Update [2005-4-1 16:45:29 by susanhbu]: JUST IN: Now let’s see if they follow through. The previous diary material remains below. The story from AP/Newsday:
By MATT KELLEY, Associated Press Writer
April 1, 2005, 5:53 PM EST
WASHINGTON — Contractors for the former Coalition Provisional Authority in Iraq can be sued in U.S. courts under an anti-war-profiteering law, the Justice Department contended in a federal case Friday.
Government lawyers said the federal False Claims Act applies to contracts issued by the CPA, which ran Iraq from shortly after the 2003 invasion until it handed over power to an interim Iraqi government last June.
Although much of the money the CPA used was seized from the former government .. U.S. government or military workers distributed it, making fraud against the CPA equal to fraud against the U.S., … Justice Department lawyers said in a court brief.
The brief came in response to a judge hearing a fraud lawsuit against the security firm Custer Battles LLC. …
Custer Battles [argues] it cannot be sued in the U.S. for actions involving the use of seized Iraqi funds … [its lawyers] said U.S. officials originally had declined to take the case against Custer Battles for the same reason.
The Justice Department brief offered no opinion on whether Custer Battles defrauded the CPA. But it did say the False Claims Act is an important tool for “rooting out any fraud that might have occurred during the occupation of Iraq.”
[The] brief sided with lawyers for the former Custer Battles employees, saying that the U.S. law applied because U.S. officials were handing out the money. Victor Kubli, one of the former employees’ lawyers, said the brief raises the “pregnant question” of why U.S. officials originally said CPA contracts were not covered by the U.S. anti-fraud law.
A lawyer for Custer Battles said Friday he believes the False Claims Act only applies to contracts using money from the U.S. Treasury, not the Iraqi funds used in the contracts … the Justice Department “is attempting in this brief to extend the False Claims Act far beyond its intent and purpose.”
The former employees, Robert Isakson and William Baldwin, sued under a federal law that allows citizens to sue on behalf of the government when they suspect fraud in federal contracting. Should they win, those who bring the lawsuit can get up to 30 percent of the money recovered. …
Isakson and Baldwin say they were threatened and fired when they objected to Custer Battles’ business practices. The lawsuit says Custer Battles billed the CPA for work that was never done, employees who were never hired and equipment which never arrived.
Custer Battles has denied any wrongdoing and has asked the court to throw out the case.
The company and the former employees have until April 15 to file briefs with U.S. District Judge T.S. Ellis III, who will then decide whether to dismiss the case.
[The] brief also gives details of how the United States moved money to Baghdad to fund the fledgling Iraqi government and pay contractors.
A dozen U.S. military flights carried about $10.3 billion in cash to Baghdad during the time the CPA was governing Iraq, the brief said. That currency was deposited in the Central Bank of Iraq. The CPA used wire transfers to make another $6 billion in payments. … (Emphases mine.)
Previous diary information:
I have a computer screen full of articles about the unbelievable fraud committed by Custer Battles against U.S. taxpayers, but there is NOT ONE story about today’s looming deadline in the New York Times, the Washington Post, the LA Times, or any wire service. Last week’s Newsweek article, “Follow the Money,” is subtitled:
“Watchdogs are warning that corruption in Iraq is out of control. But will the United States join efforts to clamp down on it?”
Why does this matter so much? Find out below:
Jason McLure’s March 4 article in Legal Times, “How a Contractor Cashed In on Iraq,” which goes into the legal complexities of this and other such cases, notes the importance:
One senior Pentagon lawyer told Legal Times that a number of other suits have been filed that will turn on this exact question.
Should the court decide that the False Claims Act does not apply to CPA contracts in the Custer Battles case, procurement attorneys say it’s unclear how violations of those contracts can be prosecuted in other cases.
In other words: The American taxpayer gets screwed. Again.
