Gambling, GOP politics intertwine. Michael Kranish.

Full Text: COPYRIGHT 2005 The Boston Globe

Byline: Michael Kranish

Jun. 3--WASHINGTON -- George W. Bush gave the nation's gambling industry plenty of reason to fear his presidency.

He moved to shut down an Indian-run casino while governor of Texas. He declared in a widely circulated state report that "Casino gambling is not OK. It has ruined the lives of too many adults, and it can do the same thing to our children." He wooed religious conservatives by boasting in a presidential debate about his "strong antigambling record."

But as president, Bush has not spoken out against gambling. After promising not to take money from gambling interests, Bush's campaign fund accepted large contributions from gambling-related sources. His 2001 inaugural committee raised at least $300,000 from gambling interests, including gifts from MGM/Mirage, Sands, and a leading slot-machine maker. Bush later appeared at a Las Vegas casino for a fund-raiser for his reelection campaign.

Bush's retreat from his antigambling rhetoric came as Republican lobbyists and activist groups collected tens of millions of dollars from Indian tribes seeking to preserve their casinos. Now those payments are the focus of Senate and Justice Department investigations.

Bush is not the subject of the investigations and denied through a spokesman having anything to do with aiding Indian casino interests. But Bush's aides acknowledge that the president met with Indian gaming leaders at the White House in annual sessions over a four-year period that were arranged by antitax crusader Grover Norquist, in some cases after tribes contributed to Norquist's organization. Norquist and the White House say casinos were not discussed.

As the investigations continue, the politics of gambling are crucial to understanding how some Republican leaders and organizations have profited from the industry. When Bush was a firm opponent of gambling, his position opened the door for GOP lobbyists to court gaming tribes worried about a tough administration policy. After Bush dropped his antigambling rhetoric, lobbyists touted their access, and fund-raising from Indian tribes grew exponentially.

Among the prominent figures who have come under the scrutiny of Senate and federal investigators are Norquist, whose organization received $1.5 million from tribes and fought a tax on Indian casinos; lobbyist Jack Abramoff, a top Bush fund-raiser who earned millions of dollars in fees as a consultant to gaming tribes; and Ralph Reed, the former director of the Christian Coalition who allegedly used some money from Indian gaming tribes to fund his efforts to close down rival casinos and lotteries. House majority leader Tom DeLay, who has said he is strongly antigambling, also has drawn media scrutiny because of his ties to Abramoff and opposition to an Indian gaming tax.

"We had great hopes and expectations when Bush was elected," said Tom Grey, a Methodist minister who heads the National Coalition Against Legalized Gambling. But now "gambling has become the feeding trough" for politicians, he said.

Grey called on Bush to take the lead in returning gambling contributions and to speak out against casinos.

"To have nothing come out of his mouth is tantamount to saying, 'It's OK, you can operate business as usual vis-a-vis gambling,' " Grey said.

Dana Perino, a spokeswoman for the White House, said Bush has not spoken out against gambling because it "is primarily a state-level issue, and his record as governor reflects that."

But many Indian tribes believed they had much to fear from Washington, and much to gain from hiring lobbyists who boasted of their access to the Republican leadership -- all the way up to the White House.

As Bush prepared to run for president, he hoped to avoid a mistake that hurt the reelection bid of his father. George H. W. Bush felt uncomfortable wooing religious conservatives. The younger Bush worked closely with religious conservatives, especially Reed, who had been quoted in Business Week in 1998 as warning that "any presidential candidate who receives casino support is going to come under heavy fire."

Bush, in presenting his antigambling credentials during the 2000 presidential campaign, cited his efforts to close the Speaking Rock Casino run by a tribe called the Tigua in El Paso. The same casino would later become a focus of the investigations into whether lobbyists defrauded Indian tribes. Though Bush was consistent in his opposition to the casino, the Tiguas became an early example of how GOP lobbyists played on tribes' desperate desire for influence with Republicans to reap millions of dollars in fees and solicit contributions to conservative groups.

The Tiguas were among the poorest Indians in the United States. After Congress passed legislation in 1988 clearing the way for Indian gaming, the 1,300-member Tigua tribe opened the Speaking Rock Casino, which at one point made an estimated $60 million in annual profits. Some of the money went for healthcare, education, and jobs; the tribe's unemployment and dropout rates went from more than 50 percent to nearly zero.

