By Carol D. Leonnig
Washington Post Staff Writer
Wednesday, July 15, 2009
When an Air Force command in north Florida sought new battlefield technologies, Rep. John P. Murtha (D-Pa.) steered millions in federal dollars its way to hire defense contractors.
The research effort at the Pensacola Air Force base fell apart, however, when investigators found evidence that it was used to improperly pay a series of companies linked to Murtha. A handful of defense firms were paid for work that was never done or not called for in the contracts. Some of the companies involved, based in Wyoming, Florida and Murtha's district in Pennsylvania, had hidden owners, prosecutors allege; one was secretly owned by the Air Force official who helped approve the payments.
As prosecutors reveal new details of their criminal probe into the $8 million earmark that Murtha arranged for the Air Force project, one familiar player is never mentioned by authorities. Several of the companies had hired the lobbying firm of the lawmaker's brother, Robert C. "Kit" Murtha.
Today, one of Kit Murtha's earliest clients has agreed to tell the government what he did and the crimes he said he saw committed as the lead contractor on the Murtha-orchestrated project. Richard "Rick" Ianieri, former chief executive of Coherent Systems International, is expected to plead guilty to taking kickbacks and preparing fraudulent invoices. Ianieri, a Pennsylvania entrepreneur, saw his business grow dramatically after hiring Kit Murtha's firm, KSA Consulting.
There is no indication that Murtha or his brother were aware of the alleged misuse of funds. Charges have focused on a small group of defense executives and the Air Force official and, thus far, companies that received funds improperly are not accused of wrongdoing.
But the charges have brought criminal allegations the closest yet to Murtha's controversial practice of steering "earmarked" funds to favored firms.
"We had no knowledge of these disturbing transactions, and if they are true then the individuals and companies in question should be held accountable under the law," Murtha spokesman Matthew Mazonkey said in an e-mailed statement.
Over the years, Murtha arranged tens of millions of dollars in earmarks for two Pennsylvania firms central to the investigation, Coherent Systems International and Kuchera Defense Systems.
"It really puts a fine point on the murky, unaccountable web that exists around earmarks," said Steve Ellis, of the watchdog group Taxpayers for Common Sense. "These earmarks, because there is very little accountability, provide a petri dish for corruption."
Several years ago, Ianieri told the news media that he had selected Kit Murtha's lobbying firm on the advice of Murtha's chief of staff. Federal prosecutors in Florida charge that Ianieri helped an Air Force contract manager, Mark O'Hair, pay five companies -- including Coherent's fellow KSA clients Gensym and VidiaFusion -- nearly $2 million that they should not have received.
Prosecutors charge that Gensym and VidiaFusion collected $300,000 and $274,000, respectively, for purported software for the communications system, known as "Ground Mobile Gateway." Authorities say their work consisted of a few compact discs that stayed locked in a Coherent Systems closet.
Gensym lists as its North America headquarters the same Rockville address and office suite as KSA Consulting's offices.
Murtha's congressional staff and KSA founder Ken Stalder have said they have little recollection of VidiaFusion, a KSA client from 2004 to 2007. But Mike Hoban, VidiaFusion's president, is someone who should be familiar to both offices.
Hoban, who was briefly a General Dynamics employee, co-founded Aeptec Microsystems with a base office in Murtha's district. The defense company also hired KSA. Hoban could not be reached for comment.
In 2002, Murtha and Hoban came together to announce good news: the opening of a data facility the Navy was paying Aeptec to operate in Blairsville, Pa.
"My congratulations to Aeptec Microsystems for contracting with the Navy to establish and operate the Ready Response Center," Murtha said then. "This contract illustrates that, in a very short time, Aeptec has demonstrated its strong capabilities."
In addition to Gensym and VidiaFusion, prosecutors allege that the Air Force project improperly paid Kuchera, Schaller Engineering and Colorado Power Systems.
Ianieri also is charged with submitting an invoice for O'Hair to approve, paying Kuchera $650,000 for five "prototype cards." Prosecutors say these cards were not part of the mobile communications contract.
In a related Pennsylvania case recently unsealed, Ianieri has agreed to plead guilty to Pennsylvania charges that he accepted $200,000 in kickbacks from an unidentified company that closely resembles Kuchera Defense Systems.
O'Hair, a retired Air Force colonel, is a central figure in the Florida probe. Prosecutors allege that he concealed from his bosses that he had a financial stake in companies he arranged for the Air Force to pay. O'Hair was a director of Schaller Engineering with a fellow Air Force colleague, Dick Schaller, and paid a firm to create a Wyoming company he owned, authorities allege, and approved invoices for both.
Research editor Alice Crites contributed to this report.