As a Rehoboth lifeguard last year, he made $11.35 an hour
By CRIS BARRISH
The News Journal
05/14/2006
Anthony Wiles became suspicious four years ago when a lifeguard named Michael Scanlon offered to pay cash for Wiles' $4.8 million home in Dewey Beach.
Wiles insisted that the baby-faced 31-year-old prove he could afford the 7,000-square-foot oceanfront compound built in the 1940s by philanthropist Alexis Felix du Pont Sr.
So Scanlon produced a bank statement showing he had "around $10 million," Wiles recalled.
"He told me he had done some lobbying for the Indian tribes and they paid him a large amount for casino work. I knew their casinos were profitable in Florida, and it appeared to be a legitimate way to get the money.
"Obviously it wasn't."
Scanlon and once-powerful lobbyist Jack Abramoff recently pleaded guilty in federal court to running a scam on several Indian tribes between 2000 and 2004. The two collected more than $80 million from the tribes while conspiring to defraud them and bribe government officials.
While bilking the tribes, Scanlon embarked on an extravagant real estate spree in Sussex County, buying and selling millions of dollars worth of real estate and capitalizing on the booming market.
Though Scanlon faces up to five years in prison and must pay up to $19.7 million in restitution, former federal prosecutor Melanie Sloan predicted Scanlon could emerge from the scandal a multimillionaire.
"Commit a great fraud, enrich yourself, go to jail for a while and get out rich," said Sloan, executive director of Citizens for Responsibility and Ethics in Washington. "He would hardly be the first person to do it, but it does seem pretty outrageous."
Scanlon and a corporation he controls bought 10 properties for $18.7 million from May 2001 through January 2005 -- and paid $12.2 million in cash, a News Journal review of Sussex County property records found.
The properties included five multimillion dollar homes -- the cedar shake former du Pont mansion, two in Rehoboth Beach and two in Henlopen Acres. He also bought four properties in Georgetown -- two homes, a downtown office-apartment complex and an office park off U.S. 113.
Scanlon has since sold three homes -- for $4.5 million more than he paid, records show. Six properties are still in his name.
His lavish lifestyle included three leased airplanes, one of them a Gulfstream jet, a penthouse suite at Washington's Ritz-Carlton, and a hilltop estate in the Caribbean island of St. Barts, according to friends and published reports. He also confounded those close to him in 2002 by breaking off his engagement to a U.S. State Department aide, for whom he had bought the Dewey Beach home, and marrying a Sussex woman seven years his junior.
Scanlon would not agree to an interview.
His attorney, Stephen L. Braga, said his client's tribal earnings were "not the proceeds of any crime," although court records show the tribes first hired Scanlon at Abramoff's urging, as part of the duo's criminal plot.
Scanlon spent some tribal profits to buy properties, Braga said, plus other earnings from clients the attorney would not identify.
Sloan, a Delaware native, countered that Scanlon took "outrageous" profits from Indian clients, and with Abramoff "took relatively unsophisticated clients and just gouged them."
Scanlon's illegal activities have disgusted many in Sussex who knew and liked him.
Rehoboth lifeguard boss Kent Buckson said beach patrol members had been honored in 2004 when they flew to a national competition in Daytona Beach, Fla., on a jet provided by Scanlon.
"He pretty much had us all duped," Buckson said. "I feel set up, suckered. Every one of us who went on that airplane were under the complete impression it was his."
Duo's scam uncovered
Scanlon, who grew up in the Washington area, began spending summers at the Delaware shore as a teenager in the mid-1980s.
While in high school, he joined the Bethany Beach lifeguard crew, where he was known by a middle name, Sean. Others called him "Opie" for his resemblance to Ron Howard's character in the television series "The Andy Griffith Show."
His family was part of a wave of Washingtonian-area residents descending on the Delaware shore -- giving Rehoboth its reputation as "The Nation's Summer Capital."
The money and the people who poured en masse into the coastal towns -- Rehoboth, Dewey, Lewes, Bethany and Fenwick Island -- fueled a real estate rush that since 1990 has boosted Sussex County's population 56 percent and transformed aging seaside cottages into million-dollar properties.
Like many Washingtonians, Scanlon invested in the Sussex coast.
In 1999, he and his first wife, Carrie Anne, along with his older sister, Erin, and her husband, paid $165,000 for a bungalow on West Street in Dewey. He was then press secretary for U.S. Rep. Tom DeLay, a Texas Republican who later became House majority leader.
