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Former GOP Chair's Company Accused of Labor Violations

A major moving company led by former Maryland Republican Party chairman John Kane for years paid its workers less than required by federal contracts while submitting "false and fraudulent documents" indicating the company was in compliance, federal prosecutors have alleged.

The allegations are the latest bad news for the beleaguered party, whose current chairman, James Pelura, is facing calls to resign from some GOP legislative leaders after he abruptly fired the party's top staff member this week without consulting with other party leaders.

The recently unsealed federal complaint (.pdf file), filed under the False Claims Act, alleges that the Maryland-based Kane Company and its subsidiaries paid lower wages than mandated for numerous moving and office installation projects for the federal government dating back to 1998.

It charges that Kane, the company's chief executive officer and chairman of the Maryland GOP from late 2002 to 2006, had full knowledge of the "fraudulent pattern of practice" and took no action to correct it. If proven true, the company could potentially face millions of dollars in civil penalties.

Ronald Meliker, the company's chief operating officer, who returned a call placed to Kane, said the company is cooperating with prosecutors to resolve the matter and was aware of only "a couple of minor situations" where the company underpaid its workers.

Meliker said that Kane was not aware of any fraudulent practices by the company.
"I think when the day is over, we'll be vindicated," Meliker said, adding that the Kane Company had not have any previous problems with the federal government in the company's 40-year history.

Kane, a Potomac resident and one-time gubernatorial hopeful, served as party chairman during the tenure of former governor Robert L. Ehrlich Jr. (R). His wife, Mary Kane, was secretary of state during Ehrlich's administration, a promising period for the GOP in a state where the party has struggled for relevance.

Democrats have a more than 2-to-1 advantage in party registration in Maryland and sizable majorities in the legislature. Since Ehrlich's defeat by Gov. Martin O'Malley (D) in 2006, the state GOP has been beset with financial difficulties and internal strife.

According to the complaint, Kane's company and its subsidiaries, Office Movers and Office Installation, won numerous government contracts that require private contractors to pay a "prevailing wage" determined by the Secretary of Labor, as well as certain benefits. The company would have not won many of the contracts if it had not pledged to meet those standards.

The complaint says that Kane's company "routinely failed to comply" with the law "for most of its federal government contracts between 1998 and 2003 and a substantial number of those contracts between 2003 and the present. The complaints lists more than two dozen agencies with which Kane's company had contracts, including the General Services Administration, the Department of Defense, the Department of Health and Human Services and the U.S. House of Representatives.

Kane's company and its subsidiaries have also done a significant amount of contract work for the state of Maryland. Between 2000 and 2008, the state paid the state paid the companies nearly $2 million, according to records from the state Comptroller's Office.
That work is not a subject of the federal complaint.

The complaint was originally filed in 2007 by Anthony Head, a former employee of Kane's company. Meliler described Head, who at one point served as vice president of moving services, as a "disgruntled employee."

In April, the federal government took became a party to the action, typically a signal that prosecutors believe a false claims case is a strong one.

Staff writer Maria Glod also contributed to this story.

By Anne Bartlett  |  July 10, 2009; 6:00 AM ET
Categories:  John Wagner  
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Comments

A GOP fat-cat caught running his business like a sweatshop? Yawn! Slow news day?

TGIF

Posted by: free-donny | July 10, 2009 7:46 AM | Report abuse

So what else is new? Kaine just double bills the State and national party. Barry just plain cheats, Obama's chief-of-staff STILL runs a business out of his house in Chicago and does not pay taxes. And Obama hauls his family to include mother-in-law around on the taxpayers dime. So what else is new? The sole apparent aim of getting elected is to enrcih yourself and others at the taxpayers expense.

Posted by: KBlit | July 10, 2009 9:56 AM | Report abuse

KBlit

Yarn, so your response is to find some dirt on a democrat. Yep, that makes the fraud just disappear. Make up some dirt about Obama, that will make the problems of the GOP go away. Meanwhile who is being investigated, Obama or Kane? Ok give me the typical angry republican response of Obama is not being investigated for what you are saying he is doing because he is the "messiah" right? The left wing media is controlling law enforcement and keeping an investigation from being launched right? Another stupid post from another angry frustrated republican. If only you guys would have taken care of business instead of gloating over your power you would still be in power.

