It started with the bribery indictment of California Rep. Randall "Duke" Cunningham, but before it's over, a sprawling investigation into a Pentagon contractor called MZM could snare some of Washington's most powerful inside players
Wade plied CIFA employees, MZM sources say, with meals, prime seats to ballgames, and invitations to the annual company Christmas party. Soon after CIFA was created, Burtt visited MZM and gave a talk about his new brainchild. "Mitch went out of his way to make sure Cunningham came and sat in the front seat," says a former senior MZM executive. "It was a message that he has the Duke in his pocket and you had better do what he says."
But Burtt was not in Wade's pocket. He was frustrated with MZM's clout, says Cynthia Bruno, MZM's program manager for special defense programs, but he needed Wade's contract-generating abilities to help his fledgling agency get funding, and he viewed Wade as an unavoidable part of the equation. "My impression was Burtt didn't like Mitch," says Bruno, "but thought that he was a necessary evil."
In the fall of 2002, Burtt asked a team of private contractors, including MZM, to evaluate CIFA's unclassified and classified networks, installed by MZM's prime contractor, Gray Hawk. Defense Department rules require that even its unclassified day-to-day business must be handled within the Pentagon's secure .mil domain. But the evaluation team learned that Gray Hawk had built a .net commercial-type intranet instead. Separately, the team also discovered that most CIFA intelligence analysts lacked access to classified intelligence data, including situation reports of potential terrorist threats, stored in secured classified networks. "My comment was," a team member told U.S. News, "if these networks were airplanes, they would be crashing." But senior Gray Hawk officials, who were nervous and angry about the evaluation, repeatedly blocked the team members from giving Burtt an honest assessment, the team member said.
Around this same time, prosecutors say, Cunningham earmarked $6.3 million for projects "to benefit" CIFA in the fiscal 2003 legislation and told a fellow congressman not to make any decision that would hurt "his two top priorities," namely, Wade and Wilkes. But when it looked as though Cunningham would get only a $5 million earmark, his staffers knew he would be furious. "I am under my desk ducking and cowering," one wrote. Another later said that Cunningham "stormed into his office, p---ed, and said he might just as well become a Democrat. I thought that was the end of it until he came out and said he wants to take $1 million from some other big-ticket item and put it back on Mitch's. He wants it at six" (million dollars).
The profit from the deal was more than 850 percent, prosecutors say, adding that MZM first attempted to deliver an even cheaper system that would have given the company a profit of 1,700 percent. "Adding insult to injury," the prosecutors in San Diego said, the final system was "never installed" because it was "incompatible" with CIFA's network system and "remains in storage."
MZM had acquired another, similar computer system, ostensibly to support the CIFA mission, but that somehow wound up in the MZM basement, under Richard Peze's management. "There was never any CIFA information stored on that hardware," says Peze. And although the computers had a huge storage capacity, their servers were not powerful enough to process any of the data. "Wade used to speak of those computers as being worth $6 million," Peze says. "I knew there was no way in the world they were worth anywhere near that." MZM's information technology program manager, Scott Rubin, said that an investment of $150,000 in new hardware could transform the machines' capabilities. "But Mitch wouldn't give me the money," Rubin recalls. "He just wanted the machines to look like they were doing something." Thanks to this and other schemes, MZM's 2002 revenues soared.