Fitial's Imprisoned Friend Scanlon Ordered To Pay Restitution

April 23, 2011

Michael Scanlon, Jack Abramoff's side-kick who often visited the CNMI when he wasn't ripping off Indian tribes, is in the minimum security Pensacola Florida Federal Prison Camp. The felon will be behind bars for 20 months after being found guilty of bribing a U.S. Congressman and defrauding Indian tribes. He will be released in September 2012.

Scanlon was former Rep. Tom DeLay's chief of staff. DeLay (R-TX), also a felon, is awaiting sentencing after being found guilty.

Yesterday Scanlon was hit with another blow when U.S. District Judge Royce Lamberth ruled that the crook must pay restitution to Greenburg Taurig and may not keep any proceeds he acquired from criminal activity.  The felon was ordered to pay the lobbying firm $17.7 million. The money was paid by the firm to clients that Scanlon and Abramoff defrauded. Scanlon fought in the courts to keep the money, but Greenberg's attorneys claimed that the firm knew nothing of their schemes.

Scanlon took the millions he made by defrauding innocent victims and invested it in lucrative real estate ventures. He is now a very wealthy man. Among his property holdings is a luxury hilltop property in St. Barts, a beachside house in Rehobath Beach, Delaware and several other real estate investments in Florida where he lives. A reporter from the Delaware News Journal blew the story on his lavish lifestyle, exposing that while he was working as a lifeguard making a little more than minimum wage, he was dropping millions on mansions and other property. TPM Muckraker reported:
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.
Scanlon has been selling off properties he bought with the money he stole from clients in order to pay the millions he owes in  restitution.

Fitial and Scanlon

The story of how Governor Fitial ended up stealing the speakership is documented from the Halls of Congress to national newspapers and magazines to television and radio shows. It was also told in the Saipan Tribune. It involves felons Jack Abramoff, Tom DeLay and Michael Scanlon, Fitial's "friends."

One source clearly outlines the story. That source is Rep. George Miller (D-CA) who has helped to expose the corruption and abuses in the CNMI for decades. In May 2005, Rep. Miller sent a letter to former California Richard Pombo (R-Abramoff) who was the Chair of the House Resources Committee. Rep. Miller asked for an investigation of the wrong doings in the CNMI. The letter succinctly details the scheme to steal the speakership (emphasis added):
Recent media reports have uncovered information about suspected wrongdoings by lobbyist Jack Abramoff, his associates, and clients in the CNMI. This new information adds additional weight to my request of April 14, 2005 that you begin a thorough investigation of the matter by the Committee on Resources which has jurisdiction over territorial affairs. Your staff asked for documents associated with my request, and on April 22 I provided 428 pages of evidentiary materials related to my initial request to you.In my April 14 letter to you, (please note that it was in fact April 14 and not April 12 as stated in your letter to me of May 9), I wrote that in 1999, two men associated with then-Majority Whip Tom DeLay - Ed Buckham, a one-time chief of staff who later became the head of ARMPAC, and Mike Scanlon, a DeLay spokesman - were reportedly involved in an effort to influence the election of the Speaker to the CNMI House of Representatives. I have since learned of additional evidence to suggest these two men may have traded political favors to sway the election in favor of a candidate most likely to renew a contract with lobbyist Jack Abramoff.

In 1999, Mr. Abramoff s contract with the CNMI government was suspended, with no clear prospect of renewal.' At the same time, an Abramoff supporter, Mr. Benigno Fitial, was a candidate for Speaker of the CNMI's House of Representatives. Mr. Fitial, however, was two votes behind his opponent, Mr. Heinz S. Hofschneider, according to press reports of a letter signed by 10 out of the 12 CNMI Republican House members in support of Mr. Hofschneider, including Representative Alejo Mendiola and Representative Norman S. Palacios. These 10 Republican legislators were enough to secure Mr. Hofschneider the election. New reports by the Los Angeles Times and Marianas Variety confirm that in 1999 Mr. Fitial did indeed meet with Mr. Buckham and Mr. Scanlon - who was still on Mr. DeLay's payroll at the time. At the meeting, Mr. Fitial recommended that the two men meet with Representatives Mendiola and Palacios, both of whom had signed the letter in support of Mr. Hofschneider, to encourage them to switch their votes for speaker.

When Mr. Scanlon and Mr. Buckham met with the two legislators, they reportedly promised to help secure money for local projects in exchange for their votes for Mr. Fitial, including federal resources for repairing a breakwater on the island of Tinian, a priority for Mr. Palacios. They were successful, and Mr. Fitial was elected Speaker. Mr. Abramoff s contract was subsequently renewed.

