When Carol Lam, the US Attorney for the Southern District of California, was publicly humiliated and dismissed by the Bush Administration on December 7, 2006, she became the latest casualty in George W Bush’s "War on Terror". The "War on Terror" is multi-pronged. It consists of the wars in Iraq and Afghanistan, the war against al Qaeda, and the war of profit and political favors. It was the war of profit and political favors that killed Carol Lam’s career.
This is the story of one of the warriors of greed and profit. This is the story of the warpath of dollars that leads all the way to the White House.
The reason being floated by the Administration for Carol Lam’s dismissal is her alleged lax pursuit of immigration cases. Congressman Darryl Issa has attacked Ms. Lam on her office’s prosecution of immigration misdemeanors prior to her firing, and that attack is being now spun as a cause for her dismissal. However, it is clear from the emails released by the Justice Department that the Department was aggressively defending Ms. Lam and considered Mr. Issa something of a pest.
It is ironic that Darryl Issa, who has been arrested multiple times for gun possession and auto theft, should pursue Carol Lam for exercising prosecutorial discretion in deciding whether to pursue misdemeanor offenses. If the prosecutors had not exercised prosecutorial discretion in the cases involving the Congressman, Mr. Issa would likely have seen some jail time. But I digress.
Politics however is sometimes fought as asymmetrical warfare. The most plausible speculation about Carol Lam’s dismissal is that she was fired because of her prosecution of Duke Cunningham and the possibility that the ongoing investigation was starting to come too close to the White House. Darryl Issa, a defender of Duke Cunningham to the end, may have been prosecuting a flanking maneuver.
The smoking gun tying Carol Lam’s firing to the Duke Cunningham case seemed to be contained in an email from Kyle Sampson:
The U.S. attorney in San Diego notified the Justice Department of search warrants in a Republican bribery scandal last May 10, one day before the attorney general’s chief of staff warned the White House of a "real problem" with her, a Democratic senator said yesterday.
The prosecutor, Carol S. Lam, was dismissed seven months later as part of an effort by the Justice Department and the White House to fire eight U.S. attorneys.
…
Sen. Dianne Feinstein (D-Calif.) said in a television appearance yesterday that Lam "sent a notice to the Justice Department saying that there would be two search warrants" in a criminal investigation of defense contractor Brent R. Wilkes and Kyle "Dusty" Foggo, who had just quit as the CIA’s top administrator amid questions about his ties to disgraced former GOP congressman Randy "Duke" Cunningham.
The next day, May 11, D. Kyle Sampson, then chief of staff to Attorney General Alberto R. Gonzales, sent an e-mail message to William Kelley in the White House counsel’s office saying that Lam should be removed as quickly as possible, according to documents turned over to Congress last week.
"Please call me at your convenience to discuss the following," Sampson wrote, referring to "[t]he real problem we have right now with Carol Lam that leads me to conclude that we should have someone ready to be nominated on 11/18, the day her 4-year term expires."
Since that revelation the issue has been much clouded by the raising of the immigration issue. But where there is smoke, there is likely to be fire – especially when the Bush Administration is involved.
Duke Cunningham was being bribed by MZM, a company run by Mitchell Wade. It has emerged through the hard work of Talking Points Memo and Think Progress that MZM got its start in government contracting and the bribery business in a most unusual way:
– Wade’s company MZM Inc. received its first federal contract from the White House. The contract, which ran from July 15 to August 15, 2002, stipulated that Wade be paid $140,000 to “provide office furniture and computers for Vice President Dick Cheney.”
– Two weeks later, on August 30, 2002, Wade purchased a yacht for $140,000 for Duke Cunningham. The boat’s name was later changed to the “Duke-Stir.” Said one party to the sale: “I knew then that somebody was going to go to jail for that…Duke looked at the boat, and Wade bought it — all in one day. Then they got on the boat and floated away.”
Of course, the big prize for MZM followed the very next month:
The money and gifts MZM gave Cunningham were a small price to pay for the ultimate prize. In September 2002, the General Services Administration signed a so-called blanket purchase agreement with MZM totaling $250 million over five years.
So, the facts are a company (MZM) gets its first contract from the White House, gets paid $140,000, and two weeks later spends $140,000 to bribe Duke Cunningham, and the very next month gets a $250 million dollar contract from the Defense Department. That kind of meteoric rise is unheard of in government contracting. Add to that the fact that MZM was the only bidder for a $250 million dollar contract from DOD, and you have the makings of major corruption. Anyone who has ever bid for a government contract, especially a $250 million dollar contract that was a full and open bid, knows that everyone who is anyone in government contracting would have bid for such a lucrative contract.
