The Michael Milken for the new millennium, Mitchell Wade bribed and intimidated his way to
at least $150 million in federal contracts, compromising people in some of the most
sensitive jobs in national security to do it.
His aggressive pursuit of federal money was not simply business as usual. It was not even avarice as usual. As one intelligence officer told U.S. News and World Report, what Wade did was “throwing chum out there to attract the sharks, who are going to prey on what you are doing. And you are inviting penetrations of your company.”
- In his quest for ever-larger defense contracts, Wade:
- bribed congressmen, including former Rep. Randall “Duke” Cunningham;
- bribed federal employees and hired their relatives to curry their favor inside government;
- rewarded government workers who helped advance convicted defense contractor MZM’s agenda by hiring them at high salaries;
- provided sloppy and ineffective work for agencies working in the crucial areas of counterterrorism and intelligence;
- directed executives to make illegal campaign donations; and
- conspired with fellow defense contractors to hide exactly how much money he was milking from the government. One of these contractors was Brent Wilkes, who is named as “Co-conspirator No. 1” in Cunningham’s plea agreement.
One MZM executive has already been convicted of a misdemeanor for helping Wade commit campaign finance fraud, and at least three others are under investigation as of the end of 2007. Among them is retired U.S. Army Lt. General James C. King, who founded and ran the National Imagery and Mapping Agency, an intelligence program that collects and analyzes data from satellite images. (It is has since been renamed the National Geospatial-Intelligence Agency). King steered tens of millions in NIMA contracts to MZM in late 2001, then joined the company as senior vice president of intelligence programs. While working at MZM, King continued to consult with the Defense Department and to guide more counterterrorism contracts Wade’s way.
When Wade pleaded guilty to conspiracy to commit bribery in February 2006, he agreed to help investigators learn the extent of his corruption. Just before the Duke Cunningham scandal broke, MZM won contracts to provide “intelligence services” to the White House.
Wade worked for several years at the Pentagon, quitting to create MZM in 1993. MZM did not win any big federal contracts until late 2001 and early 2002, when Wade began cultivating his relationship with Cunningham. It started with a $12,000 shopping spree at an antiques store and a $50,000 cash payment that Wade routed to Cunningham through a third man, New York businessman Thomas Kontogiannis, who is still under investigation as of the end of 2007.
According to his plea agreement, over the ensuing four years, Wade would pay Cunningham more than $1 million in cash and gifts. In one of the more sensational moves, and one that attracted the attention of prosecutors, Wade paid more than $1.6 million in November 2003 to buy Cunningham’s home. When Wade sold it nine months later, it turned out to be worth only $975,000. Wade also bought Cunningham a $140,000 yacht, which the Congressman named the “Duke-stir.”
Shortly after the bribing began, MZM received a $225 million blanket purchase agreement from the Department of Defense. The agreement was not a contract, but rather it was more like a promise: MZM could draw down on that line of credit if it could find contracts within the department to work on. With Cunningham’s help, Wade and his company found plenty.
MZM received the agreement shortly after Wade hired the son of William Rich Jr., who was then director of the National Ground Intelligence Center, which analyzes intelligence for the Army. Under Rich’s leadership, the NGIC contributed to the false intelligence report that alleged Saddam Hussein possessed aluminum tubes that could be used to build nuclear weapons. (It was later revealed that the tubes are used in rockets.)
In late 2002, Cunningham earmarked money at NGIC for classified projects that went to MZM, including one on a computer program called FIRES. (FIRES is an intelligence database of international building blueprints.) After a few months on the project, MZM’s work came up for review. To ensure a favorable rating, Wade again made a strategic hiring decision, this time giving a job to the son of Robert Fromm, the FIRES manager. (Wade billed the salary for Fromm’s son back to the NGIC.)
Hiring the relatives of people in a position to help him was a Wade specialty – prosecutors say he did at for at least 15 government employees. They include Joe James, an executive at the now-closed MZM-owned Foreign Supplier Assessment Center, whose wife May James is an assistant to the Undersecretary of Defense for Intelligence, Stephen Cambone.