The following year, Congress passed one appropriations bill in October that included $150,000 for the breakwater restoration project in Mr. Palacios' district and another appropriations bill in May that listed funding for an airport repaving project in Rota in the committee report as a priority for discretionary grants. The Rota project was located on the island that Mr. Mendiola represented.

Mr. DeLay was a member of the conference committee on the bill that included the breakwater project, as well as a member of the subcommittee that approved the transportation project. His aide, Mr. Scanlon, was on the appropriations committee payroll when he traveled to the Mariana Islands with Mr. Buckham to secure Mr. Fitial's election as speaker.

This new information makes it even more imperative that you launch a bipartisan and thorough investigation into potential unethical and illegal behavior by Mr. Abramoff and others with respect to U.S. territorial matters, including whether there was inappropriate congressional interference into CNMI elections. As you may already be aware, both the CNMI legislature and Governor Babauta's office have publicly stated that they have no objection to such a congressional investigation.
Congressman Miller outlined the relationship between Tom DeLay, Scanlon, Buckham, Abramoff and Fitial. Omitted from his narrative was the fact that Abramoff also sent lobbyist Neil Volz to the CNMI in January 2000 to ensure Fitial's election and to secure his lobbying contract with the CNMI government. Volz was the former chief of staff for former Rep. Bob Ney who was convicted and served jail time for Abramoff-related crimes.

How intertwined was the lobbyist work with the CNMI infrastructure projects on Rota? A March 12, 2002 Saipan Tribune article entitled, "Rota mayor seeks aid of US officials on airport project" claims (emphasis added):
Rota Mayor Benjamin T. Manglona urged federal officials to extend necessary assistance for the rapid completion of the Rota airport improvement project, which is seen to alleviate the economic situation of the island.

Citing economic growth and a potential contributing partner of the Commonwealth, Manglona provided US Rep. Mike Scanlon and US Department of Transportation Airports District Officer Daniel S. Matsumoto a draft copy of the Rota International Airport Runway Extension analysis.
Just for the record, Mike Scanlon was a former congressional staffer and lobbyist, not a member of Congress. He left his position as with Rep. Tom DeLay in March 2000. It's not surprising that lines got blurred between members of the U.S. Congress and the lobbyists. If you read the billing records, memos and indictments it does appear that the lobbyists controlled some members of Congress.

TPM Muckraker also covered the scandal (links added):
DeLay staffer Michael Scanlon and former DeLay Chief of Staff Ed Buckham (then a lobbyist with Alexander Strategy Group) traveled to Saipan in December 1999 armed with federal incentives to convince two members of the commonwealth legislature, Alejo Mendiola and Norman S. Palacios, to change their votes for Speaker and elect Benigno Fitial. Fitial was expected to reinstate Abramoff's expired lobbying contract. (A Ney staffer followed in January 2000.)

Fitial e-mailed top Marianas officials on June 30, 2000 pressuring them hire Abramoff: "Please urge Teno [the island's governor] to execute the agreement as we will continue to encounter problems...if the contract is not executed. We need P & G [Abramoff's law firm] to help save our economy...Please help!!"
At the end of that July, the Marianas House passed a resolution urging the Governor to rehire Abramoff. A few days later, Abramoff and Preston Gates were hired for $100,000 a month. This contract went with Abramoff to Greenberg Traurig and continued until a new governor took office in 2002.
December 16, 1999 Saipan Tribune article reported:
Both Mr. Mendiola, who was re-elected in the last Nov. 6 polls, and Mr. Palacios initially threw their support behind Mr. Hofschneider’s bid for the top House post during a caucus held by GOP members last month, along with seven others.

Their withdrawal ended weeks of speculations on whom they were finally supporting in the speakership battle that began immediately after the elections. Current House Speaker Diego T. Benavente decided to step down to give way to Mr. Hofschneider, who has been eyeing the post since 1997.
After the alliance was formed, Fitial became speaker, Mendiola won the vice-speaker position and Palacios was awarded the chair of the Federal and Foreign Relations Committee.

In April 2000, Fitial led a delegation of 12 CNMI lawmakers to Washington, DC. According to the Saipan Tribune the delegation led by House Speaker Fitial met with many of Abramoff's foot soldiers:
Meanwhile, the delegation is nearing to the end of its week-long visit to Washington with a "busier" schedule, according to Vice Speaker Alejo M. Mendiola.

Meetings are planned with key members of Congress, including House Majority Whip Rep. Tom DeLay (R-TX), Reps. George Radanovich (R-CA), Bob Schaffer (R-CO), Jim Hansen (R-Utah) and Dana Rohrbacher (R-CA).

