SunCruz Casinos sale (2000)

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Abramoff Scandal

Events & scandals

Plead guilty

Jack Abramoff (70 months)
John Albaugh
Jared Carpenter (45 days)
Robert Coughlin
Italia Federici (2 months)
J. Steven Griles (10 months)
William Heaton (24 months probation)
Adam Kidan (70 months)
Bob Ney (30 months)
Tony Rudy
Michael Scanlon
Roger Stillwell (24 months probation)
Neil Volz (24 months probation)
Mark Zachares

Convicted

David Safavian (18 months)

Named but not charged

Others

Lists

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SunCruz Casinos is one of many cruise lines that offer "cruises to nowhere," legally transporting passengers into international waters beyond the reach of federal and state gambling laws. In the 2000s, it became known for the involvement of some high profile lobbyists such as Jack Abramoff, and the murder of its former owner, Konstantinos "Gus" Boulis.

1 Founding and investigation
2 Purchase of SunCruz Casinos and political ties
3 Payment dispute and murder
4 Bankruptcy, investigations, and indictments
5 Connections to Congressman Bob Ney
6 References
7 External links

[edit] Founding and investigation

In 1994 Boulis, already a multi-millionaire by founding the Miami Subs sandwich shop franchise, bought a number of luxury yachts. He remodeled the yachts as casinos, and began to operate his "cruises to nowhere", departing from the Florida coast into international waters. There, out on the sea, passengers would spend millions at poker and blackjack and slots. Boulis called his fleet of 11 ships the SunCruz Casino line. By the time he sold the company in 2000 SunCruz Casinos was earning tens of millions of dollars in annual profits and employed over 2,000 people.

Florida state officials made several attempts to shut the business down, finally succeeding in 1999 when federal prosecutors charged Boulis with violating shipping laws over the ship's registration—U.S. shipping code forbids foreign nationals from owning American commercial vessels, and Boulis was a Greek citizen. Boulis agreed to pay a $1 million fine, sell the business, and never work in the gaming industry again. So that Boulis's would be able to get a fair price when he sold, the deal with the feds would be kept a secret. In January 2000, Boulis went looking for a buyer.

[edit] Purchase of SunCruz Casinos and political ties

Boulis' lawyer, Art Dimopoulos, worked at Preston Gates Ellis & Rouvelas Meeds, a megafirm in Seattle, Washington. Dimopoulos was tasked with finding a buyer for SunCruz. Jack Abramoff, a lobbyist then employed at the same firm, heard about the situation. Abramoff told Dimopoulos that he knew buyers who would be interested. They included himself, but ethics rules prohibit the same law firm from representing a buyer and a seller, therefore Abramoff hid his interest in the purchase from his firm.

Abramoff enlisted Adam Kidan as a partner in the deal and another minor partner, Ben Waldman. Both were acquaintances of Abramoff during his College Republican days.^[1] The deal started to come together. The price was approximately $145 million; Abramoff and Kidan would come up with a $23 million down payment, and then other financiers would release loans.

Press accounts have suggested that Abramoff used his political connections to gain support for the deal in Washington ^[2]. Tom DeLay, then House minority whip gave Boulis a flag that had flown over the capitol building. Abramoff brought his lead financier in the deal to a fund raiser for DeLay in Abramoff's box at FedEx Field.

Ohio Republican Representative Bob Ney aided the purchase in the House on several occasions. In March 2000, before the deal was closed, Ney entered comments in the Congressional Record accusing the SunCruz management of cheating passengers.

Rep. Dana Rohrabacher (R-Calif.) was listed as a financial reference for Abramoff in the purchase. He was also quoted as saying, "I don't remember it, but I would certainly have been happy to give him a good recommendation", and "He's a very honest man." by the Washington Post^[3]

On September 22, in secret, Abramoff and Adam Kidan convinced Boulis to accept promissory notes for $20 million in exchange for a secret 10 percent interest in the newly reorganized SunCruz Casinos. The deal was doubly illegal: Abramoff and Kidan were violating the terms of their purchase agreement with their financiers which required that they put up $23 million of their own money, and Boulis was violating the terms of his settlement with the government, which required that he separate himself entirely from his company.

The deal was closed on September 27 using false documents that purported to attest that Abramoff and Kidan has paid the $23 million. On October 26, 2000, Ney entered comments into the Congressional Record praising the change of ownership. Ney has since accused Abramoff of duping him.

[edit] Payment dispute and murder

The business relationship soured soon after the purchase. Boulis allegedly clashed with Kidan over the falsified wire transfer. Abramoff was mostly a silent partner, but both he and Kidan used SunCruz funds to pay for numerous personal expenses.^[4] Boulis also alleged that Kidan had links to organized crime. ^[5]: The relationship between Kidan and Boulis grew so contentious that they had a fistfight at a business meeting in December 2000, with both parties allegedly making threats. Boulis was shot to death two months later in February 2001, in what police called "a gang style hit". A suit brought by Boulis' estate alleges that Adam Kidan made three payments of $10,000 to Moscatiello immediately prior to the murder.^[6]

Kidan had hired Anthony Moscatiello as a business advisor despite a previous indictment as former bookkeeper for the Gambino crime family (led by Mafia crime boss John Gotti), paying him $145,000 through SunCruz for services that were allegedly never rendered. Ferrari also received $95,000 from SunCruz as payment for security services, in addition to further sums in casino chips.

