Accountability and transparency within our institutions and leadership.
posted by jewishwhistleblower @ 1:30 AM
Note: Rabbi Lapin's last name is misspelled. As well this transcript indicates the crazy email was to Rabbi Daniel Lapin and not, as published reports indicate, to his brother Rabbi David Lapin. An email response is also presented from Rabbi Lapin.>Exhibit 31 has a memorandum from >Mr. Abramoff to a Rabbi Latham >(ph). He said, "I hate to ask >you for your help with something >so silly but I've been nominated >for membership in the Cosmos >Club which is a very >distinguished club, composed of >Nobel Prize winners and so on.>>"The problem for me is most >prospective members have >received awards and I've >received none. I was wondering >if you thought it possible that >I could receive an award from >your organization. Probably you >could call it something like >Scholar of Talmudic Studies or >Distinguished Biblical Scholar >Award.>>DORGAN: "It would even be better >if it were possible that I >received these in years past, if >you know what I mean.">>(LAUGHTER)>>MCCAIN: That's to who? Who was >that?>>DORGAN: It's Exhibit 31. It's >from Mr. Abramoff to a Rabbi >Daniel Latham (ph).>>But my point is that this wasn't >just cheating on a grand scale. >In fact, I believe that goes on >and on, and actually they >describe the type of...>>MCCAIN: Rabbi Latham's (ph) >response is?>>DORGAN: He said, "What I'm >trying to do here -- it would >only be used for this situation >at the Cosmos Club, but there's >a chance they'd have to call >someone to verify. Probably just >a few clever titles and awards>and dates, as long as you can be >the person to verify them.">>And the response from the >recipient, Mr. Latham (ph), >is, "Yes. I just need to know >what needs to be produced. >Letters? Plaques? Neither?">>And at any rate, the memorandum >goes on.FDCH Political TranscriptsJune 22, 2005 WednesdayCommittee HearingSENATE INDIAN AFFAIRS COMMITTEEU.S. SENATOR JOHN MCCAIN (R-AZ) HOLDS HEARING ON TRIBAL LOBBYINGSPEAKER:U.S. SENATOR JOHN MCCAIN (R-AZ), CHAIRMANLOCATION: WASHINGTON, D.C.WITNESSES:CHARLIE BENN, DIRECTOR OF ADMINISTRATION, MISSISSIPPI BAND OF CHOCTAW INDIANSDONALD KILGORE, ATTORNEY GENERAL, MISSISSIPPI BAND OF CHOCTAW INDIANSNELL ROGERS, PLANNER, MISSISSIPPI BAND OF CHOCTAW INDIANSKEVIN RING, FORMER ASSOCIATE OF JACK ABRAMOFFSHAWN VASELL, FORMER ASSOCIATE OF JACK ABRAMOFFAMY RIDENOUR, PRESIDENT, NATIONAL CENTER FOR PUBLIC POLICY RESEARCHGAIL HALPERN, FORMER TAX PREPARER AND ADVISER TO JACK ABRAMOFFBRIAN MANN, FORMER DIRECTOR, AMERICAN INTERNATIONAL CENTERDAVID GROSH, FORMER DIRECTOR, AMERICAN INTERNATIONAL CENTERAARON STETTER, FORMER ASSOCIATE, CAPITOL CAMPAIGN STRATEGIESU.S. SENATE INDIAN AFFAIRS COMMITTEE HOLDS A HEARING ONTRIBAL LOBBYING JUNE 22, 2005 SPEAKERS:U.S. SENATOR JOHN MCCAIN (R-AZ)CHAIRMANU.S. SENATOR PETE V. DOMENICI (R-NM)U.S. SENATOR CRAIG THOMAS (R-WY)U.S. SENATOR GORDON SMITH (R-OR)U.S. SENATOR LISA MURKOWSKI (R-AK)U.S. SENATOR MIKE CRAPO (R-ID)U.S. SENATOR RICHARD BURR (R-NC)U.S. SENATOR TOM COBURN (R-OK)U.S. SENATOR BYRON L. DORGAN (D-ND)RANKING MEMBERU.S. SENATOR DANIEL K. INOUYE (D-HI)U.S. SENATOR KENT CONRAD (D-ND)U.S. SENATOR DANIEL K. AKAKA (D-HI)U.S. SENATOR TIM JOHNSON (D-SD)U.S. SENATOR MARIA CANTWELL (D-WA) MCCAIN: Good morning.Last February, the committee launched an investigation into allegations of misconduct made by six Indian tribes against their former lobbyist Jack Abramoff and former political consultant Michael Scanlon.Later in the year, the committee held two hearings examining the duo's representation of the Saginaw Chippewa Indian tribe of Michigan, the Agua Caliente band of Cahuilla Indians of Palm Springs, and the Tigua tribe of El Paso.Among other things, the committee determined that Mr. Scanlon's companies collected at least $66 million from the six tribes and secretly paid Mr. Abramoff almost $22 million from that amount.Today's hearing is the third in this series of hearings. The committee is pleased to have with us representatives of the Mississippi band of Choctaw Indians, Nell Rogers, who was the tribe's primary contact with Jack Abramoff and Michael Scanlon, and Donald Kilgore, the tribe's attorney general who is presently examining the full extent of the tribe's injuries.Also attending as Chief Martin's personal representative is Charlie Benn, the director of administration in the office of the chief.Chief Martin and I met in my office just weeks ago to discuss this hearing. Given the knowledge and candor of Ms. Rogers and Mr. Kilgore, the committee concluded that Chief Martin's presence would not be necessary.The committee, nevertheless, appreciates Chief Martin's graciousness in sending his personal representative here today.During our meeting, Chief Martin shared with me the rumors and misinformation that persists about the committee's investigation.Let me reiterate the focus of the committee's investigation in today's hearing.The committee's investigation is and always has been directed at the allegations of misconduct made by a number of tribes against their former lobbyists and political consultants, and the consequent harm to the tribes.This investigation has never been an attack on tribal sovereignty, nor an assault on the tribe's legitimate participation in our great democracy.This particular hearing is not aimed at Chief Martin, his administration, or the tribe. There have been no allegations of wrongdoing made against them, nor have we seen any evidence of such wrongdoing.With that in mind, I thank Chief Martin for the Mississippi Choctaw's complete and continuing cooperation in the committee's investigation.During our collaborations, the tribe has raised concerns about public revelation of certain matters it deems protected by the First Amendment.Sensitive to the tribe's concern, whether couched in constitutional terms or not, the committee and the tribe have successfully worked together to ensure that the committee has full access to pertinent information without needlessly disclosing information potentially damaging to the tribe. It's a commitment I ask my colleagues to honor and respect, and one which I intend to uphold as chairman.From our first hearing emerged the utter contempt that Mr. Abramoff and Mr. Scanlon held for their tribal clients. In the second, Mr. Abramoff's and Mr. Scanlon's insatiable greed came to the fore.MCCAIN: Today's hearing is about more than contempt, even more than greed; it's simply and sadly a tale of betrayal.When that betrayal began, exactly when and why, we do not and may not ever know. What we do know is that Mr. Abramoff betrayed a longstanding client, betrayed his colleagues, betrayed his friends.Of all his tribal representations, the Mississippi Choctaw was Jack Abramoff's longest.As far back as 1995, the Mississippi Choctaw hired Mr. Abramoff while at Preston Gates to represent their interests on Capitol Hill. By all accounts, Mr. Abramoff and his team discharged their duties ably and with great success.When Mr. Abramoff and his team left Preston Gates for Greenberg Traurig at the end of 2000, the tribe moved their account with them. Over the proceeding five years, the tribe, and more particularly Chief Martin and his aides, had grown to trust Jack Abramoff and his team. Little did they know that, that trust would soon be abused.Over the next three years, it appears that Mr. Abramoff separately and in concert with Mr. Scanlon and others defrauded the tribe in three ways.The first is not new to this story -- the previous hearings revealed the secret partnership shared by Mr. Abramoff and Scanlon, and the artificially inflated prices they obtained under false pretenses. The second and third ways have not yet been examined, and these are the use of tax-exempt organizations to affect their scheme and the fraudulent billing of fees and expenses by Jack Abramoff and his team at Greenberg Traurig.According to witnesses, Mr. Abramoff introduced the tribe to Mr. Scanlon and recommended it hire him in late 2001.MCCAIN: The two presented Mr. Scanlon as an independent operator. Never did they confess their secret partnership to the tribe. Never did they reveal that, together, they set prices to account for Mr. Abramoff's stake in the profits.Never did they even hint that the two devoted a small fraction of the payments to the uses intended by the tribe -- pocketing the rest.Until last year, the tribe had no reason to question the man that had represented and advised them for years. At all times, the tribe understood and expected that Mr. Abramoff and Mr. Scanlon were working in their best interests.Even today, the tribe could not have envisioned the betrayal it suffered at their hands.And how big was that betrayal? According to a January 8th, 2002 e-mail from Mr. Abramoff to Mr. Scanlon, the two had charged the Mississippi Choctaw $7.7 million for projects in 2001.Of that amount, Mr. Scanlon spent $1.2 million for the efforts. He and Mr. Abramoff split an astounding $6.5 million.Not content with these astronomical sums, Mr. Abramoff and Mr. Scanlon conspired for more. In a November 4th, 2002 e-mail, Mr. Scanlon asked Mr. Abramoff how he should seek more money from the tribe's legislative liaison, Nell Rogers.Quote: "Last time you said to me to just tell her that we are spending our own money to get it done and we're going deep into the hole."Mr. Abramoff replied: "I think you should call her and tell her that we have turned the corner, but you are pouring it on to make sure we win. Tell her, as of now, you're finally willing to say that we will win this, but, laughingly say, 'I don't know how I'm going to get back all the money I had to dump into this'."This, of course, was untrue.Since our first hearing, Mr. Abramoff and Mr. Scanlon have suggested to the tribes that the two were not partners and that the sums Mr. Scanlon paid Mr. Abramoff were merely referral fees.That explanation strains credulity.Not only did Mr. Scanlon pay Mr. Abramoff half his company's profits, conspire with him to set prices and refer to him as a partner, we now know that Mr. Abramoff was prepared to claim, to prospective financiers on another venture, that, quote, "2000 was a business transition year where I" -- Mr. Abramoff -- "was building CCS."CCS, of course, was Capital Campaign Strategies, a company owned and operated by Mr. Scanlon.Last year, the committee reported that Mr. Abramoff's and Mr. Scanlon's partnership apparently commenced in June 2001.MCCAIN: It appears that their scam actually started earlier. It apparently began with payments to the American International Center, a self-styled international think tank in Rehoboth Beach, Delaware, that was Greenberg Traurig's fifth largest lobbying client in 2002, paying $840,000 in fees to the firm.With us today are the center's former directors, Brian Mann and David Grosh. These two gentlemen will hopefully be able to educate us on the nature and scope of the American International Center's business.I suspect both men will be surprised to learn that Mr. Scanlon and Mr. Abramoff used the center to carry out their allegedly fraudulent scheme.As an example of this, in a May 2nd, 2001 e-mail, Mr. Abramoff informed Mr. Scanlon that the Mississippi Choctaw were about to pay money into the American International Center and according to Mr. Abramoff, quote, "I'm going to try to get us $175,000, $100,000 to Ralph, $25,000 to contribution, $5,000 immediately to the conservative caucus; rest, give me five."Ultimately, in April 2003, the AIC paid Mr. Abramoff's company, Kay Gold, almost $1 million.Though their "give me five" scheme seems to have begun with a modest $50,000, as we know, it would soon rocket into millions.Based on the evidence thus far, the Mississippi Choctaw paid approximately $15 million directly to Mr. Scanlon's companies, and Mr. Scanlon paid Mr. Abramoff more than $5 million from those funds.Unfortunately, the alleged fraud perpetrated against the tribe does not end there.In 2002, Mr. Abramoff and Mr. Scanlon successfully employed other vehicles to extract another $2 million from the tribe. Apparently at Mr. Scanlon's direction, the tribe paid $1 million into the Capital Athletic Foundation, Jack Abramoff's personal charitable foundation.MCCAIN: The tribe intended and understood that the $1 million would be distributed to various grassroots organizations to advance the tribe's legislative interests.At all times relevant, the tribe understood that the foundation's sole function was a conduit of money; never a legitimate charity.The tribe neither intended nor authorized its money to be used as a charitable contribution to the foundation. It certainly never agreed to the uses that Mr. Abramoff ultimately put those funds.To what uses did Mr. Abramoff and his foundation put the money received from the Mississippi Choctaw and other donors in 2002? According to the foundation's tax and accounting records, nearly 80 percent of the funds went to the Eshkol Academy, the all-boys, Jewish school established by Jack Abramoff.The foundation also paid a monthly stipend and Jeep payments to Mr. Abramoff's high school friend living in the Israeli West Bank who conducted sniper workshops for members of the Israeli Defense Force and others.As Mr. Abramoff tried to square these payments with the charitable mission of the foundation, according to Mr. Abramoff's secretary, his friends suggested that he could write, quote, "Some kind of letter with his sniper workshop logo and letterhead. It is a 'educational' entity of sorts."Mr. Abramoff could only respond: "No. Don't do that. I don't want sniper letterhead."Based on evidence examined by the committee, Mr. Abramoff adjusted the transactional structure on the books to continue, in the words of his tax planner, quote, "the Jeep payments as well as all the other military expenses that don't look good on the foundation's books," unquote.His cohort in Israel did so by establishing a bank account in the name of a school that apparently existed only on paper. Whether the substance, as opposed to the form, of the transaction comports with our tax laws will likely be of interest to the IRS.MCCAIN: Interestingly, in 2002, the foundation listed as beneficiaries of its largess the Alexandria Police Youth Camp Foundation, Boy Scouts of America, YMCA of Metropolitan Washington and other legitimate organizations.Yet, cumulatively, those organizations received only $7,000 in donations that year, a sum that pales in comparison to what each of the three largest recipients received individually. In fact, the listed organizations together received less than 1 percent of the money spent.Before its Web site was taken out, Mr. Abramoff's foundation listed its mission as "fostering character development through sportsmanship," which it defined as, quote, "ethical behavior both on and off the playing field, both in athletics and in business, both as a youth and as an adult."Given what we have learned over the past year and what we will hear today, that mission statement rings hollow.More betrayals were to come.On October, 2002, Mr. Abramoff and Mr. Scanlon successfully defrauded the tribe of another $1 million. To accomplish this, Jack Abramoff betrayed not just the tribe but also two long-time friends and violated his fiduciary duty to the non-profit organization on whose board he sat.The process was two-fold. On the top end, Mr. Abramoff directed the tribe to pay $1 million into the National Center for Public Policy Research upon whose board he sat and whose executive director he knew for over 20 years.To induce the tribe into making the payment, he told them that the money would be used for their grassroots activities, activities which he knew the center could and would not undertake, either on its own or through another.To the center, Mr. Abramoff explained, that part of the money was a donation ultimately destined for the Capital Athletic Foundation and the rest was intended for a huge educational effort the tribe was undertaking to educate the public on the benefits of Indian gaming and the distinction between Indian and non-Indian gaming.MCCAIN: The center understood it would participate in that educational effort.On October 10th, 2002, the center provided Mr. Abramoff with an invoice for $1 million for, quote, "contribution to the national center for educational and research programs and activities," unquote.But the tribe never saw that invoice because Mr. Abramoff never sent it. Instead, he sent an invoice fabricated by Mr. Scanlon's shop, purportedly from the National Center for Public Policy Research for, quote, "professional services," unquote. That was the invoice the tribe ultimately saw and paid.Once the money arrived at the center, Mr. Abramoff told the center to pay $500,000 to Capital Campaign Strategies, which Mr. Abramoff claimed was performing the heavy lifting on the educational effort, and $50,000 to Nurenberger (ph) and Associates, which Mr. Abramoff said would be supervising the efforts. He told the center the remaining $450,000 was intended as a charitable contribution to the Capital Athletic Foundation.In fact, the tribe never intended to donate any of that money to Mr. Abramoff's personal charity. Mr. Nurenberger (ph) never worked on behalf of the center or the Choctaw. He received his money in repayment of a personal loan he had made Mr. Abramoff years earlier. When Mr. Nurenberger (ph) raised concerns about the center repaying the loan, Mr. Abramoff assured him that the funds were due Mr. Abramoff as director of the center.To try and give his activities a veneer of legitimacy, Mr. Abramoff instructed his executive assistant to, quote, "make up invoices," unquote, from Nurenberger (ph) and Associates and the Capital Athletic Foundation, which he then submitted to the center.According to Mr. Nurenberger (ph), he neither saw nor approved the