The US Attorney's Office, Southern District of California, has released a press release on MZM Inc. owner Mitchell Wade's guilty plea. Besides the known bribery of Rep. Randy "Duke" Cunningham (see page 3 of this document to see his "bribe menu"; pdf), Wade provided "illegal benefits to Defense Department officials," and he attempted "to curry favor with two other members of Congress by making illegal campaign contributions."
The "illegal benefits to Defense Department officials" part sounds a lot like the Darleen Druyun-Boeing tanker lease scandal, where Druyun negotiated a job with Boeing while in a position to promote Air Force contracts with them. She awarded Boeing a $4 billion contract months after Boeing hired her daughter and son-in-law.
It sounds like MZM used some of Boeing's tricks. The US Attorney's Office press release says that Wade's activities included:
- arranging for a Defense Department official's son to be hired as an MZM employee; the cost of that job was ultimately paid for by the government in reimbursement agreement with MZM; and
- extending an offer of employment, and then ultimately hiring, a Department of Defense official who was responsible for overseeing much of MZM's work. Federal law prohibits government employees from, among other things, discussing potential employment with companies with whom they do government business.
- Certain Department of Defense employees provided: valuable procurement information that MZM could use to tailor a proposal for work that MZM could perform under the BPA [Blanket Purchase Agreement];
- an official recommendation that MZM receive contracts under the BPA for certain activities involving the imaging and archiving of Defense Department documents; and
- favorable performance reviews about MZM. These performance reviews were critical to MZM. Notwithstanding the fact that Wade received these purchase orders without competitive bidding as a result of his earlier receipt of the $225 million BPA, MZM could not be assured that they would continue to receive new purchase orders without receiving these type of favorable reviews by Defense Department officials.
In engaging in this corrupt activity, Wade deprived the citizens of the United States of their right to the honest services of government -- the right of the Defense Department to make decisions free from bias and favoritism.
MZM persuaded two Defense Department components--the Counterintelligence Field Activity (CIFA) and Department of the Army's National Ground Intelligence Center (NGIC)--to contract with MZM.
Surprisingly, we've heard that the press release's reference to a Defense Department official's son is not a reference to William S. Rich III, son of William S. Rich Jr. who is a former Executive Director of NGIC. William S. Rich Jr. went to work for MZM as well as his son, after MZM was awarded contracts by NGIC. So it must be some other DoD official's son. Press accounts point to numerous NGIC employees moving to or with a relative at MZM, including the "wife of Robert Canar, until last month the center's longtime chief of staff, [who] was employed as a secretary at MZM" and the "former sergeant major at the NGIC, George A. Peeterse, [who] is an MZM vice president."
Even if neither Rich is the ones referred to in Wade's plea agreement, the employment of numerous former Defense Department employees or their relatives by MZM highlights the too-cozy relationship and corruption that too often stem from the revolving door.
MORE: The National Journal's Hotline Blog takes a stab at figuring out who the "two other members of Congress" might be. One of those might be Congressman Virgil Goode whose district contains the National Ground Intelligence Center in Charlottesville, Virginia. Goode sits on the House Appropriations Committee. Goode "has said he requested funding for a Foreign Supplier Assessment Center in Martinsville, which became the second MZM facility to open" in his district. Talking Points Memo had a very informative piece on the connections between Wade and Goode last November.
AND MORE: Here's the full press release, the Statement of Offenses (pdf), the Plea Letter (pdf) and the information on the four counts against Wade (pdf).
The Post Weighs In: They say that the Defense Department official who went to work for MZM, as well as his son, was Robert Fromm. And they seem certain that Goode and Rep. Katherine Harris, both Republicans, are the representatives besides Cunningham that were influenced by MZM.
