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George Allen: The Million Dollar Cover-Up Man

October 10, 2006

Bloomberg News today shed more light on Republican Sen. George Allen's failure to disclose stock options in the Virginia-based Xybernaut Corporation. Allen repeatedly claims the stocks were “worthless” and thus did not need to follow Senate ethics rules. But, according to Bloomberg, they “were worth as much as $1.1 million at one point.”

After first helping Xybernaut as Virginia’s governor, George Allen was rewarded handsomely with a spot on its board of directors and was granted stock options worth as much as $1.1 million at one point. Allen continued to help Xybernaut when he came to the Senate, even while he owned their stock. Xybernaut collected $2 million in federal contracts yet George Allen won't say what he did on behalf of the company. Given these circumstances, George Allen owes it to Virginians to immediately disclose his correspondence with the Department of Defense on behalf of Xybernaut.

“Senator Allen can’t seem to keep his stories straight about his stock options,” said Democratic National Committee Press Secretary Stacie Paxton. “First, he didn’t disclose the options, then he said they were worthless. Today, it was revealed that the stock was worth more than $1 million dollars at one point. George Allen now admits that he helped Xybernaut but he won't say how, despite the fact that the company received $2 million in federal contracts. What else is Senator Allen hiding? Americans are tired of the corruption and cover ups Republicans are fostering in Congress. Democrats are offering a new direction which includes an honest and ethical government that upholds the integrity of its people.”

XYBERNAUT: As Governor, Allen Announces Contract Between Xybernaut and SBS During European Trade Mission. Xybernaut announces that the highly successful trade mission in Stuttgart, Germany, sponsored by Virginia's Governor George Allen resulted in an expanded marketing relationship with Germany's Software-Zentrum, Boeblingen/Sindelfingen (SBS Software Center). [Xybernaut Release, 6/25/97; VEDP, 6/17/97]

• June 25, 1997 - Xybernaut Member of Corporate Board Praised Allen for Strong Support. "The support given to Xybernaut by the Commonwealth, and especially Governor Allen has greatly aided the rapid consummation of both manufacturing and software capabilities that we believe will allow Xybernaut and its 'see- and-speak' technology to dominate the computer marketplace," said Dr. Steven A. Newman, a member of Xybernaut Corporation's Board of Directors. [Xybernaut Release, 6/25/97]

XYBERNAUT: Allen Joins Xybernaut's Board of Directors. In a release, Xybernaut's President said, "We welcome Governor George Allen to the Xybernaut team. He quartered Virginia as it climbed the top ten list of high technology states. Now he will be in Xybernaut's huddle, as we kick off our latest product, the MA-IV." [Xybernaut Release, 8/11/98]

• Allen Represented Legitimacy and Access While On Xybernaut Board. "Xybernaut was always clear about why its management wanted Allen on the board. He represented legitimacy and access. 'George Allen is on Xybernaut's board of directors and is very helpful in dealings with government,' company CFO John Moynahan wrote to the Xybernaut Corp. Yahoo! Group, an investor forum, in 1999. Moynahan repeatedly touted Allen - 'former governor of Virginia and candidate for U.S. Senate' -- on the message board as one of the company's strengths." [American Prospect, 9/12/06]

XYBERNAUT: Allen Owned Options to Buy 110,000 Shares of Xybernaut Stock. Allen reported owning Xybernaut stock on his financial disclosure forms from 2000 through 2005. In 2001, he owned options to purchase 110,000 shares of Xybernaut stock. [Senate Financial Disclosure Reports for George Allen, 2001-2005; AP, 10/8/06]

• Xybernaut Looked Forward to a "Staunch Supporter" in the Senate. On November 8, 2000, the day after Allen won his Virginia Senate race, Moynahan informed the Yahoo! Group investors about his pending departure, saying, 'While his contributions to the board will certainly be missed, I believe that our shareholders are better off with a staunch supporter of Xybernaut in the U.S. Senate.'" [American Prospect, 9/12/06]

• And They Got One: Allen Weighed in on Behalf of Xybernaut with the Department of Defense While He Owned 110,000 Shares of Xybernaut Stock; Company Got $2 Million in DOD Contracts in 2004. Allen admits helping Xybernaut while in the Senate, in December of 2001. At the request of the company, Allen asked the Army to resolve a lingering issue with Xybernaut. At the time, Allen still owned his options to buy 110,000 shares of Xybernaut stock, which could be affected by any new federal contracts. Allen's office refused to release the correspondence relating to the request. In September 2003 the U.S. Defense Department announced $2.13 million in contracts to buy the company's wearable computers. [AP, 10/8/06; Bloomberg, 10/9/06]

• Allen Says Xybernaut Stock Options Were "Worthless" But Were Actually Worth $1.1 Million. "Stock options that Senator George Allen described as worthless were worth as much as $1.1 million at one point. SEC records showed that Allen owned 60,000 options at the end of 1999, worth $38,200. For 2000 and 2001, he filed amendments to his annual disclosures stating that he owned Xybernaut options." [Bloomberg, 10/9/06]