general description of the services I performed

for the Abramoffs.

I prepared Mr. and Mrs. Abramoff’s personal income tax returns

from the 1996 tax year until the 2002 tax year inclusive. I prepared gift tax returns for Mr. and Mrs. Abramoff when required

during this time as well. I prepared their children’s income tax returns and I prepared trust income tax returns for the Jack and

Pamela Abramoff family up to and including the 2003 tax year as

required.

I prepared personal and trust tax returns based on information

provided by Mr. and Mrs. Abramoff or by those authorized to provide such information on their behalf, namely Mr. Abramoff’s office

at Preston Gates or later at Greenberg Traurig, or Mr. Abramoff’s

business office.

I did not prepare any corporate, partnership or tax exempt entity

returns, as I am not an expert in those areas of the tax law. Those

returns were prepared by other competent accountants.

Upon their request, I provided some tax planning advice to Mr.

and Mrs. Abramoff within my limited areas of expertise. I also provided some estate planning advice and some financial planning advice to Mr. and Mrs. Abramoff as requested by them. I also answered general accounting and tax questions from the Abramoffs or

from other authorized people in Mr. Abramoff’s offices, as mentioned earlier.

Any questions that I was not able to answer, such as questions

that were specific to a certain area of accounting or law, I referred

to attorneys or accountants who practiced in that area of accounting or law. Mr. or Mrs. Abramoff made all of the decisions.

For Mr. Abramoff’s daily checking account and for some of his

business entities, I worked with Mr. Abramoff’s business office to

help implement a bookkeeping software package that required

them to input all the information required for me or for others to

prepare tax returns. I did not keep the book or prepare the books

for Mr. Abramoff’s daily checking account, business entities or for

any of the non-profit entities that he started. Rather, my role was

to answer questions or refer him to specialists who could answer

questions when such questions were posed by Mr. Abramoff or by

the bookkeeping personnel or staff.

The day-to-day bookkeeping work was done by others. I was not

an employee, officer, director or member of any of Mr. Abramoff’s

entities. Instead, I am an independent accountant and I service

other clients besides the Abramoffs. The tax returns that I prepared and any tax, estate and financial planning services that I

rendered were based on information provided to me by Mr. or Mrs.

Abramoff or by personnel in Mr. Abramoff’s offices mentioned earlier.

To the best of my knowledge and based upon the information

that they provided to me, all income received by the Abramoffs or
33

their children or their family trusts for which I prepared income

tax returns, was reported and included in the relevant tax returns.

Thank you.

[Prepared statement of Ms. Halpern appears in appendix.]

The CHAIRMAN. Thank you.

Mr. Mann.

STATEMENT OF BRIAN MANN, FORMER DIRECTOR, AMERICAN

INTERNATIONAL CENTER

Mr. MANN. Mr. Chairman, I have no opening statement.

The CHAIRMAN. Mr. Grosh.

STATEMENT OF DAVID GROSH, FORMER DIRECTOR,

AMERICAN INTERNATIONAL CENTER

Mr. GROSH. I am embarrassed and disgusted to be part of this

whole thing. The Lakota Indians have a word, ‘‘wasichu,’’ which

aptly describes all of us right now.

The CHAIRMAN. Thank you.

Mr. Stetter.

STATEMENT OF AARON STETTER, FORMER ASSOCIATE,

CAPITOL CAMPAIGN STRATEGIES

Mr. STETTER. Mr. Chairman, I have no opening statement.

The CHAIRMAN. Thank you.

Mr. Grosh and Mr. Mann, I thank you for being here today. I

know of no problem that we have with you personally. It is a situation that we are trying to get to the bottom of and we thank you

for appearing here today.

Mr. Grosh, you and Mr. Mann were designated as directors of

the AIC, which was described in its own website as an ‘‘international think tank.’’ It is very interesting on its website. It is described as, the American International Center is a public policy research foundation founded in 2001 under the high-powered directorship of David A. Grosh and Brian J. Mann.

While only recently incorporated, the AIC has been striving to

advance the cause of greater international empowerment for many

years. Based on sunny Rehoboth Beach, DE, the AIC staff is using

21st century technology and decades of experience to make the

world a smaller place. In summary, the AIC is bringing great

minds together from all over the globe.

It goes on in that vein.

Mr. Grosh, I will begin with you. What did the AIC do?

Mr. GROSH. I was only involved maybe 5 months, 4 or 5 months.

The whole time I was involved, we rented the first floor of a house

and installed some computers.

The CHAIRMAN. Mr. Mann, do you know what AIC did?

Mr. MANN. Mr. Chairman, upon the advice of counsel I must respectfully decline to answer your questions based on my rights

under the 5th amendment to the U.S. Constitution.

The CHAIRMAN. Mr. Mann, did you know that you were designated a director until you recently interviewed with the Justice

Department?

Mr. MANN. Again, I must respectfully decline to answer your

question based on my rights under the 5th amendment.
34

The CHAIRMAN. Mr. Grosh, did you give Mr. Scanlon permission

to put your name up on the AIC website?

Mr. GROSH. On the website, no.

The CHAIRMAN. Did you give Mr. Scanlon permission to hold you

out as a director for the AIC?

Mr. GROSH. Yes.

The CHAIRMAN. Mr. Grosh, I would like to show you an exhibit

which is 195. Can you provide that to the witness? Look in there

at 195. It is a letter from the AIC that is under your signature.

Here we are. This letter signed by David Grosh as president:

Thank you very much for your recent contribution to the American International Center. Your donation of $200,000 will go a long way in assisting the AIC in its

efforts to carry out its public policy agenda. As you know, the AIC is committed to

influencing key policymakers on issues important to you and your constituents.

On and on.

The American International Center is a non-profit corporation dedicated to educating the public on important issues such as our national relationship with commonwealths, foreign governments and sovereign territories. As we discussed, we are

not a tax-exempt organization, as your contribution is subject to tax. Again, we appreciate your generous support.

Do you recall writing that letter, Mr. Grosh?

Mr. GROSH. No; I do not.

The CHAIRMAN. Do you ever remember seeing it?

Mr. GROSH. No; I do not.

The CHAIRMAN. Mr. Grosh, did the AIC conduct any board meetings?

Mr. GROSH. I recall one.

The CHAIRMAN. And how long did that last?

Mr. GROSH. 15 minutes.

The CHAIRMAN. Do you recall any business that was discussed at

these board meetings?

Mr. GROSH. Off the top of my head, no. I am sure we discussed

something, not to be glib.

The CHAIRMAN. Mr. Mann, I think it says when these meetings

took place, the extent of your role in the AIC at that time was

cleaning the downstairs office space. Is that correct?

Oh, Mr. Mann does not want to answer.

As far as you were concerned, Mr. Grosh, was this basically another Scanlon entity?

Mr. GROSH. Well, legally, no. It was Mr. Mann and I, but he was

calling the shots, sure.

The CHAIRMAN. So were you a little surprised when all this information started coming out that you were a director of an internationally respected think tank?

Mr. GROSH. Surprised, not really. The reason I got out of it when

I found out it involved the Federal Government, Indian tribes and

gambling, I knew that was a tad down the wrong road.

The CHAIRMAN. I want to point out again, Mr. Grosh. I appreciate your cooperation. I am disappointed in your lack of it, Mr.

Mann, but this committee holds no brief against you on this issue.

We are trying to get to the bottom of things. We know of no allegation of wrongdoing on your part, at least that I know of.

Tell me how this all began, Mr. Grosh. Were you friends with

Mr. Scanlon?

Mr. GROSH. Yes; I have known Mr. Scanlon since I was about 14.
35

The CHAIRMAN. And what happened? He approached you in some

way?

Mr. GROSH. A phone call.

The CHAIRMAN. And said?

Mr. GROSH. Do you want to be head of an international corporation. [Laughter.]

It is a hard one to turn down. [Laughter.]

The CHAIRMAN. And at the time were you living in Rehoboth

Beach?

Mr. GROSH. Yes, sir.

The CHAIRMAN. And Mr. Scanlon then informed you that your

home would be the headquarters?

Mr. GROSH. Actually, at that point, no. There were no headquarters.

The CHAIRMAN. Could you tell me just the sequence of events

that took place after that?

Mr. GROSH. I asked him what I had to do, and he said nothing.

So that sounded pretty good to me. [Laughter.]

I am trying to think how it all happened. He came by; we spoke

about it. At the time, I was, like, yes, sure, but not really taking

it seriously. And then he had me sign some papers. I met him here

in Washington, DC and we took over the bottom of the house I was

living in.

The CHAIRMAN. Did you receive compensation for this role?

Mr. GROSH. Yes.

The CHAIRMAN. And your background is a very honorable one, I

understand, as a lifeguard. Is that correct?

Mr. GROSH. Among other things. I am not a lifeguard anymore,

no.

The CHAIRMAN. And could you give us a little resume of some of

your background?

Mr. GROSH. Right now, I am an excavator, a machine operator,

construction workers, mentor in preschools, bartender. Typical

beach employment.

The CHAIRMAN. Thank you. Do you remember the extent of the

compensation that you received from Mr. Scanlon, roughly?

Mr. GROSH. No more than $2,000 or $2,500.

The CHAIRMAN. A month?

Mr. GROSH. No; total.

The CHAIRMAN. Total.

Did Mr. Scanlon promise you any fringe benefits?

Mr. GROSH. Well, I do not know if this is related to the AIC, but

we went to a Washington Capitals-Pittsburgh Penguins hockey

game.