But Texas officials said the casino was illegal because the Tiguas were recognized under a federal law that required state approval for gambling. The Tiguas countered that Texas had forfeited its right to oppose Indian gaming because the state already was in the gambling business. Texas was collecting hundreds of millions of dollars annually from a state lottery, with the money boosting education efforts that Bush would eventually highlight in his presidential bid.

The Tiguas even ran an ad that said: "Dear Governor: Get your own house in order before you pick on Native Americans."

Fearing that Bush would try to shut the casino down, the Tiguas poured tens of thousands of dollars into the campaign of the Democrat running against Bush in 1998, Gary Mauro.

The move may have backfired. After being reelected, Bush redoubled his earlier efforts to shut down the Tigua casino. He arranged for a special appropriation to help cover the cost for the state's attorney general, John Cornyn, now a US senator, to take legal action against the tribe.

Eventually, the effort to shut down the Tiguas would attract two figures who loom large into the current investigation into lobbying for Indian gaming tribes: Jack Abramoff and Ralph Reed.

Reed, the man who had earlier declared that no presidential contender should take gambling money, now acknowledges that payments for some of his efforts to stop the Tigua casino came from rival Indian gaming tribes.

Abramoff, who helped arrange for the rival tribes to give the money to Reed's group, turned around and offered his services to the Tiguas -- for $4.2 million in fees split between himself and a partner, the Senate investigation found.

"What sets this tale apart, what makes it truly extraordinary, is the extent and degree of the apparent exploitation and deceit," Senator John McCain, Republican of Arizona, said in opening the Senate investigation. "Even in this town, where huge sums are routinely paid as the price of political access, the figures are astonishing."

Over the years, Abramoff and his partner in Indian gaming consulting would receive more than $60 million in fees from six different tribes seeking to advance their gambling interests, the Senate investigation found. Abramoff also told the tribes to give money to political candidates and organizations. Eventually, the tribes gave $3 million, two-thirds of it to Republicans. Now, the Senate Indian Affairs Committee, the Interior Department, and the FBI are looking into whether the tribes were defrauded and how all the money was spent.

Abramoff and Norquist met in Massachusetts in 1980, when Abramoff was at Brandeis University and organizing college Republicans. Norquist, who grew up in Weston, was attending Harvard Business School and also organizing Republicans on campus.

The bond between Abramoff and Norquist grew deeper when the two worked in Massachusetts for the 1980 Republican presidential candidate, Ronald Reagan, who carried the Bay State by about 6,000 votes.

The following year, Abramoff and Norquist came to Washington together to lead the Republican Party's national effort to recruit college students. Reed soon joined what became a tight circle of friends; eventually, Reed would introduce Abramoff to Abramoff's future wife.

By 2000, when they worked in various capacities on behalf of Bush's campaign for the presidency, the trio were leading figures in the Republican Party. Reed, who had built the Christian Coalition into a powerful grass-roots group, helped recruit religious conservatives for Bush. Norquist, who headed the leading antitax group in Washington, rallied economic conservatives behind Bush. Abramoff, who was a GOP lobbyist, gave money to Bush's campaign.

Norquist and Abramoff had already advocated on behalf of Indian gaming. In 1997, when antigambling fever was high within the Republican Party, some GOP leaders, including the former House Ways and Means chairman, Bill Archer of Texas, had called for a tax on Indian casino profits. Abramoff, working as a consultant to the tribes, and Norquist, who saw the tax on Indian casino profits as another way for the government to raise taxes, helped persuade key members of Congress to kill the idea, which died in Archer's committee.

While Norquist and Abramoff were known in Republican circles as defenders of Indian gaming, Reed was not. As one of the nation's best-known religious conservatives, Reed took a staunchly antigambling position. But behind the scenes, he worked through Norquist and Abramoff to finance his antigambling campaigns with contributions from those who stood to benefit the most from seeing casinos and lotteries closed -- Indian tribes running rival casinos.

In 1999, Don Siegelman, the Democratic governor of Alabama, proposed a lottery that would have pumped hundreds of millions of dollars into public schools and even provided free college education for most Alabama high school graduates.