United States Attorney Kenneth L. Wainstein
District of Columbia
FOR IMMEDIATE RELEASE CONTACT: CHANNING PHILLIPS
FRIDAY, FEBRUAY 24, 2006 PHONE: (202) 514-6933
WWW.USDOJ.GOV/USAO/DC FAX: (202) 353-0121
DEFENSE CONTRACTOR MITCHELL WADE PLEADS GUILTY TO BRIBING FORMER CONGRESSMAN “DUKE” CUNNINGHAM, CORRUPTING DEPARTMENT OF DEFENSE OFFICIALS, AND ELECTION FRAUD
WASHINGTON, D.C.—Mitchell Wade, the former owner of MZM, Inc., a major defense contractor based in the District of Columbia, has pleaded guilty to bribing former Congressman “Duke” Cunningham, corrupting defense officials, and election fraud, announced United States Attorney Kenneth L. Wainstein, Joseph A. McMillan, Special Agent in Charge, Defense Criminal Investigative Service, Joseph Persichini, Jr., Acting Assistant Director in Charge of the FBI’s Washington Field Office, and Rick A. Raven, Special Agent in Charge, Internal Revenue Service, Criminal Investigation.
Wade, 46, of Great Falls, Virginia, entered his guilty plea earlier today in U.S. District Court before the Honorable Ricardo M. Urbina to multiple felony counts related to his wholesale corruption of the defense procurement process. The conduct includes Wade making over $1 million in payoffs to then-Congressman Duke Cunningham, providing illegal benefits to Defense Department officials, and attempting to curry favor with two other members of Congress by making illegal campaign
contributions.
Specifically, Wade pled to a four-count information, including one count of conspiring both to bribe Congressman Randall "Duke" Cunningham and to tax evasion; one count of Use of Interstate Facilities to Promote Bribery; one count of conspiring to deprive the Defense Department of the honest services of its employees; and one count of election fraud. Under the terms of the agreement, Wade, who has been cooperating with officials in this ongoing investigation, faces up to 135 months of incarceration. A sentencing date has not yet been set.
“The Department of Justice and this Office have made combating corruption within the multi-billion dollar defense contracting industry a top priority, said U.S. Attorney Wainstein. “Today's prosecution makes the clear statement that legislators, civil servants and defense contractors alike have a duty to maintain the integrity of the defense appropriations and contracting process. Those who violate that duty can expect to be investigated, prosecuted and sent to prison.”
“The American public expects the Department of Defense and other government agencies to manage an acquisition system that is devoid of corrupt behavior and influence,” said Defense Criminal Investigative Service Special Agent in Charge McMillan. “We are committed to dedicating the necessary resources to identify, investigate, and prosecute the corrupt actions of public officials and contractors.”
“The American people are entitled to lawful and ethical public service,” added Acting Assistant Director in Charge Persichini. “The FBI will continue to apply resources to achieve that goal.”
According to the government’s evidence, Wade grew his company, MZM, into a defense contracting company that, since 2002, received over $150 million in Department of Defense government contracts by engaging in a series of corrupt acts throughout the defense procurement process: from ensuring that the members of Congress who could appropriate funds for special Defense Department projects looked favorably on MZM, to the Department of Defense officials—some of whom Wade knew when he was a government official—who could give him favorable reviews and inside information to ensure that the work would continue to flow.
Wade was able to exploit the procurement system in three distinct ways: by bribing a sitting United States Congressman; by conspiring to give favors to Department of Defense officials responsible for procuring services from Wade’s company; and by funneling illegal campaign contributions to two Members of Congress.
Bribery of Congressman Cunningham
Randall “Duke” Cunningham was a powerful member of the Defense appropriations subcommittee, and Wade understood that Cunningham had the ability to make or break MZM. In order to become a Cunningham favorite in the use of special Congressional appropriations, Wade showered the Congressman with many types of gifts, including checks, cash, rugs, antiques, furniture, yacht club fees, boat repairs, and the use of a Rolls Royce. Wade also purchased Cunningham’s house at a wildly inflated price and arranged for Cunningham to live on a yacht, the “Duke-Stir,” anchored in the Potomac. Wade paid these bribes, totaling over $1 million, in order to receive special consideration in Cunningham’s use of his special defense appropriations and to pay for Cunningham’s use of his power in an effort to steer funds and contracts to MZM.
Cunningham has pled guilty to bribery conspiracy, and will be sentenced in San Diego on Friday, March 3.