The CHAIRMAN. Did you go to St. Bart’s with him?

Mr. GROSH. No; by that time I was no longer.

The CHAIRMAN. I see.

Well, I want to be very clear, Mr. Mann, and I am not asking

you to change your position, but we view this as just a gigantic

scam and you two individuals were used clearly by Mr. Scanlon.

We feel very strongly that your testimony could help us. I hope you

will maybe reconsider that or get a new lawyer, Mr. Mann, but I

hope you will reconsider it.
36

You obviously had nothing to do with posting this description of

AID on the Web site, did you, Mr. Grosh?

Mr. GROSH. No, sir; if I may?

The CHAIRMAN. Please.

Mr. GROSH. I am an adult. He did not use me. I have sense.

The CHAIRMAN. It was a pretty good deal, huh?

Mr. GROSH. Well, obviously not.

The CHAIRMAN. At the time, it seemed like a good deal.

Mr. GROSH. Well, you know, I didn’t just crawl out of a cotton

patch. Anything that sounds too good to be true usually is.

The CHAIRMAN. And they used the bottom floor of your house?

Mr. GROSH. Yes.

The CHAIRMAN. Thank you very much.

Mr. GROSH. We did.

The CHAIRMAN. They did. I see. Thank you.

Ms. Ridenour, since 1982 you have served as president of the National Center for Public Policy Research. Is that true?

Ms. RIDENOUR. Yes.

The CHAIRMAN. In October 2002 in your capacity as president of

the NCPPR, as you testified, you received $1 million from the Mississippi Band of Choctaw Indians. Correct?

Ms. RIDENOUR. Yes.

The CHAIRMAN. Let’s talk about how you came to receive the $1

million from the Choctaw Tribe. In June and July 2002, you told

Mr. Abramoff that the NCPPR wanted to keep its ‘‘program numbers’’ up for marketing purposes. That is according to e-mails that

we have.

Ms. RIDENOUR. In general, yes, sir.

The CHAIRMAN. So you told Mr. Abramoff NCPPR would be willing to participate in any program consistent with the NCPPR’s taxexempt purpose that Mr. Abramoff was working on.

Ms. RIDENOUR. In general, yes, sir.

The CHAIRMAN. Mr. Abramoff told you he and his firm invented

for the Choctaw Tribe a ‘‘new kind of lobbying,’’ as you have testified. And you concluded such an educational purpose was consistent with NCPPR’s charitable mission?

Ms. RIDENOUR. Yes, sir.

The CHAIRMAN. In October 2002, Mr. Abramoff told you the Choctaw Tribe had $1 million to do this educational project, as you

have testified. Ms. Ridenour, before you allowed Mr. Abramoff to

use the NCPPR as a pass-through, you repeatedly warned him that

whatever the $1 million was used for needed to be appropriate for

a non-profit charitable foundation.

Ms. RIDENOUR. I certainly did.

The CHAIRMAN. After you received the $1 million, Mr. Abramoff

instructed you to cut three checks: one $450,000 to Mr. Abramoff’s

private charity, the Capital Athletic Foundation; $500,000 to Mr.

Scanlon’s outfit, Capitol Campaign Strategies; and $50,000 to a

small lobbying firm called Nurnberger and Associates. Correct?

Ms. RIDENOUR. Yes; except that in some cases, they were wire

transfers.

The CHAIRMAN. Thank you. What, if anything, did Mr. Abramoff tell you about the $450,000

payment to Capital Athletic Foundation?
37

Ms. RIDENOUR. It was to be a grant to the Capital Athletic Foundation for its purposes, consistent with the wishes of the ultimate

donor, the Mississippi Choctaw.

The CHAIRMAN. As you testified, you did not know that the Capital Athletic Foundation was Mr. Abramoff’s private charity.

Ms. RIDENOUR. Actually, I did not know Kaygold was owned by

Mr. Abramoff. I did know that he had an association with the Capital Athletic Foundation. I simply found it consistent with what I

knew to be a warm relationship between him and the Choctaws.

The CHAIRMAN. Did you know the primary beneficiary of the

Capital Athletic Foundation was first and foremost a Jewish boys

school in Maryland founded by Mr. Abramoff?

Ms. RIDENOUR. No; I was aware of the school, but I believed,

based on private conversations I had with Jack, that it was financed through tuition from the parents.

The CHAIRMAN. We heard testimony that Mr. Abramoff told the

Choctaw Tribe that this $1 million would be used for ‘‘grassroots

activities to influence legislation.’’ Did he tell you this?

Ms. RIDENOUR. Not only did he not tell me that, he repeatedly

told me that legislation would not be involved. I would not have approved our participation at all had I even known there was legislation. I had several things that needed to be specified before I went

okay with it. The absence of legislation was something he had to

assure me about.

The CHAIRMAN. What, if anything, did Mr. Abramoff tell you

about the $500,000 payment to Mr. Scanlon’s business, CCS?

Ms. RIDENOUR. That it was to be used for educational program

services, particularly polling and telephone banks, but not necessarily exclusively; research, potentially paid advertising; I was

told later petition drives, that sort of thing, but 100 percent educational program services.

The CHAIRMAN. What, if anything, did Mr. Abramoff tell you

about the $50,000 payment to Nurnberger and Associates?

Ms. RIDENOUR. At first he told me nothing, meaning in the conversation, so I immediately inquired. He told me then that Mr.

Nurnberger was going to coordinate the project.

The CHAIRMAN. In the invoices that you received from CCS, CAF

and Nurnberger and Associates, the Capital Athletic Foundation

was seeking payment for ‘‘sports and politics projects.’’

Ms. RIDENOUR. That is what they wrote, yes.

The CHAIRMAN. Do you believe that happened?

Ms. RIDENOUR. Looking at the tax returns, it apparently did not.

The CHAIRMAN. For a second, the invoice reportedly issued by

Nurnberger and Associates for $45,000 was for a supposed research

grant. In an interview with the committee staff, Mr. Nurnberger,

senior partner of the lobbying firm Nurnberger and Associates,

stated that neither he nor his firm issued this invoice to the

NCPPR. In fact, the firm never issued an invoice regarding the

$50,000 it received from the NCPPR. In addition, Mr. Nurnberger

attested that Mr. Abramoff told him that the $50,000 he was having the NCPPR pay him was repayment on a personal loan that

Mr. Nurnberger had made to Mr. Abramoff some years ago.
38

Did Mr. Abramoff ever tell you that the $50,000 you were sending to Nurnberger and Associates was in fact repayment to Mr.

Nurnberger on a personal loan?

Ms. RIDENOUR. Absolutely not.

The CHAIRMAN. I think I know your response if he had told you

that.

Ms. RIDENOUR. Yes, Senator.

The CHAIRMAN. What, if anything, did you do to try to verify that the $1 million was being put to use in the manner Mr. Abramoff

stated?

Ms. RIDENOUR. Unfortunately, I mostly asked Jack Abramoff for

documentation. One of the things that we are now doing at the National Center is putting into place a series of checks and balances

so that in the future this sort of thing will not happen to us again.

I trusted Jack. I believed not only that he had the fiduciary responsibility to us, but in fact was attempting to serve his clients, the

Choctaws, a non-profit entity, to the best of his ability as well.

So what I did do was talk to him; not enough.

The CHAIRMAN. Thank you, Ms. Ridenour. I want to thank you

for your candor and your willingness to appear here. I do believe

that your organization has done excellent work over the years. I

have been familiar with much of it. I thank you for your testimony

today.

Ms. Ridenour, with respect to the $1 million transaction, do you

believe Mr. Abramoff lied to you?

Ms. RIDENOUR. Certainly. I do not know how I could reach any

other conclusion at this point in time.

The CHAIRMAN. Do you believe that he may have defrauded the

tribe?

Ms. RIDENOUR. Certainly I do.

The CHAIRMAN. Do you think he may have defrauded the

NCPPR?

Ms. RIDENOUR. Certainly I do.

The CHAIRMAN. Thank you, Ms. Ridenour. I thank you for being

here today. Your involvement has been sad, but helpful to us, and

I thank you.

Mr. Stetter, could you take the microphone please from Ms.

Ridenour? You are a former employee of CCS. Right?

Mr. STETTER. Yes.

The CHAIRMAN. One of the things that you do is set up groups

that Mr. Scanlon or Mr. Cathcart used to have you conduct grassroots activities. Is that correct?

Mr. STETTER. I would not say set up groups, no. I would not say

that.

The CHAIRMAN. What would you say?

Mr. STETTER. I wrote phone scripts with groups that were already provided to me, but I have never set up a group before,

never.

The CHAIRMAN. I see. Is the Christian Research Network a real

organization, to your knowledge?

Mr. STETTER. To my knowledge, no.

The CHAIRMAN. How about the Global Christian Outreach Network?

Mr. STETTER. To my knowledge, no.
39

The CHAIRMAN. And the Concerned Citizens Against Gaming Expansion?

Mr. STETTER. To my knowledge, no.

The CHAIRMAN. And the Citizens Against Gaming, Michiganders

Against Gaming? In other words, these organizations were used

when your organization made phone calls, right, to various constituents on issues?

Mr. STETTER. Yes.

The CHAIRMAN. Particularly gaming.

Mr. STETTER. Yes, sir.

The CHAIRMAN. And these names of these organizations were

just provided to you?

Mr. STETTER. Yes.

The CHAIRMAN. And again, Mr. Scanlon or Mr. Cathcart would

instruct you to draft a phone script opposing some gaming initiative that might harm one of CCS’s tribal clients. Is that correct?