invoice submitted in his firm's name. Believing the transaction in order and relying upon the word and fiduciary duty of their director, the center disbursed the funds.By abusing the trust of those involved, Mr. Abramoff and Mr. Scanlon profited by another $1 million.I want to thank Amy Ridenour, the president of the National Center for Public Policy Research, for agreeing to appear here today to help illuminate what appears to be a $1 million fraud.The third area of possible fraud identified by the committee involves the possible fraudulent billing of fees and expenses by Mr. Abramoff and his team while at Greenberg Traurig. It ranges from charging nonbusiness meals at Mr. Abramoff's restaurant, Signatures, to the impermissible expensing for club dues and other items hidden from the tribe.It apparently also involves the padding of bills. As just one example, when Mr. Abramoff learned that the tribe's bill was nowhere near the $150,000 monthly mark, Mr. Abramoff instructed one of his associates to, quote, "add 60 hours," unquote, for him and to, quote, "pump up Scanlon, Todd (ph) and you, give Amy some hours if you have to," unquote.MCCAIN: Even when Mr. Scanlon began running his own companies and receiving payments directly from the tribes, Mr. Abramoff nevertheless tried to bill clients for Mr. Scanlon's time.There's other evidence which I believe the Department of Justice should review if it has not already begun to do so.If proven true, such activity would well constitute a violation of the mail and wire fraud statutes.There's much more to this story than I could possibly describe in the limited time we have today.Indeed, the committee has come upon evidence suggesting that Mr. Abramoff may have perpetrated a similar scam on some of his non-tribal clients. And while we cannot emphasize enough the harm Mr. Abramoff and Mr. Scanlon inflicted upon the tribe, we should not overlook the toll their actions took on the men and women they betrayed.How that wound can be salved I cannot say. I leave it to Mr. Abramoff and Mr. Scanlon to try.I ask the vice chairman for his concurrence in having documents that I'll be asking questions on -- those related to these areas -- entered as part of today's record.DORGAN: Without objection, I would support that.MCCAIN: Senator Dorgan?DORGAN: Mr. Chairman, thank you very much.And I will make a similar request that the documents on which I ask questions be made a part of the record.MCCAIN: Without objection.DORGAN: Mr. Chairman, this is, as you've described, a disgusting story of greed unlike any that I have seen in my service in Congress.I think it's important to begin, as you did, to point out that there is no evidence of wrongdoing by the Choctaws, by the Indian tribe that will be discussed here.We have had full cooperation. We appreciate the cooperation of Chief Martin and others from that tribe.And it's important to understand that this tribe has been a victim of fraud, we believe, and we will describe some of that in a hearing and learn much more from the witnesses.The commitment that the chairman has made in this committee to provide a thorough and an exhaustive investigation of how a number of Indian tribes were deceived and defrauded by Jack Abramoff and Mr. Scanlon is important. And today we focus on the Choctaw tribe of Mississippi and how they were victimized.The Choctaw tribe is a notably successful tribe in its business operations. It's the second largest employer in the state of Mississippi. The tribe has a very substantial annual payroll. It's businesses are diversified and successful. And these are business- savvy people with a business plan. And part of their plan was to hire someone whom they could trust to advance their agenda.The Choctaw tribe began its relationship with Jack Abramoff 10 years ago. Mr. Abramoff designed a business model for the tribe, running their money through a variety of people and entities for grassroots public policy and public relations purposes.DORGAN: These included Preston Gates, Greenberg Traurig, Americans for Tax Reform, Capital Campaign Strategies, Ralph Reed and many more. In fact, there were a large number of characters who became recipients of the tribe's money, through various means.At some point, it appears to me, in probably around the year 2002 -- January of 2002 -- it is a memorandum, in fact, that Mr. Abramoff and Mr. Scanlon decided they could be making millions instead of less than that. And they decided they wanted not to send money to others, including Ralph Reed; and they referred to him as "a bad version of us; no more money for him" in January, 2002.And then they hatched the scheme whereby Abramoff told the tribe to hire Scanlon for millions. But he failed to tell the tribe that his firm would be getting at least a third of the Scanlon fee as his reward.The tribe was accustomed to sending money, at Abramoff's direction, to various organizations as a part of its public relations efforts. It appears they did not raise questions about the new groups that began to appear at Mr. Abramoff's recommendation: The American International Center, which is a Scanlon company; the National Center for Public Policy Research, whose board membership included Abramoff; Capital Athletic Foundation, whose sole board members were Abramoff and his wife; Scanlon Gould Public Affairs, also know as Capital Campaign Strategies.As part of its investigation, the committee uncovered a mindboggling list of organizations used as financial and grassroots conduits by both Scanlon and Abramoff.The organizations provided an alarming picture of how these groups were used and, in some cases, manipulated: sometimes for personal gain, sometimes for political gain. But the goal was always the same: to hide, to obscure and to mislead where the money was coming from and where it was going.The committee didn't need a Deep Throat to tell us to follow the money. The e-mails that you will see today have done that for us.E-mails show that Mr. Abramoff may have tried to evade taxes by having earned income sent to his private charitable foundation, which seemed also to serve as his personal piggy bank, the Capital Athletic Foundation.Quoting from one of his e-mails, and I quote: "I have some money due me from CCS" -- Capital Campaign Strategies -- "If I have them write it to the Capital Athletic Foundation for services rendered, can the Capital Athletic Foundation just take it and not pay taxes if the services are in the realm of what the Capital Athletic Foundation does, advice on athletics or something like that? That way, CCS could expense it and the Capital Athletic Foundation could take it in tax- free," end of quote.E-mails show how Jack Abramoff shopped around for a 501(c)4 or multiple 501(c)4s to be used as pass-throughs for various money transactions.In an e-mail to Ralph Reed, Mr. Abramoff refers to Amy Ridenour, at the National Center for Public Policy, I'm quoting now: "She does not have a (c)4; only a (c)3. So we are back to ATR" -- Americans for Tax Reform -- "only. Let me know if this will work. Just do this through ATR until we can find another group."That's February 2nd, 2000.A few weeks later, Abramoff responds to Reed about how to continue funding Reed's work: "Thanks, Ralph. I hope to have a decision imminently on going back up hard. I also have a new (c)4 to use."There are numerous memos between Mr. Abramoff, Reed, ATR, Mr. Norquist -- how to move more money through (c)4s to obscure or deceive the source of the money.And, Mr. Chairman, while it's not in this committee's jurisdiction to determine whether nonprofit organizations were acting legally or not, it certainly begs the question as to whether they were acting within their charitable or tax-exempt purpose.And I hope we will consider a future hearing, perhaps with the Senate Finance Committee, to explore the activities of these 501(c)3s and 501(c)4s. And I suggest that we consult with the Finance Committee about how to further investigate those activities.Over the course of the Choctaws' involvement with Mr. Abramoff and Mr. Scanlon, the tribe spent at least $20 million on various lobbying and grassroots activities. No one questions their right to contract for services to grow their business.Like many groups who work with lobbyists, they put their trust in these experts from Washington to do the right thing. But there was a breach of trust and a betrayal.This tribe was never told about the secret scheme that allowed Jack Abramoff to skim $5 million from the money that Michael Scanlon had promised the tribe would be spent on grassroots and public relations but was not spent on that purpose.The tribe was never told that part of the $1 million they'd been told to send to the National Center for Public Policy Research for grassroots organizing would be used to repay a personal loan going back to Jack Abramoff's days as a filmmaker.The tribe was never told that $10,000 of their money would be sent to Reed for Chairman when Ralph Reed was seeking the chairmanship of the Georgia Republican Party.The tribe was not told that the $1 million they were directed to send to the Capital Athletic Fund was basically going to Abramoff's pet projects.And we know that the Capital Athletic Fund, allegedly a private, charitable foundation, was used as Mr. Abramoff's personal checking account.Were these thefts or just betrayals? And where is the line drawn?Mr. Chairman, this investigation has taken twists and turns that none of us had anticipated. It's uncovered deceptions and greed that, even by Washington standards, are breathtaking.It has raised questions of ethics and legality that we must pursue.I thank you especially for your persistence and your dogged approach. I look forward today to hearing from the witnesses.MCCAIN: Thank you very much.Our first panel is Mr. Charlie Benn, representative of the Mississippi bank of Choctaw Indian; Donald Kilgore Esquire, attorney general for the Mississippi band of Choctaw Indians; and Ms. Nell Rogers, planner of the Mississippi band of Choctaw Indians.Please come forward, and welcome to the committee.While the witnesses are seating, Senator Akaka has an opening statement.AKAKA: Thank you very much, Mr. Chairman. I want to thank you and Vice Chairman Dorgan for holding this oversight hearing on tribal lobbying practices.This is the third, as you know, of a series of hearings that this committee has conducted already.While I am appalled by these men -- Jack Abramoff and Michael Scanlon -- they were able to conduct their pattern and practice of dealings that took advantage of native peoples. I am hopeful that, through these hearings, the committee will be able to provide guidance in resolving these matters to ensure that this type of history is not repeated again.I look forward, Mr. Chairman, to hearing the testimony from the witnesses we'll hear today. And thank you for holding this hearing, Mr. Chairman.MCCAIN: Good morning.And, Ms. Rogers, who's accompanying you, for the record? Go ahead.ROGERS: Brian (ph) Rogers, who's the tribe's attorney.MCCAIN: Welcome, Mr. Rogers. Just for the record.We'll begin with you, Mr. Benn. Thank you for appearing. Please proceed.BENN: Thank you, sir.Good morning. My name is Charlie Benn and I am the director of administration for the office of Chief Philip Martin, Mississippi band of Choctaw Indians.BENN: With me today are Neil Rogers, who works in the Tribal Planning Office in the area of legislative affairs, who will also offer testimony in a few moments.Don Kilgore, the tribe's attorney general is here as well. Mr. Kilgore will also offer brief testimony and assist in answering questions that you may have.Also present with the panel is C. Brian Rogers (ph), outside counsel for the tribe.We certainly appreciate this opportunity to present the views of the tribe as regards the committee's ongoing investigation into the conduct of Jack Abramoff and Michael Scanlon.The Mississippi Band of Choctaw Indians is a federally recognized Indian tribes of nearly 10,000, most of whose members reside in eight reservation communities located on trust lands scattered over a five- county area in east-central Mississippi.The majority of our tribal members are full blood Choctaw language-speaking. We are descendants of those Choctaw people who resisted repeated efforts by the federal government to force their relocation to Oklahoma. This continued from 1830 through the early 1900s. The tribe's reservation lands are poor, unproductive and the tribe is without any natural resources which could be used to generate income.The Mississippi Choctaws were ignored and abandoned by the Congress and federal executive branch for almost a century, finally securing our initial Indian reservation lands in 1944 and federal recognition as a separate tribe in 1945.Our members were then essentially destitute without any resources and our tribal government was basically powerless to help them.Unemployment was so prevalent among our tribal members that we knew we had to find another path and we did. We made the choice to pursue self-determination as the best means to meet the growing needs of the tribe and to pursue manufacturing jobs as the best means of employing large numbers of our people.Beginning with one tribal employee in 1963, the Mississippi Choctaws have grown to become the second largest employer in Mississippi, employing some 9,200 people. They operate about 25 different commercial enterprises.The tribe has developed a strong and stable government providing the full array of governmental services. This includes the operation of a large school system, police and fire protection services, courts, hospital, clinics, social, housing, realty and economic development agencies. These were key ingredients of our latest success in building a reservation economy and attracting private investment.The passage of the Indian Gaming Regulatory Act and the introduction of class 3 (ph) gaming in 1989 in Mississippi, led to the development of the tribe's current Pearl River Resort.We have invested over $1 billion in this development, which has created jobs and generated income. Rather than make large distribution payments to tribal members, we chose to invest in our future in a different way.The success of the resort has allowed the tribe to begin catching up from generations of poverty. There has been extraordinary progress that is set forth in more detail in Chief Martin's written testimony. Still significantly remain, particularly in the areas of health, education and housing. And since all of our enterprise growth has been debt-financed, we still have a $300 million debt load to retire.Because of the tribe's government-to-government relationships with the United States and because of the need to protect tribal investments and our ability to repay business debt, the Mississippi Choctaws have engaged in extremely active and aggressive efforts to monitor and affect the federal decision-making process and to shape public opinion on matters affecting the tribe's political and economic interests.To achieve this, we have long engaged experienced professionals, including lobbyists with prestigious law firms who know and understand how federal lobbying and grassroots advocacy works.Our efforts in this regards have historically been successful. And we have relied upon the professional expertise and integrity of those law firms and their lobbyists to ensure that this work is handled for us in a lawful and appropriate manner.So when the initial press reports emerged last year regarding the large fees paid to Jack Abramoff at Greenberg Traurig or to Michael Scanlon by a number of tribes for lobbying work and grassroots advocacy, we had no reason to believe that anything questionable had occurred concerning those payments or their work for us. And we were pleased with the results that we had achieved.Later, we have learned, based on the work of the committee and our attorneys, that Mr. Abramoff, along with Mr. Scanlon, had engaged in what appears to be a consistent pattern of kickbacks, misappropriated funds, payment induced under false pretenses and padded billings, all orchestrated by Mr. Abramoff from his position as senior director of governmental affairs for Greenberg Traurig LLP, the law firm which the tribe had retained to handle its public affairs needs starting in January, 2001.From the offset of this matter, the tribe has fully cooperated with the FBI and the Justice Department. And since July 2004, almost a year ago, shortly after we saw evidence of apparent wrongdoing on the part of Mr. Abramoff or Mr. Scanlon, we have worked closely with the committee to further its investigation.BENN: Early on in this process, however, the tribe raised with the committee its concern that sensitive information regarding its lobbyists, lawful lobbying and public affairs activities not be unduly disclosed through the committee's investigation of Mr. Abramoff and Mr. Scanlon, and of the tribe's First Amendment right to protect against such involuntary disclosure.The tribe certainly appreciates that the committee has respected the tribe's First Amendment rights throughout this. Consistent with this position, the tribe has shared all requested documents and information with committee staff, but has declined to place in the record information regarding the tribe's First Amendment-protected activities when disclosures of such information is not required.This remains the tribe's position to date.I would now like to defer to Ms. Rogers to discuss how the tribe came to employ Mr. Abramoff and Mr. Scanlon, and further details on our lobbying activities, and to request that the committee's questions be deferred until each of us on this panel has had the opportunity to make a opening statement.Thank you, sir.MCCAIN: Thank you very much, Mr. Benn.Mr. Kilgore, or Ms. Rogers, whichever way -- Ms. Rogers