Contractor convicted in earmark probe

A federal jury in Florida convicted a defense contractor of helping in a scheme to defraud a military research lab and steer bogus contracts to his defense company and others.

Richard Schaller was convicted of destroying records, lying to a grand jury and helping a retired Air Force officer steer contracts to his company, Schaller Engineering, The Associated Press reported Friday.

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The charges stem from a wide-ranging investigation federal prosecutors are pursuing into improper use of congressional earmarks by defense contractors with ties to Rep. John Murtha, the powerful Pennsylvania Democrat who chairs the House Appropriations Defense subcommittee. Murtha has not been accused of any wrongdoing and has said anyone who has been found guilty of abusing the defense contracts he requested should be prosecuted and punished.

Murtha's office declined to comment on the conviction.

As part of a 31-count indictment, the federal prosecutors accused Schaller Engineering of being paid $200,000 for a component of an integrated battlefield communications system it never provided. They accused Schaller and his colleague, Theodore Sumrall, of each pocketing $60,000 in the deal. Pennsylvania-based defense contractor Coherent Systems received $1.4 million for the communications system in 2007 through a Murtha-directed earmark.

Before that infusion, Coherent Systems received $8.1 million for the same program, money that was inserted into the March 2005 tsunami relief supplemental appropriations bill. No one has stepped forward to say who inserted that earmark. At the time, Murtha was the ranking member of the defense-spending panel, which he now chairs.

His office has said it has no information about who inserted the language into the tsunami relief bill.