Today, CNMI legislators are expected to hold discussion with congressional groups like the Western Caucus, Americans for Tax Reform and the Traditional Values Coalition.

On Tuesday, they met with Sen. Craig Thomas (R-Wyoming), a ranking member of the Senate Energy and Natural Resources Committee which has oversight of the insular areas.

Mr. Fitial said they had discussed with him the conditions in the CNMI and the efforts the government is undertaking to boost the local economy, including labor and business reforms.

Mr. Thomas voted in favor of the Senate proposal seeking full extension of the federal immigration laws to the Northern Marianas, whose passage in the lower house is still uncertain as the CNMI has lobbied for its disapproval due to devastating impact on the island’s economy.

"We can tell that... he would be considering [our situation] and he would be supportive of our cause," said Mr. Fitial.
Aside from these policy-makers, the delegation also met with the editorial board of Washington Times, led by Helle Bering, in its headquarters.
All of the meetings were arranged by the Abramoff team. While Abramoff was not representing the CNMI government as a lobbyist, he was under contract representing their agenda through The Western Pacific Economic Council and Tan-owned industries who had hired him.

In October 2000, Rota Rep. Alejo Mendiola and Tinian Rep. Norman Palacios announced that that trip (orchestrated by Abramoff-Fitial) was a success. The Tribune Article reported:
Vice Speaker Alejo M. Mendiola, Jr. (R-Rota) and Rep. Norman S. Palacios (R-Tinian) announced yesterday that Rota and Tinian will benefit from the two special projects inserted in the Energy and Water appropriations bill signed into law Oct. 27 by President Clinton. The U.S. Army Corps of Engineers will begin the first phase of work to repair and improve ports on Tinian and Rota.

"There’s no question that each of these projects is sorely needed," said Rep. Palacios. "We asked Congress for help in advancing the needed appropriations when we were in Washington earlier this year. This is the result, which we owe to the advocacy of our friends in the House and Senate and to Speaker Ben Fitial, who led what-looking back on it-was a very successful delegation visit."

"Thanks to Speaker Benigno R. Fitial and our friends in Congress, we can remove the barrier to the resumption of flights, and allow Rota to take a major step forward in the expansion of our airport facilities," said Mr. Mendiola.
The new members of the alliance travelled quite a bit too. Fitial and Mendiola travelled together to the Annual Speaker's Conference in Tennessee in September 2000. In October the duo announced that they would be hosting an educator from Seattle Washington to discuss a new pilot program there. In October 2000 a delegation including Fitial, Mendiola, Palacios, other members of the legislature, and Governor Pedro Tenorio took a trip to Japan to recruit tourists and investors. Also on the trip were representatives from the business community: Saipan Chamber of Commerce Lynn Knight, HANMI President Ron Sablan, Strategic Economic Development Council Chair Scott Bowman, Aviation Committee Chair Bob Jones and MVA Board Chair Dave M. Sablan and Managing Director Perry Tenorio.

In January 2001, Governor Pedro P. Tenorio, Speaker Fitial, Vice Speaker Alejo M. Mendiola, Federal and Foreign Relations Committee chair Rep. Norman S. Palacios and Health and Welfare Committee chair Rep. Malua T. Peter flew again to Washington, DC this time for President Bush's Inauguration. It was during this time in DC that Abramoff arranged the photo of Fitial and President Bush.

In 2001 Fitial passed a House Resolution supporting continuing the contract of his friend Jack Abramoff. Governor Pedro Tenorio renewed the contract in July 2001.

The Fitial-Inos-Tan-Abramoff ties reach far back in time --as far back as the 1996. Jack Abramoff, his loyal members of Congress, CNMI officials, right-wing think tank representatives, and garment magnates did not just connect in Washington and in the CNMI. The 1996 Republican Convention held in San Diego, California from August 12th to the 15th was another gathering place where friendships would be forged and seeds would be sown.

Abramoff hosted Saipan garment magnate Willie Tan, his company executive, Benigno Fitial (former speaker of the CNMI House and present governor), and another Tan executive, Eloy Inos (currently lt. governor) at the convention.

Willie Tan, owner of Tan Holdings also was an Abramoff client, and he was a labor violator. He was charged with the largest labor settlement with the U.S. Dept. of Labor in U.S. history, paying $9 million in back wages to cheated workers. He also paid $76,000 in OSHA violations and pledged $1.3 million in factory renovations. Over the years many more labor cases would be filed against the company, including a case filed September 2008 against Tan Holdings by the EEOC.