Corrupt Activities within the Department of Defense
One key to MZM’s ability to receive government contracts was an umbrella contracting vehicle called Blanket Purchase Agreement (BPA). A BPA is a contract vehicle that permitted the Defense Department and other departments and agencies to obtain supplies and services on an as-needed basis through a “charge account” system. Operating under a BPA, MZM and Wade were shielded from the normal competitive bidding process used in government procurement and could solicit business from government components directly.
In September of 2002, MZM received its BPA from the Defense Information Technology Contracting Organization, with the acronym “DITCO,” making MZM eligible to receive up to $225 million by performing work for Defense Department customers.
The next step was for Wade to arrange for Defense Department officials to buy what he was selling. Wade extended his corrupt behavior into the Defense Department to ensure that the business kept coming regardless of MZM’s performance. Wade, himself a former Defense Department employee, knew a number of individuals within the Defense Department who could help him. Wade convinced two Defense Department components, the Counterintelligence Field Activity (CIFA), located in Arlington, Virginia, and the Department of the Army’s National Ground Intelligence Center (NGIC), located in Charlottesville, Virginia, to provide task orders that MZM could perform under the BPA.
Wade then shielded MZM from the normal performance review by crossing the line into corrupt activities. Wade’s activities included:
- arranging for a Defense Department official’s son to be
hired as an MZM employee—the cost of that job was ultimately paid for by the government in reimbursement agreement with MZM; and - extending an offer of employment, and then ultimately hiring, a Department of Defense official who was responsible for overseeing much of MZM’s work. Federal law prohibits government employees from, among other things, discussing potential employment with companies with whom they do government business.
- Certain Department of Defense employees provided: valuable procurement information that MZM could use to tailor a proposal for work that MZM could perform under the BPA.
- an official recommendation that MZM receive contracts under the BPA for certain activities involving the imaging and archiving of Defense Department documents; and
- favorable performance reviews about MZM. These performance reviews were critical to MZM. Notwithstanding the fact that Wade received these purchase orders without competitive bidding as a result of his earlier receipt of the $225 million BPA, MZM could not be assured that they would continue to receive new purchase orders without receiving these type of favorable reviews by Defense Department officials.
In engaging in this corrupt activity, Wade deprived the citizens of the United States of their right to the honest services of government—the right of the Defense Department to make decisions free from bias and favoritism.
Illegal Campaign Contributions
Wade also made about $80,000 in illegal campaign contributions to the campaigns of two sitting Members of Congress. Wade targeted these two Members of Congress because he believed that these representatives had the ability to request appropriations funding that would benefit MZM.
Federal law prohibits campaigns from receiving more than $2,000 from any one individual per election, and prohibits entirely corporate contributions. Wade wanted to curry favor with these two members of Congress, so he needed a way around the campaign contribution laws. His solution was to have his employees and their spouses make contributions to these two campaigns under their own names, then reimburse them –a technique, known as “straw contributions” that is a felony under federal election law when the straw contributions amount to over ten thousand dollars. He did so often by simply handing the employees cash – two thousand dollars for each person – and then immediately “asking” them to make a contribution. All in all, he made 39 different “straw” contributions, with 19 different employees or spouses. In order to maximize the impact of these contributions, Wade personally handed a number of the campaign contributions, in the form of personal checks from employees and their spouses, to one of the representatives.
After Wade made the campaign contributions, Wade asked that one of the Representatives and his staff request appropriations funding for an MZM facility. The Representative’s staff later
confirmed to Wade that an appropriations bill would include $9 million for the facility.
After making the illegal campaign contributions to the other Representative, Wade had a personal dinner with the Representative, in which the two discussed the possibility of MZM’s hosting a fundraiser for the Representative later in the year, and the possibility of obtaining funding and approval for a Navy counterintelligence program. That program was never funded.
Wade did not inform the two Representatives that the contributions were illegal.
