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Casino partners hit with fraud charges

A lobbyist and a businessman are accused of forging documents for the purchase of SunCruz Casinos.

MIAMI - Prominent Republican lobbyist Jack Abramoff and New York businessman Adam Kidan had known each other since their college days in the Washington, D.C., area. They stayed in touch over the years and became business partners in a 2000 deal to buy a fleet of gambling boats.

Now, both are charged in a federal grand jury indictment with fraud in connection with their purchase of SunCruz Casinos. And Abramoff says in court documents that he was hoodwinked by Kidan, who Abramoff contends kept secret his past business failures and disbarment as an attorney.

"Had I known these facts about Kidan, I would never have signed" the SunCruz loan papers central to the federal indictment, Abramoff said. The statement was in one of thousands of pages of documents filed in response to a lawsuit brought against Abramoff, Kidan, SunCruz and others by two lenders after the ill-fated purchase.

Kidan never responded to Abramoff's allegations, nor did he answer the lawsuit filed by SunCruz financiers Foothill Capital Corp. and Citadel Equity Fund Ltd. A default judgment was entered against Kidan in the case. But the lawsuit was dismissed on Sept. 1 without damages being awarded, shortly after Abramoff and Kidan were indicted.

Kidan's lawyer in the Florida criminal case, Martin Jaffe, said he would not comment on Abramoff's claims. A telephone message left at Kidan's home in New York was not returned.

Abramoff, once a close associate of House Majority Leader Tom DeLay, R-Texas, and Kidan are charged in the six-count indictment with wire fraud, mail fraud and conspiracy in their September 2000 purchase of SunCruz for $147.5-million.

Both have pleaded not guilty.

Prosecutors say Kidan and Abramoff created fake documents indicating they had contributed $23-million of their own money toward the purchase, enabling them to get $60-million in financing from Foothill Capital and Citadel Equity. Abramoff and Kidan actually contributed no money for the deal, prosecutors say.

Abramoff, who raised over $100,000 for President Bush's re-election campaign, is also under investigation in Washington for his lobbying activities on behalf of Indian tribes and for his role in paying for overseas trips for DeLay.

The civil SunCruz case provides a detailed window into the facts behind the criminal charges, including Abramoff's assertion that Kidan is to blame for the alleged fraud.

"His position has been fairly stated in the civil case," said Abramoff's criminal defense lawyer, Neal Sonnett. "Our defense is that he committed no fraud."

Abramoff and Kidan were not always at odds. Their idea in buying SunCruz, Abramoff said, was that Kidan would run the company in Florida and Abramoff would use his "lobbying expertise and network" in Washington to help the company expand and avoid regulatory pitfalls.

At the time, SunCruz operated a fleet of 11 ships for "cruises to nowhere" where people sailing from nine ports in Florida and Myrtle Beach, S.C., could gamble at slot machines and gaming tables.

According to the court documents, Abramoff was approached in 1999 by attorneys representing Konstantinos "Gus" Boulis, a Greek-born South Florida businessman who was being forced to sell his SunCruz fleet by the Justice Department because he lacked U.S. citizenship. Officials agreed to keep the requirement a secret so that Boulis could get a decent price.

Immediately, Abramoff said in an affidavit that he thought of his old college friend Kidan, who "had sold a business known as Dial-a-Mattress and was looking to invest his eight-figure payoff from that sale." Abramoff and Kidan agreed to go 50-50 in the SunCruz deal.

Throughout the negotiations, Abramoff said Kidan continually provided assurances that he would handle most of the required $23-million cash contribution. Abramoff needed to put up only $700,000, and he contended that Kidan personally handled all the closing documents in September 2000. Abramoff only signed and returned them by fax.

In fact, according to federal prosecutors, Kidan and Abramoff concocted a fake document showing that the $23-million had been transferred to a Boulis bank account. Instead of actual cash, Kidan and Abramoff allegedly gave Boulis two promissory notes totaling $20-million, indicating that Boulis was aware of what was going on.

The lenders said in court documents that they would never had made the $60-million loan if they had known about the promissory notes.

After the sale, Boulis kept a 10 percent stake as a consultant but quarreled repeatedly with Kidan over the way SunCruz was being run. On Feb. 6, 2001, Boulis was shot to death in Fort Lauderdale at the wheel of his BMW sedan, a murder that has never been solved.

Several months after Boulis was slain, SunCruz filed for bankruptcy and was eventually purchased in February 2004 by Ocean Casino Cruises Inc. The lenders filed their lawsuit in federal court in May 2003, reaching a settlement for an undisclosed amount with Abramoff but not with Kidan.

[Last modified September 24, 2005, 00:59:07]