Sources said that Kundra is not implicated in the alleged conspiracy or under investigation, but administration sources told Rediff India Abroad that Kundra was "on leave from his White House job (where he began work last week after serving as a consultant to the Obama transition team) "until further details of the case become known and the investigation completed".
White House spokesman Robert Gibbs and DC Mayor Adrian Fenty's office acknowledged that the FBI had informed them before the raid took place, but Gibbs, asked for a reaction referred all questions to the Department of Justice in which the FBI is housed.
Asked if the President had talked to Kundra in the wake of the FBI raid of his former office and if he were confident that he is not involved in this alleged conspiracy in any way, the spokesman said, "As you know, this is an ongoing investigation and the questions about the investigation, I would point you to the Department of Justice."
But, on being pressed, Gibbs acknowledged, "Obviously, it's a serious matter."
Asked if the White House had any concerns about Kundra, Gibbs reiterated, "Again, I would (direct) questions about the investigation to the Justice Department."
When reporters persisted and asked him "if there is any change in the way how the White House is trying to look at their appointments and things because of this situation," he shot back, "The answer is no."
The Indian entrepreneur arrested, Sushil Bansal, 41, of Dunn Loring, Virginia, a suburb of DC, is president and CEO of Advanced Integrated Technologies Corporation, whose company over the past five years had received more than $13 million in contracts from the DC government for the purchase of computers and software for its various agencies.
Arrested along with Bansal, was Yusuf Acar, 40, Acting Chief of Security in OCTO, who worked under Kundra and according to the FBI affidavit had ordered purchases from Bansal's firm and even though only half the products and services ordered been delivered, had falsified invoices and paid full price and split the difference with Bansal.
The FBI sting operation that included wiretaps also alleged in his affidavit that Bansal, a former employee of the DC government, had also billed the DC government for 'ghost' employees, who were paid out by Acar, and as a quid pro quo had gotten Bansal to hire his wife as a consultant in his company for an annual salary of over $100,000.
Sources said that the FBI had been helped in conducting the sting by an informant in OCTO, who had been invited to be part of the conspiracy, but instead had called the feds and blown on the whistle on the alleged racket.
Acar, a native of Turkey,who earned $127,000 a year, and Bansal, who is not a US citizen but a H-1B visa holder, were arraigned in DC Federal Court on March 12 afternoon, and Acar was held in jail without bail as he was a flight risk--since he had been heard on the wiretaps saying that he intended to flee to his homeland since he felt the conspiracy would be uncovered.
Bansal was released on his own recognizance. Both were asked to surrender their passports, and Acar had a preliminary hearing on March 17 and Bansal ordered to appear in court on April 21. He was also ordered not to engage in any overseas financial transactions.
Both their homes were raided and computers and other material taken away by FBI agents even as about another dozen FBI agents aided by technical experts executed the search warrant in Kundra's old office after the employees of OCTO who work in the 9th and 10th floor in the building at One Judiciary Square in downtown Northwest Washington were asked to go home for the day.
Sources, continued to maintain that there was no indication as of now that Kundra was involved in any way in the alleged conspiracy or was aware of it, but other sources said that FBI agents had visited his DC condo building to speak to him, but had gone away after being told Kundra was not in.
At the time of the raid, Kundra was delivering a speech in downtown DC at an annual government technology conference and expo, and the topic of his speech was about changing the way government purchases IT goods and services from vendors.
Sources said that several other individuals and businesses were also part of the alleged schemes and had been mentioned in the FBI affidavit, but not by names but identified only by their initials.
According to AITC's website, it had received OCTO contracts on May 7, 2008, June 5, 2008, August 5, 2008, September 9, 2008, and October 3, 2008, and included business from the DC Department of Motor Vehicles, Net Development Support, and Peoplesoft Consulting Support, and also for the purchase of McAfee licenses.
It also said that the Association of Indians in America, Washington, DC Chapter had on August 10, 2008, presented Bansal with the Entrepreneur of the Year Award.
AITC said Bansal was selected for the award "for his outstanding contribution in the field of information technology and to the growth of AITC".
The company said that "the ceremony was attended by over 100 people, including a very senior representative from the Embassy of India in Washington,DC," and at the event Bansal had "emphasized the importance of innovation to run a successful IT company."