Thursday, July 30, 2009

Trial Starts for Contractor with Ties to Murtha

DOJ Says Murtha Earmark Money Was Illicitly Distributed
Paul Singer
Roll Call

John Murtha

A contracting firm that had hired the brother of Rep. John Murtha (D-Pa.) as its lobbyist took the proceeds from a Murtha-provided, $8.2 million Air Force earmark and distributed hundreds of thousands of dollars to other companies represented by the Congressman’s brother for items that were not part of the project, the Justice Department charged Thursday.

The charges make no indication that the Congressman had any involvement or knowledge of the transactions.

Roll Call reported in June that Murtha used a 2005 tsunami relief bill to take away $8.2 million of government funding from a company called AEPTEC Microsystems that had severed ties with his brother’s lobbying firm and moved that money to Coherent Systems International, which had hired his brother’s firm. The lobbying firm, Rockville, Md.-based KSA Consulting, had hired Kit Murtha and Carmen Scialabba, a former Appropriations Committee staffer for Congressman.

Charging documents filed Thursday by the Justice Department in the U.S. District Court for the Northern District of Florida allege that Richard Ianieri, CEO of Coherent, paid a total of $1.8 million to other firms for items that were not part of the “Ground Mobile Gateway” project that Murtha’s earmark had funded. Ianieri is charged with one count of presenting false purchase orders to the government.

The Ground Mobile Gateway project was a mobile communications platform that could help airmen in the field better target airstrikes.

According to the Justice Department, Coherent paid $300,000 to Gensym — a Massachusetts-based company that opened an office in Murtha’s district and hired KSA as its lobbyist — for software that Coherent never used. The charges also allege that Coherent paid $275,000 to VidiaFusion, a KSA client in Florida, for software that was never used.

The Justice Department notes that both companies provided the software for which they were paid, and neither company is charged with wrongdoing.

Earlier this week, Ianieri was charged in Pennsylvania with soliciting $200,000 in kickbacks in January 2006 from a defense contractor identified only as “K.”

In Thursday’s filing, the government alleges that in December 2005, Coherent paid the Pennsylvania defense contractor Kuchera Industries $650,000 for “prototype cards” that were not part of the Ground Mobile Gateway project.

Kuchera is owned by Bill Kuchera, a friend and longtime supporter of Congressman Murtha. Coherent and Kuchera had co-located some of their operations in Pennsylvania, and Murtha had praised their close cooperation.

The government also alleges that Coherent paid $200,000 to a company called Schaller Engineering for “target tags” that were never delivered.

Richard Schaller has been charged separately with distributing the proceeds of that payment to himself and his business partners, including Mark O’Hair, the Air Force official who approved the original payment to Coherent. O’Hair has also been charged. Attorneys for O’Hair and Schaller have denied the charges, and their supporters argue that the men were attempting to build a revolutionary product for the Defense Department.

A hearing in Ianieri’s case has been scheduled for July 14 in the federal court in Pensacola, Fla., and he is expected to plead guilty to the charges.

KSA President Ken Stalder declined to comment for this article.

Murtha spokesman Matt Mazonkey called the charges disturbing and said that “if true, then the individuals and companies in question should be held accountable under the law.”
Trial Starts for Contractor with Ties to Murtha

PENSACOLA, Fla. -- Directors of a Panhandle Air Force research lab and special operations command center got around rules prohibiting the military from lobbying Congress by encouraging defense contractors to seek the money from political leaders for their pet projects, an attorney for a contractor said Monday at the start of a criminal trial.

Contractor Richard Schaller is accused of destroying records and lying to a grand jury. Schaller is also accused of aiding and abetting a research lab employee in a scheme to hide the worker's connection to Schaller's company. The lab worker would then steer contracts to Schaller's company.

Schaller is among those accused by federal prosecutors who are looking into alleged wrongdoing by defense contractors with ties to Rep. John Murtha, D-Pa., chairman of the House Appropriations Subcommittee on Defense. Murtha has not been accused of criminal wrongdoing.

Schaller and other contractors were doing what Air Force leaders wanted in the aftermath of 9/11 - ensuring funding for special research projects that would save lives on the battlefield, Schaller's attorney Albert Oram said.

"The vice commander of the Air Force Special Operations Command signed a directorate that they try to leverage Congressional funding," Oram said. "It violated Air Force policy, there is a chain of command and they are not supposed to lobby Congress."

Air Force leaders ignored the lobbying by defense contractors before widespread publicity surrounding Murtha and defense earmarks, he said.

"Then they got cold feet and decided that they really had a problem because the earmarks have become a political hot potato, but the lab wanted this done and the special operations command wanted this done," he said.

Among those expected to testify is Richard Ianieri, the former chief executive of a defense contractor with ties to Murtha. Ianieri pleaded guilty in federal court July 20 to a kickback scheme and defrauding the Air Force.

Federal prosecutors said Ianieri solicited kickbacks from a subcontractor while he headed Coherent Systems International Corp.

Prosecutors said Monday that Schaller had ties with Coherent and with Kuchera Defense Systems.

Murtha has directed hundreds of millions of dollars in government contracts over the years to Coherent and other defense contractors through a process called earmarking.

Executives at Coherent and two other companies named in court papers in Ianieri's Florida case have donated over $95,000 to Murtha's re-election campaigns and his political action committee since 2002, according to Federal Election Commission records.

One of the companies is Kuchera of Windber, Pa., about 10 miles from Murtha's political home base of Johnstown.

In 2006, Murtha said Coherent and Kuchera Defense Systems were working "virtually as one company" on 14 contracts worth $30 million to develop high-tech military gear. Kuchera built high-tech components that Coherent designed.

The Florida charges against Ianieri concerned a Coherent contract given through the Air Force Research Laboratory to deliver four Ground Mobile Gateway Systems, which are designed to help soldiers and pilots trace U.S. units and cut down on friendly fire.

The United States paid Coherent $5.9 million to build the systems. According to court documents, Coherent subsequently paid about $1.8 million to subcontractors for the delivery of software and materials that were not part of the contract.

Prosecutor Stephen Preisser said Schaller was among those paid for work he did not do.

"Coherent lobbied Congress for $8.2 million for the Ground Mobile Gateway System," he told jurors. He said Schaller received payments from this money, at least $60,000 for work he did not perform.

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