Earmark Case Yields Guilty Verdict

Posted July 31, 2009 at 4:44pm

A federal jury in Florida issued a guilty verdict Friday against defense contractor Richard Schaller for helping to defraud a military laboratory and illegally steer contracts to his own company, the Associated Press reports.

Schaller, who was charged in a 31-count indictment along with former Air Force official Mark O’Hair and contractor Theodore Sumrall, was also found guilty of destroying records and lying to a Pensacola-based grand jury.

According to the indictment, issued under seal August 2008 and unsealed in February, at the same time O’Hair managed military contracts, he was also a business partner with Schaller and Sumrall. O’Hair allegedly directed contracts to the two men, and the trio then split the proceeds of those contracts.

O’Hair pleaded guilty July 20 to skimming money from an earmark that was provided to a Pennsylvania defense contractor by Rep. John Murtha (D-Pa.). Murtha has not been accused of any wrongdoing in the case, nor does his name appear in court documents.

According to his plea agreement, O’Hair was the Air Force official responsible for evaluating contract proposals for a program focused on battlefield communication technology.

The plea agreement notes in May 2005, Congress appropriated an $8.2 million earmark for the Mobile Common Data Link Gateway, which had been lobbied for by the Pennsylvania-based Coherent Systems International Inc.

O’Hair approved various purchased orders from Coherent for items that were not part of the Gateway project, including $200,000 to Schaller Engineering for items that were never provided.

Richard Schaller, the founder of Schaller Engineering, then distributed the $200,000 to O’Hair and Sumrall though another company he created, according to the plea agreement. Sumrall has also pleaded guilty in the case.

Richard Ianieri, the former CEO of Coherent Systems, pleaded guilty July 14 to charges linked to the same scheme. He has also pleaded guilty in a Pennsylvania court to taking kickbacks from a subcontractor referred to as “K— for favorable treatment under government contracts. Coherent worked closely with Kuchera Industries and shared a facility with the company. Bill Kuchera, the owner of Kuchera Industries, has not been charged in the case. Kuchera was raided by the FBI earlier this year.