Ashland-based Sky Research Inc. is under investigation for allegedly using federal grant dollars to fund personal vacations and fulfill bribes made to a government official in exchange for padding bids, according to documents unsealed last week in U.S. District Court in Eugene.
The aerial mapping company was awarded about $160 million in federal contracts from 2004 to 2011, the span in which alleged payments were made to a contract program manager with the U.S. Army Corps of Engineers in Omaha, Neb., according to two 40-page affidavits filed in support of search warrants.
Federal agents have seized thousands of payroll, tax and personal finance documents as well as digital data and other items from the Ashland business and residence of its owners, Sky and Anne Sky.
No charges have been brought against the Skys or Jerry Hodgson, the Army Corps official whom the couple allegedly dealt with.
Hodgson maintained a close relationship with the Skys, who allegedly hired three personal assistants over a span of eight years to fulfill sexual favors for him, the affidavits state.
A confidential informant who contacted the U.S. Army Criminal Investigation Command (known as CID) in September 2010 sparked the investigation, according to the affidavits.
The Eugene Register-Guard reported late last week that CID Special Agent Derek Lindbom, an investigator on the case, said Hodgson acknowledged having sexual relationships with the assistants. Lindbom was out of the office Tuesday, but CID Special Agent Dan Olson said the investigation was ongoing.
According to one of the affidavits, filed March 12 by former CID Special Agent Jason Loeffler, multiple Sky Research employees allegedly knew that Hodgson was fixing bids for the company and providing insider information about how much to bid.
Hodgson's alleged bid massaging was so well-known within the company that some employees used the term "Jerry-ing it" when referring to an upcoming contract the company intended to fix.
Emails seized by federal agents allegedly show Hodgson and the Sky Research employees discussing before a bid opens how much money the company would like to receive to fulfill an upcoming contract in order to exaggerate the size of the project and overdraw tax dollars, according to the March affidavit.
Launched 30 years ago in Kerby, Sky Research moved to Ashland in 1997. The company specializes in aerial mapping, geophysical surveys and remote sensing, and also develops equipment for detecting unexploded material. Those products are put to use in decommissioned military ranges and other areas that harbor the threat of live munitions.
The company maintains offices in Boston, Denver, Hanover, N.H., Vancouver, B.C., and Brisbane, Australia, its website states.
Sky was formerly known as William Henry Hovelman Jr., according to a 1989 Josephine County divorce record.
According to an affidavit filed July 2 by Lindbom, about 99 percent of Sky Research's contracts are with the U.S. government.
Hodgson oversaw eight contracts totaling more than $159 million awarded to Sky Research, Lindbom's affidavit states; most of the projects are outstanding, but the federal government has paid the firm at least $21.9 million to date, it said.
"The Corps of Engineers takes allegations of violation of the procurement process and misuse of public funds very seriously," said Tom Tracy, deputy district counsel at the Omaha office of the U.S. Army Corps of Engineers. "It brings us into question with public trust."
Tracy said he could not provide any details about discussions between Hodgson and the Army Corps' Omaha office since the allegations have surfaced.
"These are serious allegations, and that's why the U.S. Army has this ongoing investigation," he said. "We are committed to being good stewards of taxpayer dollars on all contracts."
Hodgson was not available for comment Tuesday, according to the Omaha office.
Neither Sky nor his wife, who live in the 1000 block of East Main Street, returned phone messages left with their offices Tuesday.
In March, authorities seized property from Sky Research's Ashland facility, at 445 Dead Indian Memorial Road, a hangar at the Ashland Municipal Airport and one of the company's hangars in Englewood, Colo.
U.S. District Magistrate Judge Thomas Coffin signed the search warrant request March 12 for the Skys' residence in Ashland and for the firm's offices.
Coffin signed another warrant July 2 ordering Google to release information regarding an email account Hodgson allegedly established. Hodgson used it to communicate with Sky Research officials, reverting from his government email account, after having learned he was under investigation, Lindbom's affidavit states.
The two affidavits cite bribery, false claims, conspiracy to defraud the United States, wire fraud and unlawful release of sensitive procurement information as suspected crimes.
Lead prosecuting attorney on the case, Sean Hoar, of the U.S. Attorney's Office in Eugene, said he could not comment.
Sam Wheeler is a reporter for the Ashland Daily Tidings. He can be reached at 541-499-1470 or firstname.lastname@example.org.
Correction: The headline on this story has been updated to reflect the facts of the case more accurately.