Homes Raided In Rep. Weldon Influence Probe
FBI Looks at Business Run By Daughter, Political Ally

By Carol D. Leonnig and R. Jeffrey Smith
Washington Post Staff Writers
Tuesday, October 17, 2006

Federal agents raided the homes of Rep. Curt Weldon's daughter and one of his closest political supporters yesterday as part of an investigation into whether the veteran Republican congressman used his influence to benefit himself and his daughter's lobbying firm, according to sources familiar with the investigation.

The investigation focuses on actions the Pennsylvania congressman took that may have aided clients of the business created by his daughter, Karen Weldon, and longtime Pennsylvania political ally Charles Sexton, according to three of the sources.

A grand jury, impaneled in Washington in May, has obtained evidence gathered over at least four months through wiretaps of Washington area cellphone numbers and has scrutinized whether Weldon received anything of value, according to the sources. They spoke on the condition of anonymity because of the sensitive nature of the investigation.

The investigation focuses on Weldon's support of the Russian-managed Itera International Energy Corp., one of the world's largest oil and gas firms, while that company paid fees to Solutions North America, the company that Karen Weldon and Sexton operate.

The congressman, for example, intervened on Itera's behalf when U.S. officials canceled a federal grant to the company. He also encouraged U.S. companies to do business with Itera at a time when its reputation had been sullied by accusations of Russian corruption.

Weldon said in a prepared statement that he had done nothing wrong and would cooperate in the investigation "100 percent." Michael Puppio, a campaign spokesman, said Weldon hoped that "reliance on leaks would cease and the media would rely on facts that are verifiable."

Weldon said that the House ethics committee looked into the allegations in 2004 "and found that I had engaged in no wrongdoing." He said he was "extremely disappointed that we are discussing this topic three weeks before an election that could determine control of Congress."

Yesterday's raids of six locations in Pennsylvania and Florida were moved up in part because of leaks about the investigation late last week, according to two of the sources. Top federal prosecutors supervising the inquiry concluded early this month that they were progressing significantly on another front in the investigation and did not want to make their work public too soon by conducting searches, especially so close to the Nov. 7 elections.

McClatchy Newspapers reported Saturday that the FBI had recommended that Justice Department officials investigate Rep. Weldon's actions, leading to yesterday's searches.

Debra Weierman, a spokeswoman for the FBI's Washington field office, confirmed that the locations included the homes of Karen Weldon and Sexton; the suburban Philadelphia offices of Solutions North America; and the downtown Philadelphia offices of John Gallagher, a lawyer who represented Russian companies linked to Itera.

Two other sites searched were the U.S. headquarters of Itera International in Jacksonville, Fla., and a Jacksonville home, the sources said.

Prosecutors are usually loath to conduct raids against a public official so close to an election. But some involved in the investigation debated whether holding off could also appear to have been influenced by the election, sources said.

Weldon faces a difficult reelection campaign against a retired vice admiral, Democrat Joseph A. Sestak Jr., and has fallen behind in some polls. With 10 terms under his belt, Weldon is a House veteran but has not faced a real challenge in years.

His district gave Democratic presidential candidate John F. Kerry 53 percent of the vote in 2004. Sestak has painted him as out of touch with his district.

Karen Weldon and Sexton registered to lobby for Itera on Sept. 13, 2002, stating that they wanted to help the firm sell gas and oil products to the United States. The registration was terminated two years later. But Senate records do not list any lobbying payments to the pair from Itera.

Rep. Weldon said that he never knew who his daughter's clients were. "I've never helped my daughter get anything. My kids are qualified on their own," he said.

Weldon assailed the news reports as politically motivated. He blamed a 2004 complaint filed by the liberal-leaning Citizens for Responsibility and Ethics in Washington, which is led by Melanie Sloan, a former prosecutor who also has been a Democratic staff member on the House Judiciary Committee.

That complaint was based on a lengthy 2004 report by the Los Angeles Times that described the meteoric rise of Solutions North America and its relationship to Itera, which has long been dogged by international controversy over its obscured ownership.

The company, formed in 1992, made huge profits as an intermediary in natural gas sales between the state-controlled Russian company Gazprom and former Soviet republics. It eventually purchased some of Gazprom's gas fields and other assets for nominal sums, estimated by critics to be billions of dollars below their real value, and became a rival.

Oil and gas traders and Russian experts have long suggested that Itera's real owners are former senior Gazprom executives and that the company was established in the United States as a vehicle to transfer money out of Russia and into their pockets. The company could not be reached to comment yesterday, but it has previously denied that claim.

Itera drew attention for cutting off natural gas to Georgia shortly before the winter of 2002, when it tried to collect a $90 million debt from the Georgian government during a flare-up of tensions with the Moscow government. Weldon helped mediate the dispute, persuading the company to supply the gas.

The Philadelphia Inquirer and the Los Angeles Times reported that Itera's representatives signed a $500,000 contract in 2002 with Solutions North America. That year, Rep. Weldon complained to the U.S. Trade and Development Agency about its cancellation of a grant to Itera to explore a gas field in Siberia.

"Itera is a great source for American companies to be involved in joint projects," he said during a visit to the company's offices in 2002.

At a January 2003 opening of Itera's U.S. headquarters, Weldon said: "I can think of no other company that represents what Russia is today and offers for the future."

Four people listed in corporate records as Itera officers or directors wrote checks totaling $8,000 to Weldon's campaign on April 20, according to PoliticalMoneyLine, a Web site that tracks campaign contributions.

Research director Lucy Shackelford and staff researcher Madonna Lebling contributed to this report.

View all comments that have been posted about this article.

© 2006 The Washington Post Company