is fine.ROGERS: Thank you.Good morning, and thank you, Senator McCain and Senator Dorgan and Senator Inouye for your comments.And I'd also like to say that we appreciate the work of your staff in pulling together our information for the hearing.Prior to 1994, Chief Martin was the tribe's primary lobbyist. Partly this was because the tribe had no funds to pay for these services. Later, as the scale and reach of federal regulations and legislation affecting Indian tribes expanded, and as the tribe's businesses and revenues grew, attending to those enterprises required more and more of the chief's time, leaving less time to devote to the legislative process.It became prudent to hire outside lobbyists and legal counsel to assist in addressing the tribe's federal advocacy needs and to assign additional staff in the chief's office to assist in coordinating the tribe's public affairs efforts.Before the tribe retained Preston Gates, it had retained the law firm of Hobbs, Straus, Dean & Walker here in Washington to provide some legal services and public affairs work, primarily in the area of self-determination in health and in education.The tribe continues to work with Hobbs, Straus and with other law firms, firms who have represented the tribe for many years, such as Wise, Carter and Caraway, and Scott, Sullivan, Streetman and Fox firms in Mississippi, and Roth, Van Amberg, Rogers, Ortiz and Yepa in New Mexico.All have provided a high caliber of legal representation and have done so with honesty and scrupulous adherence to their duties to the tribe as a client.No less was expected from the other Washington firms hired by the tribe starting in 1995.In 1994, two simultaneous events occurred which required an expansion and a change in the direction of the tribe's public affairs work.First was the change in leadership of the Congress as a result of the 1994 elections. Second, the opening of the Silver Star Hotel and Casino by the tribe, also in 1994, gave rise to an array of new issues and concerns that had to be tracked and dealt with at the national level.The tribe also wanted to tell its economic story; how it was possible to use the tax and regulatory structures unique to Indian reservations and economies operating under tribal jurisdiction to achieve on-reservation economic development.This was not just a theory. The tribe had experienced successful economic development for 15 years before opening the first casino. It did so by finding products that could be made and sold, hiring good managers, setting up a judicial system that provided fair treatment for outside parties, building a stable, constitutional government with a separation of powers and honoring its business contracts.When the tribe opened its first casino, financed 100 percent with borrowed money, it had to be proactive in protecting its casino operations and its ability to pay off its debt.Thus, in 1995, the announcement by the then-Ways and Means Committee chairman of a plan to subject tribal incomes to taxation set off extraordinary alarms with the tribe, because that meant that the tribe's gaming and other business revenue could be taxed up to 34 percent, threatening the tribe's ability to pay off its debt and undermining its capacity to provide essential governmental services to the some-10,000 tribal members.It was in this climate, then, that the tribe recognized the need to reach out to the new Republican majority and to redouble all efforts to outline its longtime unmet needs and its reservation development experiences with all members of Congress in a bipartisan way.Jack Abramoff was identified to us in 1995 as a potential public affairs specialist in the Washington office of a major law firm, Preston Gates. This firm, in addition to having ties to the new majority, also included former Congressman Lloyd Meeds, who was known to the tribe as someone knowledgeable of tribal issues as well as of the government-to-government relationship that exists between the tribes and the Congress.ROGERS: At Chief Martin's request, I contacted the firm and subsequently, following a meeting with Mr. Meeds, Mr. Abramoff and others in the firm, a retainer agreement was executed.What followed was a very positive relationship with Preston Gates from 1995 through 2000. They did very effective work for the tribe, both at the federal level and through various grassroots projects.Then Mr. Abramoff and most of his team left Preston Gates to join Greenberg Traurig in 2001.Since the bulk of the work done by Preston Gates for the tribe was in the area of public affairs and not ordinary legal work, and since Mr. Abramoff and most of his team who had handled that work at Preston Gates moved to Greenberg Traurig in 2001, the tribe then retained Greenberg Traurig.Later, Mr. Abramoff introduced us to Michael Scanlon as a political consultant who had several companies which he used for his public affairs, marketing and grassroots work.When Mr. Abramoff left Preston Gates to move to Greenberg, there was no reason to believe that anything improper or unlawful had occurred in connection with this work.There was no reason to question the integrity or otherwise doubt that the representation through Greenberg would be handled in any less professional and honest way than we believed had previously occurred.Unfortunately, those expectations were not met and misconduct did occur.Details on what the misconduct was and how it occurred will be addressed by Mr. Kilgore, the tribe's attorney general, in his opening statement. However, before I turn to Mr. Kilgore, there are some matters which the tribe wishes to clarify, largely because of errors by the media in reporting on these events.First, the tribe has never authorized any payment for the purpose of sending any member of Congress on any golf trip, anywhere. And this includes the widely reported Scotland trip.Second, the tribe did not contribute any money to Americans for Tax Reform to buy the opportunity to attend a White House meeting with President Bush. In particular, no money was paid to ATR for that purpose as regards to the White House meeting on May 9th, 2001, and no tribal representative attended that meeting, as has been reported in the press.Third, the tribe decided years ago that its core governmental operations, including public relations and related public affairs activities, that were administered through the office of the chief would not be funded with gaming revenue.In this regard, none of the funds the tribes paid to Americans for Tax Reform for various purposes in 1999 to 2002 were generated by the tribe's gaming operation.And finally, the tribe has been extremely careful to ensure that its public affairs efforts complied with all the applicable rules. That remains the case.The behavior of both Mr. Abramoff and Mr. Scanlon, which is the subject of this hearing, is not associated with the nature of the work they were doing for the tribe, but misconduct in the way the tribe was charged for that work and in the diversion to themselves of those payments from lawful authorized activities.And in this regard, Senator McCain, the tribe appreciates your acknowledging that the tribe hasn't been accused of wrongdoing at any point in these proceedings and we appreciate that.Now, if you're agreeable, I'll ask Mr. Kilgore if he can complete the tribe's opening statement.MCCAIN: Mr. Kilgore?KILGORE: Mr. Chairman, many members of the committee, we, again, thank you for this opportunity to present the tribe's view with regard to this investigation into the misconduct of Jack Abramoff and Michael Scanlon.As previously referenced, I was only appointed to serve as Choctaw attorney general recently. But since then, I have worked closely with the tribe's outside legal counsel, Mr. Rogers, to full acquaint myself with this investigation and review his analysis and conclusions of the evidence.Clearly, after my consultation with outside firms and with your staff, Senator, it has become apparent that Jack Abramoff and Mike Scanlon engaged in a consistent pattern of kickbacks, misappropriated funds, payments induced under false pretenses and padded billing.First of all, the kickback scheme: Under the kickback scheme, we learned that Mr. Abramoff calls Mr. Scanlon, who was represented to us an independent contractor, to quote prices which included undisclosed and exorbitant add-ons in the fee. They were then split, half going to Mr. Abramoff as a kickback, half being retained my Mr. Scanlon as monies obtained under false pretense.KILGORE: All of this was in furtherance of their "give me five" scheme.It should be noted that while the prices were high, they were not out of line with other billings from other contractors for similar work that we had experienced.However, we now know, after reviewing thousands of e-mail exchanges, but before these quotes were given Mr. Abramoff and Mr. Scanlon had already agreed upon the amount of extra money that they were going to solicit from us under false pretenses and then split between themselves.I refer to, as an example, of that kickback scheme, an e-mail, Senator McCain, dated September 2nd, 2001, which your staff has."Mr. Abramoff: So let me see. That's $700,000 each for us and $100,000 for the effort. Seriously, what do you think we can score?""Response: If you think they're good for it, then I can slide you $350,000 with no sweat. Plus, you have $313,000 sitting here. So if you want, $663,000 is yours on Tuesday. When the clip comes in, another $350,000, which will put you over $1 million. But that's not all. There will be more when the dust settles. And if we get to 4, 4.6, much, much more. I think the $350,000 strategy is the best way to go. It's good on the 'give me five' front."Response: Thanks. I'm having a great time running the 'give me fives.'"MCCAIN: And who was that?KILGORE: That was an exchanges between Mike Scanlon and Jack Abramoff.MCCAIN: Without objection, be made part of the record.KILGORE: Thank you.The pass-through scam, the second phase of the fraud that was perpetrated on the tribe. Regarding grassroots advocacy projects, some of the actual work was always going to be performed by various third parties after passing through the Scanlon companies. For example, American International Center, Capitol Campaign Strategies, Scanlon Gould Public Affairs, or other entities, such as the National Center for Public Policy Research or the Capital Athletic Foundation.The tribe never agreed that any of these monies were to be retained by Mr. Scanlon or Mr. Abramoff. When the tribe was quoted a price for a given project, the tribe expected that its payment to fund that work would be expended for that purpose; and where there was pass-throughs involved, that the money would be passed through to the appropriate lawful entity for that purpose.In this regard, the tribe was also induced in 2002 to send large sums to NCPPR and CAF. Mr. Abramoff did not, as the chairman has observed, disclose to us that CAF was Mr. Abramoff's private charity, nor that he sat on the board of directors of NCPPR.These payments were made on Mr. Abramoff's representation that the funds would be used to carry out previously approved grassroots projects.Instead, these additional funds were solicited and used to generate money to complete the financing of unauthorized kickbacks and fee-sharing arrangements per Mr. Abramoff's and Mr. Scanlon's "give me five" scheme.Another e-mail that is an example of this pass-through scheme, was an e-mail between Mike Scanlon and Jack Abramoff dated Friday, May 31st, 2001; an extraordinarily candid exchange. Mr. Scanlon says, "Here is the overall plan. We need about $200,000 to run the operation, leaving $1.3 million to split, or $650,000 a piece. So to make you whole, the idea was to get the $500,000 to CAF directly, then have AIC cut Kay Gold a check for the remaining $150,000" -- clearly perpetrating a fraud on his client.The last area that we have investigated and looked at thousands of documents, along with your staff, we've learned that a number of the bills received by the tribe from Greenberg Traurig contained fabricated time entries and unauthorized expense charges. Unlike many or all of the other tribal clients who retained Greenberg and Jack Abramoff, Choctaw's retainer agreement with the firm was on a regular hourly billing basis.The tribe never agreed to pay a flat fee per month. However, it is now clear that Mr. Abramoff consistently manipulated the bills at Greenberg in order to have them approach a minimal billing target of fees and expenses of between $135,000 and $150,000 a month.When the actual hours of work completed were insufficient to approach that target, Mr. Abramoff routinely directed that the bills be padded and pumped up.The e-mail that I wanted to refer to, Mr. Chairman, is the one that you have already referred to about he only had two hours and therefore he directed that that be pumped up. So I'm not going to repeat that e-mail.But we also note there's a significant amount of unauthorized expenses charged in those billings, and it was structured in such a way that, looking at the bill, the tribe couldn't detect those unauthorized expenses and billings.After we'd learned what had happened, we were surprised that a senior director at a major law firm could and would engage in misconduct of this part, whether it's the billing fabrication or the more egregious "give me five" scheme, and he was able to get away with it for so long.What we have learned regarding Mr. Abramoff's misconducted at Greenberg has caused us to take a closer look at his work at Preston Gates. Those inquiries have just begun. It presently appears that some similar financial misconduct also occurred while Mr. Abramoff was at Preston Gates, though on a vastly smaller scale, both as to billing improprieties and as to Mr. Abramoff's unlawful diversion of money.We have initiated discussion with Preston Gates on these matters. However those discussions are in a very preliminary stage.In regard to Greenberg Traurig, we wish to acknowledge that positive settlement negotiations with that firm are now under way and that we have been assured that they will take appropriate action to address and remedy any concerns and issues which we may identify as to any respect of our relationship with that firm.They have responded to this situation in a professional and honorable way, which we very much appreciate.KILGORE: Thus we are confident a mutually agreeable settlement of our claims respecting these issues will be reached with Greenberg.In closing, I want to thank the committee for its efforts in the investigation. We are moving forward with our efforts to build our reservation economy, which also benefits our non-Indian neighbors as well, and to strengthen our government-to-government relationship with the United States to enhance our capacity to improve health care, education and employment opportunities for our members.Mr. Chairman, we consider this a lesson, and we will endeavor to ensure that we will not experience anything like this in the future.Thank you.MCCAIN: Thank you very much.Senator Inouye, did you want to say anything?INOUYE: Mr. Chairman, I have an opening statement. May I make one?MCCAIN: Without objection, Senator Inouye's opening statement will be made part of the record.Ms. Rogers, you said that these funds that were expended didn't come from gaming revenues. Where did they come from?ROGERS: From revenues from the tribe's other businesses, manufacturing businesses, a printing plant.MCCAIN: I see.Ms. Rogers, Jack Abramoff recommended the tribe hire Michael Scanlon at the end of year 2001, as you have testified. Did Mr. Abramoff tell you that Mr. Scanlon was an independent contractor?ROGERS: He did.MCCAIN: Did Jack Abramoff or Michael Scanlon ever disclose to you that Mr. Scanlon would pay Mr. Abramoff any of the money paid to Mr. Scanlon by the tribe?ROGERS: Oh, no, sir.MCCAIN: The tribe never intended the money it paid to Michael Scanlon and his company be kicked back to Jack Abramoff.ROGERS: No.MCCAIN: Ms. Rogers, in 2002, the Capital Athletic Foundation, Mr. Abramoff's private charitable foundation, reported on its tax forms that the Mississippi band of Choctaw Indians was far and away the single biggest contributor. According to publicly available tax forms, of the $2.6 million that the Capital Athletic Foundation raised that year, almost $1.9 million -- 70 percent of it -- went to the Maryland Jewish boys school started by Mr. Abramoff.Michael Scanlon and Jack Abramoff directed the tribe to make these contributions.ROGERS: These weren't intended as contributions, Senator. They were intended to be passed through to other groups doing grassroots public advocacy work for the tribe.MCCAIN: In other words, the tribe did not know that 70 percent of these monies were going to...ROGERS: Not at all. They were never intended to be contributions.MCCAIN: Jack Abramoff and Michael Scanlon never told you that the Capital Athletic Foundation was Mr. Abramoff's private charity.ROGERS: No.MCCAIN: Ms. Rogers, another major beneficiary of the Capital Athletic Foundation in 2002 was an entity called the Kollel Ohel Tiferet; received almost $100,000 from the Capital Athletic Foundation that year. Based on this committee's investigation, it appears this organization was a sham entity designed to funnel payments from Mr. Abramoff to an Israeli settler who ran a sniper workshop.Is it fair to say that neither Mr. Abramoff nor Mr. Scanlon never told anyone at the tribe that the tribe's money would be used to finance paramilitary activities in Israel?ROGERS: Oh, no. We only learned that from your staff.MCCAIN: Mr. Kilgore, Exhibit 95 is an e-mail exchange between Jack Abramoff and Michael Scanlon on March 3rd and 4th of 2002. Basically it says, "By any chance you send us a balance. Can you get me a check