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Contractor ordered to pay $10M


Published: Fri, March 10, 2006 @ 12:00 a.m.


The total amount to be paid is likely to surpass $10 million.
ALEXANDRIA, Va. (AP) -- A federal jury Thursday ordered military contractor Custer Battles to pay nearly $10 million in damages and penalties for defrauding the government on its work in Iraq.
"Americans are fighting and dying in Iraq," said Alan Grayson, the lead attorney for two whistle-blowers who brought the civil suit on behalf of the government. "Companies like Custer Battles go there with the idea of stuffing their pockets with cash. This jury of eight people heard the evidence and were repelled by it."
The jury's decision followed a contentious three-week trial featuring charges that Custer Battles used fake invoices, forgery and shell companies in the Cayman Islands to run up millions of dollars in profits.
The focus of the case was a $3 million advance Custer Battles received from the Coalition Provisional Authority, the U.S.-led agency that ran Iraq after the war, to build three camps to distribute Iraq's new currency.
What law allows
Under federal law, the government can be awarded triple the amount of alleged fraud.
The whistle-blowers are also entitled to various expenses and legal fees that are expected to push the total amount the defendants must pay beyond $10 million.
Defense attorney David Douglass said his clients did nothing wrong.
"In our view, they billed the appropriate amounts," he said.
He also said he believed the legal question remains as to whether the Coalition Provisional Authority was an agent of the U.S. government.
Whistle-blowers Robert Isakson and William Baldwin were former business associates of Custer Battles.
Jurors also awarded $230,000 in back pay and penalties to Baldwin, who was demoted by Custer Battles. The two whistle-blowers can receive a fraction of the damages the government was awarded.
Former Army Rangers Scott Custer and Michael Battles co-founded Custer Battles, which had offices in Rhode Island and Virginia.
Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


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