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Gary S. Chafetz Headshot

Taken With a Grain of Salt

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What one reads in the newspapers is often oversimplified and distorted so much so that it borders on fiction--a lesson we need to be reminded of constantly.

On Thursday, May 21, The Washington Post reported that convicted and imprisoned ex-lobbyist Jack Abramoff, recently received a $520,189 IRS tax refund. The Justice Department wants that refund applied to the $23 million the government claims Abramoff owes his former tribal clients whom he is accused of defrauding.

Before and during his incarceration, I spent over 100 hours in secret face-to-face and unconditional interviews with Abramoff. I poured over thousands of documents, many of them never released to the public. And as a hard-core liberal I'm not exactly inclined to give someone like Abramoff, an arch-conservative, much slack.

Not surprisingly, the truth is far more complex. Here's what the Post failed to report.

First of all, the IRS actually owed Abramoff a $1.7 million refund. Secondly, he did not defraud his "gullible" tribal clients.

According to the Post, "Abramoff admitted that he and Scanlon, a onetime press aide to former House Majority Leader Tom DeLay (R-Tex.), ran a kickback scheme that defrauded the tribes. Abramoff told tribes to hire Scanlon's public relations firm at inflated prices and the two split the profits."

First of all, "inflated prices" are not illegal. Secondly, what's illegal about splitting profits? Nothing. The "kickback scheme" was in fact a perfectly legal referral fee used by mortgage brokers, lawyers, and orthopedic surgeons every day, who do not inform their clients that they are receiving a referral fee. Federal prosecutors later conceded this very point when they had to charge him with some crime, so they came up with "private honest-services fraud." What exactly is that? No one can really say. (Google it and see if you can figure it out.)

These casino-rich tribal clients weren't gullible. There were incredibly savvy, sophisticated operators, who could afford the very best lawyers, consultants, accountants, and lobbyists. They were shrewd enough to hire and retain--in some cases for 10 years--the extraordinary services of Abramoff, who, for example, single-handedly saved Indian Country over $33 billion by defeating several Republican attempts to tax tribal casinos. That's not exactly what I would call defrauding Indians.

Years later, of course, these cunning tribes cried foul in front of Sen. John McCain's Senate Indian Affairs Committee, so they could subsequently sue Abramoff's former law firms and win huge (and secret) financial settlements. Which means these casino-rich tribes received Abramoff's services essentially for free. The final kicker is that these tribes are now slated to receive an additional $23 million from Abramoff in restitution, part of which will come from his long-overdue tax refund. Gullible the casino-rich Indians are not.

Abramoff has been battling the IRS for several years for this refund--money that he overpaid on his income tax before 2004--which the IRS had stubbornly refused to return. He needs the money. Abramoff hasn't paid his lawyers in several years and has been borrowing from his father to keep his wife and five children out of a homeless shelter. Abramoff has no hidden stash of cash. Despite misleading Washington Post stories about his former allegedly sybaritic lifestyle, he gave away most of his money--often anonymously--to charity. He hadn't even paid off his own home mortgage.

Abramoff's wife, Pam, (two of their five children still live at home) is barely hanging on. She works as a secretary at a culinary institute in the DC area, so that she and the children can have health insurance. And she struggles to send her husband a little spending money in prison, so he can eat Kosher-approved snacks from the canteen, make phone calls, and pay for postage. She has sold off all of her antique furniture and has taken in six teen-age boarders to help make ends meet. And she can't afford to fix several leaks that have sprouted in the roof.

What is bizarre is that Abramoff was also forced to plead guilty to tax fraud, despite the fact that the IRS owed him a huge tax refund. His alleged tax fraud involved a charity, to which he donated a huge proportion of his income, and for which he and his wife worked tirelessly without any compensation whatsoever. He did, however, improperly spend 4% of the donations (essentially his own money) on items not consistent with the purpose of the charity. Under normal circumstances, he would have been fined, which would have been easily offset by his tax refund. At the same time, there were egregious abuses being committed by well-known and respected charities--including The Red Cross and The Nature Conservancy, not to mention the outrageous shenanigans of The Coalition to Support American Heroes and Help Hospitalized Veterans--which far exceeded anything Abramoff ever did. But no criminal charges were ever filed against the people in charge of and personally enjoying the largesse from those charities.

In fact, Abramoff's lead prosecutor quietly urged her superiors--to no avail--to rescind Abramoff's tax-evasion guilty plea, because it was so unjust.

What the Post has never had the integrity to report or suggest is that Abramoff didn't plead guilty because he actually believed he was guilty of defrauding his tribal clients. The Justice Department threatened to bankrupt him with legal fees and find him guilty of the impossible-to-define crime of "private honest-services fraud," after which Abramoff would have been imprisoned for 30 years in a maximum-security prison with violent offenders. Instead, he pleaded guilty and agreed to cooperate in order to receive a reduced sentence, spent in a relatively cushy prison camp, where violent offenders need not apply. Guilty or not, virtually all white-collar defendants would have done exactly the same.

And now the Justice Department wants Abramoff to give his tax refund to the wealthy Indians he allegedly bamboozled.

In this particular case, it's the readers of The Washington Post who have been bamboozled by this foolish story.

Gary S. Chafetz is the author of the recently published book, The Perfect Villain: John McCain and the Demonization of Lobbyist Jack Abramoff.