In announcing today’s guilty plea, United States Attorney Wainstein, Defense Criminal Investigative Special Agent in Charge Joseph A. McMillan, FBI Acting Assistant Director in Charge Persichini, and IRS Special Agent in Charge Rick Raven praised the efforts of FBI Special Agents Julie Hemmy and Matthew Young and DCIS Special Agent Edward Cassin. They further acknowledged the efforts of prosecutors and federal agents in the Eastern District of Virginia, Southern District of California and the Eastern District of New York. Finally, they commended the work of Legal Assistants Shavonne Rush, April Peeler and Teesha Tobias, and Assistant United States Attorneys Howard Sklambergand John Carlin, who are prosecuting the case.
###
Where you at the 1936 Olympics and/or cheering with the Kennedys, Regans and Bush's?
Posted by: | Mar 01, 2006 at 06:33 PM
Why are Americans being tortured and/or excecuted and/or murdered in our prisons and mental health institutions and alleged AWOL deserters like George Bush and possibly other executive leaders that from alleged facts also allow torture and murder and are rewarded by our Global Companies and Lawyers and National Whistleblower Center and presumably POGO (Barbara Striesand and Rokefeller foundation) supporters and their overwhelming money contributions, support, influence and power?
Posted by: Axel | Mar 01, 2006 at 06:32 PM
Blah! Blah! OLD NEWS. Continued No Empeachment talks as factual allegations of Corruption, Bribery, Perjury, Torture (and resulting in death= Executive high crime of murder) continue within the Executive, Congressional and Judicial Branches of our US Government and in direct violation of our US Constitution. The same people that are running our US Government today are the very same people that where alleged and/or convicted in the Nixon and Regan (Watergate (murder), Iran Contra (Assinations) etc.) and numerous other high crimes (and Presidentially pardoned).
Posted by: Axel | Mar 01, 2006 at 06:24 PM
While our representatives sell US out little does anyone make of the fact they are allies to terrorist. How do the American people feel about having our loved ones in Iraq in the belief they are there patriotically when our mis-representatives are making millions of $ on scams involving defense contracts?
The President would suggest we break our addiction to oil, just one of our problems. Break the grip lobbyist have on our representatives and the revolving door! How does Osama Bin Laden feel about having the support of people we pay, provide health insurance, & retirement selling out the people of America while prewar Rumsfeld remarks "war in Iraq surely won't last two years." Or putting the cost of war at $50 billion. How do defense contractor scams effect that #? It has already cost$440 billion & Bush would ask for $120 billion more while cutting education & health care.
Bottom line is America is mismanaged by less than qualified people who would sell out their own mother and when caught would lie using our tax $ to cover their lies.
When our elected officials start to listen to the people of America instead of taking advantage of US we will once again be a free nation. Promoting democracy throuhout the world while democracy is failing here in America is not only rediculous but has to be something terrorist enjoy. Can you imagine?
Bush & the rest of our mis-representatives are controlled by corporate un-America! Illegal immigration has been promoted for years by our representatives who won't raise minimum wage in return for campaign contributions. America is the biggest joke in the world and the joke is on US! Headlines tell the truth about the lies. Insider trading, campaign finance scams, CIA leaks, our President breaking constitutional law, selling ports to United Arab Emirates, & a list perpetual. Came on America, WAKE UP!
Posted by: Scott Tisthammer | Feb 28, 2006 at 09:27 AM
And, it appears the Sean T. Fromm is now working for a company called ZeNETeX LLC, out of Herndon, VA.
The company just hired Sean Fromm on Jan 16, 2006:
http://www.zenetex.com/pressroom/20060116.html
_______________________________________________________________________________________________
ZeNETeX, LLC adds new Executive
Sean Fromm to head ZeNETeX Network Service Practice
Herndon, VA, January 16, 2006 “ Strengthening its Network Services Practice, ZeNETeX a leading provider of network consulting services to the Federal Government, today announced the appointment of Sean Fromm as Vice President of Network Services.
Sean has worked closely with Federal Agencies to deploy secure network solutions around the world . His experience and expertise make him the ideal candidate to join ZeNETeX as Vice President of Network Services and we are excited to have him on board, said Greg Smith, CEO of ZeNETeX. Adding Sean will allow us to expand our network services practice and deliver even more value to our clients.
