Earmarks Became Contractor's Business
Tuesday, February 21, 2006
In the fall of 2003, Randy Beck, the president of a small San Diego manufacturing company, showed a new acoustics technology he was developing to his neighbor, defense contractor Brent Wilkes. Wilkes soon came back with an unusual proposition.
Wilkes said that Congress had set aside or "earmarked" $25 million in the military budget for the Navy to develop an acoustical system. He promised he could win the government contract to develop the system for Beck's Horizon Sports Technologies, according to allegations in a lawsuit. In return, Wilkes wanted $1.5 million up front to cover his lobbying expenses and a 51 percent interest in a new company they would set up to collect the government cash.
Wilkes's dealings with Beck -- outlined in court records after a falling-out -- provide insight into how one businessman set out to exploit the Washington system of earmarking -- the practice of members of Congress setting aside pots of money for pet projects. That practice, involving billions of dollars annually, is vulnerable to abuse because much of the lobbying and decision making takes place behind closed doors, according to critics. And Wilkes, who has been implicated in the bribery-related conviction of resigned Rep. Randy "Duke" Cunningham (R-Calif.), pushed the limits of that system.
Although it is common for lobbying firms to charge clients large fees to pursue earmarks, Wilkes's demand for a majority interest in the resulting contract is highly unusual, experts said. "It has a strong, bad odor about it," said Kenneth A. Gross, a Washington lawyer who specializes in ethics law. He said many states, including California, have banned such contingency, or success, fees, though there is no federal prohibition.
"My client did nothing inappropriate or illegal in trying to obtain funding for his clients' projects," said Wilkes's attorney, Michael Lipman of San Diego.
Wilkes was an obscure California contractor and lobbyist until his name surfaced last year as one of two defense contractors alleged to have given Cunningham $2.4 million in cash and other benefits in return for Cunningham's steering government business their way. One of Wilkes's companies received more than $80 million in Pentagon contracts over the past decade that stemmed from earmarks that Cunningham slipped into spending bills.
Although he has not been charged in the case, Wilkes's attorney has confirmed that he is the "co-conspirator" identified in the federal charging documents who allegedly made $625,000 in illegal payments to benefit Cunningham in 2000 and 2004. Prosecutors say the investigation is continuing.
Wilkes, 51, grew up in San Diego and graduated from San Diego State in 1977 after studying accounting. He worked in Washington in the 1980s but did not make his first federal political donation until 1991. Wilkes then went to work for a Southern California software company that was seeking federal contracts for converting paper documents to digital ones.
In 1995, Wilkes started a competing business, ADCS Inc., which stood for "automated document conversion systems." With Cunningham's help, he began winning contracts from the Pentagon.
He snared a $1 million Pentagon contract in 1997, which Cunningham proclaimed "an asset" to San Diego. In 1999, ADCS was awarded a $9.7 million contract to convert documents in Panama. Subsequently, the company began collecting more than $20 million a year in defense business.
As his business grew, Wilkes bought new homes in San Diego and Northern Virginia, started a charitable foundation and built an $11 million headquarters for his privately owned company. The San Diego Union-Tribune reported that he took expensive vacations to Hawaii and Idaho, and treated his staff and congressional friends to meals in fancy restaurants.
Defense officials asked the inspector general in 1999 to review the program because they were bothered by the aggressive style of Wilkes and Cunningham in seeking additional earmarks for ADCS.