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A Lucrative Center for Visclosky, PMA

Tory Newmyer/Roll Call
The Merrillville technology incubator sits at the site of a former cornfield. It was built with $7 million appropriated by the area’s Congressman, Rep. Peter Visclosky.

MERRILLVILLE, Ind. — In a former cornfield 10 miles south of the blighted core of Gary, the once-thriving steel capital, stands an ultra-modern technology incubator that locals hope will spark an economic resurgence.

Built with $7 million in federal money secured by Rep. Peter Visclosky, the tech center has been a pet project for the 12-term Democrat from this Rust Belt district in the northwest corner of the state.

Its purpose, officials with the center say, is to nurture startup technology companies into viable businesses that will eventually move into their own space nearby, continue to grow and create jobs.

But well before the building has had a chance to bring a full-scale revival to the area, it has brought something else: five clients of the PMA Group, the lobbying firm that has emerged in recent years as Visclosky’s top political benefactor.

When the center opened its doors in January 2005, the five clients — only one of which is headquartered in the building — comprised the bulk of its seven charter tenants.

Though the center now houses 14 businesses, the PMA clients were the only tenants to receive earmarks from Visclosky in House appropriations bills this year. Together, those companies stand to collect $12.9 million.

The move by PMA clients into Visclosky’s district has coincided with a strengthening of the firm’s ties to the lawmaker.

Since hiring Richard Kaelin, Visclosky’s former chief of staff, at the beginning of 2004, PMA and its clients have roughly doubled their fundraising support for the Congressman. That help includes contributing 50 percent of the total funds raised through June 30, 2007, by Calumet PAC, Visclosky’s four-year-old leadership political action committee, according to an analysis of federal election records.

It is a classic Washington, D.C., triangle of interlocking self-interests: in this case, a powerful Congressman, an influential lobby shop and the lobby firm’s numerous clients. And while it is impossible to know the exact reasons that some firms get earmarks and others do not, in Visclosky’s case, there are certain irrefutable facts: PMA and its clients are the Congressman’s top fundraisers — and PMA clients his top earmarking recipients.

Visclosky declined to answer detailed questions about his involvement with the center. In a statement, spokesman Justin Kitsch called the operation “a magnet for cutting-edge research and development.”

He said the Congressman played no role in recruiting companies to the center. “Obviously, given the diverse tenants, and the need to expand, the Purdue Technology Center has proven its success,” he said. “While Congressman Visclosky is not involved with daily operations of the facility, or the recruitment of companies, he certainly enjoys monitoring the success of the facility.”

It is unclear precisely how the five PMA clients found their way into the building, officially called the Purdue Technology Center of Northwest Indiana.

The PMA Group, per firm policy, declined to comment for this story, and none of its five clients in the center returned several calls for comment. The five clients collectively paid PMA $420,000 in fees during the first six months of 2007.

John Hanak, the center’s executive director, and Joseph Hornett, senior vice president of the Purdue Research Foundation, which oversees the Merrillville operation as part of the university’s statewide business incubation program, both said they had never heard of the PMA Group and were therefore unaware of its relationship with the charter tenants and Visclosky.

Bob Wichlinski, who was charged with scouting the first occupants for the building as its interim executive director, did not return five phone calls for comment. After handing over the reins to Hanak in June 2005, Wichlinski was hired by one of the PMA clients — an Arlington, Va.-based company called 21st Century Systems — and now works out of the company’s space in the technology center.

Visclosky’s office also declined to address why PMA clients were the only companies in the center to secure earmarks from the lawmaker this year.

In his statement, Kitsch said the Congressman “works hard to represent the people of Northwest Indiana, and believes that as the representative for the First Congressional District, he is better suited than some Washington bureaucrat to determine the needs of Northwest Indiana.”

When making decisions about how to appropriate federal funds, Kitsch said Visclosky follows some basic guidelines: “Is it the right thing to do? Does it improve the quality of life of people in Northwest Indiana? Does it have long-term potential to benefit the area?”

Appropriations Clout
Though by all accounts a low-key lawmaker who shuns the national spotlight, Visclosky has exceptional clout in determining the flow of federal funds. The Democratic return to power only magnified his status on the Appropriations Committee: He retained his seat on the powerful Subcommittee on Defense while gaining the chairmanship of the Subcommittee on Energy and Water Development, another rich earmarking source.

Like Rep. John Murtha (D-Pa.), a close ally who wields the gavel on the Defense Subcommittee, Visclosky has not been shy about flexing his spending muscle.

Besides Murtha, only four other House Members — Speaker Nancy Pelosi (D-Calif.), Majority Leader Steny Hoyer (D-Md.), Appropriations ranking member Jerry Lewis (R-Calif.) and Subcommittee on Defense ranking member Bill Young (R-Fla.) — managed to secure more earmarked funds in this year’s spending bills than Visclosky, according to a study by Taxpayers for Common Sense.

