Over the last four years, Sen. Conrad Burns (R-Mont.) has earmarked more than $8 million for a project ostensibly designed to make Montana a center for space-related research and industry. But despite the millions of dollars in federal funding, it appears to have produced few tangible results while spawning several state and federal investigations. It has also earned lobbyists and companies connected to Burns hundreds of thousands of dollars in contracts and lobbying fees as well as more than $80,000 in campaign contributions for Burns and Rep. Denny Rehberg (R-Mont.).
The story of the program — the Inland Northwest Space Alliance — illustrates not only the opaque manner in which federal earmarks are doled out, but also the often-interconnected and complex roles lawmakers, their family members and former staff play in the procurement and use of these spending initiatives.
It is unclear how much of the $8 million in earmarks Burns sought to steer to INSA either directly or through the University of Montana has been allocated to the group. However, INSA’s tax records, federal lobbying reports and an audit by Montana’s legislative auditor of earmarks funneled to the group through the university show that between 2003 and 2005, more than $761,000 has been spent on salaries and benefits. Additionally, more than $320,000 has gone to former Burns Chief of Staff Leo Giacometto and a company associated with him.
According to Montana State University professor Loren Acton, a former astronaut who has long been involved in the private aerospace industry, almost from its inception INSA was plagued by a lack of “competence” and the technical inability to meet its goal of turning Montana into a center of private space travel and exploration.
“It didn’t seem to us that there was a foundation of competence ... to do what should be done with NASA funding,” Acton said. Acton, whose space research program at MSU is heavily funded by earmarks secured by Burns, recommended in a September 2004 memo to university officials that MSU have only limited dealings with INSA, a recommendation to which the school agreed. “I’m glad we kept them at arms’ length,” Acton said.
Burns campaign spokesman Jason Klindt maintained that federal funding steered toward INSA was intended to help create jobs in the state and the lawmaker had no knowledge that federal funding was going toward lobbying expenses — a violation of federal spending rules.
“There’s no story here,” Klindt said, arguing that Burns should not be faulted for trying to “bring good-paying jobs to Montana.”
Similarly, Erik Iverson, Rehberg’s chief of staff and a campaign aide to Burns this year, maintained that neither Burns nor Rehberg was involved in any unethical or illegal activities and that both lawmakers were simply interested in bringing high-tech jobs to the state.
INSA has long had close connections to Burns. His daughter, Keely Burns, briefly held uncompensated positions on the boards of directors of both INSA and the University of Montana’s Space Privatization Consortium, which created INSA. Sen. Burns also worked closely with INSA President George Bailey to create the alliance, and Bailey credited former Burns aide Kathy Olson with being instrumental in founding INSA, according to Acton’s memo.
In 2003, Burns, Bailey and Mike Gold, counsel for Bigelow Aerospace, tentatively agreed on a deal to create the “Free Flyer Consortium” between INSA and Space Sciences Inc., a nonprofit research organization founded by hotel magnate Robert Bigelow, whose empire includes not only the Budget Suites hotel chain and Bigelow Aerospace, but also the now largely defunct National Institute for Discovery Sciences, a UFO, paranormal and “consciousness” research outfit based at Bigelow’s Skinwalker Ranch in Nevada.
In fact, Bigelow tapped NIDS’ top researcher, Colm Kelleher, to initially run SSI. Kelleher had previously been involved in an investigation into cattle mutilations outside of Great Falls, Mont., that was conducted by NIDS and local authorities. (Cattle mutilations have been ascribed by some conspiracy theorists to space aliens or other paranormal forces.)
As talks on the creation of the consortium progressed, Bigelow and Gold began making campaign contributions to Burns and fellow Montana Republican Rehberg — the first time either man had made contributions to Montana politicians. Beginning in June 2003 and June 2004, Gold and Bigelow donated a combined $21,500 to Burns’ re-election campaign and political action committees connected to the Big Sky Republican, according to a review of federal campaign finance documents. The two men also donated a combined $6,000 during the same time to Rehberg’s re-election campaign and associated PACs.
Additionally, Bigelow spent more than $4,500 in combined travel expenses for trips by Rehberg and members of his and Burns’ staff to visit his Las Vegas headquarters in 2003 and 2004. Burns aide Ryan Greer traveled to Las Vegas along with Rehberg aides Robert Martin and Julia Gustafson for three days in April 2003 on a fact-finding mission, according to House and Senate travel records, costing a total of $2,535.50.
Then, in February 2004, Bigelow spent an additional $2,000 to bring Iverson and Rehberg to Las Vegas, House records show. According to Iverson’s travel form, the trip was taken in order to “meet with and speak to Bigelow Aerospace executives and employees to discuss possible expansion of Bigelow Aerospace to Montana,” while Rehberg’s form indicates Bigelow paid for his trip from Washington, D.C., to Las Vegas, and then a trip to Billings, Mont., on Feb. 7.
Ten days later, on Feb. 17, Rehberg, Burns, Bailey and then-Gov. Judy Martz were scheduled to meet for a “Discussion of Bigelow Aerospace operation,” according to a Feb. 10, 2004, press release from Rehberg’s office that outlines his itinerary while in Montana for the Presidents Day district work period.
According to sources close to Bigelow and INSA, Bigelow was willing to commit as much as a half-billion dollars of his own money toward perfecting the inflatable space habitat technology required to build a private space station.
In order for Bigelow to commit to funding, according to these sources, the government had to also make a good-faith commitment to work on the project, a condition to which Burns agreed. In 2003, Burns inserted two earmarks into the Veterans’ Affairs, Housing and Urban Development, and independent agencies portion of the fiscal 2004 omnibus spending bill — a $1.5 million earmark for the University of Montana’s National Center for Space Privatization, which was used to fund INSA, and a $1.25 million earmark specifically for a Space Sciences Inc. microgravity pharmaceutical research initiative, according to a press release issued by Burns.
