PMA Client Sues Because it Didn’t Get Earmark; More Evidence of Pay-to-Play?

Alexander Comisar reported in Roll Call on June 23:

The PMA Group, the lobbying titan that closed its doors in March after an FBI raid, has filed more than a dozen lawsuits against former clients for failure to pay outstanding debts. Now, one company has responded with a $3 million countersuit that alleges PMA cheated it out of an earmark it was expecting to receive. PMA’s lawyer called the complaint absurd and said the firm has filed a formal response with the court.

The lawsuit filed by the Michigan-based Badenoch company provides yet further evidence of what many suspect is a pay-to-play scheme in which influential members of Congress target earmarks to companies in their districts and, in turn, receive cash donations for their re-election campaigns.

PMA Group founder Paul Magliocchetti is reportedly under investigation for possibly funneling donations to congressional campaigns using straw donors. Rep. John Murtha (D-PA) in particular benefited greatly from the Washington, D.C.-based PMA Group and companies it represented. Before launching PMA Group in 1989, Magliocchetti served as an aide to Murtha. Since 1989, PMA Group and its clients have given $2.37 million to Murtha. In turn, between 1998 and 2009, Murtha earmarked $38.1 million to PMA clients.

Earlier this month, the House Ethics Committee announced that it is examining the tie between earmarks and campaign contributions. House Majority Leader Steny Hoyer (D-MD) said that “substantial questions had been raised” concerning the relationship between lawmakers and the PMA lobbying group. “This is a serious matter and it ought to be dealt with,” said Hoyer.

Whether the Ethics Committee will actually do anything remains to be seen. Nevertheless, the federal raid and the growing investigation make it increasingly difficult for Nancy Pelosi and the Democratic leadership to ignore the possibility that Murtha and other Democrats could be involved in illegally trading earmarks for campaign cash.

The case of the Badenoch company shows that there was a clear understanding that retaining the PMA Group meant access to earmarks. Badenoch, a defense engineering firm, received a $3 million earmark in the fiscal year 2009 budget to advance its research into creating an alternative to the military’s Humvee.

Badenoch paid PMA Group $80,000 in 2008.

On April 24, PMA sued Badenoch claiming that it had failed to pay its monthly bill for lobbying services since July. But Badenoch countersued, charging breach of contract. Badenoch was expecting to receive the same $3 million earmark for fiscal year 2010. When it didn’t, it accused PMA of dropping the ball.

In its June 5 complaint before the Arlington, Virginia County Circuit Court, Badenoch says that it “was advised from congressional officials that it should expect to receive approximately $3 million in earmarks for continued development of its projects to the United States Army.” However, the earmark never came because PMA failed to file the formal request required by Congress.

The company claims that the PMA Group not only missed the February deadline for submitting the earmark paperwork but failed to inform Badenoch that the deadline had been missed. The company is seeking $3 million in damages.

Badenoch apparently had no idea that PMA had been raided, which obviously would have affected its ability to deliver the promised earmark. “PMA concealed the fact that the FBI raided its offices and was under investigation,” says the company’s complaint. “Because PMA had been raided by the FBI and was under investigation, it was unable to perform its services.”

Carmen Jacobs, PMA’s lawyer, says Badenoch’s counterclaim is baseless because an earmark cannot be guaranteed by any congressional officials before it is formally granted. “They can make any allegation they want, but they are out of their minds,” said Jacobs. “You don’t get guarantees from Congress on earmarks.”

Perhaps that argument is legally accurate but the Badenoch case clearly shows that the PMA Group operated on the principle that by paying for its services it would deliver federal largesse.

Badenoch’s earmark was supported by Senator Carl Levin (D-MI), Rep. Debbie Stabenow (D-MI), and former Rep. Joe Knollenberg (R-MI). The fact that the company is based in Troy, Michigan, a suburb of Detroit, hardly can be coincidence.

It certainly raises strong suspicions that in exchange for more than $2 million in campaign donations from PMA clients since 1989, Murtha may have repaid those grateful gestures with tens of millions of dollars in earmarks.

photo: AP/Wide World