That Jack Abramoff was innocent of the mail and wire fraud charges was maintained at first by the lobbyist himself and later by a colleague, Ben Waldman, the President of SunCruz, who witnessed the key events in question. Waldman even wrote a letter to the U.S. District Court Judge who presided over that case to say as much. Yet, somehow after becoming caught up in a confluence of events beyond his control, Abramoff wound up pleading guilty to a crime he did not commit and was even forced to additional jail time for it.
In a separate jurisdiction, U.S. District Court Judge Ellen Huvelle, who presided over the Abramoff cases, remarked that she decided to lengthen the prosecutors’ recommended sentence for the lobbyist since he had a “prior criminal record,” alluding to the fraud surrounding his efforts to purchase the SunCruz gaming fleet, when the reality is that he had nothing whatsoever to do with it. Without casting aspersions on Huvelle’s objectivity in the matter, she is a former partner of Williams & Connolly, a firm which provided counsel to the lobbyist’s former employer, Greenberg Traurig, during the Abramoff investigation.
For more information about the SunCruz loan, please refer to the complaint Citadel Equity Fund filed against Foothill Wells Fargo on November 22, 2004 at the U.S. Bankruptcy Court, South District of Florida, Ft. Lauderdale division. (Case No: 01-24661-BKC-PGH/Case No: 01-04662-BKC-PGH).
In 2000, Abramoff and his partner, Adam Kidan, endeavored to purchase the SunCruz gaming fleet in Florida for $148.5 million. Kidan was to assume responsibility for securing the down payment and negotiating the deal through closing while the lobbyist was poised to expand the business once the deal closed. At least that was the plan.
Instead, the deal imploded, bringing to light a secret agreement between Kidan and Foothill Wells Fargo which was allegedly rife with fraud.
In the complaint, Citadel, the secondary lender, outlines the “gross negligence and recklessness” of the primary lender, Foothill, in the loan which closed on September 2000 at the New York offices of Foothill’s counsel, Schulte Roth & Zabel (SRZ).
Revealing a nexus of close financial relationships, after advising Foothill, SRZ was retained by Merrill Lynch in “a case involving the Seminole Tribe of Florida,” the firm’s website announced. In 2004, the financial advisor went on to sponsor a Native American Indian Finance Conference at the Seminole Hard Rock Hotel & Casino, alongside Akin Gump, a firm with extensive ties to Sen. John McCain and which enjoys a “strategic alliance” with IETAN Consulting, whose lobbyists played a key role in railroading Abramoff.
In 2008, the Phoenix, Arizona-based Native American Finance Officers Association heaped praise upon Merrill Lynch and Greenberg Traurig for their joint efforts to facilitate the Seminole’s purchase of the Hard Rock franchise for $965 million. Once Abramoff fell under investigation, the Seminoles, under the advisement of their lobbyists, reached out to their rival’s former client, the Saginaw Chippewa Indian Tribe of Michigan, claimed that tribe as a client, and attempted to forge collaborations under the Hard Rock brand name. Their road to riches made Lombard Street look like a straight line.
In interviews with the U.S. Attorney and the FBI in Ft. Lauderdale as far back as 2002, Waldman maintained that “Jack was not – and could not have been complicit to the Kidan fraud.”
Yet, based upon Citadel’s assertions, there are strong indications that SRZ had a hand in killing the SunCruz deal which ultimately entrapped Abramoff.
As the complaint reveals, Kidan provided promissory notes in lieu of an equity contribution as a downpayment for the loan. Foothill Wells Fargo, which organized and led the loan, allegedly “concealed from Citadel that an employee of Foothill’s counsel notarized Kidan’s signature on Kidan’s notes,” revealing possible complicity.
The complaint goes on to state that the FBI even questioned Foothill’s counsel “concerning its abilities at closing. Upon questioning by the FBI, Foothill’s counsel eventually admitted that one of its employees had notarized the Kidan notes.”
Citadel also asserts that Foothill deliberately withheld nearly $5 million from the $32.5 million in term financing that it had committed. “The proceeds would have allowed the buyer-borrowers to acquire certain assets of the paradise of the Port Richey casino-gaming business,” the complaint states. “Foothill knew the acquisition and operation of PPR was an important component of the buyer-borrower’s plan for serving the lender loans and for the profitability of the SunCruz casino business. In fact, Foothill’s internal approval documents specifically required the acquisition of PPR as a condition precedent to making the Foothill loans.”
As Citadel maintains, “Foothill’s failure to make the PPR loan contributed to the …subsequent defaults….PPR was projected to generate substantial revenue and cash flow, making it important to the operation of the…business and to their ability to repay the Citadel loan.”
Having failed to acquire the PPR loan, the new SunCruz owners then were unable to secure the intellectual property of SunCruz, including the SunCruz trade name and trademarks. “The likely consequence of this ruling was that the buyer-borrowers would have been required to cease operating the business under the SunCruz name,” Citadel affirms. “Rebranding every aspect of the business and rebuilding consumer goodwill under a different brand would have required enormous expenditures and resulted in significant lost revenue. These additional costs and lost revenue, including the cost of removing the trade name and trademarks from every aspect of the operation coupled with the loss of revenue while doing so would make it impossible to service the lender loans.”
It would appear that Foothill set out to ensure that the fleet never left port and that competition to the Seminoles was promptly incinerated from within. Once Abramoff joined Greenberg Traurig, the firm offered to negotiate a settlement on his behalf but passed his paperwork on over to the Department of Justice instead, in breach of attorney-client privilege.
The firm then teamed up with Merrill Lynch to help the Seminoles purchase the Hard Rock franchise, and Wells Fargo went on to forge lucrative business opportunities in Indian Country. As Abramoff would soon learn, having friends in all the right places would prove very rewarding indeed.
(To read Waldman’s letter, please visit: http://www.susanbradford.org/SunCruz.php).
For full coverage of how the fraudulent loan was constructed to entrap Abramoff, please read Lynched! The Shocking Story of How the Political Establishment Manufactured a Scandal to Have Republican Super-lobbyist Jack Abramoff from Power.)
(c) Susan Bradford 2011