GOVERNMENT CONFLICTS, CORRUPTION AND INDICTMENTS

- FEDERAL -

Date	Individual / Gov’t Agency	Who, What, Where?
12/31/04	Fannie Mae	Fannie Mae Violates Accounting Rules Securities regulators said this month that Fannie Mae had violated accounting rules and would have to restate its earnings, possibly erasing $9 billion in profit. The findings came after Fannie Mae's regulator cited it for serious accounting problems and accused it of manipulating earnings. The chairman and chief executive of the nation's largest mortgage lender, Franklin Raines, is due a lifetime pension of more than $1.3 million a year. But regulators have asked Fannie Mae to delay payment until they can decide whether the company acted appropriately by letting him retire early instead of firing him.
01/08/05	David Rosen	Lying About Senatorial Campaign Monies A federal grand jury has indicted David Rosen on charges he lied about the amount of money collected and spent during a Hollywood party that raised more then $1 million for Hillary Rodham Clinton’s 2000 senatorial campaign. It is not known if other individuals, including Senator Clinton, were suspected of collaboration.
02/01/05	National Institute of Health (NIH)	NIH Accused of Shoddy Conduct in HIV/AIDS Trials Former Director Johnathan Fishbein of the Office of Policy in Clinical Research Operations at the National Institute of Health (NIH) has accused the NIH of shoddy politically motivated conduct in trials examining the safety and efficacy of the drug nevirapine. Fishbein stated that the drug could be very dangerous although a study by the John Hopkins School of Medicine concluded that the drug was safe and effective based on a late 1990s study conducted in Uganda. Fishbein alleges that the most basic procedures of Good Clinical Practice were absent from their work.
02/10/05	Kelly Air Force Base	Government Lawsuit Accuses Contractor of Gross Profits The federal government has accused defense contractor Science Applications International Corporation (SAIC) of San Diego, California, of reaping profits of 30% on environmental testing and cleanup work they performed at Kelly Air Force Base in Texas. Under the contract, SAIC is only permitted a profit of 10%. In May 2005, the government settled the case in which SAIC will reimburse the government for $2.5 million for false claims for work they performed.. One of the company’s project managers blew the whistle on the company claiming that SAIC defrauded the government by padding cost estimates for environmental cleanup work. The most mind-boggling outcome of this incompetency and thievery is why does the government continue to do work with these modern-day pirates? Would you continue working with a vendor who stole from you? The government rip-off just keeps rolling along. According to a lawyer who has handled contracting lawsuits, “A lot of companies feel they can outsmart the government.” This is another example of a contract that was awarded without competitive bidding.
03/01/05	Titan Corp.	Titan Corp. Pleads Guilty to $28.5 Million African Bribery Titan Corp., a San Diego defense contractor, pleaded guilty yesterday to three felony charges related to foreign bribery and agreed to pay $28.5 million to end investigations that spanned the globe and included allegations that the company funneled money to the president of the West African country of Benin. The penalty is the largest for violations of the Foreign Corrupt Practices Act by a publicly traded company, prosecutors said. Lockheed Inc., now Lockheed Martin Corp., paid $24.8 million in 1995 for conspiring to bribe an Egyptian politician. The company said it told its largest customer, the U.S. Navy, about the plea agreement and has been negotiating a separate administrative agreement that will allow it to continue to receive contracts. Now you don’t honestly believe that will hinder the U. S. Navy from a “Business as usual” policy with the contractor, do you?
03/05/05	Department of Homeland Security	Investigation of Alaska Native Corporations – Homeland Security Contracts Federal lawmakers called for a congressional investigation into an excessive amount of homeland-security contracts that were awarded to Alaska Native Corporations for up to $2.2 billion, many without competitive bidding. Long established contractors, who have stated that they never had an opportunity to bid on the work, have said in interviews that taxpayers are not benefiting from this exclusionary process.
05/10/05	Medicare	Armless and Legless Floridians Outrageous Medicare billing caught the attention of a federal judge in Florida when she asked the question, “Why had the government paid out so much for 21,000 sudden amputees in one location?” A private firm that processes Medicare claims paid for 21,000 artificial limbs for South Floridians over a four-month period. Medicare paid the bill: $122 million. When federal prosecutors heard from seniors that they didn't need and hadn't received new limbs, they investigated and filed a civil suit against the 48 small businesses and the billing agency that had submitted the claims.
11/01/05	Iraqi Coalition Authority	Dozens of Iraqi Officials Linked to $1 Billion Fraud According to the Star-Ledger, Iraq has issued arrest warrants for the former defense minister, Ayad Allawi, and 27 other officials over the disappearance or misappropriation of $1 billion in military procurement funds. Iraqi investigators have been looking into allegations that millions of dollars were spent on lucrative deals for shoddy weapons and military hardware, with the underlying purpose being a method of laundering cash. I’m sure we’re all happy knowing that our tax dollars are going into the coffers of corrupt Iraqi officials.
