War Bribes

Many successful business owners can't resist showing off. They get their name in the newspaper, they donate to local politicians, or they put a big shiny sign on their offices to build a sense of identity.

One of Oregon's most successful manufacturers does none of these things. It has a signless white building in an office park in Tualatin. Barbed wire rings the gate that surrounds its parking lot.

This company is famous only to the highly trained specialists who use its primary product, an emergency stretcher that has carried countless wounded soldiers from battlefields around the world. 

The high quality of this company's products have made it an industry leader and its owner, a 74-year-old former U.S. Army medic and denturist, a wealthy man.

But the actions of this company, Skedco, and its owner, Carston “Bud” Calkin, have threatened to unravel this success. 

Court documents show Skedco paid $365,000 to a U.S. Defense Department official "in return for increasing the amount of federal contracts" it received.

Neither Calkin nor Skedco has been charged with any crime. But a Defense official is doing time in a federal prison in Englewood, Colo., after a jury convicted him of 35 counts of bribery, extortion and accepting illegal gratuities. Evidence presented in the case, and in a related civil case in Oregon, reveals that Skedco was the source of those payments.

Now Skedco, which has received more than $8 million in federal contracts over the past decade, faces losing access to its biggest customer, the U.S. Army. Nine weeks ago, the Army put Calkin and others who did business with the now-imprisoned official on a list of "excluded parties"—as in, excluded from selling to the federal government.

As WW went to press, the Army's Suspension and Debarment Officer had yet to decide whether to ban Skedco, Calkin and his wife and business partner, Catherine Calkin, from government contracting.

Whatever the Army's decision, the case illustrates the vanishing line between the public and private sectors throughout the U.S. military, a trend that makes the $703 billion Defense budget a potential bonanza of corruption.

Conflicts of interest span the ranks. Some 80 percent of retiring three- and four-star generals and admirals went on to work as consultants or executives for Defense contractors, a Boston Globe investigation found last year. In the Beltway, they're known as "Rent-A-Generals."

Calls to the Defense Department's waste, fraud and abuse hotline have nearly doubled since October 2002—totaling more than 11,000 in the most recent six-month reporting period. 

But the congressionally chartered Commission on Wartime Contracting said in its final report this year that the Pentagon remains far too lenient with companies accused of wrongdoing. The Army debarred or suspended 281 companies and individuals in the last fiscal year.

Skedco is the first Oregon company to face an Army debarment since 9/11. This state has remained largely untainted by contracting scandals in the "war on terror," if only because Oregon gets relatively little Defense spending. 

This unseemly chapter of Skedco's story might have been as obscure as its rise to success had another company not drawn a line. The other company, facing similar threats of extortion, refused to pay bribes and instead blew the whistle. 

Much remains unclear. Some key court records remain sealed. Few people are talking. Calkin, reached on his cell phone, referred questions to his attorney. An attorney for the imprisoned Defense official did not return messages. 

But an intimate look into the case is possible because of two brothers: one, the ex-Defense official in prison for bribery; the other, a police officer who witnessed his brother's slide to ruin. What the police officer has since disclosed about his brother's crimes offers a rare insight into the greed, anger and remorse built into the business of war.{::PAGEBREAK::}

The shooting starts. A soldier falls. And medics place the wounded on a hard plastic stretcher so common it's known by its brand name: Skedco.

"You say 'Give me the Skedco' the same way you say 'Give me the Kleenex,'" says Andrew Cull, chief executive of Seattle-based Remote Medical, which sells the stretcher to the military and other customers. "They're just so entrenched—it's a staple of rescue teams around the world."

And for good reason. For decades, medics and rescue teams used stretchers, also known as litters, made of fabric or netting. Skedco makes litters of a tough yet flexible plastic, making them compact and light.

"You can drag it, you can lift it—in a Humvee it's easier to put under the seat for when you need it," says Cull, who has years of mountain rescue experience. "It just saves a lot of headaches."

