Obama Defends Budget, Furor Grows Over AIG

It was the latest case of damaging information emerging publicly about one of Obama's choices after he announced their appointment or nomination. A few have withdrawn, including former Sen. Thomas Daschle, nominee for health and human services secretary; Gov. Bill Richardson, commerce secretary nominee, and Nancy Killefer, appointed as the White House's chief federal performance officer.

The White House would not immediately say whether it knew of Vivek Kundra's guilty plea before announcing his appointment. Kundra, now 34, pleaded guilty in Maryland District Court in Rockville, Maryland, to theft of less than $300 on Aug. 27, 1996. It was unclear what he stole.

Mafara Hobson, a spokeswoman for Washington Mayor Adrian Fenty, said she was confident Kundra is not a target of the investigation. Authorities said Yusuf Acar, the acting chief security officer under Kundra in the city's technology office, and technology consultant Sushil Bansal and unnamed others defrauded the city.