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FBI Saw Dark Side of Rep. John Murtha

Douglas Graham/CQ Roll Call File Photo
Neither Rep. John Murtha nor anybody from KSA Consulting was ever charged with a crime, and it is unclear what happened to the FBI’s investigation.

By 2004, Murtha had helped Aeptec secure millions in earmarks, and in April of that year, the Congressman announced the opening of a new building in Indiana, Pa., that Aeptec would occupy. At the time, Aeptec’s lobbyists at KSA included Stalder, Scialabba and Kit Murtha.

But later that year, someone discovered a problem with Aeptec. “They were outsourcing to Taiwan,” Stalder told Roll Call in a June 2007 interview. A Murtha spokesman told Roll Call in 2009, “there was an import/export issue that had involved Aeptec, and when this was brought to light, they disappeared as a company.”

By the end of 2004, KSA had terminated its relationship with Aeptec, and in early 2005 — with Murtha as ranking member of the Appropriations Subcommittee on Defense — the House approved a supplemental defense spending bill with a technical amendment that stripped the firm’s funding. The technical amendment directed the Pentagon to transfer $8.2 million from Aeptec projects to a program known as the “Mobile Common Data Link Gateway.” That project was an earmark for Coherent Systems Inc., another KSA client.

The Mobile Gateway earmark money ended up scattered among companies that had close ties to KSA.

In 2009, the Justice Department filed charges against Coherent CEO Richard Ianieri, alleging that he had used money from the Mobile Gateway project to buy products unrelated to the contract from several companies, including KSA clients VidiaFusion and Gensym.

VidiaFusion had no website, no telephone number and no email address. The address listed for VidiaFusion on the lobbying registration form submitted by KSA is a condominium building in West Palm Beach, Fla. The Florida secretary of state has no record of a company called VidiaFusion. The government charged that Ianieri paid VidiaFusion $274,660 for “software” that was unrelated to the Gateway project and was never used.

Ianieri also transferred $300,000 to Gensym, another KSA client, which was passing funding through to a subcontractor called Applied Technology. The FBI described Applied Technology as “an example of a KSA-created business that acquired federal earmarks and has no legitimate purpose.”

The FBI records indicate two KSA lobbyists were on the Applied Technology payroll, though their names have been redacted.

Ianieri pleaded guilty to filing false purchase orders and accepting a kickback from another company close to Murtha, Kuchera Defense Systems, and was sentenced to a fine and probation.

Coherent did deliver to the Air Force a vehicle-based communications system envisioned in the original “Mobile Gateway” earmark.

Mark O’Hair, an Air Force contracting official who oversaw the Gateway contracts, and contractor Richard Schaller, who was paid by Ianieri, both went to jail for their roles in the scheme, but nobody else was ever charged. There is no evidence that the FBI conducted a serious probe of who in Murtha’s office might have known about the bogus earmarks.

Roll Call reported in March 2010 that KSA had folded. Stalder and other KSA lobbyists appear to have created a new firm called Edge Solutions, but the phone number at that office is now disconnected and emails sent to Edge Solutions went unanswered.

Potential Cases Not Pursued

The FBI files uncovered by CREW offer a tantalizing array of hints of other possible malfeasance.

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