To be added to the Murtha Watch ping list please notify myself or RedRover.
Posted on 06/02/2009 4:48:25 PM PDT by jazusamo
FBI Investigating Multi-Billion-Dollar Defense Contractor With Tax-Exempt Status In Congressman's Hometown
CBS News has learned the FBI is investigating a little-known not-for-profit organization called Commonwealth Research Institute. It's located, like a lot of Rep. John Murtha's, D-Penn., pet projects, in his hometown, Johnstown, Penn.
Commonwealth gets the same benefits as the Salvation Army or any other charity: It doesn't have to pay taxes. But its line of work may be surprising. It's a defense contractor.
"It certainly raises a question," says Dean Zerbe, a former top Senate investigator. He questions Commonwealth's tax exempt status, saying it seems to do business just like any for-profit defense contractor.
"There’s a lot of tests to being a charity, and just saying, ‘Well I’m doing research paid for by the government," said Zerbe, " - if that were the case, I would have 10,000 companies that would tomorrow be a charity."
If Commonwealth were not a charity, it could owe roughly one-third of its profits in taxes. That could add up to millions, on more than $45 million dollars in government contracts. But it pays nothing.
Documents show when Commonwealth was formed, company officials touted their connections to "the local Congressman" Murtha.
According to a letter from the IRS to Commonwealth dated August 1, 2000, the agency questioned the officials on their application for charitable status. "(M)erely because an organization conducts research does not mean it will qualify for exempt status," wrote the IRS official.
The IRS also noted, "Research results must be made available to the interested public within a reasonably short time after completion of the project." The IRS concluded, "We do not believe the information provided thus far clearly distinguishes you from a commercial research company which makes its services available to the general marketplace."
Commonwealth officials responded in a Dec. 3, 2000 letter saying they anticipated their research would be for the "Department of Defense, Justice Department, National Science Foundation or the National Institute of Health (sic)." Commonwealth officials told the IRS that they may have some classified work but that only, "some small portion (10-20 percent) of the work completed will be restricted [from publication] for good reason."
It was partly on that basis that the IRS ultimately granted Commonwealth charitable status.
But nine years later, Commonwealth has apparently not published a single word of its government-backed research.
Murtha's hometown, far from Washington, is an unlikely hub for defense contractors like Commonwealth. But they're in western Pennsylvania because it's Murtha's town, and as chairman of the Defense Appropriations Subcommittee, he has influence over which companies receive billions of tax dollars.
Commonwealth Research gets all of its funding from government contracts. As for what taxpayers get in return, that’s hard to say. Commonwealth doesn’t have a website and wouldn’t tell CBS News how many employees work there or how they have spent millions of tax dollars.
CBS News went to the address listed on Commonwealth’s tax records looking for the offices. But a security guard stopped us and our camera crew, saying, "Don’t, don’t photograph, I’m gonna ask you to get in your car and leave."
A Commonwealth spokesman declined an interview and told CBS News they have "a track record of providing significant value" to the military and that "all" of their work, including a government contract under investigation worth up to $45 million dollars ... is "classified." The Pentagon wouldn't confirm that. A government-run federal spending database notes that at least $14.3 million of the contracts were no-bid.
Tax records show that Commonwealth’s top five most highly paid employees make six figure salaries and live all over the country. None were made available to speak with us when we visited Commonwealth’s headquarters.
For the biggest hint as to what Commonwealth is all about, it may help to know something about its parent company, Concurrent Technologies. Concurrent is another defense contractor in Johnstown, also registered as a charity at the same address. And, with the help of Murtha and The PMA Group, a lobby firm that's also under FBI investigation, Concurrent has gotten a billion dollars-plus in defense contracts and earmarks.
Concurrent employees have also given Murtha’s campaign over $95,000 in donations since 2002.
This isn't the first time Commonwealth has been involved in controversy. Back in 2007, the charity mysteriously paid $26,000 to a Pentagon official who was in between positions at the Pentagon and waiting to be confirmed for a top Air Force procurement position. The official admitted to a Washington Post reporter that he hadn’t done any work to earn the Commonwealth payment. Less than three weeks after The Post published an article on the controversy, the official committed suicide.
The incident kicked off an investigation at the Pentagon's Inspector General’s office. CBS News has learned that review has been put on hold in light of other active federal investigations into entities connected to John Murtha. Last spring Commonwealth was subpoenaed in a federal investigation into a government defense contract it received that is worth up to $45 million.
One former Commonwealth employee who is now a high-ranking official at the Pentagon declined to answer our questions about what he did for Commonwealth.
