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Contractor Appeals Conviction in Earmark Case

A defense contractor convicted of skimming money from projects funded by Congressional earmarks is appealing his conviction by arguing that his actions were approved as part of an effort by the military to skirt the regular appropriations process.

Richard Schaller, president of Schaller Engineering Inc., was convicted in July of working with Air Force employee Mark O’Hair to steer contracts to companies they owned, and destroying documents to cover up the scheme.

Schaller has filed documents to appeal his conviction and has laid out a defense that essentially argues the Air Force endorsed O’Hair’s effort to engage contractors and lobbyists to create a research and development program based on Congressional earmarks.

In an Oct. 30 motion seeking his release from prison pending his appeal, Schaller’s lawyers argue that Schaller was denied the right to a fair trail because he was barred from presenting the majority of his defense — which was “that the charges were part of an effort to whitewash the Air Force Research Lab/Munitions Directorate and Special Operation Command of responsibility for an acquisition plan, which [they] originally thought was a worthy idea and they developed for more than a year, but turned out to be a significant violation of Air Force policy and was related to an on-going political corruption investigation.—

Roll Call has previously reported that the Air Force created a “battlefield airman— research program to develop communications and advanced targeting technologies and that the intention was for the program to be funded by earmarks.

The case against Schaller and O’Hair was based on two earmarks being carried out by Pennsylvania-based contractors: one called the Clandestine Electric Reconnaissance Vehicle, sponsored by Rep. Bill Young (R-Fla.), and the other called the Ground Mobile Gateway, provided by Rep. John Murtha (D-Pa.).

Schaller and O’Hair were also working with Richard Ianieri, president of Coherent Systems, a contractor in Murtha’s district that had received millions of dollars worth of earmarks from Murtha. Coherent was also partnered with Kuchera Defense Systems, another Pennsylvania contractor with close ties to Murtha.

Schaller’s lobbyist was the PMA Group, which was raided by the FBI last year and is at the center of a House ethics committee investigation into earmarks and campaign donations. Coherent’s lobbyist was KSA Consulting, the firm that employed Murtha’s brother.

Documents filed along with Schaller’s motion for release include a July 7 memo that Schaller claims to have sent to former Special Operations Command Gen. Michael Wooley, indicating that “the numbers are significant. We have $50 million in [fiscal] 2006 funds. Early projections are for $100 million in FY2007 earmarks. We plan $200 million in FY2008.— In the memo, Schaller reminds Wooley, “We cannot execute without strong leadership willing to take advantage of the direct congressional funding process in the long term.—

The plan was for the earmarks to be distributed back to the contractors who had lobbied for them through sole-source contracts from the Air Force, according to other documents generated in the case.

In a Nov. 4 response to Schaller’s motion, the government said the lower court had already properly dismissed these issues and notes that none of this resolves Schaller’s convictions for destroying evidence and lying to the grand jury. “To this day, by all indications, the defendant continues to believe that this conduct was either justified or necessitated by the misconduct of others,— the government argued.