to Presidential Kosher Holidays from my Choctaw share? Do you think we could figure a way to expense this? Any idea? Thanks." That's from Mr. Abramoff to Mr. Scanlon.Mr. Scanlon says, "I'll think of something on this. I'll get back to you."And then Mr. Abramoff says, "You is that man."Did you intend any of the money you paid to Mr. Scanlon's companies to be used to cover Jack Abramoff's Passover vacation?KILGORE: Absolutely not, Mr. Chairman.MCCAIN: We could go on and on.Mr. Kilgore, in October, 2002, as you mentioned, the tribe paid $1 million to the National Center for Public Policy Research at the direction of Jack Abramoff. Is that correct?KILGORE: That's correct.MCCAIN: Jack Abramoff told the tribe that the entire $1 million would be passed through to the grassroots organizations working on issues important to the Mississippi Choctaw tribe. Is that true?KILGORE: That was our understanding.MCCAIN: There's other questions, but the pattern is clear here.I, first of all, want to thank the tribe. I know that this has been a very difficult time for them, and there was concern that somehow the tribe would be blamed for this exploitation and ripoff that is taking place.I view you as people who are trying to act in the best interests of your tribe and recognize that a lot of those interests are affected here in our nation's capital. There's no one I have greater respect for than Chief Martin, who I've had the privilege of knowing for more than 24 years.I only have one additional question, Senator Dorgan, that I guess I would ask.Ms. Rogers had the most interface with Mr. Abramoff and Mr. Scanlon. If they were here right now, Ms. Rogers, what would you say to them?ROGERS: Chief Martin asked me that same question. And I told him that I'm past anger and bitterness. But it is the act of betrayal -- betrayal of the tribe's trust, betrayal of those of us who worked with him. It's an extraordinary story of betrayal, of deliberately building trust and then betraying it.MCCAIN: Would you like to make any additional comments, Mr. Benn?BENN: No, sir. We certainly appreciate the time you have provided for us, sir.MCCAIN: Mr. Kilgore?KILGORE: No, Mr. Chairman, I have no...MCCAIN: And how long have you been in office?KILGORE: March 1st of 2005. That's after 32 years of private practice.MCCAIN: And you have a very large task ahead of you. And we thank you for all of your cooperation.KILGORE: Thank you, Mr. Chairman.MCCAIN: We have a vote beginning shortly. I'm going to run over to vote while Senator Dorgan asks his questions. And then I'm going to try and get right back.DORGAN: Mr. Chairman, thank you very much. We were told the vote would begin about 10:45. So if it works the right way, we'll be able to proceed with the hearing without a brief recess. And if that is delayed just a bit, we'll have a very brief recess.First of all, Ms. Rogers and Mr. Kilgore and Mr. Benn, thank you for your cooperation. The staff has indicated to us that you've been extraordinarily helpful to them.And I know, based on your statement, Ms. Rogers, that you use the word "betrayal," which I think is an awfully good description of what has happened here.There are two tracks here that I want to talk about. One, I think Senator McCain has covered pretty well, and that's the track of just what appears to be outright fraud, extracting money for one purpose and then using it for something else and not disclosing to the tribe, who was spending this money as a part of a business relationship, that this money was misused -- used for some other purpose.And it's pretty clear, with the research that our investigators have done, that the trail on that is evident. It's in writing. We have many, many, many memoranda that go back and forth that describe in great detail exactly what has happened.The other area that I described briefly in my opening statement, it is not the kind of fraud that is just upfront fraud. It's the obscuring of the source of money in order to deceive where money came from or where it was spent.And that, also, is of interest. I don't think that -- it's a kind of a different set of circumstances because it appears to me the money was run through (c)3s or (c)4s, I guess, in this case, in order deliberately to obscure the source of the funds. And that was at the request of Mr. Abramoff, as I understand it, and others.So I want to ask you just a bit about that, if I might, whether everybody knew that. There's an exhibit number 33, I believe -- as I ask about that, Ms. Rogers, you indicated that the money on that side of the issue, that is for activities that were perfectly legal -- grassroots activities -- the money on that side came from nongaming sources. Is that correct?ROGERS: Right. That's correct.DORGAN: What would be the purpose, then, of the recipients of that money demanding that it be washed through organizations in order to obscure and deceive the identity of the money? If it is, in fact, nongaming, what was the purpose of the deception on behalf of the recipients and those who decided to run it through (c)4 organizations?ROGERS: I may have to consult with the tribe's attorneys, because I'm obliged by the tribe to be concerned about First Amendment issues. But I'd like to try to answer your question.We didn't have a sense of an effort to obscure the money. There was simply the use of intermediaries -- which is a common practice in this country, by businesses and political and professional groups, to use intermediaries to get their message out.And Jack Abramoff had structured that.I am sure there probably were concerns -- or public perception concerns -- about some of the recipients, about not being associated with a tribe or with a gaming tribe.And I hope I've answered your question. I'm not trying to be evasive. I'm trying to...DORGAN: I understand...ROGERS: ... deal with my obligation to the tribe as well.DORGAN: Memorandum number 33 is a memorandum, I believe, from Mr. Abramoff to Mr. Reed. It says, "Thanks, Ralph. The firm has held back all payments pending receipt of a check from Choctaw, which was held up because of a paperwork glitch."And in that case, my expectation would be the recipient -- or the expected recipient of the money -- because of that memo, knew exactly where the money was coming from. And, for that reason, I don't understand the reason to try to move that money through a (c)4 organization to obscure the identity of the money.Do you have any notion of why that was the case?ROGERS: If I can consult the attorney...DORGAN: Yes, of course.ROGERS: Yes, the recipient did know where the money was coming from.DORGAN: And, presumably, then wanted it obscured so that it wasn't evident to others.ROGERS: Presumably. We never had any direct conversation.DORGAN: Do you know that some money to that type of recipient -- Mr. Reed and some others, I believe -- was passed through Preston Gates at one point. Did Preston Gates charge for any of the money for being a conduit for some of that money?ROGERS: I don't know the answer to that question. I would have to ask the attorney who are looking at all the billing. That was so long ago.DORGAN: But for the purpose of obscuring the identity of the source of the money, there was a charge made by the Americans for Tax Reform, is that correct?ROGERS: No, sir. I don't believe that there was a charge made for obscuring the money.DORGAN: Let me rephrase it then. The money that was run through the (c)4, Americans for Tax Reform, a fee was charged by the Americans for Tax Reform for the purpose of moving the money through that (c)4, isn't that correct?ROGERS: There was a small management fee. But I had a long-term relationship with Americans for Tax Reform and assumed that that payment would simply be used to support the overall activity of ATR.DORGAN: How large is that payment, do you remember?ROGERS: I believe it was $50,000 over a period of time. But we routinely made contributions to Americans for Tax Reform because they had allied themselves with the tribe early on in the tax fight to tax tribal revenue.DORGAN: Let me ask about, if I might, the issue you raised in your testimony, the issue of money for the purpose of a meeting with the president or a White House meeting. And you indicated that no Choctaws had...ROGERS: No donation was made for that purpose nor did anyone attend that meeting.DORGAN: Are you aware at this point, based on the evidence, that some of the money went for that purpose?ROGERS: The attorneys are saying we don't know that.DORGAN: I believe there are a series of memoranda. I don't think Ihave the number for those at the moment. But in an e-mail dated April 5th,2001, Abramoff dictated a note to...ROGERS: Do we have that exhibit?DORGAN: I believe you do. It's exhibit number 38.Mr. Abramoff appears to dictate a note to Grover saying, "Here is the first of the checks for the tax event at the White House. I'll have another $25,000 shortly."Are you familiar with that?On the top of that memo, I believe it says, "Nell approved that."ROGERS: What we funded, Senator Dorgan, if you look at the first memo at the bottom e-mail, Jack Abramoff sent an e-mail to me asking us to make a contribution to the new anti-tax campaign. That's what we approved was a contribution for that.DORGAN: So you were making a contribution, you thought, for that purpose...ROGERS: Right.DORGAN: ... and Mr. Abramoff was...ROGERS: And then he represented to ATR that we had made the contribution apparently from this e-mail trail. His representation to ATR was that it was for the White House dinner.DORGAN: And then there was another follow-up memo from ATR about a White House meeting the second year, I believe 2002, and that's where I think the confusion was, because in that memorandum it was represented by ATR that the Choctaws were involved in the White House meeting previously and had made a contribution for that event.And so you're saying that that representation is inaccurate, right?ROGERS: That's inaccurate.DORGAN: These pieces of information are part of the record, and I think hopefully we'll clarify exactly what was happening.It appears to me that Mr. Abramoff and others, ATR, Mr. Norquist and others were putting together events, trying to put together events at the White House -- one apparently must have happened in 2001 -- and seeking $25,000 contributions for the cost of those events and promising meetings with the president and so on.It's helpful for us to know because the written information from Mr. Abramoff and ATR also would suggest that the Choctaws...ROGERS: The Choctaws didn't -- I remember those invitations; that normally they were primarily for state legislators to come in and meet with the president, and then tribes were extended invitations. But the Choctaws did not participate, didn't respond to any of those invitations.DORGAN: The money that the tribe paid to the National Center for Public Policy Research, that money was expected to go where, in your judgment?ROGERS: It would have gone to support some of the grassroots activities, the smaller groups, polling, research, opinion pieces, education pieces.NCPPR had done some of those for us earlier when Ms. Ridenour visited the reservation and had expressed a real interest in how the tribe was using gaming revenue to support tribal culture, language and that sort of thing.DORGAN: So sending that money to the National Center for Public Policy Research and discovering that a portion of that paid for a previous bill that was owed -- I believe $75,000 that was owed by Mr. Abramoff to someone going back to his days as a filmmaker, that was something that you would not have been aware of and would have been an unauthorized use of the funds?ROGERS: Absolutely.DORGAN: How about $10,000 of your money being sent to Reed for Chairman -- Ralph Reed, seeking the chairmanship of...ROGERS: We didn't know that or certainly didn't authorize it.DORGAN: So what you have, it seems to me, is a substantial amount of money going from the tribe with the expectation it's going for a normal business purpose, a business relationship with Mr. Abramoff; a substantial portion of that being skimmed off to a secret partnership established by Mr. Abramoff and Mr. Scanlon. And that represents what appears to us to be the fraud side.And, of course, that's a judgment that I'm sure that Justice and others will make in the criminal arena.And then on the other side, money that is moved through (c)4 and perhaps a (c)3 organization, part of which appears to have been -- I was going to say misdirected, but that's too soft a word -- part of which appears to have also been fraudulent, particularly the expenditure of the money through the National Center for Public Policy Research.I'm not suggesting that they're the ones that spent that money -- and, in fact, they're going to testify today, and we appreciate their cooperation -- but I'm suggesting the money was diverted by Mr. Abramoff and Mr. Scanlon.And then the other question that I mentioned is whether there was misuse of (c)3 and/or especially (c)4 organizations to be a conduit to receive funds in order to obscure its identity for the purposes of others.And I don't know the answer to that. I suggested to the chairman that we hold open that question and perhaps meet with Senate Finance Committee.I think it does warrant additional inspection because, in addition to the information we have, we have references in e-mails to other (c)4 organizations that have been used.So I don't know what the entire inventory of (c)4 organizations would be here, but it appear to me that the (c)4 organizations were used as a convenient buddy system to move money around in order to obscure its identity.Sometimes that's called laundering, but that has a criminal connotation. I don't know that this is criminal, though, but I know that it is laundered from the standpoint of the recipient so that it comes out clean for the recipient. That appears to be what the e-mail trail suggests, and not from the standpoint of the tribe but from the standpoint of the recipient.So I think all of these raise an enormous number of questions. We have, as I said, e-mail trails and e-mail tracks on it, which I think will be helpful.DORGAN: Let me ask Senator Inouye if you have some questions at this point, Senator?INOUYE: Thank you.During this period of relationship with Mr. Scanlon and Mr. Abramoff, how much did the tribe provide these two men and their organizations?KILGORE: Senator Inouye, in both Senator Dorgan's opening comments and Senator McCain's opening comments, they referred to those amounts. They got those from the staff. We had provided detailed financial information to the staff. They've accumulated those figures. Yesterday, we met with the staff. And in anticipation of that question those figures is what our records show.INOUYE: I'm sorry. I wasn't here, but what is the number?KILGORE: I believe that payments to Capital Campaign Strategy, dba Scanlon Gould, and his groups was approximately $15,855,000. And then in Mr. Abramoff's receipt out of those funds was in the range of $5 million to $7 million.We have not been able to pin those down exactly, but we are working on that. And we'll be glad to supplement the record at a later date, once we get an agreement with the staff as to exactly what that figure is going to be.INOUYE: As a general rule, organizations and law firms who are doing business would provide periodic reports in writing to their clients, giving them a progress report on projects and such. Did you ever receive any report from Mr. Abramoff or Mr. Scanlon?ROGERS: Yes, sir. We know that the work was done. We received detailed reports. We met once a year or twice a year. And we also had independent means of determining that work was done.INOUYE: And this was not fraudulent work.ROGERS: No, sir.INOUYE: Did you also receive receipts from these organizations?ROGERS: We received bills from the law firm. Yes, sir, we received receipts.INOUYE: From the law firm.ROGERS: We always had a budget and cost from Mr. Scanlon's companies as well and from the grassroots companies.INOUYE: Now, these reports would advise you that certain things have occurred?ROGERS: Yes, sir.INOUYE: Did you take the time to check to see if they did actually occur?ROGERS: We know that the work was done.INOUYE: So you're saying that a certain portion was not fraudulent?ROGERS: The work was done. What appears to be fraudulent were the overcharges and the conspiracy -- I probably shouldn't use that word because I'm not lawyer -- between the two to plan to overcharge.INOUYE: Setting aside the work that was done, the legitimate work, how much of the amount that you mentioned would you attribute to fraud or overpayment or padding of books, et cetera?KILGORE: Senator Inouye, may I inject here? The circumstances that we're faced with here, we prefer not to give you -- are not able to give you the amount of harm in money terms. And the reason is this: We have very sensitive settlement negotiations with various parties. And if we go into much detail on that -- Senator Inouye, I think you can appreciate it -- would jeopardize our ability to settle that civil matter with those parties.We've already mentioned two of the firms that you've made an inquiry in are in serious negotiations. What we will do is once we conclude that, we'll be glad to get back to staff and supplement this record. We would even agree to an in-camera meeting with you and your staff to detail of those monies. It's just that this is a very sensitive time for us in those negotiations.INOUYE: When did the tribe realize that it was being defrauded or conned?ROGERS: I believe it was in June, 2004, when Chief Martin and Mr. Rogers met with the law firm that was conducting the internal investigation for Greenberg Traurig. They were shown evidence.INOUYE: And what steps did you take at that point?ROGERS: Well, the tribe immediately