From the Los Angeles Times

Abramoff's Charity Began at Home
The lobbyist admits he used nonprofits to evade taxes, pad his pockets and bribe officials.
By Chuck Neubauer and Richard B. Schmitt
Times Staff Writers

February 11, 2006

WASHINGTON — In his own way, disgraced super-lobbyist Jack Abramoff engaged in many charitable endeavors over the course of his decade-long career as a Washington insider.

There was the time he laundered money through a religious group's accounts to try to bribe a congressional aide. He diverted funds from a youth athletic foundation to bankroll a golf junket for a congressman and to bolster the bank account of his Washington restaurant. He used two other nonprofits to line his own pockets with millions of dollars defrauded from clients.

Charities are supposed to advance the public interest, which is why they aren't taxed. But Abramoff, by his own admission, used them to evade taxes, enrich himself and bribe public officials, according to a plea agreement he signed with federal prosecutors in January.

"One of the most disturbing elements of this whole sordid story is the blatant misuse of charities in a scheme to peddle political influence," said Mark Everson, commissioner of the Internal Revenue Service.

Abramoff's use and misuse of nonprofits played a key role in each of the three counts of his indictment: conspiracy, mail fraud and tax evasion. He admitted evading $1.7 million in income taxes over three years, in part by using nonprofits to conceal personal income from the IRS.

The fast-growing ranks of tax-exempt, nonprofit organizations are tailor-made for operators like Abramoff.

The number of tax-exempt groups in the United States has tripled over the last three decades, but nonprofit groups usually pay no tax, so there is little incentive for the IRS to keep an eye on them.

The lack of oversight is especially meaningful in Washington, where trade associations, public-interest groups and grass-roots lobbying organizations all have tax-exempt status under generous IRS rules designed to foster public debate. Members of Congress are also getting into the act and forming their own charities.

Abramoff and a partner, Michael P.S. Scanlon, a onetime aide to former House Majority Leader Tom DeLay (R-Texas), admitted bilking Indian tribes out of tens of millions of dollars and attempting to bribe public officials. They used a network of charities and other nonprofits — some existing, some they created — to forge a full-service influence-peddling operation.

They included:

• The Capital Athletic Foundation, created by Abramoff as a sports-oriented youth charity. He funded it with millions improperly diverted from his lobbying clients and treated it as his "personal piggy bank," a lawmaker said, spending money on pet projects that had nothing to do with its stated purpose.

• The American International Center, a bogus "international think tank" at a beach house near Rehoboth Beach, Del. Abramoff and Scanlon used the center to collect millions from their lobbying clients and then send it to their personal bank accounts.

• Toward Tradition, a nonprofit in Mercer Island, Wash., that promotes "traditional Judeo Christian values" and was used to help Abramoff funnel an alleged $50,000 bribe of an aide to DeLay.

• The National Center for Public Policy Research in Washington, an obscure conservative organization that Abramoff used to defraud an Indian tribe and an offshore gaming alliance of at least $2 million for his and Scanlon's personal enrichment.

Abramoff's story is not just one of clever fraudsters, but of the seeming willingness of some donors and charities to look the other way. They say that they too are victims, although some experts question whether they were diligent enough.

Rabbi Daniel Lapin, the head of Toward Tradition, said he had no reason to be suspicious of a gift from an Abramoff client called eLottery, even though his organization is avowedly anti-gambling. Abramoff, a former board member of the group, was considered a trusted friend.

"Toward Tradition and I interact with thousands of individuals and hundreds of organizations every year," Lapin said in a statement. "It is just unrealistic to suppose that none of these relationships are ever going to become problematic. There was no reason for Toward Tradition to spurn Jack Abramoff's support."

Some experts say charities ask for trouble when they accept gifts with strings attached.

"The moment the donor appears to have a vested interest in who I hire and how I conduct my business … I think I have an obligation to look into that," said Diana Aviv, the president and chief executive of Independent Sector, a Washington-based coalition that lobbies on behalf of nonprofit groups.

The story of Abramoff's misuse of charities and nonprofits was pieced together from his plea agreement, nonprofit tax returns, interviews, and e-mails and other documents released by the Senate Indian Affairs Committee, as well as testimony from the committee's hearings on Abramoff.

The Senate Finance Committee is investigating Abramoff's use of charities and other tax-exempt organizations, and has requested detailed information from the Capital Athletic Foundation and the National Center for Public Policy Research

Abramoff, a Republican activist since college, became a lobbyist when the GOP captured control of Congress in 1994. He was good at his job. Among his early handiwork was helping to preserve tax breaks for the $20-billion-a-year Indian gaming industry, which bankrolls schools, hospitals and tourist attractions for the tribes.

By the new millennium, he was viewed as one of the most powerful and effective lobbyists in Washington. In January 2001, he moved his lobbying business to the new Washington office of the Greenberg Traurig law firm of Miami, which would become the base for an even more aggressive operation.

Abramoff, by then secretly in partnership with Scanlon, aggressively recruited new Indian tribes as clients. In addition to paying lobbying fees to Greenberg, Abramoff persuaded the tribes to send millions to Scanlon's consulting firm, Capitol Campaign Strategies, which performed "grass-roots and public relations work" for inflated fees.

Through that arrangement, according to their guilty pleas, the men secretly split about $40 million they stole from the tribes between 2001 and 2004.

Less than a year into his new job, Abramoff engineered his first major fraud involving a charity, converting a $1-million check that one of his new tribal clients, the Coushatta Tribe of Louisiana, had written to Greenberg for lobbying services.

He persuaded his new partners at Greenberg Traurig that the Coushatta intended the money as a contribution to a charitable organization, the Capital Athletic Foundation. Abramoff had organized the group a few years earlier. The law firm forwarded the money.

But he told Scanlon he wanted the money to first go through Greenberg to pump up its lobbying revenues so it did not drop out of the ranks of the top 10 lobbying firms. The tribe believed that the money was being used for lobbying or political activities on its behalf. Scanlon sent the tribe a fraudulent $1-million invoice on behalf of Greenberg — misspelling it "Greenburg" — for "public affairs services." Greenberg had not authorized the invoice; the Coushatta had not authorized giving the money to the Capital Athletic Foundation.

Abramoff had thus achieved an unusual twofer: He defrauded the tribe out of its money using the false Greenberg invoice, and then shook the money loose from Greenberg by telling his partners that it was a charitable donation from the Coushatta.

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