Mr. STETTER. That is correct.

The CHAIRMAN. And they would give you some guidance on what

the draft should actually say?

Mr. STETTER. Yes; I would follow along from old drafts.

The CHAIRMAN. And you returned the draft for their approval

with the name of the organization left out. Is that correct?

Mr. STETTER. It would be left out or provided later. It would be

put in later.

The CHAIRMAN. And usually that would be Chris Cathcart, Mr.

Scanlon’s primary assistant would plug in the name of a grassroots

group.

Mr. STETTER. I believe so, yes.

The CHAIRMAN. For example, the Christian Research Network. In

fact, an example of one such script that was drafted under that

very name, it is number 124. This is a phone script and it says:

Hello, my name is John. I am calling from the Christian Research Network. We

need your help to stop the spread of gambling in Louisiana. The situation is very

critical.

Do you consider yourself pro-gaming or anti-gaming? Record response. If pro, disconnect. As you have seen in the newspaper, the Jena Band of Choctaw Indians is

trying to bring yet another casino to Louisiana, this time to DeSoto Parish, about

70 miles from where they are based. What is more is that the people of this Parish

have never been given a say in this matter. As a concerned citizen who opposes

gambling, would you be willing to call Senators Breaux/Landrieu and tell him or her

to stop the spread of gambling in Louisiana. If no, disconnect; if yes, we can connect

you to the Senator’s office. When they pick up, tell them to take a stand against

gaming in Louisiana. Tell them to oppose the new Indian casino, patch through and

collect data.

Are you familiar with that one?

Mr. STETTER. Yes; I am.

The CHAIRMAN. And to your knowledge, you do not know who the

Christian Research Network is?

Mr. STETTER. To my knowledge, no, sir.

The CHAIRMAN. As a Senator, personally I am interested in this

ability to patch right through to the Senator’s office, something I

always suspected, but it is certainly an effective tool.

I guess what I am trying to get at, Mr. Stetter, and I understand

the business that you are in, but should somebody have maybe

checked to see whether these organizations were legitimate organizations? Or was it just your job to plug in the script?
40

Mr. STETTER. Mr. Chairman, as an entry-level employee, I did

not have particular questions about what these groups were. I was

just provided the names and then I provided the scripts.

The CHAIRMAN. I see. All right, sir. We have more questions. I

have another round, but I would like to yield to Senator Dorgan

at this time and then I will come back for the others.

Thank you. I thank the witnesses.

Senator DORGAN. Mr. Chairman, thank you very much.

It is hard to know where to start with all of this material. I know

that you were asking Mr. Grosh about his employment and his opportunity to become a part of that organization. Some found it

funny. There is very little that is funny about this issue. Going

through the e-mails, I might just observe that this was not only

fraud on a pretty grand scale, but let me just describe the smaller

fraud here.

Exhibit 31 has a memorandum from Mr. Abramoff to a Rabbi

Lapin. He said:

I hate to ask you for your help with something so silly, but I have been nominated

for membership in the Cosmos Club, which is a very distinguished club composed

of Nobel Prize winners and so on. The problem for me is most prospective members

have received awards and I have received none. I was wondering if you thought it

possible that I could receive an award from your organization. Probably you could

call it something like scholar of Talmudic studies or distinguished biblical scholar

award. It would even be better if it were possible that I received these in the years

past, if you know what I mean.

[Laughter.]

The CHAIRMAN. That is to whom?

Senator DORGAN. It is exhibit 31. It is from Mr. Abramoff to a

Rabbi Daniel Lapin.

My point is that this was not just cheating on a grand scale. In

fact, I believe that goes on and on and actually they describe the

type of——

The CHAIRMAN. And Rabbi Lapin’s response is?

Senator DORGAN. Abramoff said I am trying to do here, it would

only be used for this situation at the Cosmos Club, but there is a

chance they would have to call someone to verify; probably just a

few clever titles, awards and dates, as long as you can be the person to verify them.

The response from the recipient, Mr. Lapin, is yes, I just need

to know what needs to be produced—letters? Plaques? Neither?

Anyway, the memorandum goes on.

Look, the point of all of this, there is a lot of deception going on

and there are victims of this deception. Let me go through a couple

of areas, if I might.

Mr. Stetter, if I might ask you first, it appears that what we had

was the establishment of a good many bogus groups isn’t that correct? Bogus organizations?

Mr. STETTER. Yes; if that is the term you want to use for it, yes.

Senator DORGAN. Was it a case where these organizations, in

many cases, actually just had a telephone. Those telephones were

all in a drawer and when the telephone would ring, you would just

go to the drawer and pick out which telephone it was for whichever

organization?
41

Mr. STETTER. To my knowledge, there was that drawer. It was

not my job to pick up the phones, but to my knowledge that is how

it worked.

Senator DORGAN. These were organizations that were created

with names, some of which perhaps my colleague, Senator McCain

just read, and it was not as if they did not have any connection to

anything. They obviously had a telephone line with a telephone

number, but you could just put all those organizations in a little

drawer and when the phone rings, you open up the drawer and figure out which phone rang and then answer with the name of that

organization. So that is what I refer to when I talk about bogus organizations. I believe there is a trail with respect to some memoranda on that as well.

I would like to ask a couple of questions, Mr. Stetter, about Mr.

Cathcart, because his name was just used a moment ago and I will

go through this very quickly. You took a position with Michael

Scanlon and his companies, Scanlon-Gould and Campaign Strategies, correct?

Mr. STETTER. Scanlon Gould Public Affairs or Capitol Campaign

Strategies.

Senator DORGAN. And you did some administrative duties and

some research for clients?

Mr. STETTER. Yes, sir.

Senator DORGAN. You always maintained a support role behind

the scenes, you told us?

Mr. STETTER. Yes.

Senator DORGAN. After you left the Scanlon companies, you were

hired by the National Restaurant Association as manager of a

grassroots program. Is that right?

Mr. SETTER. Yes, sir.

Senator DORGAN. Given your background prior to working for

Mr. Scanlon, exactly what did you do at the Scanlon companies

that qualify you for a job as manager of grassroots programs at this

point?

Mr. SETTER. I would say the main qualification was actually

working on some of the phone scripts and working on some of the

campaigns. I actually went to some of the gaming facilities and assisted with letter-writing campaigns. So I did do some grassroots

functions.

Senator DORGAN. Every organization has a kind of right-hand

man, somebody that is in charge. Who was Mr. Scanlon’s righthand man?

Mr. SETTER. From my experience, it would be Chris Cathcart.

Senator DORGAN. Did he run the Washington, DC office?

Mr. SETTER. When Mike was out of town, without him having a

title or anything, it was understood that Mr. Cathcart ran the

Washington, DC office.

Senator DORGAN. I believe Mr. Cathcart has asserted publicly

that he was just a mere gofer in the operation. Do you disagree

with that?

Mr. SETTER. I guess in some degree we were all gofers for Mr.

Scanlon. I was probably described as a gofer for probably everyone

in the operation.
42

Senator DORGAN. Who was in charge when Mr. Scanlon was not

there in the Washington, DC office?

Mr. SETTER. I answered directly to Mr. Cathcart.

Senator DORGAN. So Mr. Cathcart was in charge. Thank you.

Let me ask Ms. Ridenour a couple of questions about the passthrough. We know of the $1 million that has been discussed. Is this

the first time money in that quantity has been passed through your

organization in order to obscure its identity?

Ms. RIDENOUR. Well, I do not believe it was. Well, from our perspective, it was not being done to obscure its identity. The grant

to Capital Athletic Foundation we perceived to be a legitimate

grant, and the rest of it we perceived to be ongoing program work

that we intended at some point to brag about on our Web site. So

obscurity was never a goal.

Senator DORGAN. Except that, and you may be right with respect

to that. You have heard me describe the other attempts to deceive

and obscure. But when Mr. Abramoff told your organization, which

is a research organization, is it a (c)(4)?

Ms. RIDENOUR. It is a (c)(3).

Senator DORGAN. When he told your organization that he wanted

a $500,000 check written for a grant, was there actually a grant

request that came in for the grant that described what the grant

money will be used for, the purpose of the grant, and on what basis

the grant will be awarded?

Ms. RIDENOUR. What happened was we received an invoice

through Greenberg Traurig in October 2002 and I discussed with

Jack on the telephone the activities of the Capital Athletic Foundation. I was aware of his affiliation with it. I also had had a prior

knowledge of what the Capital Athletic Foundation at least officially was supposedly doing. One of the things that I worked to do

at that time was ascertain that the Capital Athletic Foundation’s

mission not only was as a legitimate 501(c)(3), which it apparently

was, but also that its mission was consistent with our own in terms

of educational program services. Those tests seemed to be met, so

I agreed to do the grant, believing that that was the wish of the

Choctaws.

I also said, however, specifically to Jack at that time that if I am

not convinced that all of the legal tests are met, and in this case

I was thinking of (c)(3) regulations, I was not even thinking about

larceny or anything of that sort, that I would simply make the offer

to the Choctaws to return their money.

Senator DORGAN. This is the first time that $1 million has been

moved through your organization for the purpose of moving it elsewhere?

Ms. RIDENOUR. Certainly, yes. It is the largest grant we had ever

received.

Senator DORGAN. Okay. And you did not receive a grant request

from the Capital Athletic Foundation saying we are requesting a

$500,000 grant with a 1-page or 2-page or 10-page description of

what we want to do.

Ms. RIDENOUR. Correct. We did not receive the formal grant proposal, and I assure you in the future we certainly will.

