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Abramoff Pleads Guilty, Will Help in Corruption Probe (Update4)

By Michael Forsythe and Jonathan D. Salant

Jan. 3 (Bloomberg) -- Jack Abramoff, the once-powerful Republican lobbyist at the center of a federal corruption investigation, pleaded guilty to three criminal charges and will cooperate with a Justice Department probe that threatens to ensnare lawmakers.

Abramoff entered a plea in U.S. federal court to conspiracy to corrupt public officials, mail fraud and tax evasion. He faces 30 years in prison, although the government will recommend a 9 1/2 to 11-year sentence depending on how much he cooperates, Assistant Attorney General Alice Fisher told reporters.

``The corruption scheme with Mr. Abramoff is very extensive, and we will continue to follow it wherever it leads,'' Fisher told reporters in Washington. ``This case is very active.''

The government says Abramoff and former business partner Michael Scanlon, a one-time aide to Representative Tom DeLay, pocketed tens of millions of dollars from Indian tribes; set up a foundation that financed a trip to Scotland for public officials and Abramoff's colleagues; and provided a ``stream of things of value'' to officials, including money, meals, trips and entertainment to entice them to help the lobbyist and his clients.

``All of my remaining days, I will feel tremendous sadness and regret for my conduct and for what I have done,'' Abramoff, 46, told District Judge Ellen Segal Huvelle in Washington after offering his guilty plea. ``I only hope that I can merit forgiveness from the Almighty and from those I have wronged.''

$25 Million

Abramoff and Scanlon must pay at least $25 million in restitution to the tribes, according to the plea agreement. In addition, Abramoff agreed to pay $1.7 million in back taxes.

The government says Abramoff and Scanlon provided gifts and other benefits to one lawmaker -- identified as ``Representative #1'' -- and his staff, including a golf trip to Scotland, campaign donations and ``regular meals and drinks at an upscale restaurant owned by Abramoff.'' That tracks allegations made in a plea deal Scanlon reached with prosecutors in November, after which the lawmaker was identified as Representative Bob Ney, an Ohio Republican.

In return, the lawmaker agreed to help Abramoff and his clients by putting statements into the Congressional Record, helping a Russian client of Abramoff's get a U.S. visa and pushing legislation that would benefit Abramoff's tribal clients.

DeLay, Ney

Criminal allegations the government filed today also mention an unnamed former chief of staff to Ney, accused of lobbying the lawmaker and his staff without waiting the required one-year period after leaving Capitol Hill. Neil Volz is the only former Ney chief of staff who went to work for Abramoff.

DeLay, a Republican who was forced to step down as House majority leader in September after being indicted in an unrelated probe in Texas, took a golf trip to the U.K. in 2000 with Abramoff. DeLay also has benefited from Abramoff-related campaign donations, taking in more money directly from the lobbyist -- $17,000 from 2001 to 2004 -- than any other member of Congress, according to Federal Election Commission records.

Today's hearing came less than a week before Abramoff was scheduled to be tried in Miami on separate charges of wire fraud in connection with the purchase of a Florida casino cruise-ship company. His partner in that deal, Adam Kidan, already pleaded guilty to wire fraud and conspiracy and agreed to cooperate with prosecutors. Abramoff is scheduled to appear before U.S. District Judge Paul Huck at 1 p.m., local time, tomorrow in Miami to offer a plea agreement in that case.

Abramoff's Miami lawyer, Neal Sonnett, said the lobbyist would plead guilty to conspiracy and wire fraud, and agree to cooperate with the government. The other four counts of the six- count Miami indictment would be dismissed, Sonnett said.

$50 Million in Fees

The Justice Department says Abramoff and Scanlon defrauded casino-owning Indian tribe clients out of more than $50 million in fees. Scanlon pleaded guilty in November to conspiring to bribe Ney and is cooperating with the government.

``At the time I dealt with Jack Abramoff, I obviously did not know, and had no way of knowing, the self-serving and fraudulent nature of Abramoff's activities,'' Ney said in an e- mailed statement.

