MSM Not Going To Cover This Alert!
By: Kenneth P. Vogel
Sep 5, 2007 09:40 PM EST
Rep. Paul E. Kanjorski (D-PA)
Though Kanjorski, a 12-term Democrat, represents a safe working-class district, Republicans have seized upon the issue as they head into Campaign 2008.
A twisted tale of congressional earmarking has taken another turn.
The U.S. Navy wants a business owned by the family of Rep. Paul E. Kanjorski to hand over a piece of high-tech equipment bought with some of the $9.25 million in taxpayer funds Kanjorski steered to the company.
Except no one seems to know where to find the equipment — a high-pressure pump. The mystery of the missing pump, combined with newly unearthed evidence that federal investigators probed Kanjorski’s connections to the company, Cornerstone Technologies, has given new life to a story that seems unlikely to go away.
Though Kanjorski, a 12-term Democrat, represents a safe working-class district, Republicans have seized upon the issue as they head into Campaign 2008. They’ve been highlighting it and other cases of alleged self-dealing by congressional Democrats to question the new majority’s commitment to one of the promised reforms on which it swept into power last fall: cleaning up the earmarking process through which lawmakers sometimes insert cash into spending bills for cronies, donors and relatives.
And the legal system has kept Kanjorski’s saga fresh. A county judge presiding over countersuits between former Cornerstone employees and the company threatened bench warrants for some of the Kanjorski clan. But three days before a scheduled contempt hearing last year, Cornerstone filed for bankruptcy protection, stalling the suit.
Kanjorski, who along with his chief of staff was subpoenaed in one of the cases but never testified, said he’s storing some of Cornerstone’s property but can’t speak for the company.
“I have no relationship to the Cornerstone company and have had no involvement in the company’s legal proceedings, except I indicated my willingness to give a deposition,” he said in a statement to Politico. If Cornerstone owes the Navy something, he said, “that is a matter between the contracting parties.”
Cornerstone’s lawyer was unaware of the pump and said the Navy never mentioned it.
“I don’t deny that they may have paid money and may have thought that that’s what they were getting. And maybe there is one there,” said John H. Doran, a Wilkes-Barre, Pa., lawyer specializing in bankruptcies. “It strikes me as strange that they’re saying a year later, ‘Gee, that’s our pump.’”
The company reported in its bankruptcy filing that it owed a debt of unknown value to the Navy for an “incomplete contract,” but the U.S. government has not filed a claim against Cornerstone.
Claim or not, the Navy wants the pump, which was part of a prototype water-jet mill taxpayers paid Cornerstone to develop, according to Ignacio Perez, the Navy program officer who oversaw Cornerstone’s work. “The Navy will collect only the pump when it finds it,” he said, but “it has not been located at this point.”
Earmarked public funds don’t lend themselves to accountability, particularly when the recipients are close to members of Congress, said Steve Ellis, an official with Taxpayers for Common Sense.
“We’re giving them money to develop something or to purchase equipment. But if we don’t get something back, when does it end up just becoming a gift to the company?” asked Ellis, whose group advocated for more transparency in budgeting and a ban on earmarks benefiting the extended families of members. “People need to have faith their elected officials are making decisions in the best interest of the country, not in the best interest of their family.”
Kanjorski seeded company
An admitted science geek who became enchanted by the idea of using high-powered water jets to break down materials for use in composites, Kanjorski encouraged the creation of Cornerstone in the late 1990s to develop — and one day commercialize — the technology. It was formed by his nephew, Peter Kanjorski, and a scientist, Bruce Conrad, who were joined in the company by four of the congressman’s other nephews and his daughter.
In 1998, with the help of Rep. John P. Murtha, a fellow Pennsylvanian and the top Democrat on the Defense Appropriations Subcommittee, Rep. Kanjorski earmarked $3.5 million for the research through the Navy.
Though Kanjorski has denied he actively steered taxpayer cash to Cornerstone, the Navy’s Perez said the company was the only applicant for the research contract. And a 1999 e-mail exchange suggests Kanjorski and Murtha pressured the Defense Department to release funds to Cornerstone.
The department was withholding at least part of the funds, a Navy official wrote to Conrad, “and the only way it will be … released [is] if Congress gets on their back.”
Conrad forwarded the message to Kanjorski’s chief of staff, Karen Feather. She responded that Kanjorski talked to Murtha’s appropriations staffer who “said this is an annual dance and ‘guaranteed’ us that our project would not be rescinded. But he promised to call over to make sure they knew the appropriators were watching over this project carefully.”
The e-mails were provided by Conrad, who was fired months after a 2000 dispute among Cornerstone officials mediated by Rep. Kanjorski. Another employee involved in the dispute, Thomas Unger, also was fired and later filed a wrongful termination suit — for which Kanjorski and Feather reported receiving subpoenas, according to the Congressional Record. The company countersued, claiming the two men leaked proprietary information to a competing firm.
Meanwhile, the earmarked cash continued quietly flowing to Cornerstone until 2002, after the media disclosed the earmarks.
Kanjorski, who hadn’t publicized the earmarks, stopped pursuing them because the controversy made the research “politically untouchable,” he explained at the time. But he defended both the merits and ethics of the contracts, predicting the work would have put his district at the center of “the carbon age of nanotechnology for the next several hundreds of years.” And he said the House ethics committee verbally cleared his involvement in the Cornerstone earmarks.
Under the tougher ethics rules House Democrats passed this year, Kanjorski, who supported the rules, would have been required to publicly disclose his earmarks but not his connection to Cornerstone.
That’s because the new rules bar earmarks that benefit lawmakers or their spouses but are silent on extended family. And Kanjorski’s nephews and his adult daughter were the only members of his clan involved in Cornerstone.
Separate from House rules, federal law prohibits members of Congress from contracting with the federal government. A previously unreleased document obtained by Politico through the Freedom of Information Act suggests that while Kanjorski was defending his involvement in Cornerstone, federal investigators were looking into allegations of “improper connections” between him and the company. All names are redacted from the document, a Defense Criminal Investigative Service “Report of Investigation.” But it seems clear from the context that the names of Kanjorski, who represents Pennsylvania’s 11th Congressional District, and that of at least one associate were among those blacked out.
It says the FBI in July 2002 referred information to the DCIS about “alleged misconduct by [name redacted], 11th Congressional District, U.S. House of Representatives, and improper connections to companies … including Cornerstone Technologies.”
It appears from the report, though, that DCIS investigators focused primarily on Cornerstone’s finances. They conclude the company charged the Navy for work not directly related to its Navy contracts, but the report says Navy officials “had no objection to billing commercial time” to contracts, since commercializing the technology could help the Navy.
In July 2003, the U.S. attorney declined to prosecute because “there was no evidence of a federal crime,” according to the report, which concludes: “No further investigative activity will occur.”
Still, without a congressional benefactor and with mounting legal bills, Cornerstone collapsed. It fired staff and mothballed its high-tech equipment.
When it declared bankruptcy in September 2006, Cornerstone reported owing $1.3 million to an array of former employees, officers, partners and vendors. It also listed unknown debt for the incomplete Navy contract.
That was news to the Navy, according to program officer Perez.
“Cornerstone completed the contract and does not owe the Navy anything except for a high-pressure pump, … which was purchased with project funds,” he said in a statement.