Clients of the PMA Group have fared particularly well by Visclosky this year. They won 14 of 28 earmarks he inserted into the Defense spending bill alone — a total of $28 million in projects, or some 52 percent of the funds Visclosky earmarked in the bill, according to an analysis by Roll Call and Taxpayers for Common Sense. (A Roll Call analysis of Visclosky’s earmarks last month undercounted his support for PMA clients, since the firm failed to file a mid-year report with the Senate detailing its work for ProLogic, a West Virginia-based company and a tenant in the technology center.)

The Indiana lawmaker’s help steering millions of federal dollars to PMA clients this year comes against the backdrop of what appears to be the firm’s most aggressive fundraising for him to date. In the first six months of this year, PMA and its clients contributed $248,400 to Visclosky’s leadership PAC and personal campaign coffers, 29 percent of his total haul.

Of that sum, $152,650 came in a burst of fundraising in the second half of March, the end of the first quarter fundraising period, but also the two-week period before Visclosky submitted mandatory letters certifying he has no financial interests in his earmark requests. The firm and its clients contributed $75,000 on March 28 alone, five days before Visclosky submitted those letters, on April 2.

PMA lawyer Carmen Jacobs told Roll Call last month that the firm has no control or knowledge of what their clients decide to contribute. Still, the dollar amounts, and the date of their donations, are striking.

The $75,000 contributed by PMA and its clients on March 28 represented 94 percent of the total collected by Visclosky that day, with $27,000 coming from PMA lobbyists and $48,000 from officials with five different PMA client companies. Three of those companies — 21st Century Systems, Advanced Concepts and Technologies International, and NuVant Systems — are tenants in the technology center.

Ryan Alexander, president of Taxpayers for Common Sense, said the numbers paint a troubling picture that suggests a pay-to-play scheme.

“The fundraising so close to the appropriations cycle certainly looks bad,” she said. “If there’s a good explanation — if it turns out this is the best way to do economic development in his district, if it turns out that coincidentally, all those clients of PMA decided to give him campaign contributions at the same time, he should make that case.”

“At this point, when you see a pattern like this, the burden shifts to the Member of Congress to explain it,” she added.

Established Players
The technology center, according to Hornett, was Visclosky’s brainchild. Hornett said that during a brief meeting in 1999 between then-Purdue University President Martin Jischke and Visclosky, the lawmaker noted the success of the Purdue Research Park, an incubator the school set up near its main campus in West Lafayette, Ind., to try to commercialize research breakthroughs by students and faculty.

“Congressman Visclosky was basically saying, ‘I’ve seen what you’ve done in West Lafayette. The region up here needs something transformational to get over what’s taken place with the steel industry here. ... How can Purdue help us?’” Hornett said.

As it happened, the university owned about 400 acres on the outskirts of Merrillville, Visclosky’s hometown of 30,000 people whose most prominent feature is a highway interchange, bracketed by strip malls, at the intersection of Interstate 65 and U.S. 30. Purdue’s land had been used to grow corn and soybeans, but with a pledge from Visclosky that he would find federal money to build and operate a business incubator there, the university turned it over for the tech center.

The Congressman went to work securing the money. In January 2002, he issued a news release announcing that he had landed the first earmark, worth $1.4 million, to get the project off the ground. Another $1 million came in October, and by February 2003, Visclosky finished the job by inserting $5.5 million for the center in an omnibus spending bill.

Announcing the news in a release, Visclosky said, “Many people have terrific ideas for new companies, but they often do not have the kind of experience they need to make their ideas work. The Purdue Technology Center will provide the know-how needed to help these entrepreneurs start companies that will survive and thrive, and that will be good for all of Northwest Indiana.”

The model tenant for the center, then, would be a fledgling enterprise looking for support through its rocky startup period. Hornett pointed to the example from the West Lafayette incubator of Solid State Chemical Information, a company started by a Purdue faculty member and his wife in the sewing room of their home. In 1998, they moved into a 100-square-foot office in the research center but expanded rapidly to occupy 5,000 square feet with 25 employees. The growth eventually forced them into a different building, which the company then bought and operates out of today.

Established companies with steady sales would have a harder case to make to get into a Purdue incubator, Hornett said. “We would try to accommodate them, but we wouldn’t necessarily try to accommodate them in the context of an incubator. I mean, if someone came to us of a fairly good size, we would probably look for other alternatives.”

But among the PMA clients that were the first to move into the Merrillville center, only NuVant Systems could realistically be called a startup. The company also was unique for its brief history with PMA at the time the center opened.

Unlike the other clients of the firm, which had been working with PMA since at least 2002, NuVant, a developer of fuel-cell technology, signed up Jan. 1, 2005, just 12 days before the center celebrated its grand opening.

The other four companies, to varying degrees, were all well-established by the time they moved into the incubator, with headquarters outside the state and, in most cases, several satellite offices across the country. Advanced Concepts and Technologies International had $7.5 million in federal contracts that year; 21st Century Systems had $23.9 million; ProLogic, $32 million; and Sierra Nevada, $122.7 million, according to records compiled by FedSpending.org.

Asked about the seeming maturity of the four companies, officials with the center said they made appropriate tenants for the building. “There is no hard, fast rule. What we’re looking for ultimately is job growth,” Hornett said in a follow-up interview.