Some former military officers say Skedco gear saves more than headaches. "Bud is not just a hero to a lot of us that have him as a personal friend, but he's a hero to a lot of soldiers, sailors and airmen who owe their lives to his equipment," retired U.S. Army Col. Peter K. Landsteiner says. "I would give my left arm for Bud Calkin."

Calkin, Skedco's founder, calls himself a pioneer of "extreme medicine." He routinely leads training sessions for U.S. forces on bases and in the field, including a trip this year to Afghanistan. 

"My primary goal in life is to save GI lives. That's what I live for," Calkin told the Journal of Emergency Medical Services in July. "It's extremely important to me, because the American soldier is the greatest treasure of America; they save lives and they keep us free."

The Skedco stretcher, Calkin told another interviewer, was adapted from a rig his sister had used to drag deer out of the woods after a hunt. Today, the full Skedco litter kit runs $769.

Records show Calkin moved to Oregon around 1980 and moved in with a friend, Pat Trotti, in Trotti's Tigard home. 

According to court records, Trotti allowed Calkin, a licensed denturist until 2003, to use his dental clinic free of charge, and then loaned him money to help launch Skedco. In exchange, Trotti got a one-third ownership stake in the company.

(In 2004, Trotti's widow, Louise, sued Skedco and the Calkins in Washington County Circuit Court, claiming they had failed to pay her husband $2.5 million in dividends. Louise Trotti says the settlement agreement she reached with Skedco bars her from talking about the case or the Calkins.)

Today, Bud Calkin's wife, Hang Lee Calkin, who goes by Catherine, is Skedco's principal owner, which allows the company to qualify as a minority-owned small business under federal contracting rules. Catherine handles the books, while Bud designs, sells and personally tests the products. 

"My life goes in every product that handles the patient before anyone else is allowed to get in it," Calkin told the Journal of Emergency Medical Services. "If I don't trust it, then I should not be selling it to you."

He first began selling his unique brand of flexible plastic litters to the U.S. military in 1984. 

At first, Calkin had a hard time persuading rescue crews to buy his new product, according to the August 2007 issue of International Fire Fighter magazine. He would drive as far as 1,000 miles to sell a single litter, so his story goes.

The company got its first break with the 1989 U.S. invasion of Panama. Calkin's litters "performed very well during that operation. Lives and at least one spinal cord were saved," the IFF article says. A few years later, during the first Persian Gulf War, Skedco received "gigantic orders."

By 2004, Bud and Catherine Calkin were making a combined $625,000 a year in salaries, court records show. A year later, the Calkins purchased a $1.4 million, 7,700-square-foot home in the Stafford area of Clackamas County. A formidable security gate, complete with an intercom system, guards the Calkin home, with a large deck facing an idyllic green hillside.

Today, the company reports $6.5 million in annual revenue and 21 employees. Skedco's Tualatin headquarters are located near a United Parcel Service distribution center not far off Southwest Tualatin-Sherwood Road. It, too, restricts access with a tall gate, heavy doors and an intercom. Tiny letters on a tinted window read "SKEDCO."

Calkin's Facebook page shows him to be a tea party supporter. On it, he recommends the Tea Party Action Center, a website promoting causes like the balanced-budget amendment and the repeal of "Obamacare."

Despite Calkin's limited-government politics, Skedco hired a Washington, D.C., lobbying firm, the DLM Group, to request $4.5 million in earmarks from U.S. Sens. Ron Wyden and Jeff Merkley, both Oregon Democrats, in fiscal years 2010 and 2011. 

The earmarks were never approved, but the senators moved Skedco's request on to the relevant appropriations committees. Merkley spokeswoman Julie Edwards tells WW the senators wouldn't have sought the earmarks if they had known Skedco was involved in a public corruption investigation.

Over the years, Calkin has donated relatively small sums to the national Republican Party. It seems most of his time and attention were devoted to his business with the military. Calkin is a familiar face at conventions of the Society of Army Physician Assistants and the Special Operations Medical Association, and other trade shows.

A number of military officials have sent supportive letters to Calkin's attorney in preparation for Skedco's debarment hearing.