Posted by: ged0386 | July 10, 2009 1:11 PM | Report abuse

This is flat out crap. Anyone who has done business with Kane knows he's a top notch, incredibly honest guy who treats his employees very very well. Ask them. The malcontent who made the original charges has an ax to grind. Period. End of story.

Posted by: boristbone | July 10, 2009 1:50 PM | Report abuse

Anyone surprised at another Rethuglican crook? There's no news here.

Posted by: jabreal00 | July 10, 2009 2:10 PM | Report abuse

I am not a partisan. I have worked for The Kane Company in a management position and now work for an International Labor Union. In my experience, Mr. Kane comports his business with unimpeachable ethics and and genuine concern for the health, safety, and welfare of his workers. This case demonstrates the perils that honest business owners face when whistle blower laws reward disgruntled employees who throw accusations against a wall and get a payday if something sticks. I'm no stranger to willful wage and hour law violators, and Kane ain't one!

Posted by: tjb67 | July 10, 2009 5:09 PM | Report abuse

If Kane is indeed ethical and the claim against him is false, it should be made plain in the light of day.

However, with the enormous theft, mismanagement and lack of oversight on federal contracts during the Bush/CHeney administration, this claim cannot be ignored based solely on character witnesses (some posters attest to this man's business ethics).

Investigate. Everyone is innocent until proven guilty, but many are proven guilty.

Posted by: free-donny | July 10, 2009 8:53 PM | Report abuse


I wonder why it took so long to catch a con artist like John Kane. This is the guy who back in 2002 said that lobbyists who wanted to have access to then newly elected Governor Bob Ehrlich should have to pay an access tax. His comments earned him a scathing editorial in the New York Times. When criticized by members of his own party for his comments he shrugged it off by saying that "bad breadth was better than no breadth," and that with Ehrlich's victory "the Maryland Republican Party was now relevant."

Where were the Guapo reporters and op/ed writers in all of this? Nowhere to be found. And the Gazette Newspapers in Maryland? Ditto. Which again proves that to get news and editorials about good governance in Maryland often you need to read the New York Times or other out-of-town newspapers.

Posted by: GoodAmerican | July 10, 2009 11:39 PM | Report abuse

Total crap. The Kanes have always been honest people and anyone who knows John, knows that he worked in every level of the company. Shame on the Washington Post for publishing tabloid rumors. They will amount to nothing. I feel bad for the Kanes because disgruntled employees can be a real bear to deal with, but just be glad the guy didn't come back and shoot everyone up!

Posted by: drfroland | July 13, 2009 6:28 PM | Report abuse

Why is this a story?

Why would attack someone for a past political affiliation in what is a business issue. Why is this in the politics section and not business? Why would your political team cover this?

This smells funny Washington Post and you should be ashamed.

Posted by: mj99990 | July 13, 2009 6:33 PM | Report abuse

Sounds like a bunch of fluff from some pissed off ex-employee who probably didn't get the severance pay he wanted. Sure Barack Obama's attorneys will investigate, I mean the guy has GOP attached to his name. But, really, is it only one employee complaining? Geeze, if maybe the guy sneezes the Washington Post will write about a federal biohazard complaint. Talk about lameo

Posted by: h20andoil | July 13, 2009 6:43 PM | Report abuse

h20andoil, respectfully, that comment does not make as much sense as you usually contribute. Are you suggesting the charge should be ignored? (not investigated - because he is GOP)?

I agree, he should not be investigated because of party affiliation, but investigators need to do their job with due diligence, correct?

Posted by: free-donny | July 14, 2009 8:20 AM | Report abuse

It is good to see that Kane has emkane26 as a supporter. He needs someone to repeat his stories.

It is not despicable to connect the public positions Mary and John Kane have had to the way the family business is conducted. The Kane’s have made the connection for the public by touting their professional and political importance when it suits them. An internet search will provide many examples.

What is despicable is to presume that a former employee providing information to the Federal Government is: “a disgruntled employee who … is now trying to get some money out of the Kane Company” The employee provided information and only after a federal investigation was conducted were charges brought.

The complaint does not reference employees who were laid off “during this tough recession.” The investigation is from five years ago. I hope the Kane Company (and family) will not try confusing the public into thinking the company is “just like almost every other business in America.” While many of us have had to institute lay offs every other business in America hasn’t been charged with knowingly submitting false and fraudulent documents to various federal agencies over a period of several years.

Posted by: linglebee | July 16, 2009 11:35 AM | Report abuse

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