Scanlon, Abramoff `Backroom Guy,' Points Probe at Ney (Update2)

By Jonathan D. Salant

Nov. 21 (Bloomberg) -- For more than a year, Michael Scanlon has been a shadowy presence behind former partner Jack Abramoff, the Republican lobbyist at the center of a corruption probe. Now, Scanlon may help prosecutors raise the investigation to a higher level.

Scanlon, a former aide to Representative Tom DeLay, pleaded guilty today in U.S. District Court in Washington to a conspiracy charge, clearing the way for his cooperation in the federal investigation of Abramoff. He also agreed to pay up to $19.7 million in restitution. His testimony would ratchet up the pressure on Abramoff and aid prosecutors in widening the investigation to members of Congress, such as Republicans DeLay and Representative Robert Ney of Ohio.

Scanlon, 35, is the second person to face criminal charges in connection with the Justice Department-led probe of the 46- year-old Abramoff. In October, a federal grand jury indicted the White House's former chief procurement officer, David Safavian, once an Abramoff associate, for obstruction and making false statements.

``Now you have two people instead of one,'' said Stan Brand, a former counsel to the House of Representatives when it was controlled by the Democrats. ``What you're building is a ladder. You have Abramoff at the intermediate step, elected officials above him, and Scanlon and Safavian underneath.''

Beyond the potential legal concerns, Scanlon's cooperation with authorities may spell political jeopardy for Republicans leading into next year's elections, especially if he helps draw other lawmakers into the investigation. ``He knows where all the bodies are buried,'' said a congressional aide who worked with Scanlon.

`Representative #1'

The Justice Department on Nov. 18 charged Scanlon with conspiring with ``Lobbyist A'' -- identified by a person close to the investigation as Abramoff -- to defraud Indian-tribe clients and corrupt federal officials. Those officials included a lawmaker identified only as ``Representative #1.''

Ney, chairman of the House Committee on Administration, who took an Abramoff-sponsored trip to Scotland in 2002, said earlier this month that prosecutors had subpoenaed records. A spokesman for Ney, 51, said the lawmaker hasn't been told he's a target.

Scanlon's lawyer, Stephen Braga, said his client agreed to the plea bargain to ``resolve the charge,'' declining further comment.

As investigators get closer to Abramoff, they may also get closer to DeLay, said Craig McDonald, director of Texans for Public Justice, an Austin-based group that has called for a special prosecutor to investigate DeLay.

`Dirt on DeLay'

``It's likely that Abramoff has lots of dirt on Tom DeLay,'' McDonald said. ``The further Abramoff sinks into trouble, the more likely he is to start pitching that dirt.''

DeLay, 58, who once called the lobbyist ``one of my closest friends'' and went on an Abramoff-sponsored trip to Scotland in 2000, stepped down as House majority leader after being indicted in September in an unrelated campaign-finance case in Texas.

Other Republican lawmakers may find themselves under scrutiny as well. Senator Conrad Burns, a Montana Republican, helped win a $3 million government award for the Saginaw Chippewa Tribe of Michigan to build a school, the Washington Post reported earlier this year. The Interior Department ruled the tribe was ineligible because its Soaring Eagle casino makes it one of the richest, the Post reported. The tribe, an Abramoff client, donated $32,000 to Burns from 2001 to 2003.

``The only action Senator Burns ever took was as a request from other senators,'' said his lawyer, Cleta Mitchell. ``He has absolutely no connection with Mike Scanlon.''

Abramoff

Though prosecutors say Scanlon shared millions of dollars in fees from Indian-tribe clients with his former associate, he has escaped the attention heaped on Abramoff, a tireless networker who organized trips abroad for lawmakers and owned a downtown restaurant where he hosted fund-raising events.

``There should have been a lot more written about Scanlon,'' said Melanie Sloan, a former federal prosecutor who now heads Citizens for Responsibility and Ethics in Washington, an advocacy group. ``He wasn't the one taking the trips and having the meetings with members of Congress. He was the backroom guy.''

When Illinois Republican Dennis Hastert became House speaker in 1999, he blamed Scanlon for stories surfacing in the press suggesting DeLay was the real power and the new speaker was a figurehead, according to a former Hastert aide.

The aide, speaking on condition of anonymity, said Hastert asked DeLay to fire Scanlon. Scanlon left the congressional office shortly thereafter and eventually joined Abramoff's firm, later founding a public affairs company, Capital Campaign Strategies.

Deriding the Tribes

What came next was laid out by the Senate Indian Affairs Committee, which has released transcripts of hundreds of e-mails and documents during five committee hearings in the last 18 months. The e-mails are laced with derogatory references by the two men toward their tribal clients. In one December 2001 e-mail, for example, Abramoff referred to their Saginaw Chippewa clients as ``troglodytes.''

``What's a troglodyte?'' Scanlon asked. ``A lower form of existence, basically,'' Abramoff replied.

Scanlon also was involved in a casino cruise company in Florida that Abramoff and a partner bought in 2000, serving as a spokesman. Abramoff was indicted on charges of fraud and conspiracy in August in connection with his purchase of the company. He pleaded not guilty.

``The Justice Department needs Scanlon to cooperate so they can get everything else,'' said Sloan, who served as an assistant U.S. attorney in Washington from 1998 to 2003. ``Just because he hasn't been in the media forefront doesn't mean he wasn't in the eyes of the prosecutors. I don't think they ever lost sight of Scanlon.''

To contact the reporter on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net

Last Updated: November 21, 2005 17:11 EST

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