"Bud was and continues to be a legendary figure, known to most medics and field commanders," writes retired U.S. Army Col. Frederick E. Gerber. Another supporter, Col. Drew Kosmowski, an emergency physician at a military hospital in Colorado, adds that "Bud always maintained the highest ethical standards."

{::PAGEBREAK::}It's not clear how Bud Calkin first met Joe Marak, the Defense official convicted of taking bribes.

Marak, 51, was born in Connecticut, became an Eagle Scout and enlisted in the Army in 1979, training at Fort Lewis, Wash. He trained as a medic, served in Bosnia and retired as a sergeant first class in 1999. In a military service evaluation, submitted during his criminal case, a superior wrote "Joe's abilities are endless."

By July of that year, Marak was leading the development of a new litter kit that could be attached to the belly of a Blackhawk helicopter or slide under the seat of a Humvee, then be quickly removed and carried into the field. 

The new litter kit, known as a CASEVAC for "casualty evacuation," was developed especially for rugged terrain like Afghanistan's. Defense procurement is rarely so straightforward as the government placing an order or a company making a sales pitch. In this case, the government—Marak—came up with the idea and went looking for a company to make the kit.

Marak led the design of the CASEVAC over the next few years, as his job description required. However, prosecutors say he put his own interests ahead of the Army's, even signing drawings of the prototypes "property of Joseph J. Marak."

It seemed Marak had a plan to profit from his design. In the spring of 2005, Marak reached out to others who could make the plan a reality. 

During a Special Operations Medical Association conference in Fayetteville, N.C., Marak met with Bud and Catherine Calkin in a hotel room along with representatives of one of Skedco's competitors, Special Operations Technologies, known as S.O. Tech. 

Based in Carson, Calif., S.O. Tech was founded by James Cragg, an intelligence officer in the Army reserves. Cragg later said the meeting ended with a handshake deal for shared work on the CASEVAC system.

A few months later, the companies and the government had a contract. At Marak's insistence, S.O. Tech and Skedco would form a joint venture to produce the CASEVAC.

With a deal in place, Marak began asking both S.O. Tech and Skedco for what he called “royalties”—but what S.O. Tech’s Cragg believed were kickbacks. 

The demands for payment were delivered by email and in person, prosecutors said, and came with threats to yank pre-existing contracts. 

Beyond kickbacks, Marak also began asking both companies for a job. In an October 2005 email to Cragg, Marak expressed anger that Cragg had ignored his previous request for employment. "You're screwing with your life blood," Marak wrote to Cragg in an October 2005 email. "I'm all talked out and burnt out on BS promises. I make things happen."

Court documents show Marak was at that time already taking money from Skedco. From September 2005 to June 2006, according to the indictment later filed against him, Marak collected 35 traveler's checks from a Defense contractor. 

Documents filed in the case reveal that company was Skedco. The checks, for sums between $100 and $3,000, eventually totaled $13,000. 

In the spring of 2006, the Army approved the CASEVAC design. Within a few months, the Army had purchased 2,800 kits from Skedco for $3.8 million—triple the previous year's orders. 

S.O. Tech, which had refused Marak's demands for payment, would soon find itself cut out of the deal.

Gary Marak, then 38, was a sergeant with the Grand Junction Police Department. He and his wife, Lori, helped his older brother install the sewing machine in a detached garage. Joe told them he was starting his own military equipment design company, and for the next month he worked nonstop on prototypes for Defense contractors he hoped to work with.

Gary says his brother talked about Skedco hundreds of times in the year they shared a home. "Joe always talked about the persons at Skedco by first name, Bud and Catherine," Gary wrote in a five-page, single-spaced letter to the federal judge who this year sentenced Joe to 72 months in prison.

Joe's optimistic attitude began to change in July 2006, Gary recalled.  

Joe had returned upset from a brief trip to Oregon, where he visited Skedco, Gary wrote. One of the things that upset Joe: Calkin had made a comment about becoming "filthy stinking rich," Gary wrote.

"Joe would tell me over and over again that this was not what he wanted to do or become," Gary wrote, adding that Joe came to question "whether Bud and Catherine were trying to do the right things or just make money, and why they were trying to hide him and his work behind the scenes."