Reed, rallying religious conservatives, set out to try to defeat it, as well as a separate proposal that could have expanded commercial gambling in Alabama. Antigambling efforts are notoriously underfunded. But Reed, in a move that solidified his star power among religious conservatives, quickly raised $1.15 million for antigambling groups that was used for ads and telephone banks.

The money came from Norquist's group, Americans for Tax Reform. Norquist told the Globe recently that he, in turn, got the funds from an Indian gaming tribe in Mississippi that feared competition in neighboring Alabama. Norquist said that his group sent $850,000 to the Alabama Christian Coalition and $300,000 to Citizens Against Legalized Lottery. He said he did not tell the groups where the money came from. Both groups have policies against accepting gambling money.

Reed and Norquist stressed that the money could have come from the tribe's nongaming funds.

At the time Reed raised the money, he was working for Abramoff's law firm, doing political and public-relations work, and Abramoff represented the Mississippi tribe.

When the lottery was defeated in a state referendum, it may have seemed like a win-win situation: Reed won a fight against gambling, and Abramoff appeared to have satisfied a tribal client worried about competition.

But Siegelman was devastated, and saw no distinction in whether or not the money came from a tribe's gaming receipts.

"I don't know how they can sleep at night taking money from the Indian casinos to deny Alabama schoolchildren an opportunity to reach their God-given potential through education," Siegelman said.

Just as Reed was winning the Alabama fight, Bush and Cornyn were pursuing their effort to close the Speaking Rock Casino run by the Tigua tribe. On the campaign trail for the White House, Bush emphasized his opposition to Speaking Rock as an example of his moral qualms with gambling.

When Bush entered the White House in 2001, the legal effort to close the Tigua casino was left to Cornyn. Abramoff and Reed played leading roles in building political opposition to the tribe.

Abramoff had a client, the Coushatta tribe of Louisiana, that feared competition from Indian gaming in next-door Texas. The Coushattas were Abramoff's most lucrative money source; they paid $26 million in fees to Abramoff's partner in Indian-gaming deals, some of which was then funneled back to Abramoff, according to the Senate investigation.

Some of that money was sent by the Abramoff team to Reed, who was helping lead the campaign to close the casino, according to Senate testimony. He arranged for radio ads, mailings, and church-led protests. A spokesman said Reed "was approached about assisting with a broad-based coalition opposed to casino gambling . . . and we were happy to do so." On Feb. 11, 2002, Cornyn won his case against the tribe, and the casino closed.

Abramoff then launched an effort to get hired by the Tiguas, vowing that he could use his connections to top Republicans to get it reopened. He never mentioned to tribal leaders that his firm was also paying Reed, who had just run the campaign to get the casino closed.

Privately, Abramoff told Reed his view about the tribe in an e-mail obtained as part of the Senate investigation.

"I wish those moronic Tiguas were smarter in their political contributions," Abramoff wrote to Reed, referring to the tribal support for Democrats. "I'd love us to get our mitts on that moolah!! Oh well, stupid folks get wiped out."

The next day, Abramoff and his partner in the Indian gaming deals, Michael Scanlon, who worked at a separate company, boarded a private jet to El Paso, where they met with a tribal lawyer.

Abramoff laid out an elaborate plan. He offered to work for free, but he wanted the Tiguas to pay Scanlon $4.2 million. That would allow Abramoff to avoid registering as a lobbyist for the Tiguas, which might have upset competing tribal clients. Scanlon eventually sent half of the $4.2 million to Abramoff, Senate investigators found.

Abramoff's calling card was his tie to Republican Party leaders. He boasted to the tribal leaders about his access to Bush, and noted that his law firm based in Miami, Greenberg Traurig, worked on the Florida case that helped put Bush in the White House.

Scanlon, who sat by Abramoff's side as they met with the Tiguas, had previously boasted of Abramoff's ties to the president. "Jack has a relationship with the president," Scanlon told a Florida newspaper in 2001. "He doesn't have a bat phone or anything, but if he wanted an appointment, he would have one."

Abramoff, in turn, boasted that Scanlon had access to his former boss, DeLay, the House majority leader.

The Tigua tribe's lieutenant governor, Carlos Hisa, said that Abramoff told him that he had special influence with the president. Abramoff said he was "close" to Bush, and that the president asked him for recommendations to fill key positions at the Bureau of Indian Affairs, Hisa told the Globe.

Perino, Bush's spokeswoman, said in response about Abramoff: "While they may have met on occasion, the president does not know him."

