Saturday, April 08, 2006

Special Projects by Congressman Draw Complaints

[Editor's note: To those who don't pay attention and think this site only points out problems on one side of the political aisle, think again. The Congressman in question is a Democrat.]

The New York Times
Special Projects by Congressman Draw Complaints

As lawmakers have increasingly slipped pet projects into federal spending bills over the past decade, one lawmaker has used his powerful perch on the House Appropriations Committee to funnel $250 million into five nonprofit organizations that he set up.

Those actions have prompted a complaint to federal prosecutors that questions whether any of that taxpayer money helped fuel a parallel growth in his personal fortune.

The most ambitious effort by the congressman, Alan B. Mollohan, is a glistening glass-and-steel structure with a swimming pool, sauna and spa rising in a former cow pasture in Fairmont, W.Va., thanks to $103 million of taxpayer money he garnered through special spending allocations known as earmarks.

The headquarters building is likely to sit largely empty upon completion this summer, because the Mollohan-created organization that it was built for, the Institute for Scientific Research, is in disarray, its chief executive having resigned under a cloud of criticism over his $500,000 annual compensation, also paid by earmarked federal money.

The five organizations have diverse missions but form a cozy, cross-pollinated network in the forlorn former coal capitals of north-central West Virginia. Mr. Mollohan has recruited many of their top employees and board members, including longtime friends or former aides, who in turn provide him with steady campaign contributions and positive publicity in their newsletters.

The conservative National Legal and Policy Center in Falls Church, Va., filed a 500-page complaint with the United States attorney for the District of Columbia on Feb. 28 challenging the accuracy of Mr. Mollohan's financial disclosure forms. The forms show a sharp spike in assets and income from rental properties from 2000 to 2004.

Federal authorities said yesterday that they were reviewing the complaint, which was reported in The Wall Street Journal.

The case has led several Republican leaders to call for Mr. Mollohan's removal from the House ethics committee, where he is the senior Democrat.

In a statement yesterday, he said, "These groups were not created to benefit me in any way, and they never have."

Mr. Mollohan noted that the National Legal and Policy Center had attacked other Democrats and their union supporters and that it began its inquiry last May after he had voted against Republican efforts to water down House ethics rules.

"Obviously, I am in the crosshairs of the National Republican Party and like-minded entities," said Mr. Mollohan, who faces a serious electoral challenge in November. Vice President Dick Cheney is scheduled to headline a fund-raiser on April 21 for the Republican whom the White House recruited to run against Mr. Mollohan.

"They are angry at me, and I fully expect that from now until November they will continue to make baseless charges against me, my record and my family," the statement said. "I will vigorously defend my service and not be intimidated by their heavy-handed tactics."

In previous interviews, Mr. Mollohan acknowledged that he had failed to pay 2004 taxes on income from rental properties in Washington and North Carolina, resulting in a state lien of $8,948.28 being filed on Dec. 1. He said the case was resolved by final payments of all taxes, interest and penalties by January.

"Obviously it's totally my fault," he said. "I just neglected this, and it was paid late, and I regret that."

In the last three years, Mr. Mollohan, a Democrat first elected in 1982 to a seat long held by his father, has bought $2 million worth of property on Bald Head Island, N.C., with Laura Kurtz Kuhns, a former employee who now runs one of the organizations and is on the boards of two others.

He was unapologetic about his earmarks, saying that local lawmakers knew their constituents' needs best, and that he was hardly alone in mainlining money back home. "The amount of money in the transportation bill spent in Illinois in earmarked projects is astronomical," he said. "It puts $100 million on the I.S.R. building in real perspective."

The earmarking occurred as an abundance of local projects was added to spending bills outside the normal budget review, from $32.9 billion in 2000 to $64 billion in 2006, the Congressional Research Service said. Although it is impossible to trace individual earmarks for certain, an analysis by Citizens Against Government Waste, a Washington watchdog, found $480 million added in the House or in conference committees, most likely by Mr. Mollohan, for his district since 1995. That sum helped West Virginia rank fourth on the watchdog list — $131.58 for each of the 1.8 million West Virginians this year.

Although Mr. Mollohan's mentor, Senator Robert C. Byrd, has long blanketed the state in bacon in the form of large public works projects and federal complexes, Mr. Mollohan has directed more than half his earmarks to his five organizations of his design.

