Bandow resigned from Cato on December 15, 2005, after admitting he accepted payments from Abramoff ... in return for publishing articles favorable to Abramoff's clients over a period of approximately ten years. He has referred to these activities as "a lapse of judgment," saying that he accepted payments for "between 12 and 24 articles" over a period of years. He stepped down after BusinessWeek Online contacted the Cato Institute to probe news of possible payments. He typically received on the order of $2,000 per article.[3]

Copley News Service, which carried Doug Bandow's syndicated column, suspended him immediately after the payola news became public. National Society of Newspaper Columnists President Suzette Martinez Standring said his action "isn't a lapse in judgment, it’s soul-selling. With so much practice at tweaking copy for others, I’m sure the advertising industry will welcome him." [4]

Steve Clemons, publisher of the blog The Washington Note, has referred to Doug Bandow as his friend and stated that he would be happy to have him guest blog again, but later withdrew that statement. He said that Bandow's resignation was sufficient penalty for his transgressions, and that the larger problem is the corruption of think tanks. [5]

Peter Ferrara, a senior policy adviser at the Institute for Policy Innovation, also took money from Abramoff to write favorable op-ed pieces. "I do that all the time. I've done that in the past, and I'll do it in the future," he explained.[6]

On December 28, 2005, Chuck Muth, president and CEO of Citizen Outreach, announced that Bandow was joining the think tank as vice president of policy. Although Muth noted that he and Bandow did not "agree 100 percent" on every issue, he expressed admiration for his new colleague's reasoning "based on objective thought and not emotion." "He's able to justify any public policy issue from a limited government standpoint in the best tradition of our Founding Fathers," he said.[7]

Bandow resides in Springfield, Virginia.