Senator DORGAN. That is highly unusual, right?
43

Ms. RIDENOUR. Well, since I had never done it before, ‘‘unusual’’

would not be the term. Let’s put it this way: It will never be anything we ever do again.

Senator DORGAN. My understanding is that the small bit of trail

that exists here described it as the sports and politics project.

Ms. RIDENOUR. That is what Greenberg Traurig wrote on the invoice, or whoever wrote that invoice, frankly. Frankly, what I was

told, and this is consistent with what was on the Capital Athletic

Foundation’s tax returns and also their website, was that they

were doing actual educational programs, creating programs

through which teachers and mentors could teach young people

about the importance of good citizenship values. So this was exceedingly consistent with an educational mission.

Senator DORGAN. I understand. Let me just say, as Senator

McCain has, I appreciate your appearing here and your speaking

about this issue. It is probably not comfortable for you to do it because you, too, were likely deceived. But what I am trying to get

at is if in fact Greenberg Traurig’s memorandum correctly describes the $500,000 grant to the Capital Athletic Foundation as a

sports and politics project, the ‘‘politics’’ part would probably run

afoul of your (c)(3), would it not?

Ms. RIDENOUR. Well, yes, if I thought that was what they meant.

I just thought it was a person who does not understand and wrote

that, and because I had had conversations directly with Jack

Abramoff representing the foundation and had looked into the

foundation enough to know what it really did, I just thought it was

an error by the copywriter or whoever actually created it.

Certainly, if I had thought ‘‘politics’’ in the sense that we usually

use it had anything to do with that foundation, there is no way I

would have approved it.

Senator DORGAN. Do you have some sense or do you understand,

I hope you do, why those of us who look at this trail, take a look

at this movement of substantial money through organizations, and

then say wait a second; there is something fundamentally wrong

with (c)(3)s or (c)(4)s being used as conduits to move tribal money

through your organization to benefit Mr. Abramoff. And so we look

at that and say how can this happen so easily with money that just

slides through a (c)(3) or (c)(4) without even a 2- or 3-page grant

request.

Ms. RIDENOUR. It is not so easily, though. One of the things you

have to keep in mind, Senator, is the relationship that we had

going back by that time was just sort of 22 years. When you have

worked with someone for 22 years; when they have been a member

of your board of directors by October 2002 for 5 years; when you

have worked on projects together; when you know someone personally; when you believe, even though technically it is irrelevant, that

you are close personal friends; when you believe all of these things

and you also know that it is in, and I still believe to this day it

is in a person’s best interest to do a job right, your natural assumption is that the things they say to you are correct and true.

In my future career, I will never make pretty much assumptions

on anything again. But up until that time, believing that it was in

Jack Abramoff’s personal as well as professional interests to be

honest, to serve his client the Choctaws as well as he possibly
44

could, and in our interest as an educational institution to participate in bona fide educational activities that educate the national

audience about important issues, it seemed perfectly consistent

with our mission and it seemed like good, solid work.

As you know from my testimony, by July 2003, even though I did

not suspect anything resembling larceny, I pulled us out simply because we were not seeing documentation. So we did have what we

felt at the time were fairly high standards for documentation. They

were not high enough. They are higher now, but we did pull out

long before there was any news media coverage of Jack Abramoff.

Senator DORGAN. Do you feel this happened because he lied to

you? Mr. Abramoff lied to you?

Ms. RIDENOUR. Unless he walks into this room today and shows

a heck of a lot of program service work, I would have to say yes.

Senator DORGAN. Let me ask you for a moment about the 2000

golf trip to Scotland for which, I believe, an amount of money came

from your organization to help defray the costs of that golf trip. Is

that correct?

Ms. RIDENOUR. Yes.

Senator DORGAN. Can you describe how that happened, because

again you might well imagine when we take a look at money moving through (c)(3)s or (c)(4)s, we say wait 1 second; what is going

on here. The same would be the case with respect to what has been

described in some e-mails as the golf trip. Actually, there have

been two golf trips, and on the 2000 golf trip was Congressman

DeLay and a group of others, with Mr. Abramoff.

So tell me if you will and tell the committee how your organization got involved in putting some money up for that golf trip.

Ms. RIDENOUR. Certainly. First of all, while I am aware that is

referred to as the golf trip, almost universally that is not a term

that I use. We were contacted by Jack Abramoff in his capacity, I

believed, as a member of our board of directors in approximately

March 2000. I say ‘‘approximately.’’ It might have been February.

It could have been April 1, but frankly about that time.

He suggested to me in his capacity I believed as a director that

it might be a nice project to have an educational trip to Britain,

not Scotland, but Britain to meet with Parliamentarians. My mind

went to London because to the best of my knowledge, Parliament

is in London. I thought that is not a bad idea. I further thought

that given what we expected to be at that time either Mr. Gore,

with apologies Mr. Chairman, or Mr. Bush would be elected President, that in coming years, and this of course is pre-9-11, we would

either be looking at additional expansions of health care reform,

meaning Government-controlled health care reform, or potential

privatization of Social Security.

This is literally what was going through my head. I thought

given that both of these roads are places that Britain has gone, one

to good effect, in my opinion, one to the other, it is not a bad idea

for a congressional leader to go over, make some acquaintances

with members of Parliament and come home.

The trip I believed I was approving, and indeed the trip that I

invited the member of Congress on through his chief of staff, was

simply to be a trip to London, meet with some members of Parliament, and fly home.
45

I will say unfortunately, except I do not mean this except in the

sense of this controversy, at the time I was pregnant with twins

and we had recently adopted a newborn baby. I was not prepared

to go to London myself. So I expressed to Jack that I like the idea

of this project for educational reasons, but I was not going to be

prepared to go myself, and frankly quite selfishly, I was not going

to let, and this is in the husband-wife sense, my husband go with

him.

So I said we cannot do this unless there is someone responsible

who can handle logistics. We then discussed it. He volunteered. We

then discussed the propriety of the ethics laws, which I was assured, and I know this is a point, too, of media coverage, that it

was perfectly appropriate for him based on his knowledge of the

law to lay out some expenditures as long as he was promptly reimbursed by us. We discussed that in some further detail.

I then approved him handling the project as a director of the National Center. I also said, make sure on your invoices, they come

through your home address because I do not want there to be any

question in anyone’s mind should anyone ever look into this, not

actually expecting anyone would, that you are operating as a member of the board of directors of a think tank and not as a lobbyist,

which he agreed and in fact did.

At that point, then, the invitation was expressed to the Congressman’s office and I primarily bowed out of the project believing it

to be in secure hands.

Senator DORGAN. Did the project turn out differently than you

have described it to us? You have just described to us the type of

project that you approved. Obviously, the descriptions of that trip

are very different. So tell me about that.

Ms. RIDENOUR. I did become aware at approximately that same

time of the trip, and I do not know exactly when Scotland was also

included in the itinerary. I believed that, however, to be to meet

with some additional members of Parliament in that area.

Since then, and I refer primarily to things that happened in the

news media in 2005 and some things we have been told by others,

the trip seems to be very different from what I expected. I wish to

state, however, that although the news media has an interest in

this particular Congressman’s personal behavior, the fact is that I

know of nothing that the congressional office did that was inappropriate.

Now, I was not on the trip. I do not want to expand beyond my

knowledge, but from what I know, and I actually should volunteer,

but when I extended the offer, the invitation to the Congressman’s

office, his chief of staff said to me that they were interested, but

their concern would be would the trip be substantive enough. That

is an exact quote. So I had no sense from them that they thought

they were being invited on anything other than a bona fide educational opportunity.

Senator DORGAN. I will not go further into this because it is not

part of the Choctaw issue itself, although I think Choctaw money

was actually used to pay for a portion of the second golf trip. I

might say I believe that in some e-mails that these are both just

referred to as the golf outings and how much fun they are.

Ms. RIDENOUR. May I interject?
46

Senator DORGAN. Yes.

Ms. RIDENOUR. Senator, the second golf trip is something which

I will be able to provide no information other than the fact that we

do not know anything about it.

Senator DORGAN. You are correct. Again, let me say that our

committee is appreciative of the fact that you come here and visit

with us. I still remain hopeful, and it is not for the purpose of suggesting that anything you have told us today is not accurate. Our

investigators have visited with you. I have no basis for in any way

suggesting that you have not been completely open in your responses.

I think it is quite clear from what you have said, not you feel as

do many others who have reached this witness table, you feel deceived by people who used money in a manner completely inconsistent with what you had felt you had approved.

But I do think, because we have a number of (c)(3)s and (c)(4)s,

and you have actually described, Ms. Ridenour, the importance of

making sure that you are well within the bounds. We have certain

guidelines of what the use of (c)(3)s and (c)(4)s are for. So my hope

remains, and the chairman and I will talk about this, that we will

consider talking to the Finance Committee about looking into that

portion of it.

Having said all that, I think that the contribution of this panel

is to describe further the root of the money, the use of the money,

in some cases with respect to a couple of the organizations here,

what appears to be almost complete obvious fraud to everyone.

Again, that is not part of what this committee will be deciding.

This committee is about following the money and getting the facts.

If you dyed that money purple, there would be a lot of purple pants

pockets around this town and the country because they were moving it into so many different organizations.

Mr. Stetter, when the chairman and I were asking you about organizations that are only names this is part of what is wrong with

American politics today. This is probably not the only circumstance

where that happens. We get calls, Mr. Chairman, you were referring to this, we get in our office from with people who have been

contacted by a grassroots organization, apparently one that actually exists. These organization get somebody from back home on

the phone and say, okay, now we are going to connect you with

Senator Dorgan’s office or perhaps Senator McCain’s office.

