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Michael S. Scanlon, who swindled Indian tribes across America while working as a lifeguard in Rehoboth Beach and buying more than $18 million in Sussex County real estate, has been sued by a Texas tribe for racketeering and fraud.
The lawsuit could be the first of several brought by tribes against Scanlon, Jack Abramoff and their associates, said former federal prosecutor Melanie Sloan, who has been tracking the wide-ranging federal investigation of corrupt lobbying practices.
The Texas case and those expected to follow, Sloan said, could threaten Scanlon's real estate holdings, which include two multimillion dollar homes at the Delaware shore and an office park in Georgetown.
"The damages could be worth a lot of money, tens of millions," said Sloan, executive director of Citizens for Responsibility and Ethics in Washington. "Scanlon was definitely ripping people off. There's no question about that."
Scanlon, a former press secretary to U.S. Rep. Tom Delay, R-Texas, and Abramoff, once considered one of Washington's most influential lobbyists, were architects of the criminal scheme known as "Gimme Five" -- the duo's e-mail code for kickbacks. Both have pleaded guilty to fraud, and are cooperating with authorities while they await sentencing.
Scanlon worked for the Rehoboth Beach Patrol from 2002 through 2005, but city officials rejected his request to return this summer because of the scandal.
The lawsuit, filed Wednesday in federal court by the Alabama-Coushatta tribe of Livingston, Texas, accuses Abramoff, Scanlon and three others of secretly working for a Louisiana tribe to shut down the Alabama-Coushatta tribe's fledgling casino in 2001 and 2002.
The 59-page suit describes an intricate plot designed to kill the tribe's casino by Scanlon, Abramoff, former Christian Coalition leader Ralph Reed and two employees of Abramoff's former law firm. While the wealthy Washington insiders jetted around the country, the 1,000-member tribe from impoverished East Texas had trouble buying glasses for children, said Frederick Petti, attorney for the tribe.
'Greed, corruption and deceit'
"The case chronicles [their] greed, corruption and deceit and their devastating impact" on the tribe, the lawsuit alleges. "The funding for economic programs evaporated, over 300 jobs were lost ... and the Alabama-Coushatta tribe has spent years struggling to recover and revitalize its economy," the lawsuit said.
The tribe's modest casino was closed by a federal court ruling in 2002 after it had been operating for nine months, the lawsuit said.
Scanlon could not be reached Thursday. He has been seen in recent weeks in Rehoboth Beach outside his home at 60 Baltimore Ave., which he bought for $1.5 million in 2003. He also has homes in Washington and on the Caribbean island of St. Bart's.
Scanlon's Washington attorney downplayed the lawsuit and the prospect of more civil cases.
"The complaint filed in Austin is poorly founded as to Mr. Scanlon, and we look forward to defending against it in court," attorney Stephen L. Braga said in a written statement. "This is unlikely to be the first of many lawsuits because most of the other tribes in question have already settled their issues by concluding agreements with Greenberg Traurig," the Washington firm where Abramoff worked.
Sloan, a native of Delaware, disagreed.
"Just because they settled with Greenberg Traurig," Sloan said, "doesn't mean they can't sue Scanlon."
'Lobbying through stealth'
From 2001 until their scam unraveled in 2004, Scanlon and Abramoff collected more than $80 million from at least four Indian tribes -- in Texas, Louisiana, Mississippi and Michigan.
Scanlon funneled some money through his Capital Campaign Strategies public relations firm and American International Center, a phony think tank run out of a house near Scanlon's Rehoboth home. Both corporations figure prominently in the Texas lawsuit.
According to the suit, in 2001 Scanlon and Abramoff "manipulated" the Louisiana-Coushatta tribe -- which operated a casino 115 miles from the Alabama-Coushatta tribe's Texas reservation -- into thinking the Alabama- Coushatta, who wanted to open a casino, "posed a threat to their business." A bill then moving through the Texas legislature would have allowed all tribes to open casinos on their reservations.
The Louisiana tribe paid $3 million over two years to defeat the Texas bill, the suit said, with Scanlon and Abramoff hiring Reed and his company to lobby lawmakers. Reed, who has not been charged in the lobbying scandal, is a Republican with close ties to the Bush administration and a current candidate for lieutenant governor in Georgia.
The lawsuit said Reed has admitted "lobbying through stealth," noting a previous Reed comment: "I do guerrilla warfare. I paint my face and travel at night. You don't know it's over until you're in a body bag."
Reed disguised the Louisiana tribe's involvement in the lobbying effort by forming the Committee Against Gambling, the suit said. He convinced religious leaders to speak out against the pro-casino bill, sent targeted mailings to voters, set up bogus phone banks and ran protest radio ads.
The bill passed the Texas House, but the defendants succeeded in preventing the Texas Senate from voting on it, the suit said.
The Texas tribe tested a federal gaming provision and opened the casino later that year, but the defendants kept pressuring state and federal officials to shut it down.
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