Moscatiello and Anthony Ferrari were charged with murder, conspiracy and solicitation to commit murder. James Fiorillo was charged with murder and conspiracy. In May 2006, Adam Kidan told authorities that Moscatiello and Ferrari confided in Kidan that another Gotti-associate, John Gurino, killed Boulis. Gurino himself was killed in October 2003. Gurino wasn't part of the investigation before Kidan gave authorities the name. ^[7]

[edit] Bankruptcy, investigations, and indictments

SunCruz declared bankruptcy in June 2001, and was subsequently auctioned off to new management in a bankruptcy action brought by Foothill Capital. Abramoff and Ben Waldman signed their stake in SunCruz over to the Boulis family estate, and Kidan later turned over his stake for $200,000. Foothill settled with Abramoff for an undisclosed sum and continued litigation against Kidan.

On December 15, 2005 Kidan entered a guilty plea in a Miami federal court to one count of conspiracy and one of wire fraud, each of which carries a possible sentence of five years in prison. U.S. District Judge Paul Huck accepted the plea and set sentencing for March 1. The specific allegations were:

On September 27, 2000, Foothill Capital Corporation, along with Citadel Equity Fund, Ltd., funded approximately $60 million in loans toward the $147.5 million sale to a group of investors of SunCruz Casinos by Konstantinos (Gus) Boulis. The buyers were headed by defendants Adam R. Kidan and Jack A. Abramoff. According to the Indictment, as an express condition for providing the loan, the lenders required proof that Kidan and Abramoff had made a cash equity contribution toward the purchase price in an amount of at least $23 million. As proof that this condition had been met, the buyers, led by defendant Kidan, executed a closing statement, signed by Kidan, attesting that $23 million in funds had been transferred by the buyers to Gus Boulis towards the purchase price of SunCruz. Also, as part of the closing documents, Kidan and Abramoff signed “cash equity contribution” statements asserting that the buyers had contributed no less than $23 million in cash toward the purchase of SunCruz. In support of the above false statements, Kidan and Abramoff caused to be sent to the lenders a counterfeit copy of a wire funds transfer notification, reflecting that $23 million had been transferred from the account of Leak, Inc. at Chevy Chase Savings Bank, in Chevy Chase, Maryland, to the account of Gus Boulis at Ocean Bank, in Miami, Florida.

To further support the loan application, both Kidan and Abramoff provided personal financial statements. The lenders relied on both financial statements, and the counterfeit copy of the wire funds transfer, deciding to approve and fund the loan. Some of the proceeds of the loan were then wire transferred to the account of Gus Boulis at Ocean Bank, in Miami, Florida. The copy of the wire funds transfer notification reflecting the transfer of $23 million from the buyers to the seller was fraudulent, as no such transfer of funds ever occurred, and the buyers had never made any cash contributions toward the purchase of SunCruz. Similarly, the personal financial statements provided by Kidan and Abramoff to Foothill contained false information concerning their respective assets and liabilities.

On January 4, 2006, Abramoff pleaded guilty to conspiring to commit wire fraud and mail fraud, and of a separate charge of wire fraud, relating to the SunCruz purchase. ^[8] On March 29, 2006, Abramoff and Kidan were each sentenced to five years and ten months in prison—the minimum allowed per the plea bargain—and were ordered to pay restitution of more than $21 million for their involvement in the SunCruz casino deal.

[edit] Connections to Congressman Bob Ney

According to the Washington Post, Bob Ney is under investigation by prosecutors for his role in aiding the purchase.^[9], and was implicated in Abramoff's plea agreement ^[8]. (In a separate Indian lobbying case, Abramoff pleaded guilty to charges including bribing a Congressman who was later identified as Ney.)

In March 2000, before a deal for Abramoff and others to purchase SunCruz was closed, Ney entered comments in the Congressional Record that were critical of the management of SunCruz: "Mr. Speaker, how SunCruz Casinos and Gus Boulis conduct themselves with regard to Florida laws is very unnerving. Florida authorities have repeatedly reprimanded SunCruz Casinos and its owner Gus Boulis for taking illegal bets, not paying their customers properly and had to take steps to prevent SunCruz from conducting operations altogether." It is alleged that this statement was intended to pressure SunCruz to sell to Abramoff on terms favorable to the latter.

It is alleged that Ney, like other Republicans in the House, was under pressure to raise money for the Republican National Congressional Committee (RNCC) in October 2000, a month prior to the November elections. In an October 23 e-mail from Abramoff to Scanlon, Abramoff asked "Would 10K for NRCC from Suncruz for Ney help?" Scanlon replied, "Yes, a lot! But would have to give them a definite answer--and they need it this week..."

The $10,000 was sent to the RNCC within days, and Ney got credit for raising it. Scanlon wrote a draft statement for Ney that praised Adam Kidan, the main partner of Abramoff in purchasing SunCruz. Ney then inserted the statement into the October 26 Congressional Record. ^[10]