In most cases, they do not want to be connected because they are

not interested in the subject and they do not know why they are

connected. They are not on-message, certainly. So I do not think

that approach works in any event.

But let me thank all of these witnesses for being with us and for

cooperating. Mr. Mann, I regret you have not. You certainly have

the right to exercise your constitutional protections.

The CHAIRMAN. Thank you, Senator Dorgan.

Ms. Halpern, where did Kaygold operate from?

Ms. HALPERN. To the best of my knowledge, Kaygold operated

from Mr. Abramoff’s home.

The CHAIRMAN. Exactly what is it?
47

Ms. HALPERN. Kaygold is a sole member LLC. Mr. Abramoff is

the sole member. For tax purposes, it is reported on Mr. Abramoff’s

Form 1040, Schedule C, Self Employment Income Schedule.

The CHAIRMAN. In 2002, Kaygold’s sole source of income was $13.5 million in supposed ‘‘referral fees.’’ It came in from Mr. Scanlon’s company, Capitol Campaign Strategies. Is that correct?

Ms. HALPERN. Sir, I would need to go back to check the tax

records, but in general it sounds correct. Kaygold had income from

Capitol Campaign Strategies.

The CHAIRMAN. If you are the tax consultant and you see an or- ganization based in an individual’s home that receives $13.5 million in 1 year from one source, does that ring any alarm bells with

you as a tax consultant?

Ms. HALPERN. Mr. Chairman, Kaygold’s business as indicated on

the schedule C of the tax return was political consulting. I am not

aware of what kind of revenues a political consulting practice is

supposed to generate.

The CHAIRMAN. You had access to records that showed that $13.5

million came in from one organization, that was Mr. Scanlon’s company, Capitol Campaign Strategies.

Ms. HALPERN. Yes; a 1099 was received, two 1099’s I believe that

year were received.

The CHAIRMAN. That did not raise any red flags with you?

Ms. HALPERN. Sir, again, my job was to prepare his tax return

and in my engagement letter with Mr. and Mrs. Abramoff, I state

in the engagement letter it is the client’s responsibility to provide

all the information to me so that I can prepare the tax return.

The CHAIRMAN. Well, you had the information that $13.5 million

came in 1 year from one source, Mr. Scanlon’s organization, Capitol

Campaign Strategies. Now, I ask you again, yes or no, did this

raise a red flag with you that this was certainly highly unusual?

Ms. HALPERN. Again, Mr. Chairman, I do not know if a political

consulting practice, if that would be highly unusual in a political

consulting practice. I cannot answer that. I was not involved in Mr.

Abramoff’s inner workings.

The CHAIRMAN. I do not care if it came from the moon. If it is

$13.5 million into an organization the only amount of money that

they get in supposed referral fees, wouldn’t anybody upholding

their oath of office say wait 1 minute, it is 13.5 million bucks coming in from one source in 1 year; what is going on here?

Ms. HALPERN. Sir, to the best of my knowledge, all information

that Mr. Abramoff gave me was reported on his income tax return.

Let me just state further, if you do not mind, sir.

The CHAIRMAN. Sure.

Ms. HALPERN. Mr. Abramoff in no way at any time tried to hide

this income. Now, if you tell me, did he try to hide the income,

would that raise a red flag kind of question, that is a different

question. You are asking me if $13 million came in from one entity,

I am telling you that is what he presented to me and that was reported on his tax return.

The CHAIRMAN. And obviously it did not arouse any curiosity on

your part. Most people it would, Ms. Halpern.

Senator DORGAN. Mr. Chairman, would you just yield on that

point?
48

The CHAIRMAN. Yes.

Senator DORGAN. Ms. Halpern, were you in the room when I read

the e-mail earlier today about moving money in order to avoid paying taxes?

Ms. HALPERN. I went out of the room for some time. It is possible. I am not sure. I do not recall.

The CHAIRMAN. Ms. Ridenour, you had discussions with Mr.

Abramoff that obviously as we have discussed induced you into

passing on to Kaygold two payments, $500,000 and $750,000 in

May and June 2003. Do you recall that?

Ms. RIDENOUR. Yes.

The CHAIRMAN. From those conversations with Mr. Abramoff,

what were you led to believe that Kaygold was?

Ms. RIDENOUR. I believed it was a public affairs firm run by Michael Scanlon that was very similar to Capitol Campaign Strategies. They simply had different companies to do different functions.

The CHAIRMAN. And these two payments originally came from

the International Interactive Alliance?

Ms. RIDENOUR. They came from Greenberg Traurig. Jack

Abramoff later told me the original source was the Interactive Alliance, yes.

The CHAIRMAN. Did you know what was actually done with those

payments?

Ms. RIDENOUR. No.

The CHAIRMAN. No; you did not.

Ms. RIDENOUR. I mean, I thought they were going to be used for

educational program work. To this day, I do not know.

The CHAIRMAN. According to Kaygold’s general ledger, the $500,000 payment by NCPPR to Kaygold was credited on May 18,

2003, but within 3 weeks of arriving in to Mr. Abramoff’s Kaygold

account, it appears that what was not tucked away for taxes went

straight to Mr. Abramoff’s personal account. It seems to have occurred with the $750,000 that the NCPPR paid to Kaygold on May

30, 2003. I think your reaction to that from your previous testimony is fairly predictable.

Ms. RIDENOUR. It is predictable and frankly I am appalled.

The CHAIRMAN. Ms. Halpern, you look like you want to say something else.

Ms. HALPERN. No, sir.

The CHAIRMAN. I am sorry.

Well, I want to thank the witnesses for being here. The story

speaks for itself. I hope that we will get this unraveled sooner rather than later, and this committee can issue a full report. We will

have one more hearing dealing with another tribe, then we will

issue a report. This committee expects to come up with recommendations to do whatever is necessary from the Committee on

Indian Affairs standpoint to see that this kind of gross injustice is

not inflicted on any more Native American tribes.

Senator Dorgan, do you have anything to say?

Senator DORGAN. Mr. Chairman, I do not. You indicated another

hearing. Let me again suggest at least that we hold open the prospect of visiting about the issue of (c)(3)s and (c)(4)s, perhaps with

the folks on the Finance Committee because I think additional

questions are raised there.
49

Again, let me thank the witnesses and let me thank also the investigators who have put in a substantial quantity of time. This

has not been easy to piece all this together, and we appreciate very

much their work as well.

The CHAIRMAN. I thank the witnesses.

This hearing is adjourned.

[Whereupon, at 12:25 p.m., the committee was adjourned, to reconvene at the call of the Chair.]

(51)

APPENDIX

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

PREPARED STATEMENT OF GAIL HALPERN, PART-TIME ACCOUNTANT

Thank you Mr. Chairman, Mr. Vice Chairman, and members of the committee.

My name is Gail Halpern. I am a part-time accountant. I am a certified public

accountant and a personal financial planner.

Mr. and Mrs. Abramoff were my clients from early 1997 until September 2004.

I knew Mrs. Abramoff on a social basis, and she asked me sometime in early 1997

to be her and Mr. Abramoff’s accountant and prepare their personal income tax returns. The following is a general description of the services I performed for the

Abramoffs:

I prepared Mr. and Mrs. Abramoff’s personal income tax returns from the 1996

tax year until the 2002 tax year, inclusive. I prepared gift tax returns for Mr. and

Mrs. Abramoff when required during this time as well. I prepared their children’s

income tax returns, and I prepared trust income tax returns for the Jack and Pamela Abramoff family up to and including the 2003 tax year as required.

I prepared personal and trust tax returns based on information provided by Mr.

and Mrs. Abramoff, or by those authorized to provide such information on their behalf, namely Mr. Abramoff’s office at Preston Gates, or later at Greenberg Traurig,

or Mr. Abramoff’s business office.

I did not prepare any corporate, partnership, or tax-exempt entity returns, as I

am not an expert in those areas of the tax law. Those returns were prepared by

other competent accountants.

Upon their request, I provided some tax planning advice to Mr. and Mrs.

Abramoff within my limited areas of expertise. I also provided some estate planning

advice, and some financial planning advice to Mr. and Mrs. Abramoff as requested

by them. I also answered general accounting and tax questions from the Abramoffs

or from other authorized people in Mr. Abramoff’s offices, as mentioned earlier. Any

questions that I was not able to answer, such as questions that were specific to a

certain area of accounting or law, I referred to attorneys or accountants who practiced in that area of accounting or law. Mr. or Mrs. Abramoff made all of the decisions.

For Mr. Abramoff’s daily checking account and for some of his business entities,

I worked with Mr. Abramoff’s business office to help implement a bookkeeping software package that required them to input all the information required for me or

for others to prepare tax returns.

I did not keep the books or prepare the books for Mr. Abramoff’s daily checking

account, business entities, or for any of the non-profit entities that he started. Rather, my role was to answer questions, or refer him to specialists who could answer

questions, when such questions were posed by Mr. Abramoff or by the bookkeeping

personnel or staff. The day-to-day bookkeeping work was done by others. I was not

an employee, officer, director, or member of any of Mr. Abramoff’s entities. Instead,

I am an independent accountant, and I service other clients besides the Abramoffs.

The tax returns that I prepared, and any tax, estate, and financial planning services that I rendered, were based on information provided to me by Mr. or Mrs.
52

Abramoff or by personnel in Mr. Abramoff’s offices mentioned earlier. To the best

of my knowledge, and based upon the information that they provided to me, all income received by the Abramoffs or their children or their family trusts for which

I prepared income tax returns, was reported and included in the relevant tax returns.

