Nov. 21 (Bloomberg) -- Michael Scanlon, a former associate of lobbyist Jack Abramoff, pleaded guilty to conspiring to corrupt public officials and defraud clients, clearing the way for his cooperation in an investigation of his one-time partner.

U.S. District Judge Ellen Segal Huvelle today accepted a plea agreement proposed by the Justice Department and Scanlon, which may help prosecutors widen the probe to include lawmakers. The Justice Department asked that sentencing be delayed while Scanlon cooperates. He faces a maximum of five years in prison, a $250,000 fine and repayment of $19.7 million to clients.

Scanlon, 35, will help prosecutors make their case against Abramoff and investigate his contacts in and around Capitol Hill. Scanlon, a one-time aide to former House Majority Leader Tom DeLay, had intimate knowledge of Abramoff's dealings.

``They're using Scanlon to get everybody,'' said Melanie Sloan, a former federal prosecutor who now heads Citizens for Responsibility and Ethics in Washington, an advocacy group. ``That's how it works. You keep rolling people. I'm sure Tom DeLay is unhappy today to hear Michael Scanlon has made a deal.''

Abramoff's former role as a leading Republican lobbyist may add to the difficulties already facing his party. President George W. Bush's popularity is at a record low as the death toll mounts in Iraq and scandals shake Congress and the White House. Last month, White House aide I. Lewis Libby was indicted in a probe of the disclosure of a covert CIA agent's identity. DeLay was charged with money laundering in Texas, his home state.

Conspiracy

Scanlon is accused of conspiring with ``Lobbyist A'' -- identified as Abramoff by a person close to the investigation -- to buy off public officials and bilk casino-owning Indian-tribe clients out of millions of dollars. Scanlon's net profit from the four tribes was $39.4 million, and he kicked back the $19.7 million to Abramoff, according to the plea agreement.

Scanlon declined to comment to reporters after the hearing other than to say, ``You guys will be seeing me around.'' His lawyer, Plato Cacheris, said Scanlon is trying to make amends.

``He's regretful for what happened to the Indian tribes,'' Cacheris said. ``He's trying to do what he thinks is right.''

Scanlon has been in negotiations with investigators since June, Cacheris said. Scanlon must give two weeks' notice before leaving the continental U.S. and he pledged to pay $5 million if he violates the terms of the agreement. Cacheris took possession of Scanlon's passport in court today.

Checking In

Prosecutors plan to check in with the judge every three months to discuss progress in the investigation and Scanlon's cooperation. The next hearing is set for March 1.

``It's called a plea bargain because each side gets something and gives up something,'' said Stephen Gillers, a law professor at New York University. ``It is safe to assume Scanlon had something to give and gave it.''

In a sign that the investigation may engulf lawmakers as well, the Justice Department complaint mentions ``Representative #1'' who took a trip to Scotland with Scanlon and helped in ``advancing the application'' of an Abramoff client who sought to install a cellular-phone network in the U.S. Capitol.

Representative Robert Ney, an Ohio Republican, took a trip to Scotland in 2002 that was sponsored by Abramoff. And Ney, as chairman of the House Administration Committee, was responsible for deciding on the installation of the phone network.

Ney said Nov. 4 he had received a subpoena for documents as part of the probe. His spokesman, Brian Walsh, said the lawmaker has not been told he's a focus of the investigation.

No Indictment

Abramoff hasn't been indicted in the Indian tribe billing investigation. In August, a federal grand jury in Florida charged that he and another business partner engaged in wire fraud and conspiracy to commit wire fraud and mail fraud in connection with the $147.5 million purchase of a casino ship company in 2000. Prosecutors allege the two provided false information on a loan application and used a counterfeit document to mislead lenders. Abramoff pleased not guilty in that case.

The first official to be indicted in Washington in connection with Abramoff was the White House's former top procurement official, David Safavian. A grand jury in October charged Safavian with obstruction and making false statements in the Abramoff investigation. Safavian pleaded not guilty.

To contact the reporter on this story: Kristin Jensen in Washington at kjensen@bloomberg.net Cary O'Reilly in Washington at caryoreilly@bloomberg.net

Last Updated: November 21, 2005 17:58 EST