The Arlington construction company used by the FBI to rent a Washington house to videotape members of Congress discussing cash payoffs has also served as an FBI front for other undercover operations, The Washington Post has learned.
Sources familiar with the operation said that the FBI is now ending its association with Olympic Construction Corp., but that it is still working through a subsidiary of Olympic in a major investigation in another city.
These undercover operations, which started in October 1978, involve investigations into rigging of bids on federal contracts.
Olympic, aside from its FBI connection, is a legitimate contractor that has done work for the Naval Research Lab and recently submitted the apparent low bid for reconstruction work at the reptile house at the National Zoo.
The firm first came to public attention last weekend when a Washington Post reporter told how he unwittingly rented his house to a man from Olympic who turned out to be an FBI agent.
The FBI used Olympic to rent the reporter's home to disguise an undercover operation in which agents posed as representatives of an Arab sheik and discussed cash payoffs for the promise of legislative favors by members of Congress.
News accounts last Sunday disclosed that the Arab-money operation has resulted in potential bribery cases against a senator and seven members of the House.
Use of legitimate companies such as Olympic for undercover work is a recent departure for the FBI. Traditionally, it shied from such covert work, but in the last few years, top Justice Department and FBI officials have emphasized more sophisticated tools for attacking organized and white-collar crime and public corruption.
Olympic's use by the FBI is reminiscent in some ways of the Central Intelligence Agency's control of money-making front companies, such as Southern Air Transport in Florida, which outbid competitors for contracts with the intelligence agency's help.
Olympic's president said yesterday that Olympic had no help from the FBI in obtaining contracts.
Richard M. Muffoletto, president of Olympic, described his involvement with the FBI as a "sensitive-type relationship" that began in early 1978 when he helped the bureau convict New York City's assistant commissioner of public works on extortion charges.
He said he developed a close relationship with the agent in that case, and they kept in touch.
Muffoletto, who is also president of an electrical contracting company in his native New York City, said that when he decided to start a new company in the Washington area in July 1978, the FBI again approached him about helping it.
But he said his decision to move here had nothing to do with the FBI's ABSCAM investigation.
"It just happened I was coming to Washington anyhow," he said in an interview yesterday in Olympic's plush suite of offices at 1111 N. 19th St., Arlington.
"It was a peculiar set of circumstances that comes once in a lifetime," said Muffoletto, 40, short and chubby, wearing a conservative gray three-piece suit.
He stressed that Olympic, which has about 10 full-time employes and an additional 30 or so day laborers, is a legitimate company that solicits construction business like any other.
The firm has nearly $5 million in contracts to construct facilities at the Naval Research Laboratory here, Muffoletto said, and he expects to be awarded a $1 million contract to build a District of Columbia water pollution facility as well as the zoo building.
"You see, we really do exist," he said, smiling.
He said his relationship with the FBI and the fact that he does almost exclusively government work is a coincidence.
"We have never had a contract awarded because of the FBI influence," he said. "All have been legitimate, open, competitive bids."
In the recent bidding for the reptile house at the zoo, Olympic quoted a $2 million price, followed by P. W. Parker Inc. at nearly $2.5 million and Associated Builders Inc. at $2.6 million.
Kenneth Richey, president of Associated Builders, said yesterday that the Olympic bid "was too damn low." He said he hadn't heard of the firm until the Naval Research Lab job.
"I think it's a legitimate corporation," Richey added. "Well, really I think it is a damned Mafia outfit. They're a bunch of damned Italians or Greeks or something. I heard they were from New Jersey or New York."