Added Hanak: “We’re looking at these companies on a case-by-case basis. We’ve never looked at it in terms of the maturity of the overall company. If they’re developing technologies that need this incubator atmosphere, we certainly consider them for inclusion.”

Two of the companies have earned recent attention in political scandals revolving around earmarks. Sierra Nevada paid Dawn Gibbons, the wife of then-Rep. Jim Gibbons (R-Nev.), $35,000 in consulting fees in 2004, the same year the lawmaker, who is now the Nevada governor, sought a $4 million contract for the company to develop a helicopter radar-landing system, according to a report in The Wall Street Journal. Gibbons is at the center of a federal probe into his relationship with another defense contractor.

And 21st Century Systems has earned the ire of Sen. Tom Coburn (R-Okla.), who has requested a Pentagon investigation into whether the company failed to file legally required paper work or illegally tapped federal funds for lobbying activities, a Coburn aide confirmed.

Now, with 14 tenant companies filling nearly all the 48,000 square feet in the facility, the center needs to get bigger, and Visclosky once again has stepped in to help. Through earmarks this year, he is directing $2.2 million to the center to fund a 12,000-square-foot expansion.

The center itself, however, is getting less than most of the PMA clients with offices there. Aside from NuVant, which got a Visclosky earmark worth $2 million to develop a “methanol fuel cell,” each of the clients received $2.5 million from the lawmaker in the Defense spending bill.

Nevada-based Sierra Nevada got money for “sensor development that can detect and locate low power battlefield radars that could be a threat to ground forces.” 21st Century Systems won funding to develop a “virtual fence in partnership with the Indiana State Homeland Security Department.”

ACT-I secured support to develop a “prototype that will remove contaminants from drinking water through photo catalysis technology,” according to Visclosky’s certification letters.

And ProLogic pulled in funding to improve military sensor technology. It received an additional $910,000 from Visclosky in the Energy and water spending measure to advance an energy-conservation system for national energy labs.

Hornett and Hanak were both unaware of the federal largess Visclosky is directing to the tenants, but they said it did not concern them. “If these companies had contracted for space in our incubator and all they did was take up space and did nothing productive with it, I would be very troubled by that,” Hornett said. “I know for a fact that is not the case. The space being used is being used productively.”

The Obscure Caucus
As the PMA clients settled into the technology center in Merrillville, Visclosky was ramping up his fundraising activity, largely through the leadership PAC he formed in 2003.

After the PAC launched in April of that year, the first 23 checks it received — a total of $44,250 over the course of six weeks — came courtesy of the PMA Group and its clients, including a $5,000 personal contribution from Paul Magliocchetti, the former Murtha staffer who founded the firm in 1989.

By the end of that first cycle, the firm and its clients had raised $98,250 to get the PAC up and running — a haul that amounted to 57 percent of its take during that period.

In the years since, PMA and its clients have remained the top source of funds for Visclosky, with most of their donations clustered in March, April and May — high season for House appropriators to draft spending bills.

On March 23, 2004, for example, the firm and its clients contributed more than $100,000 to Visclosky’s campaign arm and the PAC. And, at the end of March 2006, the firm and its clients contributed about $150,000 to the lawmaker, according to federal election reports.

It is not clear why Visclosky has intensified his fundraising activity in recent years. Lawmakers typically have two reasons to bank funds: Either they are facing tough re-election fights and need to build up campaign war chests, or they are trying to climb the committee or leadership ladder and want to spread money to colleagues to foster goodwill for their bids. But neither scenario appears to describe Visclosky’s position.

In 12 House runs, the lawmaker’s support has dipped below 60 percent only once — during the 1994 elections that swept Democrats from power — and has topped 65 percent in every other race. In 2006, Visclosky shattered his opponent, perennial Republican challenger Mark Leyva, by outspending him 110 to 1.

And unlike Murtha, another PMA benefactor, who launched an unsuccessful bid for House Majority Leader last year, Visclosky has no discernible leadership ambitions. Several people familiar with his thinking said he is satisfied with his cardinal status at the helm of an Appropriations subcommittee.

His studiously quiet approach to his job earned him a spot in Roll Call’s “Obscure Caucus” this year. Of national media attention, he has said, “I try to avoid that like the plague.”

He mostly has used his leadership PAC to support endangered Democratic incumbents or challengers in close races, including spreading $13,000 in the previous cycle to three Indiana Democrats — Joe Donnelly, Brad Ellsworth and Baron Hill — who ousted Republicans in heated House contests.

And unlike Murtha, who blasted the Democrats’ ethics reform package as “total crap” and was one of only 15 Democrats to vote against the party’s lobbying reform bill, Visclosky has been a leading, if quiet, advocate of reform. In March, he was one of only two veteran lawmakers to originally co-sponsor a proposal offered by freshman Democrats to overhaul the ethics enforcement process.

Chart: Contributions From PMA and Its Clients to Visclosky and His PAC; Lobbying Fees From PMA Clients to PMA; and Fiscal 2008 Earmarks From Visclosky to PMA Clients | Chart: Campaign Contributions by PMA and Its Clients to Visclosky

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