11/01/05	Special Operations Command	Bribery Widespread at Special Operations Command The procurement process used to acquire battlefield equipment for the U. S. Special Operations Command, a unit comprised of Navy Seals, Army Green Berets and Rangers, is being investigated for widespread bribery and corrupt practices. According to the New York Times, this investigation falls on then heels of the conviction of a civilian government procurement official, William E. Burke, who works for the command, for accepting bribes from contractors. The Pentagon inspector general is expanding their probe to look into all contracts handled by Mr. Burke since 1999. As a part of the investigation, the pentagon is looking into accusations, made by former and current employees that one former military procurement official who oversaw millions of dollars in Boeing Company contracts went to work for Boeing after leaving the command. It seems that these corrupt practices are “business as usual” in the defense contracting business.
12/01/05	House of Representatives	Representative Randy Cunningham Resigns After Pleading Guilty to Bribery For years, based on his personal experiences as a senior manager in the defense industry, the Apathetic Voter has tried to raise awareness of the unbelievable waste, inefficiencies and corruption that exists in the relationship between the Pentagon and it’s contractors. As President Dwight D. Eisenhower lamented, “Beware the Military-Industrial Complex.” The former president, who led our country to victory in Europe in World War II, understood the problems over 50 years ago with an out-of-control defense-contracting clique that literally charges the Pentagon whatever amount of money they want, because no one is watching the store at the Pentagon. For, as I have repeated over and over again, it’s not their money, it’s only taxpayer money, so why should they care, especially when there are few incentives to control prices. The Apathetic Voter has previously ridiculed the price tag for the new F/A-22 Raptor at $358 million per plane as just one example of the stranglehold defense contractors have on the obese Pentagon piggy bank. Obviously, no one in the Pentagon has the knowledge to challenge the cost estimates of these robber barons, or perhaps no one is inclined to commit political suicide by doing so. Why don’t we just give these companies the key to Fort Knox and let them help themselves? Every month the Apathetic Voter identifies the latest multi-million dollar corruption scandal that is an obvious outgrowth of this incestuous relationship. With their obscene profits they can throw barrels of money at any politician who has the slightest inclination to make a king’s ransom using his or her influence within Congress and the Pentagon. The Apathetic Voter strongly suspects that there are hundreds of these easily cajoled politicians who just haven’t been caught with their hand in the cookie jar yet. Greed knows no bounds, especially when the money flows like the waters over Niagra Falls. It’s a simple situation that must be changed – governments at all levels have too much taxpayer money to squander! This month, House Representative Randy “Duke” Cunningham (Republican, California) pleaded guilty to receiving $2.4 million in bribes from military contractors and evading more than $1 million in taxes on that ill begotten money. Cunningham, who won national acclaim as a decorated Navy fighter pilot during the Vietnam War, admitted a pattern of bribery going back to 2000. According to the Los Angeles Times, four contractors, who were also charged, have lavished him with Persian carpets, silver candelabras, a Rolls Royce, antique furniture, travel and hotel expenses, and a lavish graduation party for his daughter. In return, he used his influence in Congress, as a member of the House Defense Appropriations Committee and the House Intelligence Committee, to influence the appropriation of funds and granting of government contracts. One of these contractors, MZM, has received over $163 million in federal contracts over the last 10 years, for the gathering and analysis of intelligence. Whenever Cunningham was in Washington, he didn’t need to live in a hotel room, he slept in luxury on MZM-owner Mitchell Wade’s 42-foot yacht. He also received numerous favors from Brent Wilkes, who headed a military contracting company, ADCS, Inc. House Minority Leader Nancy Pelosi (Democrat, California) said, “This offense if just the latest example of the culture of corruption that pervades the Republican-controlled Congress, which ignores the needs of the American people to serve wealthy special interest and their cronies.” How Representative Pelosi, who is further left than Vladimir Lenin, was able to twist this military-industrial corruption into serving wealthy special interests is beyond me, for both the Republicans and Democrats seem to share the guilt equally throughout Congress and state legislatures. Perhaps Representative Pelosi has never read a newspaper citing the hundreds of corruption charges mainly attributable to Democrats in the state of New Jersey.
