Wedtech scandal

The Wedtech Scandal was the name of an American political scandal in the Reagan administration involving the award of government contracts. It was first brought to light in 1986.

The Wedtech Corporation was founded in Bronx County, New York by a Puerto Rican named John Mariotta, and originally manufactured baby carriages. But after a number of years, Mariotta brought in a partner, Fred Neuberger, and began focusing on winning small business set-aside contracts for the Department of Defense.

As a major employer in a depressed part of New York City Wedtech enjoyed a strong local reputation, and was even praised by then U.S. President Ronald Reagan for the jobs it provided for those who might otherwise be forced onto welfare rolls. Mariotta was praised as the Small Business Owner of the Year by the U.S. Small Business Administration.

Wedtech had won many of its defense contracts without competitive bidding under a Small Business Administration program that gave preference to minority-owned businesses, despite the fact that Fred Neuberger, not a member of any government recognized minority, owned a majority of the company's stock, thus disqualifying Wedtech as a minority-owned business. To keep Neuberger's controlling ownership secret, the company committed fraud, forging papers that claimed Mariotta was still the primary owner of the company.

When Wedtech went public, it gave shares of to law firms (as payment for legal services), including Squadron, Ellenoff, Plesent & Sheinfeld. Some of the law firms employed members or relatives of members of the U.S. House of Representatives, including Bronx Congressmen Mario Biaggi and Robert Garcia. Both would later be forced to resign their seats due to their roles in the scandal and were subsequently jailed, as were State Senators Clarence Mitchell III and Michael Mitchell of Maryland. With undisclosed holdings in Wedtech, they used their positions to help Wedtech win federal work.

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