Michael Scanlon, Jack Abramoff’s partner in crime, was sentenced Friday to 20 months in federal prison — but a majority of the hearing was devoted to his real-estate development plans and whether he could travel to a luxury property in St. Barts.
Scanlon and Abramoff engaged in an elaborate kickback and fraud scheme that took down former House Majority Leader Tom DeLay (R-TX) and 20 other government officials and lobbyists. Unlike Abramoff, who was struggling to support his family at the end of the scandal, Scanlon invested his tens of millions in real estate and is a very rich man by anyone’s standards.
His attorneys wanted no prison time; federal prosecutors asked for a full two years; and at least one Native American tribe — the Lousiana Coushatta — pushed for more than two years.
The sentence didn’t shock anyone — and it’s real hard time. What was more surprising was just how much of the hearing was devoted to discussing the investments Scanlon made from “ill-gotten gains,” as Judge Ellen S. Huvelle put it, and whether Scanlon would have to cough up more than $20 million in restitution to five Native American tribes and Greenberg Traurig, Abramoff’s former firm, which has been forced to compensate some of the tribes that were defrauded.
Tom Rodgers, the Native American lobbyist and member of the Blackfeet tribe who is the central whistleblower in the scandal, was disgusted by all the talk of St. Barts and Scanlon’s real-estate mogul plans.
Rodgers was unswayed by Scanlon’s brief remarks that he is “deeply remorseful” and his lawyers’ repeated attempts to portray him as a “new man.”
“Last year Scanlon did his master’s thesis on ethics. Today’s performance was an essay on narcissism,” Rodgers remarked after the hearing, referring to a masters degree Scanlon recently earned from John Hopkins University. Scanlon has described his thesis as “an evaluative history on the House ethics process.”
It’s been six years since Scanlon pleaded guilty and agreed to turn state’s evidence against his friends, former bosses and colleagues. And in that time, some of those same associates have expressed similar feelings as Rodgers’, having watched Scanlon amass an impressive portfolio of real-estate holdings with the money he took from the tribes.
The former colleagues have privately griped about his ongoing lavish lifestyle — including extended stays at the W Hotel, one of the cities toniest addresses — while many of them have been unceremoniously dismissed from their lobbying firms and are struggling to eke out a living while facing a mountain of legal bills.
Judge Huvelle seemed acutely aware and concerned about Scanlon’s attempts to re-create himself as a real-estate mogul, and the success he’s already had in doing so. During the hearing, she asked him what his plans were now that the scandal is over.
“I’m in such a dark place, I haven’t really thought about it,” he said initially before going on to say that he planned to continue developing real-estate and “helping people in my community.”
Huvelle asked him which community that was.
“My community so far has been Rehoboth Beach, but I don’t know where it will be [in the future],” he responded.
Huvelle then asked whether he was a resident of St. Barts, since she knew he had a real-estate development there, and whether his wife lived there. The property in St. Barts is a hilltop estate, according to several published reports.
Scanlon confirmed that his wife is living in St. Barts but said he considered himself a resident of Florida where he has other real-estate developments — although he noted that he also travels back and forth to Delaware.
Scanlon told Judge Huvelle that being able to travel to St. Barts would be “very helpful” in helping him work his real-estate business since he had property there.
Later in the hearing, Huvelle prohibited him from traveling out of the country before he starts serving his sentence. Scanlon has 14 days to appeal so a different judge could overturn it, but Huvelle’s decision to freeze his international travel shows an apparent disdain for the way Scanlon has accumulated wealth, as well as his high-flying life both before and after the scandal.
While Huvelle acknowledged his “extraordinary and extensive” cooperation in the investigation and prosecution, she also said Scanlon’s crimes were very serious and rattled the public’s confidence in government.
“Your fraudulent activities were really quite extreme,” she said.
She said she was trying to be fair but also re-establish respect for the law and deter other would-be white-collar criminals.
Huvelle cannot be involved in resolving the restitution issue. She has a conflict of interest because she was previously a partner at Greenberg Traurig, Abramoff’s former lobbying firm, which is seeking compensation from both Scanlon and Abramoff for the money it was forced to pay the tribes in civil suits.
But the government probation officers and all those involved in trying to track Scanlon’s real-estate holdings and profits have a lot of work ahead of them.
Scanlon easily could have squirreled away some of his millions in offshore accounts, and his real estate dealing in Delaware alone are complicated enough, as Cris Barrish, a reporter for Delaware’s News Journal, points out in an extensively reported piece focused on Scanlon’s real-estate spending spree in the roaring real-estate market of the early 2000s.
Scanlon and a corporation he controls bought 10 properties for $18.7 million from May 2001 through January 2005 — and paid $12.2 million in cash for them, Barrish reported. The properties included an oceanfront 7,000 square-foot mansion previously owned by a member of the du Pont family, two properties in Rehoboth Beach and two in Henlopen Acres. He also bought four properties in Georgetown, Del. — two homes, a downtown office-apartment complex and an office park of U.S. 113.
Before pleading guilty and and becoming a prosecution witness, Scanlon sold four properties, including the oceanfront mansions. He earned a $4.5 million profit on in it.
Last month, Scanlon also sold two Sussex properties at a significant loss as a way to come up with some of the expected court-ordered restitution, according to Barrish.
He sold the Georgetown office park for $3.5 million. In 2002, he paid $6.3 million for it. He also dumped a home at 60 Baltimore Ave. in Rehoboth, getting only $962,500 for the “handsome, two-story home two blocks from the ocean” that cost him $1.55 million in 2003.
But those recent sales won’t go that far in helping him pay up because he still owns $3.8 million on the properties. During the sentencing hearing, Scanlon mentioned additional real-estate business in Florida and Washington, D.C.
A restitution hearing will be held within three months to access all of his holdings and determine how much he must pay the tribal victims and potentially Greenberg Traurig.
