U.S. Indicts Five in Iraq Fraud
The Justice Department has announced the first criminal indictments relating to contracting fraud in Iraq in what one official described as a "B-grade" plot, involving millions of dollars in bribes, gifts, kickbacks, and reconstruction contracts involving three senior active-duty Army officers, the spouse of one of the officers, and a U.S. contractor who owned and operated numerous companies in Iraq with ties to Romania.
Deputy Attorney General Paul McNulty said at a press conference that the Army officers and their coconspirators used Coalition Provisional Authority funds "as their own personal ATM machines," allegedly stealing millions of dollars from the CPA. The defendants and the unindicted coconspirators "rigged valuable reconstruction projects," McNulty said, "all the while helping themselves to cash, SUVs, luxury cars, jewelry, and other valuable items."
The investigation was sparked three years ago. The U.S. special inspector general for Iraq, Stuart Bowen, was sitting in his office inside the Green Zone, barely getting settled into his job, when a whistleblower, a U.S. official from the CPA comptroller's office in al-Hillah, about 50 miles southwest of Baghdad, walked in and told Bowen that some of his colleagues in the comptroller's office were stealing money from CPA funds. Bowen launched what he calls a "coordinated and rigorous investigation" by his office, the FBI, Immigrations and Customs Enforcement, and the Internal Revenue Service. For months, investigators pursued a maze of financial transactions through the Green Zone and in the United States and Romania.
Over a two-year period, McNulty said, the three Army Reserve officers conspired with three other people to rig the bids on contracts being awarded by the CPA. In all, they diverted nearly $8.6 million in contracts to one man, Phillip Bloom. One of Bloom's friends, Seymour Morris, also a U.S. citizen who operated a business in Romania, allegedly acted as a conduit.
In return for the contracts, said McNulty, Bloom "showed his gratitude" to the defendants and their coconspirators by "showering them" with gifts including more than $1 million in cash, luxury cars, a Cessna airplane, real estate, a motorcycle, jewelry, weapons, and future employment. The indictment unveiled today alleges that the defendants, in McNulty's words, "actually took bricks of stolen cash" and smuggled them into the United States. One defendant allegedly carried more than $300,000 and along with her husband, who also was named in the indictment, built a hot tub and deck in their home in New Jersey.
In all, the Justice Department said, the CPA fund lost $3.6 million in the bribery-kickback scandal but has so far recovered $2 million from the defendants. Some of the contracting work Bloom performed was legitimate, it said.
The department released a 25-count indictment, describing in minute detail the complex and audacious nature of the alleged scheme and revealing the relative ease with which the U.S. military personnel could siphon off millions of dollars in reconstruction funds, divert weaponry for their own personal use, and give lucrative reconstruction contracts to their buddies in exchange for gifts and kickbacks.
According to the indictment, three of the defendants, Col. Curtis Whiteford, Lt. Col. Debra Harrison, and Lt. Col. Michael Wheeler, were active U.S. Army Reserve officers, assigned to the CPA's office in al-Hillah. Harrison and Wheeler reported to Whiteford. The fourth defendant, Morris, owned and operated a Cyprus-based financial services business called Oxbridge Holdings Company Ltd. and lived in Romania. The fifth defendant, William Driver, is Harrison's husband.
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