It appears that the three CNMI visitors had a busy schedule at the GOP convention. Abramoff billed the CNMI for five days of meetings, meals, introductions to conservative members of Congress, and parties. Strategies were developed including plans to recruit still more potential CNMI-backers for junkets to the CNMI. From the billing records (emphasis added):
8/10/96 PP [Patrick Pizella] 2.70 Dinner meeting with W. Tan, E. Inos and B. Fitial re: CNMI issues—minimum wage , immigration and upcoming congressional elections and CNMI legislation; discussion re: upcoming trips of journalists and think tank representatives to CNMI and visits to Tan Holdings factory.
8/11/96 PP [Patrick Pizella] 4:30 Participate in event sponsored by Sen. Santorum's “FIGHT PAC” with W. Tan, E. Inos, B. Fitial and Senator Jim Jeffords (R-VT); follow-up luncheon/discussion with staff director of Senate Energy committee- G. Renkes; introduction of B. Fitial to Cong. Dan Burton (R-IN).
8/13/96 JA [Jack Abramoff] 4.00 Meetings at the Republican National Convention regarding Congressional Conservative Movement and Republican Party support for CNMI
8/13/96 JB [ Jonathan Blank ] 8:00 Meet with Saipan officials.
8/14/96 JA [Jack Abramoff] 4.00 Meetings at the Republican National Convention regarding Congressional Conservative Movement and Republican party support for CNMI
8/14/96 JA [Jack Abramoff] 8:00 Meet with Saipan officials.
8/15/96 JB [ Jonathan Blank ] 8:00 Meet with Saipan officials.
The CNMI government was billed a total of 39 hours for those meetings.

In exchange for all of the opportunities to network and gather support, John Pangelinian, Publisher of the Tan owned newspaper, The Saipan Tribune, made two $5,000 contributions to Santorum's Fight PAC in August 2006.

Fitial, Inos and Tan were the recipients of the infamous July 30, 1997 Secret Memo sent by Abramoff to outline their schemes to halt federalization. The plan included planting editorials and newspaper articles written by the lobbying team, writing speeches for members of Congress to read on the floor of the House, penning "Dear Colleague" letters, manipulating congressional hearings, defunding the Office of Insular Affairs, and getting "enemies" of the CNMI (federalization supporters) fired.

The Fitial-Inos-Tan-Abramoff connection lasted for many years and it continued even after Abramoff was indicted. In 2006, Fitial even sent a letter of support to the judge on behalf of close friend, Jack Abramoff, as a plea for leniency. From the letter:
With all that has been said and written about Jack Abramoff, I want you to know that to this day, despite his current difficulties, I continue to regard Jack as a close personal friend.
Three months before Fitial penned the letter to the judge proclaiming his friendship, he publicly denounced Abramoff and demanded that the estimated $11 million that the CNMI had spent on lobbying be returned to the CNMI by the lobbying firms. From the Saipan Tribune:
“Mr. Abramoff's criminal convictions appear to be negatively refocusing attention upon the Commonwealth. For years, the Commonwealth has diligently focused on reforming its labor system by cracking down on abuses and corruption,” the governor said.

“The scandal caused by Abramoff's actions has erased this progress by prompting some in U.S. Congress to declare that the Commonwealth maintains its unique status within the federal system as a result of Mr. Abramoff's acts of bribery and corruption,” he added.

Fitial said the lobby firms' association with Abramoff has put the CNMI in a bad position. The CNMI Attorney General's Office will also subpoena both lobby firms for records related to its dealings with the CNMI government, the governor said
Why would Fitial denounce Abramoff in January 2006 and write a letter to the judge proclaiming how great he was in March 2006? Maybe he feared Abramoff was going to rat him out and wrote the letter at Abramoff's request.

On February 15, 2007, the Marianas Variety reported that four FBI agents from the US arrived on Saipan to find out just what happened when Fitial became Speaker during the 12th Legislature. The paper reported:
Then-Reps. Norman S. Palacios and Alejo M. Mendiola had said they would support then-Rep. Heinz S. Hofschneider for the speakership but ended up voting for Fitial.
Palacios and Mendiola were persuaded by then-U.S. House Majority Whip Tom DeLay’s staffer Michael Scanlon and former chief of staff Ed Buckham to support Fitial.
Abramoff was one of DeLay’s closest friends.
After Fitial became speaker, the cash-strapped CNMI government renewed Abramoff’s contract.
It was DeLay who blocked congressional bills that would have federalized CNMI labor and immigration laws which the local garment industry also opposed.
Fitial, a former garment executive, has described Abramoff as his close friend.
It is a shame that so many officials, including Fitial, were not prosecuted for their criminal actions in the Abramoff scandal. Those who were not prosecuted continue their corrupt ways to the detriment  of the communities which they serve as "leaders."