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Reed Got $4M From Scanlon

Ralph Reed, a top campaign adviser to President Bush in the South and a power broker among conservative Christians, received nearly $4 million from a GOP public relations expert under federal investigation over huge lobbying fees paid by American Indian tribes with gambling interests.

Reed was paid more than $3.8 million during a yearlong period in 2001 and 2002 by Michael Scanlon, a former aide to House Majority Leader Tom DeLay (R-Texas), according to documents obtained by Roll Call.

The Senate Indian Affairs Committee has scheduled a public hearing for Sept. 14 to begin reviewing the activities of Scanlon and Republican lobbyist Jack Abramoff, who together were paid in excess of $45 million by four American Indian tribes for lobbying, public relations and grassroots organizing from 2001 to 2003. Congressional and federal investigators, as well as some members of the tribes themselves, are now asking what the two did to merit such exorbitant fees.

Sen. John McCain (R-Ariz.), a senior member of the Indian Affairs Committee, has been the driving force behind the Congressional probe of Abramoff and Scanlon. Aides to McCain and the Indian Affairs Committee, which has brought on more staff solely to handle the Abramoff-Scanlon investigation, would not comment on Reed’s connections to the two principals in the probe or the work his firms provided for the duo’s efforts to beat back tribal competitors to their Indian gambling clients, although they are studying the relationship between the three men, according to Congressional sources.

Of the $45 million-plus paid to Abramoff and Scanlon by the tribes, $31 million went to the former DeLay aide. Scanlon then paid Abramoff at least $10 million in “referral fees” and lobbying charges. Abramoff’s former lobbying firm, Miami-based Greenberg Traurig, cut its ties with the controversial lobbyist after it became aware of the payments from Scanlon.

A federal grand jury is investigating Abramoff and Scanlon as well, and the FBI is looking into whether some tribal members were offered financial rewards in return for big lobbying and PR contracts. IRS officials are also exploring the transactions between Abramoff, Scanlon and a number of companies and nonprofit organizations.

The payments to Reed from Scanlon were made to two Georgia-based companies that Reed operates, Century Strategies and Capitol Media, and covered a mix of grassroots organizing and media buys. Reed kept his involvement in these efforts private and has never registered as a lobbyist for any of the four tribes or any other clients.

Reed, now a corporate consultant, was chairman of the Georgia Republican Party from May 2001 until February 2003 and served as executive director of the Christian Coalition from 1989 to 1997. Reed is currently the chairman of the Bush-Cheney re-election campaign for the Southeast region.

In the past, Reed, who has called gambling “a cancer on the American body politic,” has said he has done no work for casino clients.

In an interview last week, Reed reiterated that he has never been employed by any casino operator, including Indian tribes.

“I’ve worked for decades to oppose the expansion of casino gambling, and the work Century Strategies did on these projects was consistent with that longstanding opposition,” said Reed. “The work that we did was part of a broad coalition that included anti-gambling groups, churches and nonprofit organizations. And at no time did my firm have a relationship with nor were we retained by any casino or any casino company.”

Scanlon, however, was working for four different Indian tribes with casinos, and Reed was brought in on a number of projects to gin up opposition to increasing the number of casinos from conservative Christian groups, including sites proposed by rival tribes in Texas, Louisiana and Mississippi, as well as a video poker initiative in Alabama. Reed’s efforts specifically benefited two of Scanlon’s tribal clients, the Louisiana Coushattas and the Mississippi Band of Choctaws, in their bids to protect their casino interests.

Scanlon also worked for the Saginaw Band of Chippewas in Michigan and the Agua Caliente Band of Cahuilla Indians in California, although Reed did no work that aided those tribes.

Abramoff lobbied for each of the same four tribes as Scanlon and recommended they use Scanlon’s firm for grassroots and public relations projects. Reed and Abramoff have a longstanding relationship going back to their days as College Republicans in the early 1980s, and Abramoff asked Scanlon to use Reed on several of those projects, according to sources close to the issue.

Scanlon declined to comment on his relationship with Reed. Scanlon insists that he has engaged in no improper activities and provided sworn statements from three of the four tribes praising his efforts.