In the high-stakes world of defense contracts, it helps to have connections in Congress. Apparently, Commonwealth has one of the best: John Murtha.
At last week's annual defense trade show in Johnstown, Pennsylvania, an Associated Press reporter asked Murtha about another local defense contractor also under investigation, Kuchera Industries. Kuchera was just suspended from getting any new contracts with the U.S. Navy. A Navy spokesperson cited the reason for the suspension as "alleged fraud." CBS News affiliate WTAJ in Altoona captured the exchange.
The reporter asked if Murtha thought his support for Kuchera had been too strong over the years.
"What do you think I’m supposed to oversee these companies? That’s the Defense Department’s job. It’s not my job," Murtha replied.
The reporter followed up asking Murtha if he has hired a lawyer. Murtha replied, "Why have I-what kind of a question is that?"
I saw the report. Someone is going after john....wonder why?
To be added to the Murtha Watch ping list please notify myself or RedRover.
I don’t know why but they’re on him and won’t let go. It more less started in January and steadily gets worse.
Maybe he’s taking up a key position that Obama has earmarked for an even more devoted lapdog.
This guy is a royal a**hole.
OUT-standing!!!
Every bit of Johnstown’s soul sucks the tit of the federal government.
Isn’t he the one who said our troops were murdering people in Iraq? I can’t believe the people in his district reelected him. What a turd.
Yes, Murtha’s the one who said the Haditha Marines killed innocent civilians in cold blood. He was wrong and still hasn’t apologized, he’s scum.
Murtha is such a creep....
...a little-known not-for-profit organization called Commonwealth Research Institute. It's located, like a lot of Rep. John Murtha's, D-Penn., pet projects, in his hometown, Johnstown, Penn. Commonwealth gets the same benefits as the Salvation Army or any other charity: It doesn't have to pay taxes. But its line of work may be surprising. It's a defense contractor.Another one of the purges by the Obamabots.
Back in April she was checking out CTC and CRI. I bet you remember this excerpt from her report then...
Murtha wants $8 million for Argon ST, a defense contractor whose CEO gave Murtha the maximum allowed by law - $2,400 by an individual. He's directing a $5 million earmark toward Advanced Acoustic Concepts, which also gave the max - $5,000 for a political action committee - to his campaign. In all, 10 recent Murtha donors are slated to receive $31 million in Murtha earmarks for 2010.
Taxpayer watchdogs may not like how it looks, but it's not against the law unless donations were required in order to receive the earmarks. Looking for evidence of wrongdoing, the FBI has recently raided offices of two other companies linked to Murtha.
"The sooner it gets to a bright line that's a direct connection of 'you give me money, you're going to get taxpayer dollars,' that's when you really cross the line," said Steve Ellis, with Taxpayers for Common Sense.
That line was crossed in one case, according to a defense contractor who spoke to us on condition of anonymity for fear of losing government contracts.
The contractor was set to receive $1 million tax dollars. He said the military told him the money would come through a company called Commonwealth Research Institute, whose parent company, Concurrent Technologies, ranked among the largest earmark recipients. Both were set up with Murtha's help in his own hometown. The defense contractor said Commonwealth officials told him to get the money, he should "consider opening an office" in Johnstown, Murtha's hometown, and chided his company for not giving "enough campaign contributions to Murtha," and not making "a showing at Murtha's annual defense contractor fair."
The contractor told CBS News: "I wouldn't do it. We're just not going to play." He didn't get the funds.
"You called this a 'shakedown?'" Attkisson asked Ellis.
"If you want the money then you've got to do these things, and that's being shaken down," Ellis said.
"Is there anything illegal about that?" Attkisson asked.
"It's hard to tell until you have all the details," Ellis said. "Illegality is a tricky thing on this. It's very hard to prove a quid pro quo because most of these things aren't written down."
Commonwealth, subpoenaed in a separate federal probe, would only say it's always encouraged companies to relocate to Johnstown, and attend Murtha's fair to promote growth - but does "not encourage anyone to make campaign contributions."
Murtha wouldn't comment for our report. He did recently tell a home state newspaper that he's only trying to bring home the bacon.
"If I'm corrupt," said the congressman, "It's because I take care of my district."
Thanks for posting that, remember it well. I get the feeling Sharyl is enjoying this. :-)
Jack ain’t nimble, Jack ain’t quick. Hope CBS can make it stick.
I hear you. There’s new stories breaking on him nearly every day. There’s one just posted in Breaking News from Roll Call and it could be real bad news for him.
Bumpity.
Great! Check out the other article on Murtha in Breaking News.
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