As initially envisioned, the consortium would launch “a series of demonstrator modules designed to both prove the new expandable space module technology as well as to illustrate the potential of microgravity research and development to the commercial sector,” according to a March 2, 2004, letter Burns wrote to then-NASA Administrator Sean O’Keefe obtained by Roll Call through a Freedom of Information Act request.
In the letter, Burns also wrote that he “would very much appreciate an opportunity to introduce you and/or your Associate Administrator for Legislative Affairs to the INSA and [Bigelow] leadership. ... You could learn more about our exciting work in Montana and how NASA can play a supportive role.”
According to NASA documents, a meeting between NASA, Burns and INSA and Bigelow officials took place, although it is unclear when it occurred and whether O’Keefe was involved.
But while Burns was touting the relationship between INSA and Bigelow, the agreement was in fact cratering, according to an official with Bigelow and Burns campaign spokesman Klindt.
In fact, one informed source, who requested anonymity because of the sensitive nature of the issue, explained that Bigelow had decided “that no robust collaboration would be possible between Bigelow Aerospace and INSA” by early 2004, and that by the end of the first quarter of that year “any official ties were over or ending, and any contact[s] during the summer were informal and sporadic.”
Nevertheless, Burns continued to use SSI’s name in pushing earmarks for INSA. On May 14, 2004, for instance, Burns wrote to O’Keefe regarding SSI’s “microgravity-related pharmaceutical development initiative” to inform NASA that because “SSI has not received federal grant money in any prior year ... for reasons of expediency, as well as because INSA is based in Montana where the work will be conducted, INSA is preparing, submitting and administering the grant on SSI’s behalf.” Burns also added in the letter that, “This action is being taken with both the consent and approval of my office and SSI.”
Additionally, Burns included in the fiscal 2005 NASA spending bill a $3 million earmark for “INSA — Free Flyer Program, Space Sciences Inc.,” according to a Nov. 22, 2004, press release from Burns’ office. The bill also included $750,000 for the “National Space Privatization Program” at the University of Montana, according to the release.
In an interview, Klindt acknowledged that Burns specifically labeled the earmarks with SSI’s name, explaining that they were part of the lawmaker’s efforts to “create jobs in Montana.”
But few if any new jobs appeared to have ever been created by INSA. In fact, sometime during 2004, INSA’s Free Flyer project appears to have changed focus from being a space launch research and development initiative to an almost exclusively educational and outreach initiative. Although the group’s Web site has been largely scrubbed, archived pages obtained by Roll Call indicate the bulk of INSA’s activities centered around education programs for school children, ranging from demonstrations of microgravity environments to an “exhibit” in which participants could have their picture taken “in space.”
Although financial records for INSA are only available for 2004, they, along with federal lobbying disclosure forms, a state audit of the program and interviews with sources familiar with INSA, suggest that the bulk of the money received by INSA has gone toward compensating members of its board as well as to lobbying fees charged by former Burns Chief of Staff Giacometto.
According to Senate lobbying records, INSA paid Giacometto’s firm, Gage LLC, $80,000 in 2004 and 2005. While INSA previously has insisted the funds were for “consulting,” a June 2006 report by Montana’s Legislative Audit Division found that INSA did in fact use federal funds for lobbying and that “to date, INSA has not submitted a lobbying activity disclosure form” to University of Montana officials as required by federal law.
INSA also paid Compressus Inc. — which at one time included both Giacometto and Keely Burns on its board of advisers — $270,760 in “project management” fees in 2004, according to INSA’s tax returns. Although Keely Burns’ contract with Compressus included compensation in the form of stock options, Burns said in a statement released by the Senator’s campaign to the Lee Newspaper company this summer that she never exercised the options.
According to the auditor’s report, which was narrowly focused on how INSA spent approximately $3.1 million in federal grants that came through the University of Montana, between 2003 and 2005 some $761,192 was spent on salaries and benefits, including $153,000 for Bailey and $117,000 for Lucy Chesnut, the wife of board member Lloyd Chesnut. Chesnut is under investigation by the FBI in a separate case involving a Texas university. Additionally, a source familiar with the auditor’s investigation said it appears that board members saw increases in their compensation each time earmarked funding would arrive from NASA.
Acton, the MSU professor, said the size of the compensation packages is far larger than generally accepted practice and he and other members of the MSU faculty declined invitations from Bailey to join the board because “it was clear that what he was asking people to do was very marginal on ethics.”
Although federal investigators have not named Burns as an official “target” of an investigation, sources close to the state’s investigations said the FBI has been looking into INSA and its relationship with both Burns and Giacometto. A source familiar with the legislative auditor’s work also said the auditor has given the FBI evidence not included in its June report that indicated “there was clear criminal activity” involved in the operation of the alliance. Because of the narrow scope of the auditor’s report, investigators did not include that evidence in the June findings, this source explained.
Additionally, last year federal investigators reviewed the financial reports of Burns and several current and former aides, according to Senate records.
While the state and federal investigations of Burns and his associates appear to be limited to the INSA case at this point, it is not the only example of former aides and associates of Burns seeing significant financial gains from one of Burns’ numerous pet projects in the state.
For instance, Giacometto and former Burns aides Will Brooke and Mark Baker have reaped millions in lobbying fees from firms connected to the Burns Technology Center, an MSU telecommunications program founded by Burns and funded through earmarks from the lawmaker. The BTC’s board of directors is a veritable who’s-who of telecommunications lobbyists and clients of the former staffers.