“Across the southern United States, there is a long list of would-be casinos that were blocked by the public affairs strategies implemented by our firm,” said Scanlon. “Our objective was to protect several hundred million dollars of our clients’ market share by working against casino expansion; we were paid very well to do so, and obviously we were very successful. This has obviously become a very political situation, and because of this, the search for controversy will be omnipresent. The bottom line is gaming expansion was thwarted and our clients are happy.”

The financial stakes in these battles over new casinos were enormous, running into the hundreds of millions of dollars for the winning side, and the tribes who hired Abramoff and Scanlon spent lavishly to defend their markets against encroachment.

For instance, the Mississippi Band of Choctaws, who paid Abramoff $5.3 million for lobbying from 2001 to 2003, were one of the poorest communities in the nation before opening a casino in the early 1990s. Now, with two casinos and 9,000 employees, the Mississippi Choctaws are an economic powerhouse and the second largest employer in the Magnolia State.

The Louisiana Coushattas, who rake in an estimated $30 million per month from their casino in Kinder, La., have become one of the biggest employers in their state as well, boasting a payroll of 3,000 employees.

Reed’s involvement with Scanlon began in early 2001 as the Louisiana Coushattas sought to prevent state officials from granting more licenses for riverboat casinos in the Lake Charles region, seeing it as a threat to the Grand Casino Coushatta, the largest casino in the area.

Reed also took part in a later effort by the Louisiana Coushattas to shut down a casino outside Houston opened by the Alabama-Coushattas, a rival tribe. Texans are a big part of the customer base for Bayou State casinos.

While anti-gambling forces launched a widespread campaign in the Lone Star State, Reed worked to build support for a lawsuit filed by then-Texas Attorney General John Cornyn (R) against the Alabama Coushattas and another tribe that had opened their own casino. A federal judge eventually closed both casinos in July 2002.

In addition, Reed sought to block legislation allowing video poker machines with unlimited cash payouts at four Alabama dog tracks in 2001. The proposal was rejected by the state legislature, thanks in part to political pressure from religious groups like the Christian Coalition of Alabama.

Following that defeat, the dog track owners pushed for legislation that would force the Christian Coalition of Alabama and other outside groups to disclose their donors, which they are not required to do under state law. The track owners believed that Mississippi casino operators, including the Mississippi Choctaws, one of Scanlon’s clients, had dumped millions of dollars into Alabama to derail the video poker proposal and were using religious organizations like the Christian Coalition as a front for those efforts.

John Giles, head of the Christian Coalition of Alabama, said his group has received financial and strategic support from Reed, but declined to be more specific about when that aid was offered or how it was received.

“Ralph Reed has helped our organization since its inception in 1992 in many ways,” said Giles. “Century Strategies has helped the Christian Coalition, yes.”

Giles said his organization’s standing policy is not to take funds directly or indirectly from gambling interests, and noted that the group has opposed any expansion of gambling in Alabama.

But the most high-profile battle that Reed worked on with Scanlon began in January 2002 when the Jena Band of Choctaw Indians in Louisiana secretly inked a deal with Gov. Mike Foster (R) to open a casino in southwestern Louisiana, according to news reports. The Jenas had hired then-GOP lobbyist Haley Barbour to help lobby the Bureau of Indian Affairs to approve the compact with Foster. Barbour was elected governor of Mississippi last November.

Once news of the Jena’s deal with Foster became public, the Louisiana Coushattas and other casino operators in the region worked feverishly to block the proposal from being enacted. The Nation magazine reported in July that an official with the Coushattas bragged at a meeting with lobbyists in early 2002 that his tribe “was putting Reed on the payroll. He said, ‘If they have Barbour, we need Reed.’” The Nation added that Reed wanted to make sure no one knew he was working on behalf of the Coushattas.

After heavy lobbying from both sides, the Bureau of Indian Affairs refused to approve the Jena’s casino, and the tribe was forced to search for another site for their casino.

The Jenas also attempted to open a casino near the Alabama border with Mississippi, but that proposal was rejected by state officials in Alabama. The Mississippi Choctaws, through Scanlon, worked to ensure that the Jenas did not infringe on their casino business, as the majority of the customers for the Mississippi Choctaws hail from Alabama. Reed was involved in that campaign as well.

Paul Kane contributed to this report.