Despite such reservations, court records show, Joe Marak signed on in July 2006 as a consultant for Skedco. In coming months and years, he would collect $350,000—money paid in return for the exclusive contracts he had arranged as a government employee, prosecutors said.

In June 2007, the deal between Marak and Skedco started to come to light.

That's when S.O. Tech, the company that had refused to pay Marak, sued Skedco and Marak in U.S. District Court in Oregon.

S.O. Tech claimed Skedco and Marak had conspired to steal its designs and cut it out of participation in the CASEVAC joint venture and future contracts. Among other allegations, S.O. Tech said Marak had written one of its contracts in such a way that required it to purchase laminated first-aid cards from Skedco for $10 apiece—a hugely inflated price used to fund payments to Marak.

According to Gary Marak, S.O. Tech's lawsuit increased Skedco's power over Joe. "[T]he only way he could pay for a lawyer was to work for Skedco," Gary Marak wrote. "From my standpoint, as time passed they seemed to have control over him."

Skedco’s Calkin told the court he had lost sleep over the “scurrilous” accusations by S.O. Tech. 

"Neither Skedco nor I have done anything wrong," Calkin said in a 2009 court filing. "We were just unlucky to have been talked into using an incompetent subcontractor who is willing to say anything to get back at us for rejecting its totally unusable products. I cannot get the injustice of this case off my mind."

Skedco filed a counterclaim, accusing S.O. Tech of defamation and shoddy work on the CASEVAC kits. Calkin also claimed Cragg's employees physically threatened him at a 2007 trade show. 

S.O. Tech's allegations against Marak drew the government into the case. 

Initially, the U.S. Attorney's Office in Oregon, then led by Karen Immergut, sought to have S.O. Tech's civil claim thrown out of court, on the grounds that Marak was acting in the scope of his duties as a federal employee. Immergut's office dropped the argument when the U.S. Attorney in North Carolina decided to bring criminal charges against Marak in 2010.

S.O. Tech's civil lawsuit remains pending against Joe Marak even as he sits in a federal prison. But the company settled with Skedco.

S.O. Tech and Cragg are now fighting to protect their privilege to sell products to the government. S.O. Tech's attorney, Robert Aldisert of the Portland firm Perkins Coie, says the Army sought to debar his client even though Cragg refused to pay Marak any bribes. That decision "was based on a confused reading of the indictment, which was not a model of clarity," Aldisert says. 

Skedco's attorney, Lois Rosenbaum of the Portland firm Stoel Rives, says the company should not be barred from military contracting because it was a victim of Marak's extortion, and because it cooperated with prosecutors.

She says no Skedco competitor makes products of the same quality—and that America's military personnel would be put in danger if they had to rely on inferior gear.

"It's done so much for so many people," Rosenbaum says of Skedco. "In fact, it's dedicated its whole corporate existence to saving the lives of military personnel."

The Calkins' supporters have rallied to Skedco's defense.

"I know that Bud and Catherine regret what they did that led to this hearing," Landsteiner, the retired colonel, writes in another letter of support. "I know that they have been humbled and have truly learned from their actions also."

Joe Marak is appealing his criminal conviction. Before his brother was sentenced, Gary Marak told the court he didn't understand why Skedco escaped accountability.

"I know he did not force or coerce Skedco into anything," Gary wrote. "I have seen this company now and the resources they have available to them. In their entire story, my brother was able to do everything he has done while acting alone."

"I have investigated more crimes than I can remember," he went on, "and I have seen a lot while working the streets and investigations. I am having a hard time understanding how all this is coming down on one man."

A Brother's Appeal

When Joe Marak left the U.S. Army Special Operations Command at Fort Bragg, North Carolina, he moved in with his brother, Gary Marak, a Sergeant in the Grand Junction Police Department in Colorado. Before a federal judge sentenced Joe to 72 months in prison, Gary wrote this letter asking for leniency and detailing what he saw of his brother's involvement with Skedco. Gary wrote that Joe regretted having taken money from Skedco while working for the government, and questioned why one man alone was being punished for this crime.

WWeek 2015