After leaving DeLay's office that year and forming the Capital Campaign Strategies public relations firm, Scanlon soon teamed up with Abramoff, one of Washington's most politically connected lobbyists.
In a scheme they called "gimme five" -- the pair's e-mail code word for kickback -- Abramoff convinced tribal clients to hire Scanlon to help secure licenses or fight off competition. The two agreed to keep their financial relationship a secret from the tribes.
By then, divorced with a young son, Scanlon rented space at 53 Baltimore Ave., a clapboard home near Rehoboth's boardwalk. There he ran American International Center Inc., touted by its Web site as a nonprofit agency aiming to "influence global paradigms in an increasingly complex world."
Scanlon hired two Rehoboth pals -- a lifeguard and a yoga instructor -- as "high-powered" directors, the Web site said, but gave them minimal job duties, according to the Senate Committee on Indian Affairs co-chaired by Arizona Sen. John McCain.
Displaying what McCain has called "insatiable greed," Scanlon charged the tribes exorbitant fees using bogus invoices and padded bills, the Senate panel found. Scanlon spent a small fraction on actual work, then split the difference with Abramoff after routing some money through American International Center.
From June 2001 to April 2004, for example, the Mississippi Band of Choctaw Indians paid Scanlon's firm $14.8 million, prosecutors charged. Scanlon and Abramoff split $12.8 million in profits.
The Choctaws would not comment for this article, but in testimony before the Senate panel, Donald Kilgore, the tribe's attorney general, called the scheme "a deliberate attempt to defraud a client."
The U.S. Justice Department, which is conducting a wide-ranging investigation into lobbying, also would not comment. When a grand jury charged Scanlon in November, court documents said he and Abramoff conspired "to enrich themselves ... through corrupt means."
The partners also expressed contempt for their tribal clients in e-mails made public by the Senate panel.
In one e-mail exchange about the Choctaws, Abramoff wrote, "We need to get some $ from those monkeys."
When Scanlon pledged to "take care of it," Abramoff responded, "You iz da man."
Paying millions, marrying
With his newfound wealth, Scanlon began shopping for pricey real estate in 2001.
He paid $1.6 million cash that November for a five-bedroom canal-front home in Henlopen Acres. The neighborhood bordering Rehoboth, replete with graceful custom homes, expansive lawns and towering pines, is one of the beach's most prestigious.
Though he spent tens of thousands of dollars on renovations, Scanlon never moved in, friends said. Instead, he bought the Dewey beachfront home as a gift for fiancee Emily Miller, whom he met while both were press secretaries for DeLay.
After paying $4.8 million cash in March 2002, he hired premier designer Mark Showell Interiors to remodel in anticipation of their marriage later that year. But a few months before the wedding, the couple broke up and Scanlon started dating a Sussex woman named Brandy McMahon.
The daughter of a local builder, McMahon was a Cape Henlopen High School field hockey star who graduated from Radford (Va.) University in 2000 with a marketing degree. The summer she and Scanlon met, McMahon was waiting tables at Rehoboth's Big Fish Grill.
By year's end, the two were married.
John Hughes, former Rehoboth mayor and now Delaware's environmental protection chief, said that when he dined at Big Fish, he often saw Scanlon, who usually sported a baseball cap.
"I was amazed that such a young guy who looked like a skateboard rat had so much money," recalled Hughes, a close friend of McMahon's parents. "I've spent a lifetime trying to pay for my house and this guy had made a great fortune in a short time."
Manning the stand
In contrast to his jet-setting Beltway lifestyle, Scanlon spent his summers in the sand. He worked as a full-time lifeguard from 2002 through 2005, manning a stand six days a week from Memorial Day to Labor Day.
Last year he earned $11.35 an hour, for a total of $5,126.
"He was an excellent lifeguard and interacted well with the public," Buckson said, and he performed several rescues, mainly of swimmers who ventured "near the jetties or in rough surf and got sucked out."
He hosted parties for the lifeguards and others at his oceanfront home. On one raucous occasion, some of Dewey's lifeguard stands ended up in the surf, spurring a complaint to Rehoboth officials. "He agreed to pay for the damage and that was the end to it," former Dewey Mayor Pat Wright said.
In other beach circles, Scanlon was known as kind and courteous.
Real estate attorney Barbara O'Leary, who handled a few of his property settlements, said Scanlon appeared to be another "nice young guy who happened to be successful," adding that it's not unheard of for someone in their 30s to pay cash for multimillion dollar Sussex properties.
