We just paid for meaningless work … and there was so little oversight that no one noticed. Honestly Lay Bare loves a good fraud / conflict of interest story.
They don’t come much better than the story of how a little-known, midlevel United States Defense Department insider who spent his whole career in Alabama collected $1.6 million dollars in kickbacks turning America’s missile defense program into a personal cash machine.
This is the story of Michael Cantrell.
***
Michael Cantrell, an engineer at the Army Space and Missile Defense Command headquarters in Huntsville, Alabama., along with his deputy, Doug Ennis, had lined up millions of dollars from Congress for defense companies.
Now, Mr. Cantrell decided, it was time to take a cut.
“The contractors are making a killing,” Mr. Cantrell recalled thinking at the meeting, in 2000.
“The lobbyists are getting their fees, and the contractors and lobbyists are writing out campaign checks to the politicians. Everybody is making money here — except us.”
Within months, Mr. Cantrell began getting personal checks from contractors and later returned to the airport with Mr. Ennis to pick up a briefcase stuffed with $75,000.
The two men eventually collected more than $1.6 million in kickbacks, through 2007, prompting them to plead guilty this year to corruption charges.
Mr. Cantrell worked in a division that was a small part of the national missile defense program.
Determined to save his job, he often bypassed his bosses and broke department rules to make his case on with legislators. He enlisted contractors to pitch projects that would keep the dollars flowing and paid lobbyists to ease them through. He cultivated lawmakers, who were eager to send money back home or to favored contractors and did not ask many questions.
And when he ran into trouble, he could count on his powerful friends for protection from Pentagon officials who provided little oversight and were afraid of alienating lawmakers.
The national missile defense program has cost the United States more than $110 billion since President Ronald Reagan unveiled his Star Wars plan 25 years ago.
Today, the missile defense effort is the Pentagon’s single biggest procurement program.
***
Towering over the highway near the entrance to Huntsville is a replica of the Saturn V rocket, the powerful missile that lifted the first man to the moon. Created in Huntsville, it is a fitting icon for this once-sleepy cotton mill town, now so dominated by the aerospace industry that it is nicknamed Rocket City.
An estimated 18,000 uniformed and civilian federal employees work in the aerospace industry in the Huntsville area today, augmented by about 40,000 others, who work for federal contractors.
Michael Cantrell grew up on a dairy farm nearby, listening to the rumble of rocket test flights. As a young engineer, he became a civilian employee of the Army and quickly impressed his bosses.
By 1990, Mr. Cantrell, then 35, took over an experimental program to develop faster, cheaper and lighter missiles that could intercept and knock out enemy missiles flying within the atmosphere.
Under the Reagan administration, money was plentiful for such research, but with the fall of the Soviet Union and the arrival of the Clinton administration, Pentagon bosses were forced to make budget cuts.
Like other Army employees, Mr. Cantrell was prohibited from lobbying or even visiting Capitol Hill unless he had permission from his agency’s Congressional liaison, a prohibition intended to block employees from promoting initiatives that Pentagon leaders did not see as a priority.
Soon enough, Army missile program managers started opening what amounted to their own lobbying shops in Washington, according to Mr. Cantrell and his former supervisors.
Mr. Cantrell became a regular on Capitol Hill, both in the halls of Congress and in the bars and restaurants where Hill staffers gather after hours. He set up a makeshift office in the US Airways lounge at Reagan National Airport, where he followed up on pitches for money to lawmakers and hid out from his Defense Department bosses.
He identified lobbyists who could prove useful and contractors — many of them campaign donors — with projects that needed nurturing.
Inspired by his successes, Mr. Cantrell soon embarked on a more ambitious project that would all but guarantee sustained financing.
It was easy to find willing partners.
The program’s main contractors, including the defense giant Lockheed Martin, prepared presentations for Congress making the case for an extra $25 million to $50 million a year for the project.
Officials in Alaska, who had been seeking money for a spaceport on Kodiak Island to launch commercial satellites, eagerly chimed in.
But the military already had rocket launching sites around the globe, and Gen. Lester L. Lyles of the Air Force, who then ran the missile defense program, had no intention of spending money on another one.
General Lyles and his deputy, Rear Adm. Richard D. West of the Navy, were particularly incensed when they learned of the plans to lease the helicopter carrier, the Tripoli, and spend several million dollars renovating it.
Summoned to Washington in 1997 to explain the project, Mr. Cantrell offered little information.
That only further infuriated his bosses. “Who in the hell is in charge of this program?” Admiral West finally demanded in an exchange both men recall.