Several people involved in the appropriations process said no other lawmaker employed that strategy to the same extent.

The first and largest is the West Virginia High Technology Consortium Foundation, which is absorbing the troubled Institute for Scientific Research. Another, the Canaan Valley Institute, works on stream restoration and wastewater treatment. The Vandalia Heritage Foundation redevelops dilapidated buildings, and the MountainMade Foundation helps artisans market wares.

"He's basically judge, jury and executioner for all this money," said Keith Ashdown, vice president of the Taxpayers for Common Sense in Washington.

Of the empty building in Mr. Mollohan's hometown, Fairmont, Mr. Ashdown added, "This is sort of Mollohan's field of dreams, but in his case, he's building it, and it doesn't look like they're going to come."

Kenneth F. Boehm, chairman of the National Legal and Policy Center, said the bulk of his complaint to the federal prosecutors was made up of public documents that showed 260 instances of omitted or undervalued assets on the financial disclosure forms that Mr. Mollohan filed with the ethics committee from 1996 to 2004.

Those forms show a jump in Mr. Mollohan's portfolio from less than $500,000 in assets generating less than $80,000 in income in 2000 to at least $6.3 million in assets earning $200,000 to $1.2 million in 2004, along with large mortgage debts.

Among the concerns in the complaint, Mr. Boehm said, are commissions that Ms. Kuhns's husband, Donald, received as a real estate broker on deals for the organization that she controls. The couple have donated at least $10,000 to Mr. Mollohan's political committees since 1998.

The complaint also looks at whether Mr. Mollohan properly reported 27 condominiums in the Remington, near Foggy Bottom in Washington. He and his wife own the building with a cousin, Joseph L. Jarvis, whose business once received money from a federal contract in Mr. Mollohan's district.

"The $64,000 question that's all over this thing is during the period of time all these earmarks went to very closely associated nonprofits run by people who were very close to him, did any of the money go from Point A to Point B?" Mr. Boehm asked in an interview. "Did any of his newfound wealth result from, in any way, shape or form, individuals who had benefited from his official actions?"

Lifeblood for a Weak Economy

About 75 miles southeast of Fairmont along windy roads in Thomas (pop. 473) sits the Buxton & Landstreet Building, whose lifeblood is Mr. Mollohan's largess. The Vandalia Heritage Foundation used $1.2 million in earmarks from the Department of Housing and Urban Development to help transform the yellow-brick behemoth, built in 1901 as the coal company store, from broken down to bustling.

The first floor is a vibrant gallery where the MountainMade Foundation, relying on its own earmarks from the Small Business Administration to pay Vandalia its $5,166.67 in monthly rent, sells items like Mr. Byrd's thick autobiography for $35 and a maple desk for $5,250.

Upstairs, 41 people work on stream restoration and wastewater treatment in the Canaan Valley office, whose $5,100 rent to Vandalia is covered by earmarks from the Environmental Protection Agency and the National Oceanic Atmospheric Administration.

"What else are you going to do to reinvent this economy?" asked Ms. Kuhns, Mr. Mollohan's former aide who runs Vandalia and is the co-owner of the North Carolina beach property with the congressman. "A lot of what we do would not get done otherwise."

Created in 2000 to help artisans market their creations over the Internet — Mr. Mollohan favors the earthenware pottery — MountainMade also runs glassblowing, spinning and felt-making workshops in another downtown building that Vandalia renovated.

The Canaan Valley Institute, which grew out of an effort to create a wildlife refuge near property that Mr. Mollohan owns, is building a $33 million headquarters with classrooms and laboratories on 3,208 acres that it bought with earmarks he secured.

Vandalia owns more than a score of properties throughout Mr. Mollohan's district like the Baltimore & Ohio station in Grafton that it is turning into a museum and office space and lots in Fairmont, where it plans to build houses. Earmarks from HUD bought the mothballed Waldo Hotel in Clarksburg ($230,000 in 2000) and 1,129 acres in Canaan Valley ($2.4 million in 2004).

Mr. Mollohan and the organizations' managers said their goal was to wean from earmarks and be self-sustaining. But Canaan Valley, the oldest, continues to rely on earmarks for 97 percent of its money. Last year, MountainMade received $1,085,308 from the S.B.A., nearly twice its $553,000 in sales. MountainMade also had a $124,000 state grant.