The Rev. Max J. Wolf of All Saints Episcopal Church in Rehoboth said Scanlon bought backpacks and other supplies for poor students and stood out for including a prayer for the poor in his wedding service.
"I just know him as a generous, compassionate person," said Wolf, who called Scanlon a victim of Washington's corrupt political culture. "He got caught up in things he wishes he didn't."
Buying, selling property
When he wasn't lifeguarding, jogging, playing tennis or spending time in St. Barts or Washington, Scanlon was wheeling and dealing in Sussex.
In December 2002, Scanlon Capital Management, a limited liability corporation he formed that year, paid $6.3 million for two office complexes in Georgetown, the county seat in Sussex. He put down $1.26 million cash.
At the downtown complex, the Delaware state government is his main tenant, renting space for the Division of Child Support Enforcement and a center for adults with developmental disabilities.
Early in 2003, he paid cash for a $1.6 million home on Baltimore Avenue -- across the street from the American International Center -- and opened offices. He also sold the Henlopen Acres home for $2.8 million -- $1.2 million more than he paid.
The spree continued in 2004, even after The Washington Post published an article detailing tens of millions of dollars in fees that Scanlon and Abramoff had charged to the tribes.
Within the next two months he paid $255,000 cash for two rental homes on Georgetown's Pine Street. One of the homes, which are in a distressed section of town, is a rambling Victorian with peeling paint and debris on the porch. Two Spanish-speaking tenants said they did not know their landlord.
Mike McCarthy, who manages the properties, said Scanlon wants to build an office park on Pine Street but no plans have been submitted.
Also in 2004, Scanlon sold the former du Pont mansion to Anthony J. Capano, son of developer Joseph M. Capano, for $7.5 million -- $2.7 million more than Scanlon paid two years earlier.
Scanlon also paid $2.1 million cash for a Rehoboth landmark with an ocean view. Known locally as "The House of the Seven Gables," the house's distinctive architecture has made it a town attraction for decades.
By 2004 the lobbying controversy had become a full-blown scandal, with Senate hearings and the scrutiny of federal investigators.
Scanlon soon finished his spree. In January 2005, he paid $1.9 million cash for a Henlopen Acres ranch home. The property was titled in his wife's name "for legitimate estate planning and project development reasons," attorney Braga said.
A few months later he sold the "Seven Gables" home -- for $495,000 more than he had paid.
'Deeply disturbing'
The investigation of Scanlon ended abruptly in November, when he was charged. Days later he pleaded guilty to conspiracy to commit fraud and bribery.
Now free on $5 million bail and cooperating with authorities, Scanlon's sentencing date could "be years away" because the probe is ongoing, Braga said.
As for Scanlon's properties, his plea bargain allows third parties such as Abramoff to pay part of the $19.7 million restitution. Braga said it's "impossible to know" if Scanlon will have to sell any. "He will do whatever is necessary, including the sale of real estate, in order to meet that commitment.''
There are no liens on Scanlon's properties, but he cannot sell any property without the government's permission, court records show.
In the meantime, Scanlon's plea deal hinges on providing federal authorities with "information, evidence and testimony, if required, concerning any matter."
That would include being a witness in any case brought against U.S. Rep. Robert W. Ney, R-Ohio. Ney has not been charged and denies any wrongdoing. But Scanlon and Abramoff have admitted giving gifts, including trips, meals and sports tickets, to Ney or his staff in exchange for favors for their clients.
Sloan, the former prosecutor, said Scanlon, by virtue of being the first key player to plead guilty in the case, received an attractive deal.
"This was a very serious felony," Sloan said, but getting Scanlon on their side was more important to investigators "because they had a lot more fish to catch and they wanted to go up the chain. His deal helped get Abramoff to plea. That's why he got such a good deal."
Since pleading guilty, Scanlon has been seen infrequently at the beach -- though in recent weeks he was spotted at a Brew Ha Ha!, a Bethany Beach fitness center and his favorite breakfast haunt, the Crystal Restaurant.
One April morning, Scanlon was reading a newspaper when the television above the Crystal's bar broadcast his face and a story on his crimes.
"He just looked up, then went back to his paper," one employee said. "No reaction at all."
Rehoboth officials, meanwhile, have rejected his request to return as a lifeguard this summer, Buckson said, fearing the prospect of television crews swarming over the beach should the scandal resurface in the news.
Hughes, Delaware's environmental control chief, said the entire affair has left him disillusioned.
"It's deeply disturbing," Hughes said, "a stone-cold illustration that appearances are not always real."
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