02/01/06	Congress	Lobbyist Jack Abramoff Accepts Plea Bargain Well-connected lobbyist Jack Abramoff pleaded guilty to federal criminal charges in accepting a plea deal when he said he would testify about members of Congress who are also caught in his web of corruption. Abramoff in all likelihood will be small potatoes when all of the sordid details of his involvement with Congress are exposed at trial and in the public media. According to the Miami Herald, the story of how Abramoff, who collected $80 million in fees from casino-rich Indian tribes, wined and dined politicians at his own upscale restaurant, and then flew these same people overseas for lavish golf outings, portrays a nefarious web worthy of a primetime soap opera. But the real story will be the exposure of many members of Congress for the powerful crooks they have become. The most far-reaching charge against Abramoff is that he corruptly influenced public officials and their relatives. The federal charge said, “Abramoff and others would offer and provide things of value to public officials, including trips, campaign contributions, meals and entertainment in exchange for agreements that the public officials would use their official positions and influence to benefit Abramoff’s clients … and businesses.” The Miami Herald reports that at least three Republican and one Democratic Congressmen were immediately implicated in the festivities. Bill Mateja, a former official in the Bush administration Justice Department, said, “This is going to grow and multiply. If I were on Capital Hill, I would be shaking in my boots. Because if anyone knows where the skeletons are buried, it’s Jack Abramoff.” The conviction had the rats scurrying to abandon the sinking ship. House Speaker Dennis Haskert (Democrat, Illinois) announced he would be returning $70,000 in campaign contributions from Abramoff’s clients, including Indian tribes. Previously, Senator Conrad Burns (Republican, Montana) returned more that $150,000. Although Burns accepted campaign contributions from this crook, he had the gall to say, “This Abramoff guy is a bad guy. … I hope he goes to jail and we never see him again. I wish he’d never been born, to be right honest with you.” The Abramoff scandal could rival or exceed the famous 1980 Abscam case, in which an FBI sting trapped members of Congress taking bribes. Six members of the House and one member of the Senate were convicted in that trial. With the pervasive attitude of corruption that has overwhelmed Congress and state legislatures, if for no other reason than government extorts excessive taxpayer money, the Apathetic Voter predicts that the volume of criminal prosecution against congressional representatives will be unprecedented in American history regardless of party affiliation.
03/01/06	Iraqi Coalition Authority	Feds Hand Out $82 Million in Iraq Reconstruction Money to Convicted Felon The American-led Iraqi Coalition Authority gave Robert J. Stein, Jr. $82 million of Iraqi oil proceeds and money seized from Saddam Hussein’s government to build a major police academy and other reconstruction projects. Mr. Stein began his slide into purgatory after S&K Technologies, a company that had won lucrative Army contracts, hired him. The company was supposed to conduct Pentagon background checks, but obviously slipped up on that little detail. According to the New York Times, Mr. Stein has been charged with conspiracy, bribery, money laundering, possession of a machine gun, and being a felon in possession of firearms. But Mr. Stein was not alone in the caper. The court filings indicate that, in addition to Mr. Stein, the ring of corruption involves Philip H. Bloom, who was given many millions for reconstruction projects, and at least five reserve Army officers. Mr. Stein used some of his stolen money to buy a Lexus, a part interest in a Porsche, a Cessna airplane, two plots of land in North Carolina, a personal computer, 18 Breitling watches, a 6-carat diamond ring, grenade launchers, machine guns, and a collection of silver dollars. Some of the money was lugged aboard commercial airliners in suitcases back to the Unites States. As part of their scheme, Mr. Stein and his co-conspirators dispensed and received a wide variety of goodies like cigars, alcohol, first-class plane tickets and money laundering services all on the taxpayer’s dime. His associate, Mr. Bloom, kept a villa in Baghdad where he provided women who gave sexual favors to government officials he hoped to influence. At one point, Mr. Stein and others picked up $58.8 million in shrink-wrapped $100 bills from provisional authority headquarters where he deposited the money in his vault in Hilla. Where it went from there is a subject of great debate and likely untraceable due to the lack of accounting for many projects in Iraq. He was so brazen that he wired $30,000 from a bank account in Kuwait to an account in North Carolina controlled by his wife. Two weeks later, he wired an additional $70,000. Mr. Stein sent an e-mail to Mr. Bloom indicating that an official had stomped out of his office because he had not received his next payoff of $60,000 after the official’s wife told him she had not received the money in their joint account. The ring of conspirators widens as the investigation unfolds.
03/01/06	Congress	Businessman Convicted of Bribing Congressman In last month’s newsletter, we lamented about how California Representative Randy “Duke” Cunningham was indicted for bribery, a major blow to the Republican Party. This month, Mitchell Wade, pleaded guilty to conspiring with Cunningham to bribe the lawmaker with cash, cars and antiques, and to help him evade millions of dollars in tax liabilities. According to Fox News, Wade, former president of MZM, Inc., also acknowledged making nearly $80,000 in illegal campaign contributions to two other members of Congress, who were not identified, but we can all expect that the guillotine will have two new customers in the very near future, further blighting the image of Congress. Wade also identified a Defense Department official and other employees he bribed to help him win defense contracts.