The solitary string-on-our-finger “reminder” to nudge us, the people, and the Justice Dept. that today IS the day came from a news story — “U.S. Excuses Mercenary Firm Accused of Defrauding Taxpayers” — found at The NewStandard News, an independent Internet news service:
“Assuming the Justice Dept. fails to sign on to a suit against private paramilitary firm Custer Battles filed by two former associates, the government will be officially ignoring a claim of some $50 million in scammed funds.”
Not that most folks at BoomanTribune or Daily Kos need a primer, but it’s good to review the allegations of the whistleblower case.
Who are these Custer Battles dudes?
The Virginia-based company is headed by Scott Custer, a former Army Ranger, and Mike Battles, a former CIA employee, who was fined by the Federal Elections Commission for misrepresenting campaign contributions during a failed race for Congress in Rhode Island in 2002. Battles has also been a commentator for the Fox News Channel. …
What shenanigans did they pull? From Legal Times:
Documents unearthed as part of a whistleblower suit against Fairfax, Va.’s Custer Battles reveal for the first time the extent to which the defense contractor is accused of gouging the Coalition Provisional Authority, which governed Iraq following the U.S. invasion of the country in 2003. …
Some more allegations:
- “Frank Willis [SEE PHOTO BELOW], a former CPA [Coalition Provisional Authority] official … testified before Congress in February that he handed $2 million in shrink-wrapped $100 bills to a representative from Custer Battles without properly accounting for the cash award.”
- A lawsuit “claims that Custer Battles double-billed the CPA for salaries and that they repainted forklifts they found at Baghdad airport before leasing them back to the US government at a rate of $1,000 per month per machine.”
- Billed “the Coalition Provisional Authority $157,000 for a helicopter pad that in fact cost $95,000.”
- The Air Force, “which suspended the Custer Battles contract, wrote a memorandum citing suspicion of repeated fraud. The Air Force … calls the evidence of company misconduct ‘of so serious or compelling a nature that it affects their present responsibility to be government contractors or subcontractors.'”
- Memoranda “written primarily by two company managers, charged that the security firm repeatedly billed the occupation authorities for nonexistent services or at grossly inflated prices.”
Writes Max Boot — a weekly columnist for The Los Angeles Times and Senior Fellow in National Security Studies at the Council on Foreign Relations — in “The Iraq War’s Outsourcing Snafu,” an op-ed on March 31:
Let us stipulate that most contractors are upstanding, hardworking individuals who perform valuable and dangerous work. At least 175 have been killed and 900 wounded in Iraq. But their labor has been tarnished by scandals and snafus too numerous to ignore.
Oil-services giant Halliburton and the security firm Custer Battles, among others, have been accused of swindling U.S. taxpayers. Other contractors are said to have been simply ineffective. Vinnell Corp. did such a poor job of training Iraqi army recruits that half of its first battalion walked off the job. The Army had to step in to perform the work itself.
Other companies have been accused of human rights violations [an important section worth a separate diary by someone]: …
The most valued contractors are experienced former U.S. Special Forces operatives whose training cost the Pentagon hundreds of thousands of dollars. They are being lured out of uniform by the promise of making $500 to $1,000 a day. (If they stay in the service they’ll be lucky to make $140 a day.) And where does that money come from? Pretty much all the foreign firms in Iraq are paid by the U.S. Treasury. So the government is in competition with itself for its most skilled and hard-to-replace soldiers. Does this sort of outsourcing really make sense?
Bottomline: Today’s deadline sets a precedent. Will the Justice Dept. go after any contractors who have bilked the U.S. Treasury of millions and millions of dollars?
“Coalition of the billing,” indeed.
CAPTION: “‘Fraud-free zone’: Willis (center) in Iraq with two CPA [Coalition Provisional Authority] colleagues, preparing to pay a contractor in 2003” (Newsweek) Note: Willis testified before Congress, as noted above, about the allegations of corruption and pay-offs.
