Rep. John Murtha (D-Pa.) has steered hundreds of thousands of dollars in federal and private money to a charity run by a Murtha protégé, which has as its primary mission handing out $250 checks to high school students in and around Murtha’s Congressional district.

The charity — called the Challenge Program — is well-regarded in the state, has been praised for its effectiveness by an independent auditor and has begun to extend to other Congressional districts, setting up branches in Delaware, the Philadelphia area and the northwest corner of Pennsylvania.

But ethics experts say the group’s operations highlight the close connection between Murtha and the companies that receive earmarks from the appropriations bills he oversees.

On Oct. 19, 2006 — three weeks before the elections — Murtha stood on a platform at a high school in Bentleyville, Pa., to announce the expansion of the Challenge Program into additional counties in his district and to present the organization with $70,000 in donations from “defense contractors,” according to two local news reports from the event.

Murtha’s office announced that he would be joined at the event by officials from eight defense contracting firms, four of which had received earmarks from Murtha in a spending bill that Congress approved less than a month earlier. All of the companies received earmarks the following year in a Defense appropriations bill that Murtha oversaw.

Murtha spokesman Matt Mazonkey flatly denied any connection between the earmarks and the donations, and said Murtha does not officially solicit donations for the Challenge Program, as he does for the Johnstown Symphony and the Girl Scouts.

But, Mazonkey said, “We appreciate any individual or any business that does donate to the Challenge Program” because it is a successful charity that provides a good service to kids. If asked, Mazonkey said, Murtha would absolutely endorse the program, and he has recommended it to other Members of Congress. “We have reached out to other Members of Congress who are interested in doing this in their district,” Mazonkey said. “We’ve told them that this is a program that has worked in our district and we encourage you to inquire about it. … We speak highly of its success, [and] we are more than happy to tell them what goes on in terms of our district.”

Asked specifically whether Murtha had encouraged companies to donate to the Challenge Program, Mazonkey replied, “I think it’s safe to say that Mr. Murtha supports the program wholeheartedly.”

The Challenge Program was set up in 2003 by Daniel Perkins, the CEO of MTS Technologies, who calls Murtha his mentor. According to news reports, Perkins worked in Murtha’s car wash as a teenager; MTS, the Arlington, Va.-based company he founded, has received millions of dollars worth of defense contracts and earmarks from Murtha.

The Challenge Program gives out $250 cash awards to sophomores, juniors and seniors in four categories — community service, most improved grades, best GPA, and best attendance. In 2007, according to the group’s Web site, the Challenge Program handed out 864 checks totaling $216,000, and thus far in 2008 “we will have distributed almost 1,200 checks for $280,000,” said Executive Director Barbara Grandinetti.

Other leaders of the Challenge Program include its president, Donato Zucco, who is the former mayor of Johnstown, Pa., and several former employees of shopping mall and real estate developer Mark Pasquerilla. The two are cited in a 2001 Associated Press article as being “powerful Johnstown Republicans … [who] lobbied state Republicans to accommodate Murtha” in the 2002 Congressional redistricting plan to prevent him from having to face off against another incumbent Democrat.

The Challenge Program Web site lists 90 high schools where the program is active, all but a handful within the boundaries of Murtha’s current district or the counties just to the east that he represented before the redistricting.

Grandinetti said that when the group started up, “Our expansion strategy was from one school to 15 schools. We just did geography.” After starting in Cambria County, where Johnstown is located, “we said ‘let’s go to Indiana and Armstrong’ … and then we headed towards Pittsburgh. We did Westmoreland, Green and Fayette, Somerset and Blair.”

All of these counties are in Murtha’s district, except Somerset, which was in Murtha’s former district, and Blair, which neighbors his current district to the east.

The group has since expanded its operation to one school in the Philadelphia area, several schools in and around Dover, Del., and Grandinetti said they have recently been invited into Erie County, Pa. The goal, she said, is to take the program statewide and ultimately nationwide.

In 2006, Murtha got the Challenge Program a $750,000 earmark in the Justice Department appropriations bill to fund capacity building for the group.

On Sept. 25, 2006, Murtha issued press releases touting projects for local companies in the Defense appropriations bill, including a submarine system for Progeny Systems Inc., various training programs for MTS Technologies, a weapons-tracking system for Advanced Acoustic Concepts, and torpedo countermeasures for Argon ST. These four companies were scheduled to join Murtha at the Bentleyville Challenge Program event on Oct. 19, 2006; a photograph of the event shows all but Argon.

Also on stage that day were representatives of Trident Systems, Planning Systems Inc., and Parametric Technology Corp., and BAE Systems, all of which received earmarks in the Defense appropriations bill that Congress passed in 2007, with Murtha as chairman of the Appropriations Subcommittee on Defense.

None of the firms are headquartered in Pennsylvania, though they have all opened offices in Murtha’s district. Five of the contractors have hired the same lobbying firm — the PMA Group — which has close ties to Murtha, and a long record of getting Defense earmarks for its clients.

Grandinetti and Mazonkey make the point that the Challenge Program has many more supporters than just the defense contractors, including many local companies, several foundations and even the state of Pennsylvania, which has given grants to the Challenge Program. And Grandinetti provided the summary of a state-funded review of the Challenge Program, which found that students in schools where the charity was active performed more community service, had better attendance and scored better on math and reading tests than students in schools that were not partnered with the Challenge Program.

“I’m not a political person at all,” Grandinetti said. “The only thing that I can tell you is that these [companies] were all in this area and had created jobs and were interested not only in being there but in helping the community.”

Mazonkey pointed out that many donors to the Challenge Program have no federal interests — based on a list of donors and the amounts they gave that was provided to Murtha’s office by the Challenge Program, he said. The group declined to make the same list available to Roll Call.

The House Ethics Manual states that Members of Congress may solicit donations for legitimate charities, but not for an organization “that was established or is controlled by members (or staff).” Members also may not suggest that a donor will receive favorable treatment in Congressional matters, and may not solicit donations from lobbying firms or lobbyists.

There is no evidence that Murtha directly solicited donations from the firms he shared the stage with in October 2006, nor that there was any direct connection between the donations and the earmarks. Grandinetti said the news accounts of the event were incorrect, and that Murtha did not actually deliver those donations; he simply happened to be in the district at the same time that the event was planned.

And while Murtha clearly has a strong role with the group, and its leadership consists of his long-standing friends and allies, he did not directly create the charity and there is no evidence that he controls its activities.

Nevertheless, Roll Call’s research “raises questions about what was the lobbyist’s role in the earmark and then the company’s subsequent contribution to his favorite charity,” said Jason Torchinsky of Holtzman Vogel, a firm that provides ethics advice for corporations and Republican campaigns and candidates. “It’s the smell test — you get an earmark and then you make a contribution to his favorite charity. Whether it is in technical violation of the rules, we don’t have enough facts to know. … But it’s definitely questionable. What really makes it most questionable is the proximity in time of the earmarks and the contributions.”

Tom Schatz, president of Citizens Against Government Waste, said the arrangement “is unfortunately not illegal, but it raises a lot of questions. … It is a cycle of helping people who help the Representative get re-elected.” Steering donations and earmarks to a charity that gives out cash to constituents “is just a way of cementing his power base in the district,” Schatz said.