terminated its relationship with Mr. Abramoff. And the lawyers began -- you may want to speak to that -- working with that internal investigative group.We were contacted by the committee, and of course we've been cooperating with the committee. We have cooperated fully with the Justice Department and the FBI. We've provided them documents and details.INOUYE: When did the Justice Department and FBI participate in this investigation?ROGERS: They began last summer. We had our first contact with them last summer. They came to Mississippi for interviews and records review and we had subsequent meetings. We had a subsequent meeting with them also in Mississippi.INOUYE: Are you satisfied that the investigation is moving along properly?ROGERS: I haven't had any contact with them but the tribe's attorneys have had so they may be able to address that.KILGORE: Senator Inouye, we are aware that that investigation is moving forward.Frankly, I think that the department -- it is my personal opinion -- is they're inundated with records. I mean, we've looked at probably 60,000 e-mails and that's a lot of paperwork, a lot of paper trail.Your staff has done a terrific job in putting that in some semblance of order.My understanding is it just is -- I think Senator Dorgan mentioned that every time that you take another look at this, it takes a twist or turn that's unexpected.And I think that's true for the criminal side, too. I think that every time they look at something, another avenue opens up.So that's my take on where the Justice...INOUYE: My last question: Since you severed your relationship officially with the two men, did they ever contact you?ROGERS: They have not.INOUYE: Thank you very much.ROGERS: Thank you.DORGAN: Just one additional point. It is Exhibit 102 that I was looking for when we talked about the White House issue. And I think, just for the record, I wanted to -- you don't need to refer to it but for the record, I wanted to make clear what it was I was referring to. And I think it's important that it be cleared up because it is the one that indicates, as you say, inaccurately that the Choctaws were at the White House.The vote has just started. I'm sure Senator McCain will be back momentarily.Let me ask you, Ms. Rogers, obviously, this is -- I said in my opening statement, this is a very successful tribe with substantial business skills evidenced by the success that they have had with their business enterprises.DORGAN: They hire many people, and I think they're one of the largest employers in Mississippi, so very successful tribe.And we understand from the outset that you have legitimate business interests, that you would contract with people to engage in legitimate business activities. So we understand all that.And the assumption with all these questions is not that you, yourself -- although your name is on some of these memos -- but the implication isn't that you did something wrong. It is that the tribe was deceived. And it appears to me that the tribe was defrauded.Now, obviously that's a matter for perhaps the Justice Department or someone else.But I think what Senator McCain and I and others on the committee are trying to do is just understand the story, what has happened here and how can be prevent this from happening again.You were asked by my colleague, Senator McCain, how you would address Mr. Scanlon and Mr. Abramoff. And I understand the passion of the answer.When Mr. Abramoff began to hand off a business relationship to Mr. Scanlon, what kind of relationship did the tribal representatives have with Mr. Scanlon? Was there frequent contact?ROGERS: There would be frequent contact, frequent reports.DORGAN: And at that point, did you still continue to have a relationship with Mr. Abramoff as well?ROGERS: Not as much. There were times when we contacted Mr. Scanlon to do something independently.And the unanswered question is whether or not Mr. Abramoff got a portion of that. I don't know -- we don't know that, knowing what we know now.From looking at the e-mails, it appears that Mr. Abramoff was driving -- and you've probably seen the same e-mails -- was driving the -- call up, do this, do that.ROGERS: And in many of the e-mails where Mr. Abramoff is directing Mr. Scanlon to do that, I didn't get a call or I didn't get an e-mail.DORGAN: And Mr. Kilgore referred to this, but I know that you're aware of it, as well, we now know what "give me five" means. And you've had a chance to review the e-mails.Mr. Kilgore, you have as well -- your reaction to "give me five"?KILGORE: Senator, it is a blatant, calculate scheme to defraud a client. We have been surprised -- you understand, we've dealt with reputable law firms all these years and we relied on those law firms' internal ability to audit what goes on among its members and its shareholders. And we have been surprised at the lack of institutional oversight on Mr. Abramoff.It never occurred to us -- as a practitioner for 32 years, when I bill a client, that client can be assured that I'm billing actual time and my actual expenses. And if I were in a firm, there would be somebody that would have some oversight.And we assumed that that oversight was in place and apparently if it was in place, it was insufficient.Let me refer, finally -- and the chairman has just returned, and I will then run and vote -- let me refer to exhibit number 45, just for the purpose of saying, as it occurs in a number of memos, the last two words is "give me five." Obviously, we know what that means now. It means I'm taken a cut of this and we're going to slice away a part of this for my bank account.Mr. Chairman, I have finished with these witnesses.DORGAN: I do again want to say that we very much appreciate the cooperation.Ms. Rogers, you especially perhaps were uncomfortable coming to a committee, but your name is on some of these memorandums. But from all that we know, you're a victim, and the tribe was victimized by what appears to be grand theft and fraud.And your willingness to help us try to understand this, Mr. Kilgore and Mr. Benn and others, your willingness to help us is very much appreciated. We appreciate you being here today.MCCAIN: I thank the witnesses. Thank you for being here.(CROSSTALK)MCCAIN: Hopefully we'll never see anything like this again.Our next panel is Mr. Kevin Ring, who's a former member of Jack Abramoff's lobbying team, who has information about Mr. Abramoff's practice pertinent to the investigation; and Mr. Shawn Vasell, who is a former member of Jack Abramoff's lobbying team, who has information about Mr. Abramoff's practice pertinent to the investigation.Mr. Ring, we will begin with you.RING: Mr. Chairman, members of the committee, I'm sorry to be here today under these circumstances. As I informed the committee a few weeks ago on the advise of counsel, I regretfully must decline any questions concerning the subject matter of this hearing.I'm sorry the clients for whom I worked have had to endure the enormous emotional and financial burden associated with this matter as well as the multiple investigations it prompted.As the committee knows and as my counselors advised me, my constitutional right to remain silent at this time would be forfeited should I try to answer any questions.Therefore I must abide by that advice.RING: I'd like to truly apologize for not being able to answer the committee members' questions at this time.MCCAIN: Let me make it clear, Mr. Ring, you are asserting your rights under the Fifth Amendment of the Constitution. Is that correct?RING: That's correct, Senator.MCCAIN: Mr. Vasell?VASELL: Thank you, Mr. Chairman.Mr. Chairman, honorable members of the committee, I am here today at the committee's request, with the greatest respect for the important work of this committee and the Senate itself. I have been called to testify because of my past association with Mr. Jack Abramoff whose activities are the focus of this committee's current inquiry.The committee staff reached out to me earlier this year and assured me they sought my information solely as a witness to the conduct of others. Given the range of pending investigations and inquiries relating to the work of Mr. Abramoff's government affairs practice, I engaged outside counsel to guide me toward my goal of providing meaningful and complete cooperation to such efforts.I now feel constrained to follow that guidance. Accordingly, I assert my privilege under the Fifth Amendment to the U.S. Constitution and decline to respond to questions related to my employment in Mr. Abramoff's group. I reach that decision reluctantly and with no purpose of impeding the committee's inquiry.I am persuaded that this is the right decision, however, and I will maintain it in response to any and all questions from the committee today.In advance of this hearing, my counsel confirmed my position in writing to the committee, yet I was not excused from this appearance. Therefore, I yield to questions of the committee.Thank you, Mr. Chairman.MCCAIN: Both of you have the right, obviously, to assert your Fifth Amendment rights and the committee obviously will respect it.Mr. Ring, what is KAR Consulting? And you can respond if you wish to or assert your Fifth Amendment privileges under your previous statement, if you choose.RING: I respectfully invoke my constitutional right.MCCAIN: And according to the information we have, KAR Consulting is a Maryland limited liability company formed on April 25th, 2002, and registered to your home address.We have infra (ph) attached corporate registration from the Maryland Department of Assessments and Taxation.In February 2004, KAR Consulting, which is listed to your home address, Mr. Ring, received a $25,000 payment from a company called Grassroots Interactive.We have an exhibit, which I will enter into the record without objection -- exhibit 183 of December 15th, 2003, check for $25,000 from Grassroots Interactive, LLC to KAR Consulting.Do you know who KAR Consulting is, Mr. Ring?RING: I respectfully invoke my constitutional right under the Fifth Amendment.MCCAIN: At the time of the payment, did you know that Jack Abramoff controlled Grassroots Interactive?RING: Mr. Chairman, I respectfully invoke my constitutional right under the Fifth Amendment.MCCAIN: In March and April 2002, did you receive a total of $125,000 from Michael Scanlon's company, Capital Campaign Strategies?RING: Mr. Chairman, I respectfully invoke my constitutional right under the Fifth Amendment.MCCAIN: Did that money come from payments made by the Pueblo Sandia tribe of New Mexico to Capital Campaign StrategiesRING: Mr. Chairman, I respectfully invoke my constitutional right under the Fifth Amendment.MCCAIN: What services benefiting the Pueblo Sandia did you provide for that $125,000? In fact, you didn't provide any services, according to the information that we have.Let's take a look at exhibit 43. It's an e-mail exchange between you, Mr. Ring, and Jack Abramoff dated April 24th, 2001.MCCAIN In that e-mail you asked Mr. Abramoff whether there is any way to, quote, "bury", unquote, your university club dues in the Choctaw or SGMA bill. When did you mean when you asked Mr. Abramoff whether you could "bury" your university club dues in the Choctaw bill?RING: Regretfully, Mr. Chairman, I respectfully invoke my constitutional right under the Fifth Amendment.MCCAIN: Did you ever seek to expense your university club dues through the Mississippi Choctaw or to any other clients of Greenberg Traurig?RING: I respectfully invoke my constitutional right under the Fifth Amendment.MCCAIN: I'll now refer to exhibit 136 which is Mr. Ring's expense report for September 27, 2002, in which he apportions his club's dues to the Choctaw Indian Tribe.Mr. Vasell, please review exhibit 47, an e-mail exchange between you, Mr. Vasell and Mr. Abramoff dated June 19th, 2001. It begins with you asking Mr. Abramoff why Michael Scanlon was billing time to Greenberg Traurig clients. Did Mr. Scanlon bill time to Greenberg Traurig to the Choctaw in 2001?VASELL: Mr. Chairman, I respectfully decline to answer that question on the basis of my privilege under the Fifth Amendment to the U.S. Constitution not to be made a witness against myself. It is my intention to respond to all of the committee's questions in this same manner.MCCAIN: Were you concerned that Mr. Scanlon was billing Greenberg Traurig clients through the law firm?VASELL: Mr. Chairman, I respectfully decline to answer that question on the basis of my privilege under the Fifth Amendment to the Constitution.MCCAIN: You were the tribe's client manager. You were aware, weren't you, of Mr. Abramoff billing the tribe for fees and expenses unrelated to the services that Greenberg Traurig provided the tribes?VASELL: Mr. Chairman, I respectfully decline to answer the question on the basis of my constitutional right.MCCAIN: I refer both Mr. Ring and Mr. Vasell to exhibit 37 which is on the screen. I'll quote from it, which is a March 14, 2001 e- mail exchange between Jack Abramoff and his executive assistant.MCCAIN: In it, Mr. Abramoff indicates he will ask the client managers to tell him how many hours they want him to bill.Either one of you -- both of you, do you know -- did Mr. Abramoff ever fabricate time for himself or any associate to bill the Choctaw?You can just say, "I give you the same answer."(CROSSTALK)MCCAIN: Let's take a look at exhibit 53, an e-mail between Abramoff and his assistant, dated August 29th, 2001.In it, the assistant indicates that he is, quote, "creatively," unquote, entering Mr. Abramoff's July and August time for the Choctaw account, quote, "with the help of some great language Shawn and Kevin have provided" -- "Shawn and Kevin have provided."What kind of language did you provide, Mr. Abramoff for billing purposes?RING: Again, Mr. Chairman, the same answer.MCCAIN: Mr. Vasell, I'd like to take a look at exhibit 42, which is an April 18th, 2001 e-mail from Mr. Abramoff to you. In that e- mail, Mr. Abramoff instructs you to add 60 hours to the Choctaw bill to pump up "Scanlon, Todd and you." Was this done?VASELL: Again, Mr. Chairman, I have to invoke my constitutional rights.MCCAIN: March 2001, bill to the Choctaw, total $147,340.50 in fees, and the April 2001 bill totaled $146,963.97.Well, the list goes on. And I'm sorry that two young men like yourself have engaged in such activities that you come before this committee and invoke your constitutional rights under the Fifth Amendment.MCCAIN: We had hoped that you would cooperate with the committee. Obviously, you have chosen not to do so, which, again, is your right.Senator Dorgan, I don't think there's any additional questions for the witnesses. They've invoked their Fifth Amendment rights.DORGAN: Mr. Chairman, they certainly have a right to invoke that privilege, but I share your disappointment. I believe that justice will be better served by being forthcoming about what has happened here. But I think you have asked a series of questions that I would have asked as well and I have no further questions.MCCAIN: Witnesses are dismissed.The next panel is Ms. Amy Ridenour who is the president of the National Center for Public Policy Research, a nonprofit foundation on whose board Mr. Abramoff sat, who has information pertinent to the investigation; Ms. Gail Halpern, Jack Abramoff's tax adviser, who has information about Mr. Abramoff's businesses pertinent to the investigation; Mr. Brian Mann, a yoga instructor who served as a director for one of Michael Scanlon's companies, who has information about Mr. Scanlon's businesses pertinent to the investigation; Mr. David Grosh, a lifeguard who served as a director for one of Michael Scanlon's companies, who has information about Mr. Scanlon's businesses pertinent to the investigation; and Mr. Aaron Stetter, a former employee of Michael Scanlon, who has information about Mr. Scanlon's businesses prior to the investigation.Ms. Ridenour, we'll begin with you.RIDENOUR: Thank you, Mr. Chairman and committee, for inviting me to appear before the committee. In the interest of brevity, I am summarizing my remarks but I do refer the committee to my written testimony for additional details.MCCAIN: Without objection, your entire written statement will be made part of the record.RIDENOUR: Thank you.The National Center is a 23-year-old, conservative, free-market nonprofit institution.RIDENOUR: I am the chief executive officer.One of the national center's programs is Project 21, which highlights the views of conservative and moderate African-Americans. Another activity examines the extent to which low-income and minority populations disproportionately bear the costs of some government regulations.Jack Abramoff joined our board in 1997, when we increased the number of board members from three to seven for the purpose of improving oversight. At that time, I had known Jack for nearly 17 years. He was a dedicated conservative, a successful lobbyist and businessman, and his managerial skills, it seemed to me at the time, exceeded my own.In 2000, the national center adopted a conflict of interest policy requiring directors to reveal to the board all financial interests in any entity with which the national center is negotiating a transaction. We required every member of the board to sign the resolution so that no one could later claim they were unaware of the policy. Every director did so.It is through Jack Abramoff that I had the honor, in February of 1997, of meeting Chief Phillip Martin and learning the Choctaw success story. From 1997 through 1999, the national center received contributions of $7,500 in total from the Mississippi Choctaws. In 2000, we received $6,500. I understood all of these funds to be general support contributions.I am, of course, aware of news media coverage connecting part of these contributions to a trip we sponsored by a member of Congress. At the