When the Pentagon noticed that they had handed out such a large contract without a competitive bidding process, they apparently stopped any new work on the contract. That Pentagon decision, in June 2005, came the same week that the relationship between Duke Cunningham and MZM became known:
The Pentagon has ordered a halt in new work for MZM Inc., a local defense and intelligence firm, under a contract that has brought the company $163 million in revenue during the past 2 1/2 years.
A Pentagon spokesman said in a statement that the decision to cut off further awards for MZM under the 2002 contract, known as blanket purchase agreement, was because of a change in procurement law. Rep. Randy "Duke" Cunningham (R-Calif.), a member of the House defense appropriations subcommittee, acknowledged last week that his relationship with MZM founder Mitchell J. Wade is being examined by federal authorities.
The story so far is quite damning. But, it is far from complete.
The contract MZM received from the White House for $140,000 was not an isolated contract. That contract was part of a Blanket Purchase Agreement (BPA) that MZM signed with the GSA on May 13, 2002 [Click here for a PDF of the GSA schedule for this BPA]. In addition to this BPA, MZM rode the gravy train on two other BPAs. The three BPAs are as follows:
- GSA BPA contract number GS-35F-0486M effective May 13, 2002 to May 12, 2007
- GSA BPA contract number GS-10F-0392R effective July 19, 2005 to July 18, 2010
- DITCO contract number DCA20002A5016 effective sometime in September, 2002
Between 2002 and 2006, when MZM was ostensibly sold (more on that later), the company was paid over $176 million mainly under GS-35F-0486M and DCA20002A5016. A company that made no money before 2002, made $140,000 in 2002, over $43 million in 2003, over $69 million in 2004, over $60 million in 2005 and over $3 million in a few months in 2006 before the company was sold.
The White House got the ball rolling in 2002 under GS-35F-0486M. In 2004, the Executive Office of the President also paid MZM a total of $421,474 ($50,115, $92,161, $112,161 under DCA20002A5016 and $167,037 under GS-35F-0486M) for "intelligence services" .
On February 24, 2006, the government secured a guilty plea from Mitchell Wade, the head of MZM. Wade pleaded guilty to funneling $1 million in bribes to Duke Cunningham. In the plea agreement Wade admitted to bribing the DOD Program Manager on the DITCO contract (DCA20002A5016) by hiring the Program Manager’s son and later hiring the Program Manager at MZM. In return MZM received favorable reviews and inside information that helped secure contracts for MZM under the BPA.
As I mentioned earlier in this post, the Pentagon claimed in June 2005 that they would not award any further work to MZM under the DCA20002A5016 BPA. However, government records show that MZM was awarded multiple task orders, amounting to millions of dollars, in fiscal year 2006 on the BPA.
On July 18, 2005, while MZM was being investigated for bribery and after the Pentagon claimed to have cut off the DCA20002A5016 gravy train, the GSA awarded MZM with a $2,250,000 blanket purchase agreement (GS-10F-0392R) for the MOBIS program [Click here for a PDF of the GSA schedule for this BPA]. In September 2005 MZM was renamed Athena Innovative Solutions after a purchase by Veritas Capital. Athena has continued where MZM left off by collecting over $7 million in 2006 under GS-10F-0392R and GS-35F-0486M. The gravy train continues.
Surprisingly, fully 100 percent of Athena’s inherited (from MZM) contracts and 78 percent of MZM’s contracts were full and open bids, but only had one bidder – MZM. Given the size of these contracts, these statistics should raise eyebrows.
The question must be asked – how does a small business with no revenue secure a BPA worth tens of millions of dollars (GS-35F-0486M) as the prime contractor in a full and open (not a small-business set-aside) bidding process? The question must be asked – what role did the White House play in securing this contract given that the White House was MZM’s first customer?
The question must be asked – how does a small business which has only one prior past performance in buying furniture secure a massive DOD contract worth up to $250 million dollars to do classified work without any prior DOD related experience? The question must be asked – how did the White House grant a series of unprecedented contracts in 2004 for "intelligence services" to the very same company that the White House previously hired to buy furniture? The question must be asked – since the DCA20002A5016 contract has been shown to involve bribery, were there any improprieties involved in the granting of task orders by the White House to MZM under this BPA?
The question must be asked – why would the GSA grant a multi-million dollar contract (GS-10F-0392R) to MZM within a month of it becoming public that the company was involved in bribery involving government contracts?
Finally, the question must be asked whether Carol Lam was asking these very questions? In light of the email from Kyle Sampson cited above, it appears quite likely that Carol Lam’s investigation of the Duke Cunningham scandal was probably venturing into sensitive areas – thus making Carol Lam a "real problem".
That "real problem" was solved on December 7, 2006 when Carol Lam was fired.
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