Fromm will be responsible for all operations of the ZeNETeX network services business unit including client delivery, business development and strategy. ZeNETeX has a solid reputation in the federal market for implementing and managing technology solutions that improve their clients operations.said Fromm. I'm looking forward to working with this very talented technical team.
With 10 years of technology consulting services experience, Fromm is known throughout the Federal IT market, having advised government CIOs on technology and networking strategy. Most recently, he was President of INS Federal, Inc. and held numerous other executive positions with large networking and technology consulting firms.
ZeNETeX is the leading provider of ITIL based assessment, implementation, training and management services to federal government agencies with complex, global, secure network environments. Classified as small business, ZeNETeX employees are experienced ITIL and Network certified professionals. Working with the largest federal agencies and leading systems integrators, the company has emerged as the ITIL expert for the Government market.
____________________________________________________________________________________________
A little checking at GovernmentContractsWon.com show that Sean Fromm's old company, Innovative Network Solutions, won various federal contracts:
INNOVATIVE NETWORK SOLUTIONS
3130-B MARTIN LUTHER KING
WASHINGTON, DC 20032
Government Contracts for the above Location in 2002
for the Defense Department
Government Contractor Info
Government Contractor/
Address INNOVATIVE NETWORK SOLUTIONS
3130-B MARTIN LUTHER KING
WASHINGTON, DC 20032
Type of Business Entity Small Disadvantaged Business (SDB) Performing in the United States
Women-Owned Business No
HUBZone Representation Yes
Ethnic Group No Representation
Veteran-Owned Small Business --
2004 Government Contracts 3/$12,295
2003 Government Contracts 12/$320,004
2002 Government Contracts 2/$64,030
2001 Government Contracts 0/$0
2000 Government Contracts 0/$0
Government Contract List
Product/Service ADP Support Equip
Government Contracting Office HQ USA INSCOM, Dir of Contracting Principal Place of Performance Fort Belvoir, Virginia
(Fairfax County)
Claimant Program ALL OTHER SUPPLIES AND EQUIPME
Weapon System NOT DISCERNABLE OR CLASSIFIED
___________________________________________________________________________________________
Well, it looks like Sean Fromm night become more well-known than ZeNETeX bargained for. We'll see how long his name stays up on the front page of the company web site.
Posted by: Honest Response | Feb 26, 2006 at 01:24 PM
By the way, one can view the entire list of MZM top 100 donors and see the names of the Rich father and son, the Fromm father and son and others who used to work for the Dod:
http://72.14.207.104/search?q=cache:z7jYWdOdPcgJ:www.campaignmoney.com/political/committees/mzm_inc_pac.asp+fromm+mzm&hl=en&gl=us&ct=clnk&cd=5
The source is CampaignMoney.com.
The latest cycle:
http://www.campaignmoney.com/political/committees/mzm_inc_pac.asp?cycle=06
Posted by: Honest Response | Feb 26, 2006 at 01:10 PM
I am hoping that the people who work inside the DoD and funnel contract bid info and, then, the actual contracts to bribing contractors will go down as hard, or harder than, any member of the Senate or House who is on the take. Why would people inside the DoD get involved in corrupting the contract process? Money? Well, the type of job that Robert F. Fromm, who is described in the latest WaPo article as the official involved in the MZM/Wade guilty-plea info, held at the National Ground Intelligence Center (NGIC) is described in the job announcement at
http://64.233.179.104/search?q=cache:-SYDPKASzB0J:www.usajobs.org/jobs/1035629.htm+dod+ngic+program+manager+fires&hl=en&gl=us&ct=clnk&cd=5
Department Of The Army
Agency: Army Intelligence and Security Command Job Announcement Number:
WTST05522483 Intelligence Specialist (Operations Support)
The salary range is given: 85,123.00 - 110,662.00 USD per year.
How much more did Fromm and his son Sean T. Fromm earn by going to work at MZM?
Posted by: Honest Response | Feb 26, 2006 at 12:35 PM
At first , I read : Echoes of WARDrummun. War Drumming.
Posted by: NoT Free | Feb 25, 2006 at 08:11 AM