Wade also tried to penetrate the paid staff of the House Intelligence Committee, possibly by offering bribes. But according to an internal investigation, he failed. The summary of the investigation report, which is the only part of it released publicly, doesn’t name Wade’s specific tactics. But in the end, it didn’t matter. The investigation found that Cunningham bullied the committee’s staff so relentlessly that they gave in to his demands for money for MZM projects even though they thought the projects “a waste” and were openly suspicious of Wade himself. (Had they resisted Cunningham, the report hints, he would have used his seat on the Appropriations Committee to block funding for Intelligence Committee projects.)
Undaunted, Wade poached people directly from the various Defense Department agencies that MZM provided services to, such as George A. Peeterse, who left the NGIC to be an MZM Vice President. Wade’s highest-ranking hire, however, is probably James King. Before founding NIMA, King was the associate deputy director of operations for the National Security Administration under its then-chief Gen. Michael V. Hayden, who was appointed CIA director in 2006. After Wade hired him, King supervised MZM’s work on NIMA contracts, and he worked again as an adviser to Hayden in 2004 and 2005, all the while maintaining his job with Wade.
King was also a paid consultant to an exclusive committee in 2002 charged with finding a way for the Pentagon to better protect itself from espionage. That group ultimately suggested that the Pentagon form a new agency, and Cunningham sponsored its creation in Congress through earmarks. The Counterintelligence Field Activity soon began handing out contracts – more than $1 billion in its first three years of existence – and MZM won several of them.
But Cunningham and King were not the only people to help Wade. Goode, of Virginia, sponsored a $3.6 million earmark for MZM to create a special office that evaluated foreign companies hoping to do business with the U.S. government. The Pentagon said repeatedly that it didn’t need an outside, private-contractor to do that work for it, but Congress approved Goode’s earmark anyway. MZM built the Foreign Supplier Assessment Center in Goode’s district, and Goode earmarked another $9 million to keep it running over the next three years. After both Wade and Cunningham were arrested, the Pentagon closed the FSAC down.
During those same years, Goode received nearly $90,000 in campaign contributions from Wade, King and other MZM employees and their spouses. However, most of those donations were really from Wade. Prosecutors say Wade handed out large chunks of cash and directed his employees to donate to Goode, as well as Katherine Harris. Richard Berglund, an executive at the FSAC, pleaded guilty in 2006 to making illegal campaign donations to Goode for Wade and was sentenced to a year on probation. King, as of 2007, is reportedly still under investigation for the same crime.
Wade’s corruption may extend even higher than the House Appropriations Committee. Between 2002 and 2005, MZM received about $600,000 to provide “intelligence services” to the White House.
After his arrest, Wade sold MZM to Veritas Capital, an equity firm that also owns other defense companies, including DynCorp, which has hundreds of millions of dollars in defense contracts. Veritas renamed the company Athena Innovative Solutions and promoted King to CEO. The company continues to work on the contracts that Wade won for it.
- TPM’s Wade summary: http://tpmmuckraker.com/wade.php
- US News article on MZM: http://www.usnews.com/usnews/news/articles/060917/25mzm_2.htm
- Wade’s statement of offenses for plea agreement: http://www.talkingpointsmemo.com/docs/wade-statement-of-offenses/?resultpage=16&
- MZM wins “intelligence” contracts w/the White House: http://www.tpmmuckraker.com/archives/000045.php
- House intelligence report on MZM and Duke Cunningham: http://www.talkingpointsmemo.com/docs/harman-duke/
- MZM contracts: http://www.governmentcontractswon.com/department/defense/mzm_inc_829159888.asp?yr=03
- Wade, Wilkes and Lewis? Sentencing to be postponed, again: http://www.usnews.com/usnews/news/articles/070119/19wade.htm
- Wade, Wilkes and Lewis?