time I extended an invitation to this member of Congress through his chief of staff I did not know we would be receiving contributions from the Mississippi Choctaws that year. At no time did I convey to the congressman or to his staff that we had received these contributions. And I was never told nor was I under the impression that the Mississippi Choctaws even knew we had sponsored a congressional trip.In 2002, the Mississippi band of Choctaw Indians donated $1 million to the national center. Approximately four months before we received this contribution, my husband, who is vice president of the national center, and I had lunch with Jack. The lunch was social, but we briefed him on information pertinent to the board, including the fact that the negative financial impact of 9/11 had reduced our ability to expand program services as we previously had planned for 2002.I told him that new donors would be especially valued that year, as would the opportunity to sponsor projects consistent with our mission for which funding was available.RIDENOUR: Jack then shared with us details of his work doing what he called, quote, "a new kind of lobbying," unquote.He said he and his colleagues, working with the Mississippi Choctaws, had noted that for profit, non-Indian gaming establishments were pushing to establish themselves in areas of the countries not noted for their admiration of gaming.They believed that a public backlash against gaming was brewing and that before things came to a head, perhaps four to five years down the road, they would educate the public about the Choctaw success story.I was very interested in what I was hearing. I noted that this new kind of lobbying was not lobbying at all but educational work, and I expressed an interest in the National Center sponsoring it.Jack seemed mildly agreeable but non-committal. I did not press the matter, assuming the Choctaws were financing the project and would have to approve our involvement.Approximately four months later, Jack asked me if the National Center was still interested. For reasons I describe more fully in the written testimony, we were.Jack instructed me to send a $1 million invoice to the Mississippi Choctaws, which I did. When the funds arrived, he told me how they should be dispersed -- $450,000 to the Capital Athletic Foundation, as a grant; $500,000 to Capital Campaign Strategies; and $50,000 to a company called Nuremberger & Associates.I believe Capital Campaign Strategies was to be paid for educational program services while Mr. Ralph Nuremberger was going to help coordinate the project.Jack referred to his receiving, quote, "instructions," unquote for the disbursement, which I took to mean recommendations from the donor, which was consistent with my belief that the Mississippi Choctaws were actively involved.Believing I was joining a project in progress, knowing that Jack was the legal representative of the Mississippi Choctaws, was part of a major law firm, and as a member of the National Center's board of directors, had a fiduciary responsibility to the welfare of the National Center, I disbursed the funds in accordance with Jack's instructions.At the time, I also requested and received Jack's repeated assurances, both by e-mail and verbally, that he, in assuming managerial authority for the project on the National Center's behalf, would adhere to the laws governing public charities.I often requested from Jack that he provide documentation about the educational activities we were supporting. He always said it would be no problem, and I believed him, so much so that I agreed to continue the project in May and June of 2003 when Greenberg Traurig sent the National Center $1.5 million.RIDENOUR: Jack told me $250,000 had been designated to the Capital Athletic Foundation as a grant and $1.25 million was to be paid to Kay Gold, a company I believed was owned by Michael Scanlon.I had resolved by then that if I did not promptly receive sufficient proof of good solid work performance, I would withdraw the National Center from the project.I did not get this proof so I told Jack in July of 2003 that we would cease participation. He did not object. I continued asking him for documentation for work performed on the payments we already had made.I always trusted Jack and I believed we would ultimately receive this documentation. Of the various theories I had in my mind as to why we were not receiving the funds, none of them involved the suspicion of misuse of funds.I still trusted him, frankly, after the negative press stories began in 2004, when The Washington Post published, and that is in September of 2004, that Jack owned Kay Gold, I knew that something was very seriously wrong.At that point, I telephoned our board of directors and we agreed simply on the strength of the violation of our conflict of interest policy alone, that we had absolutely no choice but to accept Jack's offer to resign which he had made in March of 2004 and again made in October of 2004.Consequently, in October, 2004, I accepted Jack's resignation from the board and I have not spoken with him since.MCCAIN: Thank you very much.Ms. Halpern?HALPERN: Thank you, Mr. Chairman, Mr. Vice Chairman and members of the committee.My name is Gail Halpern. I am a part-time accountant. I am a certified public accountant and personal financial planner.Mr. and Mrs. Abramoff were my clients from early 1997 until September, 2004. I knew Mrs. Abramoff on a social basis, and she asked me sometime in early 1997 to be her and Mr. Abramoff's accountant and prepare their personal income tax returns.The following is a general description of the services I performed for the Abramoffs.HALPERN: I prepared Mr. and Mrs. Abramoff's personal income tax returns from the 1996 tax year until the 2002 tax year, inclusive.I prepared gift tax returns for Mr. and Mrs. Abramoff when required during this time as well. I prepared their children's income tax returns. And I prepared trust income tax returns for the Jack and Pamela Abramoff family up to and including the 2003 tax year, as required.I prepared personal and trust tax returns based on information provided by Mr. and Mrs. Abramoff or by those authorized to provide such information on their behalf, namely Mr. Abramoff's office at Preston Gates or later at Greenberg Traurig or Mr. Abramoff's business office.I did not prepare any corporate, partnership or tax exempt entity returns, as I am not an expert in those areas of the tax law. Those returns were prepared by other competent accountants.Upon their request, I provided some tax planning advice to Mr. and Mrs. Abramoff within my limited areas of expertise. I also provided some estate planning advice and some financial planning advice to Mr. and Mrs. Abramoff, as requested by them.I also answered general accounting and tax questions from the Abramoffs or from other authorized people in Mr. Abramoff's offices, as mentioned earlier.Any questions that I was not able to answer, such as questions that were specific to a certain area of accounting or law I referred to attorneys or accountants who practiced in that area of accounting or law.Mr. or Mrs. Abramoff made all of the decisions.For Mr. Abramoff's daily checking account and for some of his business entities, I worked with Mr. Abramoff's business office to help implement a bookkeeping software package that required them to input all the information required for me or for others to prepare tax returns. I did not keep the books or prepare the books for Mr. Abramoff's daily checking account, business entities or for any of the nonprofit entities that he started.Rather, my role was to answer questions or refer him to specialists who could answer questions when such questions were posed by Mr. Abramoff or by the bookkeeping personnel or staff.The day-to-day bookkeeping work was done by others. I was not an employee, officer, director or member of any of Mr. Abramoff's entities.HALPERN: Instead, I am an independent accountant and I service other clients besides the Abramoffs.The tax returns that I prepared and any tax, estate and financial planning services that I rendered were based on information provided to me by Mr. or Mrs. Abramoff, or by personnel in Mr. Abramoff's office mentioned earlier.To the best of my knowledge and based upon the information that they provided to be, all income received by the Abramoffs or their children or their family trust for which I prepared income tax returns was reported and included in the relevant tax returns.Thank you.MCCAIN: Thank you.Mr. Mann?MANN: Mr. Chairman, I have no opening statement.MCCAIN: Mr. Grosh?GROSH: I'm embarrassed and disgusted to be a part of this whole thing.The Lakota Indians have a word, "waqesu," (ph) which aptly describes all of us right now.MCCAIN: Thank you.Mr. Stetter?STETTER: Mr. Chairman, I have no opening statement.MCCAIN: Thank you.Mr. Grosh and Mr. Mann, I thank you for being here today. And I know of no problem that we have with you personally. It's a situation that we're trying to get to the bottom of. And we thank you for appearing here today.Mr. Grosh, you and Mr. Mann were designated as directors of the AIC, which was described in its own Web site as a, quote, "international think tank." It's a very interesting on its Web site. It's described as -- "The American International Center is a public policy research foundation founded in 2001 under the high-power directorship of David A. Grosh and Brian J. Mann."While only recently incorporated, the AIC has been striving to advance the cause of greater international empowerment for many years."Based in sunny Rehoboth Beach, Delaware, the AIC staff is using 21st-century technology and decades of experience to make the world a smaller place. In summary, the AIC is bringing great minds together from all over the globe."It goes on in that vein.MCCAIN: Mr. Grosh, I will begin with you. What did the AIC do?GROSH: I was only involved maybe five months -- four or five months. The whole time I was involved, we rented the first floor of a house and installed some computers.MCCAIN: Mr. Mann, do you know what AIC did?MANN: Mr. Chairman, upon the advice of counsel, I must respectfully decline to answer your questions, based on my rights under the Fifth Amendment to the United States Constitution.MCCAIN: Mr. Mann, did you know that you were designated a director until you recently interviewed with the Justice Department?MANN: Again, I must respectfully decline to answer your questions, based on my rights under the Fifth Amendment.MCCAIN: Mr. Grosh, did you give Mr. Scanlon permission to put your name up on the AIC Web site?GROSH: On the Web site, no.MCCAIN: Did you give Mr. Scanlon permission to hold you out as a director for the AIC?GROSH: Yes.MCCAIN: Have you ever received -- Mr. Grosh, I'd like to show you an exhibit, which is 195.Can you provide that to the witness?Looking at 195, it's a letter from the AIC that's under your signature. This letter, signed by David Grosh as president."Thank you very much for your recent contribution to the American International Center. Your donation of $200,000 will go a long way in assisting the AIC in its efforts to carry out its public policy agenda."As you know, the AIC is committed to influencing key policy- makers on issues important to you and your constituents..." on and on."The American International Center is a nonprofit corporation dedicated to educating the public on important issues, such as our national relationship with commonwealths, foreign governments and sovereign territories. As we discussed, we are not a tax-exempt organization as your contributions are subject to tax."MCCAIN: Again, we appreciate your generous support. Do you recall writing that letter, Mr. Grosh?GROSH: No, I don't.MCCAIN: Do you ever remember seeing it?GROSH: No, I don't.MCCAIN: Mr. Grosh, did the AIC conduct any board meetings?GROSH: I recall one.MCCAIN: And how long did that last?GROSH: Fifteen minutes.MCCAIN: Do you recall any business that was discussed at these board meetings?GROSH: Off the top of my head, no. I'm sure we discussed something -- not to be glib.MCCAIN: Mr. Mann, I think it says when these meetings took place, the extent of your role in the AIC at that time was cleaning the downstairs office space. Is that correct?Mr. Mann doesn't want to answer.As far as you are concerned, Mr. Grosh, was this basically another Scanlon entity?GROSH: Well, legally, no. It was Mr. Mann and -- he was calling the shots, sure.MCCAIN: So were you really surprised when all this information started coming out that you were a director of a internationally respected think tank?GROSH: Surprised, not really. The reason I got out of it when I found out it involved the federal government, Indian tribes and gambling, I knew that it was headed down the wrong way.MCCAIN: I want to point out, again, Mr. Grosh, I appreciate your cooperation.I'm disappointed in your lack of, Mr. Mann. This committee holds no brief against you on this issue. We're trying to get to the bottom of things. We know of no allegation of wrongdoing on your part, at least, that I know of.MCCAIN: Tell me how this all began, Mr. Grosh. Were you friends with Mr. Scanlon or...GROSH: Yes, I've known Mr. Scanlon since I was about 14.MCCAIN: And what happened? He approached you in some way.GROSH: Phone call.MCCAIN: And said?GROSH: Do you want to be head of an international corporation?(LAUGHTER)A hard one to turn down.(LAUGHTER)MCCAIN: And at the time, were you living in Rehoboth Beach?GROSH: Yes, sir.MCCAIN: And Mr. Scanlon then informed you that your home would be the headquarters or did you...GROSH: Actually, at that point, no, there was no headquarters.MCCAIN: Well, tell me -- could you tell me just the sequence of events that took place after that?GROSH: I asked him what I had to do, and he said, "Nothing." So that sounded pretty good to me.(LAUGHTER)And then he -- I'm trying to think how it all happened. He came by. We spoke about it. And at the time, I was like, "Yes, sure," but not really taking it seriously.And then he had me sign some papers and then we went to a -- I met him here in D.C. and we took over the bottom of the house I was living in.MCCAIN: Did you receive compensation for this role?GROSH: Yes.MCCAIN: And your background -- is a very honorable one -- I understand as a lifeguard, is that correct?GROSH: Among other things. I'm not a lifeguard anymore. No.MCCAIN: And could you give us a little resume as some of your background.GROSH: Right now, I'm a excavator -- machine operator, construction worker, mentor in pre-schools, bartender and typical beach employment.MCCAIN: Thank you.And do you remember the extent of the compensation that you received from Mr. Scanlon, roughly?GROSH: No more than $2,000, $2,500.MCCAIN: A month?GROSH: No, total.MCCAIN: Total.Did Mr. Scanlon promise you any fringe benefits?GROSH: Well, I don't know if this is related to the AIC. We went to a Washington Capitals-Pittsburgh Penguins hockey game.MCCAIN: Did you go to St. Barts with him?GROSH: No. By that time I was no longer...MCCAIN: I want to be very clear, Mr. Mann, and I'm not asking you to change your position, but we view this as just a gigantic scam, and you two individuals were used, clearly, by Mr. Scanlon. And we feel very strongly that your testimony could help us. And I hope you'll maybe reconsider that or get a new lawyer, Mr. Mann.But I hope you'll reconsider it, because this is really not -- you obviously had nothing to do with posting this description of AIC on the Web site, did you, Mr. Grosh?GROSH: No, sir.MANN: If I may...MCCAIN: Please.MANN: ... I'm an adult. He didn't use me, you know. (inaudible)MCCAIN: It was a pretty good deal, huh?MANN: Well, obviously not.MCCAIN: At the time it seemed like a good deal.MANN: Well, you know, I didn't just crawl out of the cotton patch. Anything that sounds too good to be true usually is.MCCAIN: And they used the bottom floor of your house to...MANN: Yes. We did.MCCAIN: Thank you very much.Ms. Ridenour, since 1982 you've served as president of the National Center for Public Policy Research. Is that true?RIDENOUR: Yes.MCCAIN: In October 2002, in your capacity as president of NCPR, as you testified, you received $1 million from the Mississippi band of Choctaw Indians, correct?RIDENOUR: Yes.MCCAIN: Let's talk about how you came to receive the $1 million from the Choctaw tribe.In June, July of 2002, you told Mr. Abramoff that the NCPPR wanted to keep its, quote, "program numbers," unquote, up for marketing purposes. That's according to e-mails that we have.RIDENOUR: In general, yes, sir.MCCAIN: So you told Mr. Abramoff the NCPPR would be willing to participate in any program consistent with the NCPPR's tax exempt purpose that Mr. Abramoff was working on.RIDENOUR: In general, yes, sir.MCCAIN: Mr. Abramoff told you he and his firm invented, for the Choctaw tribe, a, quote, "new kind of lobbying," as you've testified. And you concluded that such an educational purpose was consistent with NCPPR's charitable mission.RIDENOUR: Yes, sir.MCCAIN: In October, 2002, Mr. Abramoff told you the Choctaw tribe had $1 million to do this educational project as you have testified.But, Ms. Ridenour, before you allowed Mr. Abramoff to use the NCPPR as a pass through, you repeatedly warned him that whatever the $1 million was used for needed to be appropriate for nonprofit charitable foundations?RIDENOUR: I certainly did.MCCAIN: After you received the $1 million, Mr. Abramoff instructed you to cut three checks: one, $450,000 to Mr. Abramoff's private charity, the Capital Athletic Foundation; $500,000 to Mr. Scanlon's outfit, Capital Campaign Strategies; and $50,000 to a small lobbying firm called Nurenberger (ph) and Associates, correct?RIDENOUR: Yes, except that in some cases they were wire transfers.MCCAIN: Thank you.What, if anything, did Mr. Abramoff tell you