- The Washington Times - Wednesday, February 15, 2006


A company founded by two former soldiers devised a scheme of shell companies and fake invoices to defraud the U.S. government of millions of dollars in Iraq, a federal jury was told yesterday.

“Some people think they can get away with anything,” lawyer Alan Grayson told a jury in the case of two whistleblowers suing the contractor, Custer Battles LLC.

“When you hear the crude and crass … audacious scheme that the defendants executed,” Mr. Grayson said, “you will ask yourselves: ‘Did they really believe they could get away with this?’”

Attorneys for the company countered that there was no fraud — but rather confusion and misunderstandings over contracts signed in chaotic, post-invasion Iraq run by overwhelmed and inexperienced occupation authorities.

The experience of Custer Battles “was critical to success in Iraq” because they had the contacts and know-how to do things that the U.S. military could not, said David L. Douglass, attorney for the company founded by former Army Rangers Scott Custer and Michael Battles.

Lawyers were making opening statements in the courtroom of U.S. District Judge T.S. Ellis in suburban Washington.

Whistleblowers Robert Isakson and William Baldwin are suing their former employer, Custer Battles, accusing company officials of defrauding the U.S. government of about $50 million while doing security work in Iraq.

Their attorney, Mr. Grayson, said that during the trial he will show the jury “dozens and dozens of fake invoices from sham companies” set up in the Cayman Islands by Custer Battles.

Mr. Grayson said one of the scams that the company pulled was providing 16 trucks on lease to the U.S.-led Coalition Provisional Authority — vehicles that had to be “dragged into the military base because they did not function.”

When the military protested that they did not work, a company official responded that they had been asked to provide trucks, “not trucks that work,” Mr. Grayson charged in opening arguments.

As part of a contract to provide security at Baghdad’s airport, the company took forklifts abandoned by Iraqi Airways, painted them to cover the airline’s name, and then charged the coalition thousands of dollars on fake invoices, claiming it was leasing the equipment, the whistleblowers claim.

But Mr. Douglass — Custer Battles’ attorney — said the evidence will show that “no false claims were submitted.”

He said Mr. Battles, a U.S. Military Academy graduate and former CIA employee, and Mr. Custer, who served with the 101st Airborne Division, provided valuable services in Iraq.

He said his clients “are the victims of confusion” and misunderstandings about the contracts that the company had, and some resentment among employees.

“This is not a case of war profiteering,” said Barbara Van Gelder, attorney for a third Custer Battles official, Joseph Morris. “This is a simple case of payback and self-protection.”

Individuals may sue on behalf of the government when they have knowledge that the government is being defrauded. The law lets the government collect triple the amount of any proven fraud, and the whistleblowers can receive up to 30 percent of the money.

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