04/01/06	Defense Department	Hopefully Its Custer’s Last Stand According to the Los Angeles Times, a federal grand jury has found that a private security firm, Custer Battles, has bilked the U. S. led interim government out of millions of dollars in Iraq. Custer Battles, which is based in Virginia, was found to have used shell companies, faked invoices and even stolen forklifts in a scheme to defraud the now-defunct Coalition Provisional Authority, which ruled Iraq after Saddam Hussein's regime fell. This is the first time that a federal jury has ordered a contractor in Iraq to pay back purloined funds to the government. The jury found Custer Battles responsible for 37 separate fraudulent acts; the firm could face payments and penalties totaling more than $10 million. "There is an orgy of greed among contractors in Iraq, and the Bush administration is for all practical purposes participating in it," said Alan Grayson, lawyer for the whistle-blowers who filed the case. "They have done nothing to get the taxpayers' money back. They've done nothing to punish the wrongdoers." The critical factor in this case is that IT WAS NOT the U. S. government that started the court battle to recover the funds, but two whistle-blowers who came forward in the fall of 2003 to accuse Custer Battles of fraud. Robert Isakson and William "Pete" Baldwin eventually filed a claim under the False Claims Act, a Civil War-era anti-fraud measure that allows private citizens to file suit on behalf of the government and to receive a portion of any money recovered. In this case, the two men stand to receive as much as $3 million, with the government recovering the rest. The False Claims Act allows the Justice Department to join whistle-blowers in the prosecution of cases. But in this case, government attorneys did not participate. Grayson, the lawyer for Isakson and Baldwin, attributed the decision to political considerations. Battles ran as a Republican candidate for Congress in 2002, and Custer boasted of the company's ties to the administration. Baldwin and Isakson described a scheme in which Custer and Battles inflated invoices to recover more money than allowed under the currency exchange contract. A separate trial is expected concerning the airport contract. Hugh Tant III, a retired Army general who oversaw the currency exchange project, testified that Custer Battles had supplied broken-down trucks to move the currency around Iraq, requiring Tant to use military vehicles. When Tant complained, he said, the company told him that the contract did not require it to supply "operational" vehicles. "My impression of their work was, it was probably the worst I've ever seen in over 30 years of my time in the Army," Tant said on the stand. "The absolute worst." But Custer Battles is small potatoes in comparison to the rip-off being perpetrated by Halliburton. The only question that remains is when will a few whistle blowers accuse Halliburton and it’s subsidiary, Kellogg, Brown & Root, of massive fraud, so we can square the books on their incompetence and corruption?
04/01/06	Congress	Lobbyist Jack Abramoff Sentenced to Six Years Well-connected lobbyist Jack Abramoff was sentenced Wednesday in Miami federal court to a prison term of five years and 10 months for a fraudulent loan deal to buy a South Florida fleet of gambling ships. His business partner, Adam Kidan of New York, received the same sentence before U.S. District Judge Paul Huck. The judge ordered both men to pay back $21.7 million to one of the lenders in the 2000 SunCruz Casinos deal. Both were allowed to remain free on bail for at least 90 days while they assist authorities in SunCruz-related criminal investigations. Huck's courtroom was packed with reporters, prosecutors and gawkers. Most came to witness the somber sentencing of Abramoff, whose influence peddling on Capitol Hill has spawned an array of investigations into the lobbyist's relationships with lawmakers, especially Republicans. Abramoff had already pleaded guilty in a parallel corruption probe in which he admitted giving members of Congress and their staff members bribes, foreign trips and gourmet meals. Several lawmakers -- including an Ohio congressman who operated behind the scenes in the SunCruz deal and other Abramoff activities -- may be indicted this spring, according to sources familiar with the case.
06/01/06	FEMA	26 Charged with FEMA Fraud According to the Miami Herald, a grand jury has indicted 26 Orlando area residents on charges of making fraudulent claims for federal assistance after the two hurricanes that struck the Gulf Coast last year. Federal prosecutors said on Thursday that the defendants collected a total of $150,000 in emergency assistance from the Federal Emergency Management Agency (FEMA), even though they didn't live in the areas affected by hurricanes Katrina and Rita. Charges include conspiracy, submission of a false claim to a governmental agency, theft of government property, mail fraud, wire fraud, and making a false statement to a government agency. The counts carry prison sentences ranging from five to 20 years.