Thank you.

PREPARED STATEMENT OF PHILLIP MARTIN, CHIEF, MISSISSIPPI BAND OF CHOCTAW

INDIANS

Thank you for this opportunity to present the views of the Mississippi Band of

Choctaw Indians through written testimony as regards the committee’s ongoing investigation into the misconduct of Jack Abramoff and Michael Scanlon.

The Mississippi Band of Choctaw Indians is a federally recognized Indian tribe

of nearly 10,000, most of whose members reside in eight reservation communities

located on trust lands scattered over a five-county area in east central Mississippi.

The majority of our tribal members are full-blood, Choctaw language speaking. We

are descendants of those Choctaw people who resisted repeated efforts by the Federal Government to force their relocation to Oklahoma. This continued from 1830

through the early 1900’s. The tribe’s reservation lands are poor and unproductive

and the tribe is without any natural resources which could be used to generate income. The Mississippi Choctaws were ignored and abandoned by the Congress and

the Federal Executive branch for almost a century, finally securing our initial Indian reservation lands in, 1944 and Federal recognition as a separate tribe in 1945.

Our members were then essentially destitute and without any resources and our

tribal government was basically powerless to help them. Unemployment was so

prevalent among our tribal members that we knew we had to find another path and

we did. We made the choice to pursue self-determination as the best means to meet

the growing needs of the tribe and to pursue manufacturing jobs as the best means

of employing large numbers of our people.

Beginning with one tribal employee in 1963, the Mississippi Choctaws have grown

to become the 3d largest employer in Mississippi, employing some 9,200 people. We

operate about 25 different commercial enterprises. The tribe has developed a strong

and stable government providing the full array of governmental services. This includes the operation of a large school system, police and fire protection services,

courts, a hospital and clinics, social, housing, realty, and economic development

agencies. These were key ingredients of our later success in building a reservation

economy and attracting private investment which led to commercial developments,

at first primarily in manufacturing, which created reservation-based jobs.

The passage of the Indian Gaming Regulatory Act and the introduction of class

III gaming in 1989 in Mississippi led to the development of the tribe’s current Pearl

River Resort comprised of two high rise hotel casinos, a nationally acclaimed 36 hole

golf club, a 12-acre water theme park, South Sea island beach, the soon to be

opened 300 acre Lake Pushmataha and its large entertainment and fitness facility.

We have invested over $1 billion in this development which has created jobs and

generated income. Rather than make large distribution payments to tribal members,

we chose to invest in their future in a different way.

The success of the resort has allowed the tribe to begin catching up from generations of poverty and neglect. There has been extraordinary progress: Our unemployment rate has dropped from nearly 80 percent to less than 5; our life expectancy

has risen from under 50 to 70; we have been able to provide long overdue healthcare

to our members through-the construction of-new clinics, the employment of medical

specialists, and the provision of such basics as hearing aids and eyeglasses. In education, our gains have been great as well: We operate a system of six elementary

schools and boarding middle and high schools; for the first time in our history, any

Choctaw student who wants to attend college can do so through our scholarship program which, to date, has provided scholarships totaling over $17 million to 1,387

tribal members. We have replaced frame school buildings built in the 1920’s and we

have built roads, water and sewer lines, wastewater treatment plants, and day care

centers. Still, significant needs remain particularly in the areas of health, education,

and housing; and, since all of our enterprise growth has been debt-financed, we still

have a $300-million debt load to retire.

Because of the tribe’s government-to-government relationship with the United

States and because of the need to protect tribal investments (and our ability to

repay business debt), the Mississippi Choctaw have engaged in extremely active and

aggressive efforts to monitor and affect the Federal decisionmaking process and to

shape public opinion on matters affecting the tribe’s political and economic interests.
53

To achieve this we have long engaged experienced professionals including lobbyists

with prestigious law firms who know and understand how Federal lobbying and

grassroots advocacy works. Our efforts in this regard have historically been successful and we have relied upon the professional expertise and integrity of those law

firms and their lobbyists, to ensure that this work is handled for us in a lawful and

appropriate manner.

So, when the initial press reports emerged last year regarding the large fees paid

to Jack Abramoff at Greenberg Traurig or to Michael Scanlon by a number of tribes

for lobbying work and grassroots advocacy, we had no reason to believe that anything questionable had occurred concerning those payments or their work for us and

we were pleased with the results they had achieved. Later, we did come to learn

that Mr. Abramoff, along with Mr. Scanlon, had engaged in what appears to be a

consistent pattern of kickbacks, misappropriated funds, payments induced under

false pretenses, and padded billings, all orchestrated by Mr. Abramoff from his position as Senior Director of Governmental Affairs for Greenberg Traurig, LLP, the law

firm which the tribe had retained to handle its public affairs needs starting in January 2001. Most of this misconduct occurred in furtherance of what we now refer to

as their ‘‘gimme five’’ scheme.

In pursuing this matter over the past 11⁄2 years, the tribe has worked hard

through outside counsel and the tribe’s attorney general’s office to identify the full

extent of this misconduct, the full extent of financial injury we have suffered as a

result and to seek appropriate civil and criminal remedies. Although we have made

substantial progress in pinning this down, we still don’t have final numbers for all

that occurred. At this time, however, I want to repeat what I said in my letter of

August 5, 2004 to Senator McCain, ‘‘Without your efforts it is unlike that this misconduct would ever have come to light. Thus, despite my prior concerns, I appreciate

your committee’s work on this matter.’’

From the outset of this matter, the tribe has fully cooperated with the FBI and

the Justice Department. And since July 2004—almost 1 year ago, shortly after we

first saw real evidence of wrongdoing on the part of Mr. Abramoff and Mr. Scanlon,

we have worked closely with the committee to further its investigation.

Early on in this process, however, the tribe raised with the committee its concern

that sensitive information regarding its lawful lobbying and public affairs activities

not be unduly disclosed through the committee’s investigation of Mr. Abramoff and

Mr. Scanlon and of the tribe’s 1st amendment right to protect against such involuntary disclosure. The tribe appreciates that the committee has respected the tribe’s

1st amendment rights throughout this process and I want to personally thank Senator McCain for that. Consistent with this position, the tribe has shared all requested documents and information with committee staff, but has declined to place

in the record information regarding the tribe’s 1st amendment protected activities

when disclosure of such information is not required in furtherance of a ‘‘compelling

governmental interest,’’ for example, to expose criminal conduct or other financial

wrongdoing. That remains the tribe’s position today.

In anticipation of this hearing, the tribe has worked with the committee staff and

has identified in consultation with Senator McCain [three] witnesses who will speak

on behalf of the tribe in person at the June 22 hearing.

The first is Charlie Benn, director of administration in my office. Mr. Benn has

served in that capacity since 1998 and is a member of the tribe. Charlie previously

worked for the U.S. Department of Housing and Urban Development for approximately 20 years and in his present capacity oversees the daily operation of numerous administrative functions of the tribal government. The second, witness is Nell

Rogers, a member of the tribe’s planning staff who handles legislative affairs for my

office. She has worked in that capacity for the past 20 years. Ms. Rogers has worked

for the tribe (with the exception of 5 years) since 1971. Finally, Donald Kilgore, the

tribe’s attorney general, will participate on the panel. Don was only recently appointed to his position as tribal attorney general but has a life long association with

the tribe and has practiced law in the tribal courts for many years. He has over

30 years experience in the private practice of law. I have authorized Mr. Kilgore

to provide testimony at the hearing summarizing what we have learned about the

misconduct of Jack Abramoff and Mike Scanlon which has given rise to this proceeding.

Prior to 1994, I [as Chief] was the tribe’s primary lobbyist. Partly, this was because we had no tribal funds to pay for any lobbyists. Later, as the scale and reach

of the Federal regulatory and legislative process affecting Indian tribes expanded

and as our tribal businesses and revenues grew, attending to those enterprises required more and more of my time, leaving less time to devote to the legislative process. It became prudent to hire outside legal counsel to assist in addressing the
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tribe’s Federal advocacy needs both with the Federal agencies and with the Congress.

As the tribe grew, tribal staff with program and legislative experience began to

do much of this work. Prior to this, the law firm of Hobbs, Straus, Dean, and Walker had provided some legal services and public affairs work on our behalf, primarily

on self-determination, health and education issues. We continue to work with Hobbs

Straus and with other law firms—firms who have represented us for many years—

Wise, Carter and Caroway, and the Scott, Sullivan, Streetman and Fox firms in

Mississippi and Roth, VanAmberg, Rogers, Ortiz & Yepa in New Mexico. All have

provided a high caliber of legal representation for the tribe and have done so with

honesty and scrupulous adherence to their duties to us as a client. We expected no

less from the other firms and their lobbyists we hired in Washington, DC, starting

in 1995.

In 1994, two simultaneous events occurred which required an expansion and a

change in direction in the tribe’s public affairs work. First, of course, was a total

change in the leadership of the Congress as a result of Republicans gaining majority

control in the House through the 1994 elections. Second, was the opening of the Silver Star Hotel and Casino in July 1994 giving rise to an array of new issues and

concerns that had to be tracked and dealt with at the national level.

