BigLaw Wins Bid to Recoup $17.7 Million Lost in Abramoff Scandal From Henchman

A former Jack Abramoff business partner cannot challenge Greenberg Traurig‘s demand that he pay nearly $17.7 million in restitution for money the firm doled out to victims in a fraud scheme, a federal judge in Washington said this evening.

Michael Scanlon, a public affairs specialist who worked with Abramoff to advocate for Native American casino interests, argued that Greenberg Traurig should not be allowed to recoup its losses from him. Scanlon was sentenced in February in U.S. District Court for the District of Columbia to 20 months in prison for his role in the fraud scheme.

The Native American tribes that Greenberg Traurig paid in recent years had either sued the firm or threatened to sue over the kickback scheme Scanlon and Abramoff orchestrated. Scanlon’s attorneys at Ropes & Gray argued in recent months that Greenberg Traurig had contemporaneous knowledge of certain fees Scanlon was paying Abramoff.

Scanlon’s attorneys, including Ropes & Gray partner Stephen Braga, asked Judge Ellen Segal Huvelle for a hearing to challenge Greenberg Traurig’s restitution demand. Huvelle recused, and Chief Judge Royce Lamberth picked up the dispute. (Huvelle is a former partner at Williams & Connolly, which represents Greenberg Traurig.) Greenberg’s lawyers said Scanlon should not be allowed to keep any proceeds from criminal activity.

Lamberth first had to decide whether Scanlon is permitted as a matter of law to object to Greenberg Traurig’s entitlement to restitution. This evening, in a six-page ruling (PDF), Lamberth said Scanlon does not have that option.

“Given the lack of authority for the novel proceeding [that Scanlon] seeks, [Scanlon] is not permitted to pursue his objection,” Lamberth said in his ruling.

Federal prosecutors did not charge Greenberg Traurig in the fraud scheme and did not designate the firm an unindicted co-conspirator, Lamberth noted. The Justice Department last month declined to take a position on whether Greenberg Traurig is entitled to compensation from Scanlon.