Absolutely top notch diary as always Susan… I swear I wonder how you have time to consistently write such excellent articles.
I just want to add that CB planes have been spotted flying to Lebanon with gigantic sums of Iraqi money, probably some of that missing 9 BIL. BTW they were buying weapons with it..
Pax
OMG. Have you written about that, Soj?
P.S. You have some new fans among my friends who’ve discovered you via BoomanTribune. They’re in awe of your blog.
No I’ve never written about CB specifically. Where I get tied into all of this is that last summer, around July or so, thanks to PT I believe (god rest her soul wherever she is), I was reading Le Monde and stumbled onto a bizarre fact.
That bizarre fact is that a man named Viktor Bout is running one of the largest and most complicated illegal air-freight businesses in the world and one of his biggest customers is the good old USA.
Most of the freight he runs is guns, mortars, assault weapons, missiles and even the odd tank or two. His network is so large and so extensive (and so EFFICIENT) that many of his customers are the governments of countries.
I’m not one of those “plane spotter” folks but after I began tying some of his activities together, I found out that a much better plane spotter, the Yorkshire Ranter was able to match many of Bout’s planes and therefore connect the dots on who he is supplying.
It was the Ranter who discovered that one of Bout’s planes arrived in Lebanon sporting the Custer B logo under its cockpit window. Go through his archives (this year) and you’ll find out the name of the Iraqi “government”‘s Lebanese dealer and all the details on how much money (cash) was flown in via CB planes etc.
I bet you most people are probably saying Viktor who? And yet this guy is running a FedEx or UPS size business, except he ships in guns and tanks and ships out diamonds and enormous sacks of cash to hot zones all over the world (including those picayune wars in Africa we tend to ignore).
The original Le Monde story that I read was about how Britain and the U.S. quietly wanted to take Bout off the UN ban list (for his activities in Liberia) and France was putting down their diplomatic foot about it.
A WHOLE lot of planes bringing in bullets and Humvee armor and the rest into Baghdad int’l are Bout planes, willing to dodge the risk of missiles for the enormous paycheck.
Pax
And thank you for the lovely compliment. I’m one of the idle poor.
Ah, but you are rich in time — and obviously using your idleness to good effect!
I remember the $650 million in cash found in a house early on. Covered by just about all media outlets. This caught my eye:
Uh, what records? We didn’t find any records ’cause the looters got ’em. Darn.
Just read a different article in Corpwatch with a focus on the Judge’s insistence on resolving the “who’s on first” question. The Legal Times article does not declare final filing date for the DoJ brief:
Grayson, the whistleblowers’ attorney and a partner in McLean, Va.’s Grayson & Kubli, says that the Justice Department declined to join the suit because of uncertainty over whether the CPA was a part of the federal government.
The court is currently considering that question, and Ellis has asked the DOJ to file a brief stating the government’s view of the question. On Feb. 25, the Justice Department told the court it would file a brief by April 1.
I share your interest in the topic, but have just spent an hour trying to nail down that April 1 date: no luck. Read your references, and found the CorpWatch article cited above. All the articles are consistent on the facts of the case, and all distill the issues down to one: was the CPA an official U.S. government agency?
Based on what I’ve read, and Judge Ellis’ insistence on an answer, I’m hopeful April 1st isn’t a “date certain”. Doesn’t change the facts, but would definitely lower the blood pressure.
I’m glad you looked into this so thoroughly. The Newsweek piece says the “judge’s latest deadline” — not the Justice Dept.’s — is April 1. He can probably issue another deadline (?) but it is worrisome that the Justice Dept. is stalling at all.
And it’s also apparent that the Justice Dept. is not very keen on pursuing this.
I did not get into the denser legal issues because those are beyond my ken. But I know enough to realize that dense issues can be used to obfuscate and delay.
I don’t think Justice is trying to confuse the issue – they honestly have nowhere to go:
Definitive answers about how the CPA was established, under what authority, and by whom within the U.S. government have yet to be found. Materials produced by the Bush administration alternately deny that it is a federal agency and state that it is.