The tribe also wanted to tell its economic story—of how it was possible to use the

tax and regulatory structures unique to Indian reservations and economies operating under tribal jurisdiction to achieve on-reservation economic development. This

was not just a theory, the tribe had successfully done this for 15 years before opening our first casino. We did this by finding products that we could make and sell,

hiring good managers, setting up a judicial system that provided fair treatment for

outside parties, building a stable, constitutional tribal government involving a separation of powers, and honoring our business contracts. When we opened our first

casino [financed with 100 percent borrowed money] we realized we had to be

proactive in protecting our casino operations and our ability to pay off our casino

financing debt. Thus, in 1995, the announcement by the then Ways and Means

Committee Chairman of a plan to subject tribal income to Federal income taxes set

off extraordinary alarms because that meant that the tribe’s gaming and other business revenue could be taxed at 34 percent—threatening the tribe’s ability to pay off

its debt, and undermining its capacity to provide essential governmental services to

our 10,000 tribal members, and putting us at risk of losing everything. It was in

this climate that the Tribe recognized the need to reach out to the new Republican

majority and to redouble our efforts to share our tribal needs and our reservation

development experiences with all Members of Congress.

Jack Abramoff was identified to us in 1995 as a lobbyist in the Washington, DC

office of a major law firm [then known as Preston Gates Ellis & Rouvelas Meed]

who was said to have strong relationships to leadership in the House. I arranged

a meeting with former Congressman Lloyd Meeds of Preston Gates, with Mr.

Abramoff and others in the firm, from which followed a retainer agreement. What

followed was a very positive relationship with Preston Gates from 1995 through

2000. They did very effective lobbying work for us, both at the Federal level and

through various grassroots projects. Then, Mr. Abramoff and most of his team left

Preston Gates to join Greenberg Traurig in 2001. Since the bulk of the work done

by Preston Gates for the tribe was in the area of public affairs and not ordinary

legal work, and since Mr. Abramoff and most of his team which had handled that

work at Preston Gates moved over to Greenberg Traurig in 2001, the tribe then retained Greenberg Traurig. Later, Mr. Abramoff introduced us to Mike Scanlon and

his various companies.

When Mr. Abramoff left Preston Gates to move to Greenberg Traurig, we had no

reason to believe that anything improper or unlawful had occurred in connection

with his prior work for us. So, when the team moved to Greenberg Traurig, there

was no reason to question his integrity or otherwise doubt that the representation

we would receive through Greenberg Traurig would be handled in any less professional and honest a way than we believed had occurred at Preston Gates or through

the other law firms we had retained. Unfortunately, those expectations were not

met.

The kickback scheme, we have learned that Mr. Abramoff caused Mr. Scanlon,

represented to us to be an independent contractor, to quote prices for the services

of his several companies which, built in an undisclosed and exorbitant add-on

amount which they then would split, one-half coming back to Mr. Abramoff as a

kickback, one-half being retained by Mr. Scanlon as moneys obtained under false

pretenses. We did not know of this and we did not approve it.

Regarding grass roots advocacy projects, some of the actual work was always

going to be performed by various third parties after passing through the Scanlon
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companies, for example, American International Center, Capitol Campaign Strategies, Scanlon Gould Public Affairs or through other entities, such as the National

Center for Public Policy Research [NCPPW] or the Capitol Athletic Foundation

[CAF], and some was to be performed by Capitol Campaign Strategies or its subcontractors. The tribe never agreed that any of those moneys were to be retained

by Mr. Scanlon personally or kicked back to Mr. Abramoff. When the tribe was

quoted a price for a given project the tribe expected that its payments to fund that

work would be expended for that purpose and [where pass throughs were involved],

that the money would be passed through to the appropriate entity for that purpose.

Unlike many or all of the other tribal clients who retained Greenberg Traurig

[and Jack Abramoff], Choctaw’s retainer agreement with the firm was on a regular

hourly billing basis. The tribe never agreed to pay a ‘‘flat fee’’ per month. However,

our outside counsel, C. Bryant Rogers has now confirmed that Mr. Abramoff consistently manipulated the bills at Greenberg Traurig in order to have them approach

a minimum billing target of fees and expenses of between $135,000 and $150,000

per month, and included unauthorized expense charges. When the actual hours of

work completed were insufficient to approach that target; Mr. Abramoff routinely

directed that the bills be padded with ‘‘pumped-up’’ time entries or made up hours

to increase the monthly bill. Neither those unauthorized expense charges, nor the

padded time entries, were detectable from the billings we received.

After we learned what happened, we were astounded that a senior director at a

major law firm would or could engage in misconduct of this sort—whether as regards billing fabrication or as regards the more egregious ‘‘gimme five’’ scheme—and

that he was able to get away with it for so long.

What we have learned regarding Mr. Abramoff’s misconduct at Greenberg Traurig

has caused us to take a closer look at his work for us at Preston Gates. Those inquiries have just begun. It presently appears that some similar financial misconduct

also occurred while Mr. Abramoff was at Preston Gates, though on a vastly smaller

scale, both as to billing improprieties and as to Mr. Abramoff’s unlawful diversion

of money we paid for one purpose which was used to pay for other things we had

not authorized. We have initiated discussion with Preston Gates on these matters;

however, those discussions are in a very preliminary stage.

In regard to Greenberg Traurig, we wish to acknowledge that positive settlement

discussions with that firm are now underway and we have been assured that Greenberg Traurig will take appropriate action ‘‘to address and remedy any concerns and

issues’’ we may identify ‘‘as to any aspect of our relationship.’’ They have responded

to this situation in a professional and honorable way, which we very much appreciate. Thus, we are confident that a mutually agreeable settlement of our claims respecting these issues will be reached with Greenberg Traurig.

In closing, we want to thank the committee for its efforts in this investigation.

We are, however, ready to move forward with our on-going efforts to build our reservation economy [this also benefits our non-Indian neighbors as well] and to

strengthen our government-to-government relationship with the United States to

enhance our capacity to improve health care, education and employment opportunities for our members. We will take the lessons learned from this experience and will

endeavor to ensure that we not experience anything like this in the future.

Thank you, this concludes my written testimony.
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PREPARED STATEMENT OF AMY MORITZ RIDENOUR

Thank you for inviting me to appear before the committee and for giving me the

opportunity to discuss the funds the National Center for Public Policy Research received from the Mississippi Band of Choctaw Indians. Specifically, I wish to discuss

the large sums we received during the period of October 2002 through June 2003.

I intend to share what I believed were the reasons why the National Center received

these funds and how and why we dispersed these funds to for-profit entities we subsequently learned were associated with or owned by Jack Abramoff.

Before addressing these particular points, I believe that it will be helpful to the

committee if I share some background on the National Center.

The National Center is a conservative/free market non-profit public charity that

opened in February 1982. I have had the privilege to be the first and only chief executive officer of the National Center and have made it my life’s work.

The National Center’s focus during approximately its first decade was on issues

related to the Soviet Union. However, with the fall of the Iron Curtain, the National

Center’s focus turned to other conservative programs and issues.

One such program is project 21, which highlights the views of conservative and

moderate African-Americans by helping them get op-eds published in newspapers,

arranging interviews on talk radio and other media, and issuing press releases

based on information provided by this previously under-represented group. Since

project 21’s inception in 1992, the news media has quoted its members approximately 10,000 times.

Researching environmental issues and educating the public regarding them is another National Center program. One research project includes the publication of several editions of a book that highlights 100 personal stories of Americans, who are

neither wealthy nor powerful, who have been harmed by regulations that are excessive or improperly applied. In addition, the National Center has begun to examine

the extent to which low-income and minority populations disproportionately bear

the cost of some Government regulations.

As the years went on, in an effort to make the National Center a better non-profit

organization, we implemented several changes, including, in 1997, an increase of the

number of board members from three to seven to improve oversight. When we began

our search, we decided to bring in individuals who we believed would improve the

National Center. One of the individuals we chose was Jack Abramoff. At that time,

I had known Jack for nearly 17 years, he was a dedicated free-market conservative,

a successful lobbyist and businessman, he had connections to corporate America and

his managerial skills; it seemed to me at the time, exceeded my own. We believed

we could learn from his experience. He seemed like the perfect choice. Consequently,

we extended an offer to him and, in October 1997, he joined the National Center’s

board of directors.

Our desire to improve the National Center did not stop in 1997 and over the years

we made additional policy changes. In 2000, the National Center adopted a formal

conflict of interest policy. This policy requires standing directors to reveal to the

board all direct or indirect financial interests in any entity with which The National

Center is negotiating a transaction or arrangement. We required every member of

the board to sip the resolution so that no one could later claim that they were unaware of the policy. Every director, including Jack, did so.

It was through Jack Abramoff that I first had the honor of meeting Chief Philip

Martin of the Mississippi Band of Choctaw Indians. In February 1997, I participated

in a trip to the reservation where I saw first-hand the benefits that casino gambling

had for the Mississippi Choctaw Tribe.

Through Chief Martin, I learned that the Mississippi Choctaw had once relied

substantially on government handouts and that, in the past, members of the tribe

typically had to leave the reservation in order to be financially successful. Thanks

in significant part to the capital inflow made possible by their Silver Star casino,

they were able to revitalize the tribe and better convince their young members that

they did not need to move away in order to pursue and enjoy challenging and satisfying careers.

Chief Martin struck me as one of the most impressive people I have met in my

life. After I returned from that trip, I recall telling my husband that had Chief Martin not dedicated his life and his career to his tribe, he might well have become famous as a CEO of a top Fortune 500 corporation.

Approximately 1 month after my trip to the Choctaw Indian Reservation, the National Center received a $2,500-donation from the tribe. This donation was unsolicited and the National Center used this money for general support.

