Obama CIO Kundra “on leave”; DC IT corruption probe may widen

[this is a repost of a news story elsewhere on our site] Personally, I think it’s unlikely that Kundra is involved in this scandal; and I’m guessing that he can’t be justly blamed for not knowing about it. The point of a criminal conspiracy is…it’s a secret. Here’s this morning’s story…. FBI agents have charged two men, one a staffer in the D.C. IT department run by Vivek Kundra, the Obama administration’s CIO, with bribery, fraud, and money laundering. While Kundra so far has not been implicated, FBI documents show at least five others may be involved. Just days after being named as President Obama’s CIO, Vivek Kundra is now on leave, following an FBI search of his previous posting and the arrest on bribery, fraud, and money laundering charges of one of his subordinates and a contractor. Currently there is no indication that Kundra is implicated in the scandal. The Washington Times quoted an unnamed “White House officials” as saying Kundra was on leave “until further details become known” about the investigation involving the Washington, D.C. Office of the Chief Technology Officer (OCTO), the post held by Kundra from 2007 until appointed to the CIO post on March 5. The case seems likely to widen. An FBI affidavit that lays out the details of the alleged corruption scheme identifies only by their initials at least five other individuals who are alleged involved in the corruption scheme. Two are further identified as being OCTO employees, and a third is identified as “wife of Yusuf Acar,” one of the two men arrested and charged. As CIO, Kundra is in charge of directing policy for government IT investments, and administering federal technology spending. Obama spokesman Robert Gibbs would not say whether the White House knew of the investigation when it announced Kundra’s selection, according to the Associated Press. The Washington Times reported that Gibbs confirmed the Administration knew the raid would take place (but the newspaper didn’t clarify when this was known). Gibbs said he would not comment on an ongoing investigation and told reporters at yesterdays daily White House briefing to contact the Justice Department. “This is obviously a serious matter,” Gibbs said, quoted in the Washington Times story. The FBI search of the facilities occupied by the staff of the Office of the CTO was conducted about 9 am ET Thursday. Agents arrested two men and charged them with conspiracy to commit bribery and money laundering. One is Yusuf Acar, identified as an IT security specialist and acting chief security officer for the city. He was responsible for purchasing hardware and softare, and for hiring contract employees for city agencies. Hired in 2004, his salary is $127,468. Prosecutors said they found $70,000 in Acar’s home. Acar worked under Kundra, but one report quoted a D.C. mayoral spokeswoman as saying she was “very confident” Kundra was not a target of the investigation. The second man arrested is Sushil Bansal, originally identified as an employee for a Washington IT company but in fact the CEO of Advanced Integrated Technologies Corp. The company’s Website says he worked previously as a “project manager in D.C. government and implemented its financial system.” Federal documents say the scheme involved the placing an order for goods from Bansal’s company, which then lowered the number of units bought from a distributor, but billed the city for the full amount, pocketing the difference, according to the Washington Times report. Acar’s alleged role was to place the order, and then certify that the full order had in fact been delivered, allowing the city to pay the fraudulent bill. The two men allegedly split the proceeds. UPDATE: A second scheme involved billing for work done by fictitious or “ghost” contract employees. A company, like Bansul’s, pretends to hire contract workers for an OCTO contract. No work is ever actually done, but the vendor bills the employees’ hours to OCTO, where a co-conspirator approves the timesheet, allowing the vendor to be paid. According to the FBI affidavit requesting a warrant for Acar’s arrest, Acar and at least two others, identified only by their initials and termed city “OCTO employees,” created a company called Circle Networks, allegedly for the purposes of laundering the money. There was apparently plenty of laundry. In just 14 months, from August 2007 through October 2008, Bansul’s company sent Circle Networks checks totaling over $372,000, according to the affidavit. In 2007, the Department of Justice cracked another conspiracy by city employees, who over a decade looted some $20 million in tax revenues from city coffers, managing to sidestep a brand new computerized tax system that was held up as a model for municipal tax officials.