Mr. Cantrell was ordered to remove his experimental equipment from the planned launching.
But the money kept coming.
Mr. Cantrell said he knew that building a new launching facility was wasteful.
“It doesn’t make sense,” he said. “The economics of it, they just don’t work.” But he did not care.
“I went up there to get the money,” Mr. Cantrell said of his dealings on Capitol Hill. “And we got what we needed.”
Mr. Cantrell and his deputy, Mr. Ennis, visited Kodiak Island on the afternoon of the inaugural test launching in November 1998.
The Air Force had substituted other equipment for Mr. Cantrell’s payload. The two men, armed with a cooler filled with Miller Lite beer, watched the launching from a trailer, emerging just in time to see the missile burn an orange streak into the sky.
They had hidden out to avoid any local newspaper reporters who might discover that Mr. Cantrell’s missile parts — the justification for millions of dollars in spending — were not even being tested.
“There is no way we can explain this,” Mr. Cantrell remembered telling Mr. Ennis.
***
From the US Airways club, Mr. Cantrell could see the symphony of the arriving and departing planes, the Potomac River and off in the distance, the Capitol dome.
One day in 2000, Mr. Cantrell met in the airport lounge with Mr. Ennis, his deputy, and a Maine contractor to figure out how to pocket some of the government’s money.
There were easy ways to cheat.
The prototype missile nose cone and heat shields that the Army had paid the Maine company to design for the Alaska tests.
Why not hire the business to pretend to design them again? Mr. Cantrell asked.
The ballute — an odd cross between a balloon and a parachute — had been rejected by experts as a tool to strike an enemy missile.
But why not pay the Maine company to develop them anyway? Mr. Cantrell suggested.
He could pull off such shenanigans because, by then, he had an extraordinary degree of independence.
Mr. Cantrell’s experimental missile program, which had cost nearly $250 million, was about to be canceled.
No working missile system had been built — and almost none of the components had ended up being tested in real launchings as planned.
The effort had produced some benefits for the players involved: Congress sent an annual allotment of extra money to the Alaska launching site now totaling more than $40 million, and one of the contractors that had worked with Mr. Cantrell initially to pitch the space port, Aero Thermo Technology, had secured a no-bid federal contract to provide launching services.
Now Mr. Cantrell was on to another assignment overseeing missile defense research in Huntsville, and through his friends on the Hill, he was once again getting money for projects that the Pentagon did not want.
Mr. Cantrell, who by now was helping to oversee 160 or so contractors and managing a $120 million a year contracting budget, said he knew that if he only requested a few million dollars at a time for his scheme, there would be little scrutiny of his requests or demands that he prove that the work was actually done.
For example, the missile nose cones and other parts now made round trips from Huntsville to Maine with little or no change.
Mr. Cantrell or his deputy simply marked off the work as complete, and that was the end of it.
For nearly six years, from 2001 to 2007, the men collected kickbacks from contractors.
During one visit to the US Airways Club, Mr. Ennis picked up a briefcase stuffed with $75,000 in cash, according to federal court records. Mr. Cantrell also got checks, ranging from $5,000 to $60,000, once or twice a month, court records show.
With his new wealth, Mr. Cantrell, now 52, built himself a $1.25 million home in an exclusive Huntsville neighborhood called the Ledges.
Mr. Cantrell, who received the bulk of the kickbacks, acknowledges his crime but he ticks off the failings of the system that he exploited: lawmakers who are eager to please contractors and campaign donors; unwillingness by the Army to push back against members of Congress whose agendas were at odds with those of the military; and little scrutiny.
“We just paid for meaningless work,” he said. “And there was so little oversight that no one noticed.”
Admiral West, the former deputy director of the Pentagon missile defense program, faults Mr. Cantrell for wrongdoing, but says there were multiple missed opportunities to investigate his activities.
“The blame needs to go around widely here,” he said. “Congress should know better; the contractors, too.”
Mr. Cantrell, who is awaiting sentencing on conspiracy and bribery charges, now spends his days sitting in the kitchen of his father-in-law’s house; his dream home was seized by the federal government.
On top of the kitchen table, next to a King James Version of the Bible and bottle of Extra Strength Excedrin, is a stack of books on how to master poker.
Mr. Cantrell has reduced them to mathematical formulas pinned onto a bulletin board in front of a computer terminal, where he plays Internet poker for hours at a time.
Even now, he is trying to beat the system.
(Post based on extracts from Insider’s Project Drained Missile-Defence Millions by Eric Lipton New York Times October 12, 2008)
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