Contractor Pleads Guilty to Corruption

Mitchell J. Wade, right, and lawyer Howard Shapiro walk out of federal court after Wade pleaded guilty to trying to illegally influence the Defense procurement process through bribes and illegal campaign contributions.
Mitchell J. Wade, right, and lawyer Howard Shapiro walk out of federal court after Wade pleaded guilty to trying to illegally influence the Defense procurement process through bribes and illegal campaign contributions. (By Susan Walsh -- Associated Press)

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By Charles R. Babcock
Washington Post Staff Writer
Saturday, February 25, 2006

Washington defense contractor Mitchell J. Wade admitted yesterday in federal court that he attempted to illegally influence Defense Department contracting officials and tried to curry favor with two House members, in addition to lavishing more than $1 million in cash, cars, a boat, antiques and other bribes on convicted Rep. Randy "Duke" Cunningham (R-Calif.).

The new admissions, including details that identify Reps. Virgil H. Goode Jr. (R-Va.) and Katherine Harris (R-Fla.) as recipients of illegal campaign contributions, are contained in Wade's agreement to plead guilty to four criminal charges stemming from his role in the Cunningham probe. The congressman resigned after pleading guilty in November to taking $2.4 million in bribes from Wade and others in return for steering federal funds and contracts their way.

The court filings indicated a new direction for the corruption inquiry, as Wade pleaded guilty to a conspiracy charge that he also provided benefits to an unnamed Defense official and other Defense employees to get them to help Wade's company, MZM Inc.

Kenneth L. Wainstein, U.S. attorney for the District of Columbia, told reporters after the plea that the growth of MZM appeared to be "an American success story." Instead, it was built "by spreading corruption within the congressional appropriations process, the defense contracting apparatus and the financing of congressional campaigns," he said.

Wade went beyond bribing Cunningham, Wainstein added, to include the Defense Department officials who would be making the procurement decisions that affected District-based MZM. This included hiring the son of one official who oversaw the company's work and then hiring the official, too, according to the plea agreement. In return, Defense officials gave Wade's company inside budget information and favorable performance reviews, court documents said.

The description of the official-turned-MZM-employee in the court papers matches Robert Fromm, who worked at the Army's National Ground Intelligence Center in Charlottesville as program manager for a computer project known as FIRES and subsequently went to work for MZM. MZM hired the official's son, the court papers said, and months later, MZM was hired to work on the computer project. Fromm could not be reached for comment. Wainstein and Joseph Persichini Jr., acting head of the FBI's Washington field office, said public corruption in the defense contracting industry is a top priority for their staffs. Persichini noted that $97 billion in federal contracts goes to companies in the Washington region and that he hoped the Cunningham-Wade case would "instill moral outrage" in the public, who would report attempted extortion or bribe attempts to authorities.

Wade also pleaded guilty to election law fraud for making nearly $80,000 in illegal campaign contributions to "Representatives A and B," who are identifiable as Goode and Harris. He did so, the filings said, in hopes that they, like Cunningham, would "earmark" federal money for MZM. Wade gave the funds for the donations to 19 of his employees and their spouses, who then wrote $2,000 checks to the members, according to the documents.

Goode and Harris have been identified before as recipients of large donations from Wade and other MZM employees, and prosecutors said yesterday that there was no sign either knew the contributions were illegal. Prosecutors said the investigation is continuing but wouldn't say whether Goode and Harris or the MZM employees who made the illegal donations for Wade are subjects of the investigation.

The congressman identifiable as Goode received $46,000 in such disguised contributions in 2003 and 2005, the court papers said. That was part of about $90,000 Wade and his workers contributed to Goode. Wade then asked the member to request appropriations for an MZM facility in his district, the Wade papers said, and a Goode staff member confirmed to Wade that the bill would include $9 million in funding.

Goode's office said it would issue a statement, but The Post had not received one by late yesterday.

The member identifiable as Harris received $32,000 in illegal donations from Wade and his employees in 2004. Documents filed with Wade's plea say that he took Harris to dinner early last year, where they discussed the possibility of another fundraiser and the possibility of getting funding for a Navy counterintelligence program in the member's district. One source familiar with the inquiry said Harris made such a request for funding, but it was not granted.

Harris spokeswoman Kara Borie said yesterday that the congresswoman acknowledges being "Representative B" in the court papers. Harris said in a statement that Wade had "discussed opening a defense plant in Sarasota that would create numerous high-skilled, high-wage jobs in my district." She said Harris had donated all her MZM donations to charity. "This case demonstrates the perils of a process in which candidates are sometimes asked to determine the intent of a contributor."

The statement didn't address whether Wade asked Harris to seek earmarked funding for the Navy program.

Wade, 46, told U.S. District Judge Ricardo M. Urbina that he had "great remorse" in acknowledging his actions but took full responsibility for them. He said, "I feel deep sorrow for the harm I have caused my family, friends and former colleagues."

Urbina set an Aug. 21 hearing date to check on how the contractor was cooperating with authorities before he is sentenced. The court papers said Wade offered to cooperate shortly after the investigation started last June. That was when the San Diego Union-Tribune reported that Wade had purchased Cunningham's home in San Diego for $1.675 million in late 2003 and then resold it for $700,000 less several months later.

Wade stepped down from MZM last June. It was sold to an investment firm last fall and renamed Athena Innovative Solutions Inc.

Staff writer Walter Pincus and staff researcher Madonna Lebling contributed to this report.


© 2006 The Washington Post Company

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