about the $450,000 payment to Capital Athletic Foundation?RIDENOUR: It was to be a grant to the Capital Athletic Foundation for its purposes consistent with the wishes of the ultimate donor, the Mississippi Choctaw.MCCAIN: As you testified, you didn't know that the Capital Athletic Foundation was Mr. Abramoff's private charity.RIDENOUR: Actually, I did not know Kay Gold was owned by Mr. Abramoff. I did know that he had an association with the Capital Athletic Foundation. I simply found it consistent with what I knew to be a warm relationship between him and the Choctaws.MCCAIN: Did you know the primary beneficiary of the Capital Athletic Foundation was, first and foremost, the Jewish boys school in Maryland founded by Mr. Abramoff?RIDENOUR: No, I was aware of the school but I believed, based on private conversations I had with Jack, that it was financed through tuition from the parents.MCCAIN: We heard testimony that Mr. Abramoff told the Choctaw tribe that this $1 million would be used for, quote, "grassroots activities to influence legislation," unquote. Did he tell you this?RIDENOUR: Not only did he not tell me that, he repeatedly told me that legislation would not be involved.I would not have approved our participation at all had I even known there was legislation. I had several things that needed to be specified before I went OK with it and the absence of legislation was something he had to assure me about.MCCAIN: What, if anything, did Mr. Abramoff tell you about the $500,000 payment to Mr. Scanlon's business, CCS?RIDENOUR: That was to be used for educational program services, particularly polling and telephone banks, but not necessarily exclusively. Research, potentially paid advertising -- I was told later, petition drives; that sort of thing. But 100 percent educational program services.MCCAIN: What, if anything, did Mr. Abramoff tell you about the $50,000 payment to Nurenberger and Associates (ph)?RIDENOUR: At first, he told me nothing, meaning in the conversation, so I immediately inquired. He told me then that Mr. Nurenberger (ph) was going to coordinate the project.MCCAIN: In your invoices that you received from CCS, CAF and Nurenberger and Associates (ph), the Capital Athletic Foundation was seeking payment for, quote, "sports and politics project."RIDENOUR: That's what they wrote, yes.MCCAIN: Do you believe that happened?RIDENOUR: Looking at the tax returns, it apparently did not.MCCAIN: The invoice reportedly issued by Nurenberger and Associates (ph) for $45,000 for a supposed research grant, in an interview with the committee staff, Mr. Nurenberger, senior partner of the lobbying firm Nurenberger and Associates (ph), stated that neither he nor his firm issued this invoice to the NCPPR. In fact, the firm never issued an invoice regarding the $50,000 it received from the NCPPR.In addition, Mr. Nurenberger (ph) attested that Mr. Abramoff told him that the $50,000 he was having the NCPPR pay him was repayment on a personal loan that Mr. Nurenberger (ph) had made to Mr. Abramoff some years ago.MCCAIN: Did Mr. Abramoff ever tell you that the $50,000 you were sending to Nurenberger (ph) and Associates was, in fact, repayment to Mr. Nurenberger (ph) on a personal loan?RIDENOUR: Absolutely not.MCCAIN: And I think I know your response if he had told you that.RIDENOUR: Yes, Senator.MCCAIN: What, if anything, did you try to do to verify that the million dollars was being put to use in the manner Mr. Abramoff stated?RIDENOUR: Unfortunately, I mostly asked Jack Abramoff for documentation. One of the things that we are now doing at the national center is putting into place a series of checks and balances so that in the future this sort of thing will not happen to us again.But I trusted Jack. I believed not only that he had the fiduciary responsibility to us, but, in fact, was attempting to serve his clients, the Choctaws, as a nonprofit entity, to the best of his ability as well.So what I did do was talk to him. Not enough.MCCAIN: Thank you, Ms. Ridenour. And I want to thank you for your candor and your willingness to appear here. And I do believe that your organization has done excellent work over the years. And I've been familiar with much of it. And I thank you for your testimony today.Ms. Ridenour, with respect to the million dollar transaction, do you believe Mr. Abramoff lied to you?RIDENOUR: Certainly. I don't know how I could reach any other conclusion at this point in time.MCCAIN: Do you believe that he may have defrauded the tribe?RIDENOUR: Certainly I do.MCCAIN: Do you think he may have defrauded the NCPPR?RIDENOUR: Certainly I do.MCCAIN: Thank you, Ms. Ridenour. I thank you for being here today. And your involvement has been sad but helpful to us, and I thank you.Mr. Stetter, you are a former employee of CCS, right?STETTER: Yes.MCCAIN: And one of the things that you do is set up groups that Mr. Scanlon or Mr. Cathcart (ph) used to have you conduct grassroots activities. Is that correct?STETTER: I wouldn't say I set up groups, no. I wouldn't say I set up -- that's actually.MCCAIN: Well, what would you say?STETTER: I wrote phone scripts with groups that were already provided to me, but I've never set up a group. Never.MCCAIN: I see.Is the Christian Research Network a real organization to your knowledge?STETTER: To my knowledge, no.MCCAIN: How about the Global Christian Outreach Network?STETTER: To my knowledge, no.MCCAIN: And the Concerned Citizens Against Gaming Expansion?STETTER: To my knowledge, no.MCCAIN: And the Citizens Against Gaming? Michigan Against Gaming?In other words, these organizations were used when your organization made phone calls, right, to various constituents on issues...STETTER: Yes.MCCAIN: ... particularly, gaming?STETTER: Yes, sir.MCCAIN: And these names of these organizations were just provided to you?STETTER: Yes.MCCAIN: And, again, Mr. Scanlon or Mr. Cathcart (ph) would instruct you to draft a phone script opposing some gaming initiative that might harm one of CCS tribal clients, is that correct?STETTER: That's correct.MCCAIN: And they would give you some guidance on what the draft should actually say?STETTER: Yes, I would follow along from old drafts.MCCAIN: And you'd return the draft for their approval with the name of the organization left out, is that correct?STETTER: It would be left out or provided -- it would be put in later.MCCAIN: And usually that would be Chris Cathcart (ph), Mr. Scanlon's primary assistant, would plug in the name of a grassroots group?STETTER: I believe so, yes.MCCAIN: For example, the Christian Research Network.In fact, an example of one such script that was drafted under that very name -- it's number 124 -- this is a phone script, and it says, "Hello, my name is John. I'm calling from the Christian Research Network. We need your help to stop the spread of gambling in Louisiana. The situation is very critical."Do you consider yourself pro-gaming or anti-gaming?"Record response. If pro, disconnect.""As you've seen in the newspaper, the Jenna (ph) band of the Choctaw Indians is trying to bring yet another casino to Louisiana, this time to De Soto Parish, about 70 miles from where they're based. What's more is that the people of this parish have never been given a say in this matter.MCCAIN: "As a concerned citizen who opposes gambling, would you be willing to call Senator Breaux/Landrieu and tell him or her to stop the spread of gambling in Louisiana?"If no, disconnect."If yes, we can connect you to the senator's office. When they pick up, tell them to take a stand against gaming in Louisiana. Tell them to oppose the new Indian casino. Patch through and collect data."Are you familiar with that one?STETTER: Yes, I am.MCCAIN: And, to your knowledge, you don't know who the Christian Research Network is?STETTER: To my knowledge, no, sir.MCCAIN: As a senator, personally, I'm interested in this ability to patch right through to the senator's office. It's something I always suspected but certainly an effective tool.I guess what I'm trying to get at, Mr. Stetter, is that -- and I understand the business that you're in, but should somebody have maybe checked and see whether these organizations were legitimate organizations or was it just your job to plug in...STETTER: Mr. Chairman, as an entry-level employee, I didn't have particular questions about what these groups were. I was just provided the names and then I provided the scripts.MCCAIN: I see.All right, sir, I would like to -- I have another round but I'd like to yield to Senator Dorgan at this time. And then I'll come back to the others. Thank you.I thank the witnesses.DORGAN: Mr. Chairman, thank you very much.It's hard to know where to start with all of this material. And I know that you were asking Mr. Grosh about his employment and his opportunity to become a part of that organization and some thought it funny. There's very little funny about this issue.Going through the e-mails, I might just observe that this was not only fraud on a pretty grand scale but let me just describe the smaller fraud here.Exhibit 31 has a memorandum from Mr. Abramoff to a Rabbi Latham (ph). He said, "I hate to ask you for your help with something so silly but I've been nominated for membership in the Cosmos Club which is a very distinguished club, composed of Nobel Prize winners and so on."The problem for me is most prospective members have received awards and I've received none. I was wondering if you thought it possible that I could receive an award from your organization. Probably you could call it something like Scholar of Talmudic Studies or Distinguished Biblical Scholar Award.DORGAN: "It would even be better if it were possible that I received these in years past, if you know what I mean."(LAUGHTER)MCCAIN: That's to who? Who was that?DORGAN: It's Exhibit 31. It's from Mr. Abramoff to a Rabbi Daniel Latham (ph).But my point is that this wasn't just cheating on a grand scale. In fact, I believe that goes on and on, and actually they describe the type of...MCCAIN: Rabbi Latham's (ph) response is?DORGAN: He said, "What I'm trying to do here -- it would only be used for this situation at the Cosmos Club, but there's a chance they'd have to call someone to verify. Probably just a few clever titles and awards and dates, as long as you can be the person to verify them."And the response from the recipient, Mr. Latham (ph), is, "Yes. I just need to know what needs to be produced. Letters? Plaques? Neither?"And at any rate, the memorandum goes on.Look, the point of all of this is there's a lot of deception going on, and there are victims of this deception.Let me go through a couple areas if I might. Mr. Stetter, if I might ask you first, what we had was the establishment of a good many bogus groups. Isn't that correct? Bogus organizations.STETTER: Yes. If that's the term you want to use for it, yes.DORGAN: And was it the case where these organizations in many cases actually had a telephone and those telephones had numbers and they were in a drawer. And the telephone would ring, you'd just go through the drawer and pick out which telephone it was, from which organization?STETTER: To my knowledge, there was that drawer. It wasn't my job to pick up the phones but, to my knowledge, that's how it worked.DORGAN: But these were organizations that were created with names and some of which perhaps my colleague, Senator McCain, just read. And it wasn't as if they didn't have any connection to anything. They, obviously, had a telephone line with a telephone number.But you could just put all those organizations in a little drawer and when the phone rings, you open up the drawer and figure out which phone rang and then answer with the name of that organization.DORGAN: So that's what I refer to when I talk about bogus organizations. I believe there's a trail with respect to some memoranda on that, as well.I'd like to ask a couple of questions, Mr. Stetter, about Mr. Cathcart (ph), because his name was just used a moment ago. And I'll go through this very quickly.But you took a position with Michael Scanlon at his companies, Scanlon Gould and Campaign Strategies, correct?STETTER: Scanlon Gould Public Affairs, or Capital Campaign Strategies.DORGAN: And you did some administrative duties and some research for clients?STETTER: Yes, sirDORGAN: You always maintained a support role behind the scenes, you've told us?STETTER: Yes.DORGAN: After you left the Scanlon companies, you were hired by the National Restaurant Association as manager of a grassroots program?STETTER: That's right.DORGAN: Given your background, prior to working for Mr. Scanlon, exactly what did you do at the Scanlon companies that qualify you as manager for a grassroots programs at this point?STETTER: I'd say the main qualification was actually on some of the phone scripts and working on some of the campaigns. I actually went to some of the gaming facilities and assisted with a letter- writing campaign.So I did do some grassroots functions.DORGAN: Every organization has a, kind of a right-hand man, somebody that is in charge. Who was Mr. Scanlon's right-hand man?STETTER: From my experience, it would Chris Cathcart (ph).DORGAN: Did he run the D.C. office?STETTER: When Mike was out of town. I believe that there was -- without having him having a title or anything, it was understood that Chris ran -- Mr. Cathcart (ph) ran the D.C. office.DORGAN: I believe Mr. Cathcart (ph) has asserted publicly that he was just a mere go-for in the operation. Do you disagree with that?STETTER: I guess, in some degree, we were all go-fors for Mr. Scanlon. I was probably described as a go-for for probably everyone in the operation.DORGAN: Who was in charge when Mr. Scanlon wasn't there in the D.C. office?STETTER: I answered directly to Mr. Cathcart (ph).DORGAN: So Mr. Cathcart (ph) was in charge.Thank you.Let me ask, Mrs. Ridenour, a couple of questions about the pass- through.DORGAN: Is this -- would this be the -- we know of the $1 million, I believe, it was we've discussed; is this the first time money in that quantity has been passed through your organization in order to obscure its identity?RIDENOUR: I don't believe it was.Well, from our perspective, it was not being done to obscure its identity. The grant to Capital Athletic Foundation we perceived to be a legitimate grant, and the rest of it we perceived to be ongoing program work that we intended at some point to brag about on our Web site.So obscurity was never a goal.DORGAN: Well, except that -- and you may be right with respect to that. You've heard me describe the other attempts to deceive and obscure. But when Mr. Abramoff told your organization, which is a research organization. Is it a c(4)?RIDENOUR: C(3).DORGAN: C(3).When he told your organization that he wanted a $500,000 check written for a grant, was there actually a grant request that came in for grant that described "Here's what the grant money will be used for, here's the purpose of the grant," and you therefore award a grant?RIDENOUR: What happened was we received an invoice through Greenberg Traurig in October of 2002 and I discussed with Jack on the telephone the activities of the Capital Athletic Foundation. I was aware of his affiliation with it. I also had had a prior knowledge of what the Capital Athletic Foundation at least officially was supposedly doing.And one of the things that I worked to do at that time was ascertain that the Capital Athletic Foundation's mission not only was as a legitimate 501(c)(3), which it apparently was, but also that its mission was consistent with our own ,in terms of educational program services. Those tests seemed to be met, so I agreed to do the grant, believing that that was the wish of the Choctaws.I also said, however, specifically to Jack at that time that if I am not convinced that all of the legal tests are met -- and in this case I was thinking of c(3) regulations, I wasn't even thinking about larceny or anything of that sort -- that I would simply make the offer to the Choctaws to return their money.DORGAN: But this is the first time that $1 million has been moved through your organization...RIDENOUR: Certainly. Certainly, yes.DORGAN: ... for the purpose of moving it elsewhere.RIDENOUR: It's the largest grant we have ever received.DORGAN: And you did not receive a grant request from the Capital Athletic Foundation saying, "We're requesting $500,000 grant with a one-page or two-page or 10-page description of what we want..."RIDENOUR: Correct. We did not receive a formal grant proposal. And I assure you, in the future, we certainly will.DORGAN: That's highly unusual, right?RIDENOUR: Well, I'd never done it before, "unusual" wouldn't be the term. Let's put it this way: It will never be anything we ever do again.DORGAN: My understanding is that the small bit of trail that exists here had it described as the sports and politics project?RIDENOUR: Well, that's what Greenberg Traurig wrote on the invoice or whoever wrote that invoice, frankly.Frankly, what I was told -- and this is consistent with what was on the Capital Athletics Foundation tax returns and also their Web site -- was that they were doing actual educational programs; creating programs through which teachers and mentors could teach young people about the importance of good citizenship values.This was exceedingly, you know, consistent with an educational mission.DORGAN: I understand.Let me just say, as Senator McCain has, I appreciate your appearing here and your speaking about this issue. And it's probably not comfortable for you to do it because you, too, were likely deceived.But what I'm trying to get at is if, in fact, Greenberg Traurig, in a memorandum describing the circumstances, describes a $500,000 grant to the Capital Athletic Foundation as a sports and politics project, the politics part would probably run afoul of your (c)3, wouldn't it?RIDENOUR: Well, yes, if I thought that's what they meant.RIDENOUR: I just thought it was a person who doesn't understand and wrote that.And because I had had conversations directly with Jack Abramoff representing the foundation and had looked into the foundation enough to know what it really did, I just thought it was an error in the copywriter -- whoever actually created it.Certainly, if I had thought politics in the sense that we usually use it had anything to do with that foundation, there's now way I would have approved it.DORGAN: Do you have some sense or do your understand -- I hope you do -- why those of us who look at this trail take a look at this movement of substantial money through organizations and then say, "Wait a second, there's something fundamentally wrong with (c)3s or (c)4s being used as conduits to direct money which turns out, in some cases" -- and I think the case with respect to the money that was directed through your organization by Mr. Abramoff -- money that Mr. Abramoff and Scanlon likely defrauded from the tribe?And so we look at that and say, "How can this happen so easily with money that just slides through a (c)3 or (c)4 without even a two- or three-page grant request?"RIDENOUR: It's not so easy, though.One of the things you have to keep in mind, Senator, is the relationship that we had going back by that time just short of 22 years. When you have worked with someone for 22 years, when they have been a member of your board of directors, by October of 2002, for five years, when you've worked on projects together, when you know someone personally, when you believe -- even though technically it's irrelevant -- that you are close, personal friends, when you believe all of these things and you also know that it is in -- and I still believe to this day that it is in a person's best interest to do a job right, your natural assumption is that the things they say to you are correct and true.In my future career, I will never make pretty much assumptions on anything again. But up until that time, believing that it was in Jack Abramoff's personal as well as professional interest to be honest, to serve his client, the Choctaws, as well as we possibly could and in our interest as an educational institution to participate in bona fide educational activities that educate the national audience about important issues, it seemed perfectly consistent with our mission and it seemed like good, solid work.As you know from my testimony, by July of 2003, even though I did not suspect anything resembling larceny, I pulled us out simply because we weren't seeing documentation.So we did have what we felt at the time were fairly high standards for documentation. They were not high enough. They're higher now. But we did pull out long before there was any news media coverage of Jack Abramoff.DORGAN: Do you feel this happened because he lied to you -- Mr. Abramoff lied to you?RIDENOUR: Unless he walks into this room today and shows a heck of a lot of program service work, I'd have to say yes.DORGAN: Let me ask you for a moment about the 2000 golf trip to Scotland that was, I believe, the -- an amount of money came from your organization to help defray the cost of that golf trip in 2000, is that correct?RIDENOUR: Yes.DORGAN: And can you describe how that happened? Because, again, you might well imagine when we take a look at money moving through (c)3s or (c)4s we say, "Wait a second, what's going on here?" The same would be the case with respect to what has been described in some e-mails as the golf trip -- actually, there have been two golf trips. And the 2000 golf trip was Congressman DeLay and a group of others with Mr. Abramoff.And so tell me, if you will, and tell the committee how your organization got involved in putting some money up for that golf trip.RIDENOUR: Certainly.First of all, while I'm aware that it is referred to as "the golf trip," almost universally that is not a term that I use.We were contacted by Jack Abramoff in his capacity, I believed, as a member of our board of directors in approximately March of 2000. I say approximately, it might have been February, could have been April 1, but, frankly, about that time.RIDENOUR: He suggested to me in his capacity, I believed, as a director that it might be a nice project to have an educational trip to Britain -- not Scotland, but Britain -- to meet with parliamentarians. My mind went to London because, to the best of my knowledge, Parliament is in London. And I thought, "That's not a bad idea."And I further thought that, given what we expected to be at this time, either Mr. Gore, or, with apologies, Mr. Chairman, Mr. Bush would be elected president, that in coming years -- and this, of course, is pre-9/11 -- we would either be looking at additional expansions of health care reform, meaning government-controlled health care reform, or potential privatization of Social Security. And this is literally what was going through my head.And I thought given that both of these roads are places that Britain has gone -- one to good effect, in my opinion, one to the other -- it's not a bad idea for a congressional leader to go over, make some acquaintances with members of Parliament and come home.The trip I believed I was approving -- and indeed the trip that I invited the member of Congress on, through his chief of staff -- was simply to be a trip to London, meet with some members of Parliament and fly home.I'll say unfortunately -- except I don't mean this except in the sense of this controversy -- at the time I was pregnant with twins and we had recently adopted a newborn baby. I was not prepared to go to London myself.So I expressed to Jack that I liked the idea of this project for educational reasons, but I was not going to be prepared to go myself and, frankly, quite selfishly, I was not going to let -- and this in the husband-wife sense -- my husband go with him.(LAUGHTER)So I said, "We can't do this unless there's someone responsible who can handle logistics." He volunteered. We then discussed the propriety of the ethics laws, which I was assured -- and I know this is a point, too, of media coverage -- that it was perfectly appropriate for him, based on his knowledge of the law, to lay out some expenditures as long as he was promptly reimbursed by us. We discussed that in some further detail.I then approved him handling the project as the director of the national center. I also said, "Make sure on your invoices they come from your home address, because I don't want there to be any question in anyone's mind, should anyone ever look into this" -- not actually expecting anyone would -- "that you are operating as a member of the board of directors of a think tank and not as a lobbyist," which he agreed and, in fact, did.At that point, then, the invitation was expressed to the congressman's office and I primarily bowed out of the project, believing it to be in secure hands.DORGAN: And did the project turn out differently than you have described it to us, in terms of the project -- you just described to us the type of project that you approved. Obviously, the descriptions of that trip are very different. So tell me about that.RIDENOUR: I did become aware at approximately that same time of the trip -- and I don't know exactly when -- that Scotland was also included in the itinerary. I believed that, however, to be to meet with some additional members of Parliament in that area.Since then -- and I refer primarily to things that happened in the news media in 2000 and some things we've been told by others -- the trip seems to be very different from what I expected.I wish to state, however, that, although the news media has an interest in this particular congressman's personal behavior, the fact is that I know of nothing that the congressional office did that was inappropriate.RIDENOUR: Now, I was not on the trip and but I don't want to expand beyond my knowledge. But from what I know -- and I actually should have volunteered -- when I extended the offer, the invitation to the congressman's office, his chief of staff said to me that they were interested but their concern would be, "Would the trip be substantive enough?" And that's an exact quote.So I had no sense from them that they thought they were being invited on anything other than a bona fide education opportunity.DORGAN: I won't go further into this because it's not part of the Choctaw issue itself, although I believe that a portion of the second golf trip was -- I think Choctaw money was actually used to pay for a portion of the second golf trip. And I might say I believe that in some e-mails, that these are both just referred to as "the golf outing" and how much fun it is...RIDENOUR: May I interject, Senator?DORGAN: Yes.RIDENOUR: The second golf trip is something on which I will be able to provide no information other than the fact that we don't know anything about it.DORGAN: You're correct.And again, let me say that our committee is appreciative of the fact that you've come here and visited with us. I still remain hopeful -- and it's not for the purpose of suggesting that anything you have told us today is not accurate. Our investigators have visited with you, I have no basis for in anyway suggesting that you have not been completely open in your responses.I think it's quite clear from what you have said, you feel -- as do many others who have reached this witness table -- you feel deceived by people who used money in a manner completely inconsistent with what you had felt you had approved.But I do think, because we have a number of (c)3s and (c)4s -- and you've actually described, Mrs. Ridenour, the importance of making sure that you're well within the bounds. We have certain guidelines of what the use of (c)3s and (c)4s are for.And so my hope remains that -- the chairman and I will talk about this -- that we will consider talking to the Finance Committee about looking into that portion of it.Having said all that, I think that the contribution of this panel is to describe further the route of money, the use of money, in some cases. with respect to a couple of the organizations here, what appears to be almost complete obvious fraud to everyone.DORGAN: And again, that is not part of what this committee will be deciding. This committee is about following the money and getting the facts.And if you dyed that money purple, there'd be a lot of purple pants pockets around this town and in the country. Because they were moving it into so many different organizations.Mr. Stetter, when the chairman and I were asking you about organizations, they just created, apparently, out of whole cloth, names of organizations. And part of it is what's wrong with American politics today. And this is probably not the only circumstance where that happens.We're getting calls -- Mr. Chairman, you were referring to this. We're getting calls in our office in recent weeks with people who have been contacted by a grassroots organization, apparently, one that actually exists, and then they get somebody from back home on the phone and say, "OK, now, we're going to connect you with Senator Dorgan's office or perhaps Senator McCain's office."And in most cases, they don't want to be connected because they're not interested in the subject and they don't know why they're connected and they're not on message certainly.So I don't think that approach works in any event.But let me thank all of these witnesses for being with us and for cooperating.Mr. Mann, I regret you have not. And you certainly have the right to exercise your constitutional protections.MCCAIN: Thank you, Senator Dorgan.Ms. Halpern, where did Kay Gold operate from?HALPERN: To the best of my knowledge, Kay Gold operated from Mr. Abramoff's home.MCCAIN: Exactly what is it?HALPERN: Kay Gold is a sole-member LLC. Mr. Abramoff is the sole member. For tax purposes, it is reported on Mr. Abramoff's Form 1040 Schedule C "Self-Employment Income Schedule."MCCAIN: In 2002, Kay Gold's sole source of information was $13.5 million in supposed, quote, "referral fees," unquote, that came in from Mr. Scanlon's company, Capital Campaign Strategies. Is that correct?HALPERN: Sir, I would need to go back to check the tax records, but in general it sounds correct.HALPERN: Kay Gold had income from Capital Campaign Strategies.MCCAIN: And if you're the tax consultant, and you see a organization based in an individual's home that receives $13.5 million in one year from one source, does that ring any alarm bells with you as a tax consultant?HALPERN: Mr. Chairman, Kay Gold's business, as indicated on the Schedule C of the tax return, was political consulting. I am not aware what kind of revenues a political consulting practice is supposed to generate.MCCAIN: Well, you had access to records that showed that $13.5 million came in from one organization, that was Mr. Scanlon's company, Capital Campaign Strategies.HALPERN: Yes, a 1099 was received -- two 1099s that year I believe were received.MCCAIN: That did not raise any red flags with you.HALPERN: Sir, again, my job was to prepare his tax return. And in my engagement letter with Mr. and Mrs. Abramoff, I state in the engagement letter it is the client's responsibility to provide all the information to me so that I can prepare the tax return.MCCAIN: Well, you had the information that $13.5 million came in in one year from one source, Mr. Scanlon's organization, Capital Campaign Strategies.Now I ask you again, yes or no, did this raise a red flag with you that this was certainly highly unusual?HALPERN: Again, Mr. Chairman, I don't know if a political consulting practice -- if that would be highly unusual in a political consulting practice. I can't answer that. I was not involved in Mr. Abramoff's inner workings.MCCAIN: I don't care if it came from the moon. If it's $13.5 million into an organization, the only amount of money that they get in supposed referral fees, wouldn't anybody upholding their oath of office say, "Wait a minute. This $13.5 million coming in from one source in one year, what's going on here?"HALPERN: Sir, to the best of my knowledge, all information that Mr. Abramoff gave me was reported on his income tax return.And let me just state further, if you don't mind, sir, Mr. Abramoff in no way at any time tried to hide this income. Now if you tell me "Did he try to hide the income? Would that raise a red flag?" kind of a question, that's a different question.You're asking me if $13 million came in from one entity; I'm telling you that's what he presented to me and that was reported on his tax return.MCCAIN: And, obviously, it didn't arouse any curiosity on your part? Most people, it would, Ms. Halpern.DORGAN: Mr. Chairman, would you just yield at that point?MCCAIN: Yes.DORGAN: Ms. Halpern, were you in the room when I read the e-mail earlier today about moving money in order to avoid paying taxes? Mr. Abramoff's...HALPERN: I went out of the room for some time. It's possible. I'm not sure. I don't recall.DORGAN: All right.MCCAIN: Ms. Ridenour, you had discussions with Mr. Abramoff that, obviously, as we've discussed, induced you into passing on to Kay Gold two payments, $500,000 and $750,000, on May and June of 2003. You recall that?RIDENOUR: Yes.MCCAIN: From those conversations with Mr. Abramoff, what were you led to believe that Kay Gold was?RIDENOUR: I believed it was a public affairs firm run by Michael Scanlon that was very similar to Capital Campaign Strategies. They simply had different companies to do different functions.MCCAIN: And these two payments originally came from the International Interactive Alliance?RIDENOUR: Well, they came from Greenberg Traurig. Jack Abramoff later told me the original source was Interactive Alliance, yes.MCCAIN: Did you know what was actually done with those payments?RIDENOUR: No.MCCAIN: No, you didn't?RIDENOUR: I mean, I thought they were going to be used for educational program work. To this day, I don't know.MCCAIN: According to Kay Gold's general ledger, the $500,000 payment by NCPPR to Kay Gold was credited on May 18th, 2003. But within three weeks of arriving into Mr. Abramoff's Kay Gold account, it appears that what wasn't tucked away for taxes went straight to Mr. Abramoff's personal account. Seems to have occurred with the $750,000 that the NCPPR paid to Kay Gold on May 30th, 2003.I think your reaction to that from your previous testimony is fairly predictable.RIDENOUR: It's predictable and, frankly, I'm appalled.MCCAIN: Ms. Halpern, you look like you want to say something else.HALPERN: No, sir.MCCAIN: I'm sorry.Well, I want to thank the witnesses for being here. The story speaks for itself and I hope that we will get this unraveled sooner rather than later. And this committee can issue a full report. We'll have one more hearing dealing with another tribe. Then we will issue a report. And this committee expects to come up with recommendations to -- whatever is necessary from the Indian Affairs Committee standpoint to see that this kind of gross injustice is not inflicted on any more Native American tribes.Senator Dorgan, do you have anything to say?DORGAN: Mr. Chairman, I do not. You indicated another hearing. Let me, again, suggest, at least, that we hold open the prospect of visiting about the issue of (c)3s and (c)4s perhaps with the folks in the Finance Committee because I think additional questions are raised there.Again, let me thank the witnesses and let me thank also the investigators who have put in substantial quantity of time. This is nothing easy to piece all this together. And we appreciate very much their work as well.MCCAIN: I thank the witnesses. This hearing is adjourned.ENDNOTES:[????] - Indicates Speaker Unknown [--] - Indicates could not make out what was being said.[off mike] - Indicates could not make out what was being said.
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