Friday, August 19, 2011

Probe: DARPA Head Awards Contract to Her Family Firm

By Noah Shactman

Since Regina Dugan became the director of Darpa, the Pentagon’s top research division has signed millions of dollars’ worth of contracts with her family firm, which in turn owes her at least a quarter-million dollars. It’s an arrangement that has raised eyebrows in the research community, and has now drawn the attention of the Defense Department’s internal auditors and investigators.

The Pentagon’s Inspector General is launching an audit of those deals — and of every other research contract Darpa has signed during Dugan’s two-year tenure. This is just “the first in a series of planned audits to review [Darpa's] contracting processes,” the Inspector General’s office promises.

The probe isn’t itself an accusation of wrongdoing; just an investigation to see if any occurred. Darpa representatives have insisted that the agency acted properly in its dealings with RedXDefense — the bomb detection firm Dugan co-founded with her father, Vince Dugan. She recused herself from any decisions involving the company, they say, and RedXDefense won its $1.7 million in research contracts from Darpa fair and square.

“At no time did Dr. Dugan participate in any dealings between the Agency and RedXDefense related to the contract,” Darpa spokesman Eric Mazzacone told Danger Room in March. (He declined to comment for this story.)

Nevertheless, the Inspector General’s office wants to take a closer look. Not only does Dugan still own tens of thousands of dollars’ worth of stock in RedXDefense; according to a financial report she filed last year, the company (now led by her father) has yet to reimburse Dugan for a “note/loan” with “no schedule of payment or guarantee of repayment.”

That’s one reason, presumably, why the IG is also launching a separate inquiry into “Regina Dugan’s continued financial and familial relations with Darpa contractor RedXDefense,” the office noted in a letter to the Project on Government Oversight, a watchdog group.

The look into Darpa’s deal-making won’t end there, however. Every research contract issued by the agency over the last two fiscal years will be reviewed, to “determine the adequacy of Darpa’s selection, award, and administration of contracts and grants,” the IG’s office wrote in a July 26 memorandum to other military agencies. So will Darpa’s relationship with airship-builder (and one-time agency contractor) Aeros, which now counts former Darpa director Tony Tether as a member of its board of advisors.

The scrutiny of Darpa’s $3 billion budget is needed, agency insiders say. Darpa gets wide latitude from the rest of the Pentagon — and from Congress — in how it hands out its contracts.

“You could pull a lot of money out of that place if you really wanted to,” a recently retired Darpa official tells Danger Room. “There really isn’t any due diligence there.”

Read the rest here.



  1. No due diligence when there's actual misappropriation of public funds...

    But when a private individual carries cash, look what happens, even when there is no evidence of any crime.

    CASH is the original sin for the bankers who deal in debt and credit, which they can milk for all its worth.

  2. While we're on the topic of unaccountability,
    here's a story not getting too much press:

    Deep Capture:

    "As we know from earlier chapters, the clients of Penson Financial and its partner brokerages (i.e. the clientele responsible some significant portion of the volume that made Penson the world’s largest brokerage in the lead-up to the 2008 financial crisis) included:

    many of Al Qaeda’s most important financiers (including the two involved with Madoff);
    traders tied to Hamas (e.g. Omar Amanat, who brokered many of Penson’s other client relationships);
    the Muslim Brotherhood;
    traders tied to Palestinian Islamic Jihad;
    traders tied to Hezbollah;
    traders tied to the Iranian regime, Iran’s terrorist proxies, and Russian intelligence assets (generating at least 20 percent of Penson’s volume in the month before the 2008 collapse of Bear Stearns);
    a large network of jihadi and Russian Mafia traders who had been involved with a brokerage (Global Securities) that was affiliated with the Assa Corp. (Iranian government outfit indicted for espionage in 2009);
    key financial advisors to Libyan dictator Muammar Qadaffi (e.g. Al Qaeda operative and Saudi billionaire Abdurrahman Alamoudi; also the above-mentioned Madoff feeders);
    the ruling families of Abu Dhabi and Dubai;
    traders tied to Pakistani and Saudi intelligence;
    a billionaire leader of the Marxist Naxalite terrorist group (linked to Al Qaeda and Pakistani intelligence);
    D-Company (Mafia outfit and Al Qaeda affiliate trained by Pakistani intelligence);
    the largest financier of the Tamil Tigers (linked to Al Qaeda and Pakistani intelligence);
    a fund manager who commands a paramilitary army allied with Hezbollah in Lebanon;
    the Mogilevich organization (Russian Mafia outfit closely intertwined with the Russian intelligence services);
    hedge funds and traders linked to Russian spies;
    Russian spies (through Lines Overseas Management);
    Russian oligarchs closely tied to Vladimir Putin and the Russian intelligence apparatus;
    Multiple traders implicated in the 1999 scandal that saw the Russian government and the Mogilevich organization manipulating the U.S. markets, and laundering money through Bank of New York
    Traders who perpetrated the financial terrorism (timed to coincide with Al Qaeda’s September 11, 2001 attacks on the World Trade Center and the Pentagon) that destroyed MJK Clearing, then the largest clearing brokerage in America;
    La Cosa Nostra;
    Michael Milken’s closest associates (i.e., America’s most notorious short-side market manipulators, most tied to Russian organized crime and/or La Cosa Nostra)
    All of Bernie Madoff’s key feeders."

  3. Which probably explains why Barron's (hedge-fund owned magazine) comes out against Ron Paul, whose anti-Fed initiative would end the cheap money con game:

    "Barron's Attacks Ron Paul
    Posted on August 20, 2011 by Lew Rockwell

    Why, why, Ron's investments go against everything a Merrill Lynch salesman would advise! Darn right. Also, the neocon tabloid calls Ron the "doom and gloom" (i.e., truthful) candidate. But those who want to wage constant mass murder in the Middle East, establish an anti-Muslim police state in the US, and strengthen US corporatism, banksterism, and the empire, they're happy fellas."