Can’t nail jello to a wall.
Baloney, I fear. I think they’ve concocted the Jello, to continue the analogy, in order to protect their benefactors. Not to protect Custer Battles necessarily but all the other, larger contractors from whom all their blessings flow — monetary and otherwise.
What they are doing here is the SAME thing they are doing with the Guantanamo and other detainees: They are doing everything in their power to circumnavigate any light that might be shone on their deeds by U.S. law and judicial proceedings.
They have successfully nailed jello to a wall. Hope the DoJ lawyers still have their jobs on Monday.
Viktor Bout, check the Center for Public Integrity’s The Merchant of Death
I can’t find any company called Custer Battles in Virginia. I did find Custer Battles LLC in Delaware. They were incorporated on 10/05/2001 and they registered through the Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, DE 19801 (County: NEW CASTLE). According to a filing on 10/4/2002, their former name was BLUE SKY STRATEGY CONSULTING, LLC.
here
David Wood founded Blue Sky after career service as an Army officer, including extensive special forces experience. He has worked over many years with government departments, police and security forces. He has also advised NGOs, corporates and governments in security risk management and crisis management around the world.
Robert Partridge Group Commercial Director
Robert Partridge manages Blue Sky’s commercial operations. Having run his own business in the media field for 15 years, Robert also has extensive experience in media, communications and crisis management in many of the world’s `hotspots’.
Dominic Cockram Risk Management Director
Dominic Cockram runs Blue Sky’s corporate security consulting and risk management operations. He is a highly experienced consultant with a history of producing successful risk management strategies for clients engaged in large, complex and high risk projects. He has considerable expertise in public/private sector (PFI and PPP) projects.
Piers Gorman Projects Director
Piers Gorman is responsible for the deployment of Blue Sky’s project teams and consultants operating across the globe. He has experience of managing large and complex teams in various locations worldwide including the Balkans, the Middle Eastern countries, Africa and the Far East.
Jeff Jenkinson MBE Technical Services Director
Jeff Jenkinson is one of the UK’s leading specialists in security, surveillance and counter-surveillance systems, who is reponsible for Blue Sky’s technical services.
Highly experienced in the financial and commercial sectors, Jeff has worked at high level with clients across Western and Eastern Europe, in the Middle East and in Africa. Previously he spent 14 years working with UK special forces and the National Criminal Intelligence Service.
Julian Snell Director, Incert Recruitment
A graduate in International Relations, Julian was formerly Chief of Staff for the Army’s Recruitment Group, with operational and managerial responsibility for personnel sourcing, selection and employment.
From 1999 to 2002 he worked in executive search, specialising in the communications and technology sectors, latterly with the global consultancy Harvey Nash. He joined Blue Sky in November 2002 to help establish Incert Recruitment, the group’s specialised placement solutions operation focusing on the wealth of resources available within the ex-Service community
I found this part interesting from the article you linked.
I can’t quite put my finger on it but SAIC keeps coming up on many posts that I read. Cross-posted from DKos, gnat writes
Army Gen. Wayne Downing, formerly of the NSC
Bobby Ray Inman; former CIA Director
Retired Adm. William Owens, former vice chairman of the Joint Chiefs of Staff
Robert Gates, another former director of the CIA.
I know this is tin-foil hat territory, but I can’t help but wonder if some of the missing 9 billion dollars was used for Bush’s 2004 re-election campaign. I think Custer Battles may be playing just a minor role in war-profiteering. Is there anyway we can find out all of the contracts that have been awarded to companies in the Iraq War?
Go for it, and write a diary about it…. I’ll read it! See also: corpwatch.org. I taped Chaterlee who was on CSPAN2 / BookTV this morning. I couldn’t listen much, so hope I got most of it on tape. Maybe (?) CSPAN has a video?