Ex-lobbyist Paul Magliocchetti charged with campaign-finance fraud

By Dan Eggen and Maria Glod
Washington Post Staff Writers
Friday, August 6, 2010

Paul J. Magliocchetti was one of the most powerful and influential lobbyists in Washington not too long ago, known for steering campaign contributions to favored lawmakers while securing millions of dollars in projects for his clients.

On Thursday, the former defense lobbyist stood accused by federal prosecutors of orchestrating one of the largest campaign-finance frauds in U.S. history. He faces devastating testimony from his son and has checked himself into a Baltimore clinic for anxiety.

Magliocchetti, 64, the founder and owner of the now-closed PMA Group, was charged in U.S. District Court in Alexandria with eight counts of illegal campaign contributions and three counts of making false statements. He is accused of funneling hundreds of thousands of dollars to lawmakers to enhance his firm's stature and business prospects.

His 34-year-old son, Mark, pleaded guilty in the same Alexandria courthouse Thursday to one charge of making illegal campaign contributions at the behest of his father, whom he portrays in a sworn statement as the mastermind of the scheme.

Mark Magliocchetti has promised to cooperate with prosecutors in their investigation, according to the plea agreement. A judge set Paul Magliocchetti's bond at $2 million Thursday and allowed him to see his son and grandchildren, as long as they do not discuss the case.

The developments mark the latest chapter in the saga of PMA, whose success in securing funding for often-obscure defense contractors spawned the criminal probe and a recently completed House ethics inquiry. PMA's clients gained more than $200 million in federal earmarks from a roster of lawmakers, who received hundreds of thousands of dollars in contributions from the lobbyist, his family and associates.

"Magliocchetti was Exhibit A of the pay-to-play atmosphere that surrounds the earmarks system," said Steve Ellis, vice president of Taxpayers for Common Sense, which has criticized the practice of designating special funding for pet projects. "This case will provide even more evidence that the earmarking system must be reformed."

But the case also underscores the limitations facing prosecutors and ethics investigators who hope to loosen the often cozy ties between big-money lobbyists and lawmakers who control the federal purse. The 18-page indictment unsealed Thursday does not accuse any lawmakers of a crime, and it reinforces the idea that those who received donations from Magliocchetti and his associates were unaware of any wrongdoing.

That is good news for lawmakers on the powerful House defense appropriations subcommittee who have been the focus of inquiries related to PMA. Reps. James P. Moran Jr. (D-Va.) and Peter J. Visclosky (D-Ind.), along with former subcommittee chairman John P. Murtha of Pennsylvania, were the largest recipients of donations from PMA lobbyists and their clients, according to campaign records. Murtha died this year.

Moran, Visclosky, Murtha and four other lawmakers were cleared of wrongdoing in December by the House ethics committee, but federal prosecutors had been deciding whether to take action. In spring 2009, a federal grand jury issued subpoenas in connection with the case to Visclosky, a former aide and his political committees.

Paul Magliocchetti's attorney, William Lawler, did not return calls for comment Thursday, nor did aides to Moran and Visclosky.

PMA, which was based in Arlington County, shut down last year after the FBI raided its offices as part of the investigation into the firm's Capitol Hill ties.

According to Thursday's indictment, Paul Magliocchetti concealed campaign contributions from the Federal Election Commission from 2002 to 2008. The statement from his son identified contributions worth $120,000 to $200,000 that were made by him or his wife at the request of his father, who served as the younger Magliocchetti's boss at PMA.

In addition to directing family members to make illicit contributions, prosecutors say, Paul Magliocchetti recruited two acquaintances who lived near his Florida vacation home to write checks to candidates. He reimbursed them by writing personal checks or company checks or by putting them on PMA's board of directors, even though they never worked as lobbyists and never attended board meetings, according to the indictment.

The Washington Post reported in February 2009 that the two men had previously worked as, respectively, a hotel sommelier and a golf marketing director.

Magliocchetti also instructed the firm's lobbyists to make political contributions, then repaid the employees with either personal or company funds, the indictment says. "Political contributions to campaign committees and political action committees of various candidates for federal office were a key part of Magliocchetti's plan to increase PMA's profile and its profitability," the indictment says.

Mark Magliocchetti, who faces up to a year in prison and $250,000 in fines under his plea agreement, portrayed himself in a statement accompanying his guilty plea as a fresh-out-of-college lobbyist who went to work for his father without realizing it was illegal to get reimbursed for contributions.

His "understanding of the impropriety of receiving payments to fund campaign contributions grew over time," the statement says.

"Initially, Mark Magliocchetti felt uncomfortable receiving money that he knew was for campaign contributions, intuiting that the arrangement was problematic without knowing that it was expressly forbidden," the statement says. "Over time, however, Mark Magliocchetti came to understand that it was unlawful for him to receive payments from either Person A or Company A to fund campaign contributions."

The Person A identified in the statement is his father, and the company is PMA, officials said.

U.S. Magistrate Judge T. Rawles Jones Jr. barred the elder Magliocchetti from any contact with potential witnesses, with one exception -- his son. Mark Magliocchetti's attorney, Adam S. Hoffinger, declined to comment Thursday.

Staff writer Paul Kane contributed to this report.

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