In a later letter to a Tigua official, Abramoff wrote: "While we are Republicans, and normally want all Republicans to prevail in electoral challenges, this ill-advised decision on the part of the Republican leadership in Texas must not stand, and we intend to right this using, in part, Republican leaders from Washington."

The key to the deal, Abramoff told the Tiguas in e-mails, was that they had to start supporting Republicans with significant contributions. He laid out a plan for the Tiguas to make contributions to various Republican politicians and committees. For example, the Tiguas gave $90,000 to three national Republican committees in March 2002, just after the tribe met with Abramoff, according to federal records.

Eventually, Abramoff sketched out an elaborate deal involving contributions to key members of Congress, but though the tribe came through with some of the contributions, the deal fell apart. The casino remained closed.

The fight over the Tiguas may have helped Bush win over religious conservatives during his 2000 campaign. In the Republican primaries, some of Bush's allies portrayed McCain, his chief opponent, as too close to gambling interests, and spokesman Scott McClellan was quoted as saying that Bush did not accept contributions from "gambling interests." But Bush accepted $125,000 from gambling interests in 2000 and collected $345,000 in 2004, according to the nonpartisan Center for Responsive Politics. (John F. Kerry, the 2004 Democratic nominee, received $100,000.)

Perino, the White House spokeswoman, said McClellan had been referring to Bush's refusal to take money from political action committees, known as PACs. Bush "does not accept contributions from gaming PACs. Individuals have the right to express their own opinions and their own views," she said. The center said that $11,000 of Bush's gambling-related contributions came from PACs. Many of Bush's other gambling-related contributions came from top casino executives, the center said.

As for the $300,000 raised by the 2001 Inaugural Committee, a Republican National Committee spokesperson said the inaugural organizers did not have to abide by the campaign's rules.

By the time Bush entered the White House, his antigambling rhetoric was gone. Contributions from gambling interests to Republican committees and candidates jumped from $4 million in 1998 to $7.5 million in 2002, bringing the GOP up to parity with Democrats, who previously collected the bulk of such money, according to the center.

The president even attended a 2003 Bush-Cheney fund-raiser at the Venetian Resort Hotel and Casino in Las Vegas, telling the crowd: "It's such an honor to be here."

Sig Rogich, who represents casino interests and has long been close to the Bush family, served as Bush's Nevada chairman in 2000 and co-hosted the 2003 fund-raiser. In a telephone interview, he said Bush "told me personally several times he didn't have any problem with gaming, per se. It was his opinion that it belonged in Las Vegas; it should be a destination experience. It shouldn't just be a bunch of slot machines on every corner in every city."

While Bush's spokeswoman said the president considers gambling a state issue, some antigambling activists maintain that Bush has power to stop the expansion of casinos. Representative Frank Wolf, Republican of Virginia, wrote Bush last month, imploring him to impose a two-year moratorium on recognition of Indian tribes so that Congress could review the impact of Indian casinos. Bush has not responded, according to Wolf's spokesman.

At the same time, Bush maintained ties with some of those who are now key figures in the investigation into lobbying for Indian tribes.

Reed played a key role in Bush's reelection campaign by serving as the Southeast regional chairman. Reed, who is planning to run for lieutenant governor of Georgia, has cooperated with Senate investigators and is providing records of his transactions to the Indian Affairs Committee. His spokesman confirmed that federal officials have subpoenaed Reed's records.

Norquist was an influential adviser to Bush campaign strategists in 2004 and remains a key player on tax policy, holding weekly meetings with conservatives that often include White House officials. Norquist acknowledged earlier this month that he had arranged annual meetings with Bush over a four-year period at which Indian tribal chiefs discussed tax policy. He said the tribal leaders did not discuss casinos with the president. Norquist has spoken with Senate investigators but said he has not turned over a list of donors to his organizations, citing confidentiality.

Abramoff, meanwhile, appears to be the central focus of the probe. Federal investigators are looking at whether he defrauded the tribes, and how Abramoff collected a reported $6 million -- much of it from Indian tribes -- for a group called the Capital Athletic Foundation. The foundation used most of the money to fund a private school established by Abramoff, who invoked his right against self-incrimination when grilled by members of the Senate Indian Affairs Committee.

Bush has not spoken on the matter.

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