In the second half of the 20th century, the Wedtech Corporation became a profitable political showcase of sorts—an example of how a business could thrive with support for Reagan’s values. But in reality, it became a front for massive corruption. The company took on contracts it couldn’t fulfill and paid bribes to get them. Read on at bronx-yes.com to learn how this scheme emerged in the Bronx and how the story ended.
The Story of Wedtech’s Creation
The Wedtech Corporation was founded in the Bronx by John Mariotto, who initially manufactured baby strollers. His partner, Fred Neuberger, later joined him, and the company focused on securing government contracts for small businesses, particularly from the Department of Defense. Initially, Mariotto genuinely wanted to create jobs in the South Bronx. Wedtech began as a small defense contractor that took advantage of a federal program to support minority-owned businesses. The intention was noble, but over time, everything got twisted: the company began manipulating data to qualify for the program, and then to get lucrative government contracts.
Wedtech earned a good reputation as an employer in a socially and economically neglected neighborhood of New York. The company was praised for creating jobs, and even President Ronald Reagan publicly acknowledged its contribution, highlighting that thanks to Wedtech, many people in the Bronx avoided having to rely on welfare. John Mariotto was named the Small Business Administration’s Entrepreneur of the Year.
The Illegal Schemes
Wedtech received a significant portion of its defense contracts without open bidding, using a federal program that supported minority-owned businesses. However, most of the company was actually owned by Fred Neuberger, a man who had no connection to any government-recognized minority group. This technically disqualified Wedtech from receiving the program’s benefits.
To hide the fact that control of the company remained in Neuberger’s hands, Wedtech’s management falsified documents to make it seem as though Mariotto was the principal owner. But it was later revealed that John Mariotto, who was supposedly Latino, was actually of Italian descent. It turned out that these so-called pseudo-immigrants had simply fooled everyone. But that wasn’t the main problem. The real issue was that others followed suit.
When Wedtech went public, it gave some of its shares to law firms as payment for services. Among them was the firm Squadron, Ellenoff, Plesent & Sheinfeld, which employed relatives or were themselves members of the U.S. Congress—including Bronx representatives Mario Biaggi and Robert Garcia. They had hidden stakes in Wedtech and used their political influence to help the company secure government contracts.
Among the key figures in the scandal was also Major General Vito Castellano, a cousin of mobster Paul Castellano. He held high positions in the state capital, including Commander of the New York National Guard and Chief of Staff for Governor Mario Cuomo.
Eventually, the Wedtech company, which had become a front for a real theater of corruption, felt so confident and immune that it started operating at the White House level. It approached President Ronald Reagan’s press secretary, Lyn Nofziger, to get in touch with a public relations officer, future Senator Elizabeth Dole. Thanks to her intervention, the company was awarded a $32 million contract without bidding to supply small engines to the U.S. Army. This was just the first of a series of similar deals totaling $250 million.
The corporation reached a massive scale, expanding its “empire” each year. Behind the scenes were countless intermediaries, consultants, and politicians. Journalist Traub aptly described it this way:
“Fate seemed to have led Wedtech around the world with a lantern, looking for one more dishonest person.”
In the end, many participants in this story ended up behind bars. But Traub portrays the situation not just as a story of crimes—but rather as a drama of human weakness, self-deception, and naivete.
Charges Are Filed
But nothing lasts forever. The time came for Wedtech to pay the price. In 1987, a court in Manhattan filed charges against Mario Biaggi (a Democratic congressman from the Bronx), Stanley Simon (the former Bronx borough president), and Peter P. Neglia (the former New York regional director of the Small Business Administration).
By the end of Ronald Reagan’s second presidential term, the scale of the abuses at Wedtech had become so large that they could no longer be ignored. Congress appointed an independent counsel to investigate the case, which resulted in charges being filed against many individuals.
The key figures in the case were:
- Lyn Nofziger.
A long-time Reagan associate who announced the assassination attempt on the president in 1981. After resigning, he worked as a lobbyist and consulted for Reagan’s 1984 campaign. He was charged with violating ethics rules for lobbying on behalf of Wedtech within a year of leaving government.
- Edwin Meese.
In 1982, while serving as White House Counsel, he supported Wedtech in communications with the Pentagon. In 1985, he invested over $50,000 with the company’s financial advisor, Chinn, and earned nearly $40,000 from speculative stock transactions.
- E. Bob Wallach.
A lawyer and long-time friend of Meese. From 1981 to 1982, he sent Meese numerous requests regarding Wedtech. He later received over $1 million from the company in cash and shares.
- W. Franklin Chinn.
An investment consultant and director of Wedtech, whom the company later accused of financial fraud totaling over $1.14 million.
- James E. Jenkins.
A former deputy to Meese, whom Nofziger approached about a Wedtech contract. He led negotiations at a White House meeting with army representatives and later became Wedtech’s representative in Washington.
- Michael Cardenas.
The former head of the Small Business Administration. He claimed that the White House pressured him to secure a contract for Wedtech in 1982.
- Congressman Mario Biaggi.
Along with his son, a legal partner, Stanley Simon, and company founder John Mariotto, he was charged with racketeering, extortion, and bribery. Biaggi’s son’s law firm received $225,000 from Wedtech.
- Clarence M. Mitchell III.
The former Maryland state senator. He, his brother Michael, and his uncle Parren Mitchell were accused of conspiring to obstruct an investigation. Michael’s law firm received $110,000 from Wedtech.
The Corporation’s Collapse
In total, more than 20 officials of various levels were convicted in connection with the Wedtech case. However, some of these sentences were overturned in 1991 on appeal after it was revealed that the prosecution’s key witness—former Wedtech president Anthony Guariglia—had given false testimony.
Guariglia’s testimony was crucial, as he was the one who directly linked the defendants to the corruption scheme. He had made a deal with investigators and pleaded guilty to lesser crimes. However, it later came to light that Guariglia had lied in court, denying his gambling addiction—despite evidence, including markers for $65,000 from a casino. The appellate court ruled that if the jury had known about this, they might have questioned all of his testimony.
The sentences overturned included those for E. Bob Wallach, who had been sentenced to six years in prison and a $250,000 fine, Franklin Chinn, who had been sentenced to three years and a $100,000 fine, and several other defendants in the case.
After the decision was announced, Wallach said:
“The bright streak in the dark cloud of the last four years is how my friends and members of the profession understood me, believed in me and realized that the system had been corrupted by a series of circumstances that elevated politics and ambition to such a high priority that it caused the system to break down.”
But most of the sentences were still carried out, and many participants in the clever schemes operating under the cover of Wedtech ended up behind bars. One of them was Bronx Borough President Stanley Simon.
Despite Wedtech’s bankruptcy and the massive scandal, the system was never fully reformed.