“It was a masterful display of “Oversight” the way they used my testimony to firmly establish what they already knew, but couldn’t quite put all together, in a nice little package.” ~ Wilfong
Background | The Wedtech Scandal was the name of an American political scandal that came to light in the late 1980s involving the Wedtech Corporation.
The company had been founded in Bronx County, New York by a Puerto Rican immigrant named John Mariotta, and originally manufactured baby carriages. But after a number of years, Mariotta brought in a partner, Fred Neuberger, and began focusing on contracts for the Department of Defense.
As a major employer in a depressed part of New York City Wedtech enjoyed a strong local reputation, and was even praised by then U.S. President Ronald Reagan for the jobs it provided for those who might otherwise be forced onto welfare rolls.
But Wedtech had won many of its defense contracts under a Small Business Administration program which allowed minority-owned businesses to be awarded no-bid contracts, despite the fact that Fred Neuberger, not a member of any minority, owned a majority of the company’s stock, thus disqualifying Wedtech as a minority-owned business. To keep Neuberger’s controlling ownership secret, the company committed fraud, forging papers that claimed Mariotta was still the primary owner of the company.
When Wedtech went public, it gave shares of stock to law firms (as payment for legal services). But many of the law firms employed members of the U.S. House of Representatives, including Bronx Congressmen Mario Biaggi and Robert Garcia, who would later lose their jobs for their roles in the scandal.
Wedtech then began extending its reach to the White House, utilizing President Reagan’s press secretary, Lyn Nofziger, to contact public liaison officer (and future Senator) Elizabeth Dole. Through Dole, Wedtech won a $32 million contract to produce small engines for the United States Army. This was only the first of many no-bid deals that eventually totaled $250 million.
By the final years of Reagan’s second term, Wedtech’s crimes had become too numerous to hide. An independent counsel was appointed by Congress, which later charged Attorney General Edwin Meese with complicity in the scandal (he had worked as a lobbyist for the company prior to his appointment to Justice). While Meese was never convicted of any wrongdoing, he resigned in 1988 when the independent counsel delivered the report on Wedtech.
In all, about 20 state, local, and federal government officials were convicted of crimes in connection to the scandal. Some of these convictions, however, were reversed on appeal when it was found that Anthony Guariglia, former Wedtech president and a star government witness had committed perjury, and that the government prosecution had reason to know that he had committed perjury. | Note: Halliburton has sometimes been compared to Wedtech, as another frequent recipient of no-bid contracts with possible insider connections, but lacking any specific facts, this is mere speculation.
References: Haslip-Viera, Gabriel; Felix V. Matos Rodriguez, Angelo Falcon (2005). Boricuas In Gotham: Puerto Ricans In The Making Of New York City. Markus Wiener. ISBN 1-55876-356-2. & Roth, Mitchel P. (2001). Historical Dictionary of Law Enforcement. Greewood Press. ISBN 0-313-35060-9.
ISSUE STATEMENT NO. 3825: AUGUST 14, 2008: 6:17 AM
And, a tremor goes through our body.
We heard some stuff we didn’t want to hear. Damn….
Back in the day we searched hard for things we did not want to find. When we practiced, our CPA firm was auditor for the 25 largest Community Action Agencies (War on Poverty Program) in California, Arizona and Nevada. And, we even audited 5 of them over in Micronesia. Sorry to say, but, we found many instances of malfeasance in the audits we did. But, we also were able through our Management Audit side, to provide significant recommendations for improvement, in other instances. Though we found a few bad apples, we found the program to be an overall success.
We once had 5 of our auditors run off of an audit at gun point. But, we never backed down from doing our jobs. We went back, completed the audit. And, some heads rolled. Because of our “doing our job”, a number of people got canned. And, a few others were sent to “the can”. It looks like there may be grounds for that in the recent case of folk defrauding the government through using our 8(a) Program. This time it is the ANC part of the Designated Groups that is the “subject”. We hope this latest “flash” turns out to be narrow in width and shallow in depth.
The SBA Inspector General, in doing its job, discovered that some folk violated the rules- AGAIN. Recently, GAO in doing its job, discovered similar acts of malfeasance-AGAIN. And, before that, GAO, in doing its job, discovered other acts of malfeasance. These last few months have not been good for the programs managed by SBA.
So, we woke up this morning with WEDTECH Corporation on our minds.
We’re in the midst of doing some research back in The Wilfong Archives. We’re preparing some stuff for The Wilfong Hour #10 on Monday. We’re disturbed about the recent findings about the Alaskan Native Corporation (ANC) program abuse. And, we want to get some facts straight, before we present the Wedtech Corporation thing. Wedtech almost destroyed our program. It was a story of greed on the rampage. Several SBA officials, at least one DoD official and two Congressmen went to jail over Wedtech. We hope it’s not being reincarnated.
But, we will do our due diligence, before we accept the SBA’s negligence as only that.
ISSUE STATEMENT NO. 3826: AUGUST 14, 2008: 1:25 PM
In October, 1987, I testified before the United States Senate Committee on Governmental Affairs, Subcommittee on Oversight of Government Management. It was chaired by Sen. Carl Levin, Michigan. David Pryor, Arkansas, William Cohen, Maine, George Bingaman, New Mexico and Ted Stevens, Alaska were a few of the members.
The letter said, “On September 29, 1987, we will begin hearings on the decision of the Navy and the Small Business Administration to award Wedtech a $134 million 8(a) contract for the construction of pontoon causeways.” In its “request to testify” the Chairman enumerated the things they wanted me to address in my testimony.
(1) The decision to bring the pontoon contract into the 8(a) program;
(2) The selection of Wedtech as the SBA’s candidate for the pontoon contract;
(3) Wedtech’s use of political connections to influence SBA decisions on the pontoon contract and other issues; and
(4) The role of political pressure in the award of 8(a) contracts and other SBA decisions with regard to the 8(a) program.
The “request to testify” also said, “As the SBA’s Associate Administrator for Minority Small Business in 1983 and 1984, I understand that you are familiar with the circumstances surrounding the selection of Wedtech as the SBA’s candidate for the pontoon contract.”
It was a masterful display of “Oversight” the way they used my testimony to firmly establish what they already knew, but couldn’t quite put all together, in a nice little package.
In essence it was established that, though it was my job to “select”, in this case through a convoluted and “stealthy” way, Wedtech was “selected”, by others, over someone I had decided on because they “self-marketed” the item into the 8(a) Program with a Search Letter, and other legitimate marketing. They heard how, in my estimation, Wedtech weaseled its way into a “share” of the contract, then ended up with it all. We, who were not in on “the deal”, had little or no idea of exactly how this happened. I told them that. And, I told them where they might want to look for the answers.
In the end, Wedtech defaulted on the contract which was then up to $800 million. The program had a severe black eye, and took years to fully recover. Some of us are of the opinion that it never did fully recover. Some folk paid a dear price for their roles. Two Congressmen, an SBA Regional Director, a Navy procurement official, and a few other folk got jail time. Others got “eased out”.
Yeah, we remember Wedtech……