In 1999, the National Center began soliciting funds for a program, which included

a study commissioned from an econometrics firm, to determine the impact of so-
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called ‘‘smart growth’’ policies on minority home ownership rates. The National Center undertook this study in furtherance of our burgeoning interest in the economic

prosperity of minorities in the United States. The program was to cost $50,000. We found ourselves $5,000 short. I turned to

Jack for help. He told me he would get us a donation and even offered to get a donation in excess of $5,000, if we needed it. We, told him we only needed $5,000. Soon

thereafter, we received a contribution for that amount from the Mississippi Band

of Choctaw Indians and were able to fund the program. In 2000, we received a total

of $65,000 in contributions from the Mississippi Choctaws. These contributions were

not solicited by me or The National Center’s staff, but were arranged by Jack

Abramoff. I understood them to be general support contributions. We recorded them

accordingly and, as part of the independent annual audit we have had conducted

every year of our operation, confirmed this understanding with the Mississippi

Choctaws through an audit letter.

I am, of course, aware of news media coverage connecting part of these contributions to a trip we sponsored in 2000 for a Member of Congress. At the time I extended an invitation to this Member of Congress, through his chief of staff, I did

not know we would be receiving contributions from the Mississippi Choctaws that

year. At no time did I convey to the Congressman or his staff that we had received

these contributions, and I was never told, nor I was I under the impression, that

the Mississippi Choctaws even knew we had sponsored a Congressional trip to Britain.

In October 2002, the Mississippi Band of Choctaw Indians donated $1 million to

the National Center. At that time, I believed that the Choctaws gave the National

Center this donation to support an educational project related to the Mississippi

Band of Choctaw Indians and casinos. In particular, to educate the public on the

positive impact casino gaming had for the Mississippi Choctaws, both economically

and culturally. In order to tell the story fully, however, some background information is necessary.

Approximately 4 months before we received this donation, my husband, who is

vice president of The National Center, and I had lunch with Jack Abramoff, The

lunch was social but, as was our habit when meeting with members of the board

of directors, we briefed him on information pertinent to members of the board, including such mundane things as the fact that we were current in meeting our payroll tax and other financial obligations and the status of projects undertaken by the

National Center. I also described the negative financial impact of 9–11 and stock

market contractions on the philanthropic community. I told him that new donors

would be especially valued that year, as would the opportunity to sponsor projects

consistent with our mission for which funding was available.

Once our report was over, Jack shared with us details of his professional career.

I remember him telling us that he was doing ‘‘a new kind of lobbying.’’ He said he

and his colleagues, working with the Mississippi Choctaws, had noted that for-profit, non-Indian gaining establishments were pushing to establish themselves in areas

of the country not noted for their admiration of gaming. They believed that a public

backlash against gaming was brewing and that before things came to a head, perhaps 4–5 years down the road, they would protect the Choctaw by educating the

public in the surrounding States about the benefits of Casino gaming for the Mississippi Choctaws. To educate the public, they relied on phone banks and other tools

to tell the Choctaw success story.

I was very interested in what I was hearing. Although my visit to the Choctaw

reservation had been more than 5 years earlier, I retained my enthusiasm for what

the tribe had been able to accomplish. I noted that this ‘‘new kind of lobbying’’ was

not lobbying at all, but educational work and I expressed an interest in the National

Center sponsoring it. Jack seemed mildly agreeable but noncommittal. I did not

press the matter, assuming the Choctaws were financing the project and would have

to approve our involvement.

Approximately 4 months later, Jack contacted me to see if the National Center

was still interested in the project. We were because it was consistent with our longstanding interest in promoting minority economic opportunity and was especially

welcome because we had postponed the launch of a Hispanic counterpart to project

21 because of a lack of funding. There were also other benefits, including an expansion of our program expenditures and the opportunity to gain experience with educational tools, such as telephone campaigns, with which I had no experience.

There was also one particular opportunity that I was excited about on a personal

level. I was excited by the prospect of working with Jack on a large project because

I admired him for what I believed to be his amazing managerial skills. At that time,

he not only had a lobbying practice successful enough to earn rave reviews in the

mainstream press, but he was opening restaurants and starting a school. I believed
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that he could only accomplish these feats with a superb ability to delegate authority

and manage people, and I hoped to make myself a better manager by seeing him

in action.

Jack seemed enthusiastic about having The National-Center on board with the project, and instructed me to send a $1-million invoice to the Mississippi Choctaws,

which I did. When the funds arrived, he told me how they should be disbursed:

$450,000 to the Capital Athletic Foundation, $500,000 to Capital Campaign Strategies and $50,000 to a company called Numberger and Associates, run by a Ralph

Numberger. I believed Capital Campaign Strategies was to be paid for educational

program services, such as polling, telephone calls and printing brochures and petitions while Mr. Numberger was going to help coordinate the project. In an e-mail,

Jack referred to his receiving ‘‘instructions’’ for the disbursements, which I took to

mean recommendations from the donor. This was consistent with my belief that the

Mississippi Choctaws were actively involved in the project.

Believing I was joining a project-in-progress, knowing that Jack was the legal representative of the Mississippi Choctaw, was part of a major law firm and, as a member of The National Center’s board, had a fiduciary responsibility to the welfare of

The National Center, I disbursed the funds in accordance with Jack’s instructions.

As excited as I was, I still had some concerns about inadvertently violating 501(c)(3)

regulations governing organizations such as The National Center. Consequently, I

reviewed the laws governing charities with Jack, including, restrictions on lobbying

for or against legislation and those banning expenditures relating to elections. I received Jack’s repeated assurances, both by e-mail and verbally, that he, in assuming

managerial authority for the project on The National Center’s behalf, would adhere

to them. In addition, prior to transferring funds to the Capital Athletic Foundation

as a grant in accordance with what I believed was the donor’s recommendation, I

reviewed with Jack the laws governing grants between 501(c)(3) organizations, and

told him that if the test could not be met we would simply return the money to the

donor. The proposed grant, however, seemed to be appropriate and, as such, I made

the grant.

It was about this time that a staff member at Greenberg Traurig, other than Jack,

sent the National Center a fax of three invoices matching Jack’s instructions. It all

seemed very official. My only concern at that time was the possibility that Jack,

being a lobbyist, would forget to strictly adhere to the laws governing tax-exempt

charities. Nevertheless, as nearly one-half of the funds were being sent to the taxexempt Capital Athletic Foundation as a grant, the remainder was to be used for

a program for which there was no related legislation, and because I had received

repeated assurances from Jack that he took the tax laws seriously, I believed everything was legitimate and legal.

At the time, I expected that I would personally become involved with the project.

That did not happen. Various explanations, all of which seemed reasonable at the

time, occurred to me. In addition, in the few months following our involvement in

the program my time and attention were diverted to other unrelated, business and

personal events that prevented me from aggressively injecting myself into the management of a project I believed was in good hands.

I often requested from Jack that he provide documentation about the educational

activities we were supporting. He always said it would be no problem, and I believed

him; so much so, that I agreed to continue the program in May and June 2003 when

Greenberg Traurig sent $1.5 million to the National Center. At that time, Jack told

me this money was part of the program, which I believed was the educational program about the progress being made by the Choctaw Tribe.

Jack told me $250,000 had been designated for the Capital Athletic Foundation

as a grant and $1,250,000 was to be paid to Kaygold, a company I believed was

owned by Mike Scanlon. It was not until 2004 that I learned that this money did

not come from the Choctaw, but rather from an Internet gambling company apparently unrelated to the Choctaw Tribe.

As these events were transpiring, I resolved that if I did not promptly receive sufficient proof of good solid work performance, I would withdraw the National Center

from the project. I discussed the matter with the CPA firm we used and, at far

greater length, with our tax attorney. I then requested specific pieces of documentation from Jack related to these transactions. When I did not get them, I told Jack,

in July 2003, that we would cease participation and he did not object. I did not,

however, stop asking him for documentation for work performed for the payments

we already had made.

I always trusted Jack and believed that we would ultimately receive the documentation that we requested. Of the various theories I had in my mind as to why

we were not receiving the documentation, such, as Jack was simply too busy, none.

of them involved a suspicion of the misuse of lands. I completely trusted Jack. So
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much so, that I still trusted him after the negative press stories appeared in 2004.

For months after 5 the stories appeared, I continued to believe him. It was not until

September 2004, when the Washington Post published that Jack owned Kaygold,

that I knew in my heart that something was seriously wrong.

You see, the entire time these transactions were going on I believed that Mike

Scanlon owned Kaygold. I know that Jack knew I believed this because I made

statements pertaining to this issue and he did not dispute them. I would have never

issued any money to Kaygold if I had known that Jack was the owner because this

was a clear violation of the National Center’s conflict of interest policy, which Jack

had signed.

I also will note that as I was absorbing the news that Jack owned Kaygold I read

the e-mails written by Jack that this committee published last September. These

e-mails revealed a side of Jack I did not recognize as the friend and associate I had

known for almost a quarter century. It has been over 2 years since we received the

$1 million and began what I believed was an educational project to tell the American people what I still believe is the very impressive story of the Mississippi Band

of Choctaw Indians. We have continuously requested documentation about the work

done on the project and have never received any proof that work was completed or

even started.

As for Jack Abramoff, I telephoned the rest of our board and we agreed on

strength of the violation of the conflict of interest policy alone that we had no choice

but to accept his offer to resign that he had made in March 2004 and then again

in October of that same year. Consequently, in October 2004; I accepted Jack’s resignation from the board and I have not spoken with him since.
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Æ