As for Vandalia, 92 percent of its $31.5 million in grants since 1999 arrived through federal earmarks. Separately, the 2004 tax return for the organization shows that 96 percent of its $8.5 million revenue was from government grants.

None of the three groups have dues-paying members, like many such organizations, or run regular fund-raisers. They worry about the crackdown on earmarks. The Vandalia pipeline has begun to dry up since Mr. Mollohan left the subcommittee that appropriates HUD money. The organizations said success in finding other sources had been sporadic.

The Quid Pro Quos

"The congressman gave us money" for this or that is how the groups' leaders frequently explain their programs. And they generally return the favor at fund-raisers.

A review of campaign finance records by The New York Times shows that from 1997 through February 2006, top-paid employees, board members and contractors of the five organizations gave at least $397,122 to Mr. Mollohan's campaign and political action committees.

Thirty-eight individuals with leadership roles, including all five chief executives — all but one of whose 2004 salaries outpaced the $98,456 national average among nonprofit leaders — contributed, often giving the maximum allowed.

At the same time, workers at companies that do business with the federally financed groups were among Mr. Mollohan's leading contributors. Employees of TMC Technologies, which had a $50,000 contract with Vandalia in 2003, have given $63,450 since 1998. Workers at Electronic Warfare Associates and Man Tech International, military contractors that rent space from the technology consortium and whose chief executives are on the board of the Institute for Scientific Research, combined to give $86,750.

For Kate McComas, a weaver who is the executive director of MountainMade, the $1,000 check that she wrote in March 2004 at a Mollohan fund-raiser was a first. "I bought a pair of high heels to wear," Ms. McComas recalled. "I thank him every occasion I see him for the opportunity we have here."

Asked whether contributions were required or expected, Kevin Niewoehner, the departed chief executive of the Institute for Scientific Research, said: " 'Required' is such a strong term. The political environment and the access that goes along with it has a number of expectations that involves what is appropriate and what isn't appropriate." He added that the first hint that he was falling out of favor occurred in October, when a $250 check he wrote to the campaign was returned uncashed.

"I received invitations to those events on a regular basis," he said. "I was invited to participate, and I participated."

'Teaming to Win'

Mr. Mollohan scoffed at the suggestion that the overlap among the groups that he supports and his supporters meant anything more than a meeting of the minds.

"I like to think I'm supported because I work hard," he said. "Because I bring a collaborative, a 'teaming to win,' if you will, approach to solving the really difficult challenges facing West Virginia."

The team includes overlapping rosters among the five organizations. In addition to Ms. Kuhns's multiple roles, Jack Carpenter, an old friend of the congressman, is vice president of the consortium and chairman of the MountainMade board. The board once included Mr. Mollohan's wife, Barbara.

Raymond A. Oliverio, executive vice president of the consortium, is also treasurer of the Robert H. Mollohan Foundation, named for the congressman's late father. Gina Fantasia, Vandalia's legal counsel, moved over last year from the Institute for Scientific Research. Her brother Nick, mayor of Fairmont, is chairman of the Vandalia Redevelopment Corporation, a heritage foundation sister.

"He effectively referred to it as a family," said a person involved in the Mollohan network, likening the operation to keiretsu, the Japanese concept of intermeshed corporate boards.

Down the hill from the steel structure here is the more pedestrian $14 million Alan B. Mollohan Innovation Center, built with $3.5 million in earmarks. It is the home of the high-tech consortium, which began in 1990 as six small companies hoping to seed a new economic area. The center has 200 affiliates throughout the state. Earmarks are its engine, underwriting high-tech projects like AmberView, which seeks to create a national database of three-dimensional school photographs to help find missing children.

The consortium has had better luck following earmarks with competitive grants. Its Information Research Corporation was spun off as a for-profit subsidiary after obtaining a $10 million Navy contract to build 2,500 BomBots, robotlike tractors that remotely deliver explosives .

"The congressman has enabled programs and entities to get started," said Tom Witt, director of the West Virginia University Bureau of Business and Economic Research. "But at some point, they're going to have to make the transition or they'll die."

The big test will be the $134 million Institute for Scientific Research building, three-quarters paid by NASA and HUD earmarks. The 57-member staff is barely large enough to fill a corner of the 600-plus capacity of the building.

David Johnston and Aron Pilhofer contributed reporting for this article.