Volz referred all questions to his lawyer, Tim Broas, who didn't return a phone call seeking comment. DeLay's spokesman, Kevin Madden, didn't return phone calls requesting comment.

Some 220 lawmakers received at least $1.7 million in political donations from Abramoff, his associates and nine tribal clients between 2001 and 2004, according to a review of FEC and Internal Revenue Service records. Of those, 201 are still in Congress. Republicans got $1.1 million, 64 percent of the total.

Biggest Scandal

Abramoff also raised more than $100,000 for President George W. Bush's re-election campaign and served on Bush's Interior Department transition team. White House spokesman Scott McClellan said Bush doesn't recall whether he ever met Abramoff. ``If laws were broken, he must be held to account,'' McClellan said of the lobbyist.

Congressional staff members are also likely to be ensnared in the probe. The Justice Department identifies one Abramoff lobbying colleague as ``Staffer A,'' a former congressional employee. Staffer A allegedly solicited a $25,000 contribution in June 2002 for an Abramoff charity, the Capital Athletic Foundation, from a distilled beverage maker, which was one of their firm's clients. Abramoff then used the money for ``personal and professional benefit'' to help pay for a Scotland golf trip, the government alleges.

Vodka Importer

Greenberg Traurig LLP, the firm Abramoff worked for at the time, represented SPI Spirits Ltd., a Cyprus-based importer of Russian vodka. The lobby-disclosure form that covers that period lists at least three former congressional employees as lobbying for SPI on ``trade with Russia and intellectual property rights.'' SPI Spirits gave $25,000 to Abramoff's charity in 2002, Internal Revenue Service records show.

While Staffer A was still working on Capitol Hill from 1999 to 2001, his wife received $50,000 in payments from a nonprofit entity that got money from Abramoff clients who were lobbying on Internet gambling and postal rate issues, according to the plea agreement.

Of the three lobbyists, one, former DeLay deputy chief of staff Tony Rudy, lobbied for SPI in 2002, and, according to an October story in the Washington Post, had helped Abramoff oppose legislation curbing Internet gambling and had a wife who worked for an Abramoff-related nonprofit. Rudy didn't immediately return a phone call seeking comment.

Foundation for Kids

Abramoff's Capital Athletic Foundation gave $25,000 in 2003 to the DeLay Foundation for Kids, one of the Texas lawmaker's charities.

Abramoff's plea agreement suggests investigators are also looking at Abramoff's use of his Washington restaurant, sporting- event skyboxes and golf trips as inducements for favors from members of Congress.

A cooperating Abramoff would be ``the insider who will describe every event, every phone call, every cup of coffee and conversations at golf outings,'' said Joshua Berman, a partner at Sonnenschein, Nath & Rosenthal in Washington who until 2004 was an attorney in the Justice Department's Public Integrity Section, which is leading the prosecution. ``The paper records won't tell you what was discussed at the fourth hole. Abramoff can.''

A 2002 golf trip to Scotland was one of the gifts Scanlon pleaded guilty to offering Ney, who heads the House Administration Committee.

Ney ranks third among members of Congress who received Abramoff-related campaign cash, taking in $61,225 from 2001 through 2004.

Safavian

David Safavian, the former top procurement officer at the White House, was indicted in October for making false statements about business his agency had with Abramoff before taking part in the same golf trip. The trip cost Abramoff's Capital Athletic Foundation at least $166,634, according to financial records released in November by the Senate Indian Affairs Committee. Safavian has denied all wrongdoing.

``When this is all over, this will be bigger than any (government scandal) in the last 50 years, both in the amount of people involved and the breadth to it,'' said Stan Brand, a former U.S. House counsel who specializes in representing public officials accused of wrongdoing.

To contact the reporters on this story: Michael Forsythe in Washington mforsythe@bloomberg.net; Jonathan D. Salant in Washington at jsalant@bloomberg.net

Last Updated: January 3, 2006 17:49 EST