Saturday, July 22, 2006

Custer Battles Set Up Shell Companies To Get Around U.S. Ban

The defense contractor Custer Battles, which has been banned from receiving U.S. contracts in Iraq, is back in the news today.

Two former Pentagon officials, including an acting secretary of the Navy, have been accused of scheming with a banned American contractor to get lucrative rebuilding contracts in Iraq, The Associated Press has learned.

The contracting firm, Custer Battles LLC, was suspended two years ago by the military for submitting millions of dollars in fake invoices.

The charges come in a sealed federal lawsuit, a copy of which was obtained by The AP. It was filed by two whistleblowers - one of whom won a $10 million judgment in another suit when a federal jury agreed that Custer Battles had swindled the government.

The current suit names former acting Navy Secretary Hansford T. Johnson, former acting Navy Undersecretary Douglas Combs, and Custer Battles LLC officials including founders Scott Custer and Mike Battles, who were barred in 2004 after billing the government for work that was never done and for padding invoices by much as 100 percent. (...)

The new lawsuit contends Custer and Battles, both Army veterans with Washington political connections, tried to get around the suspension order by plotting with Johnson and Combs "to set up sham companies (thereby) concealing their ownership and control of those entities."

According to the suit filed in Virginia, the shell companies committed other illegal acts, including selling weapons on the Iraqi black market, creating a dangerous possibility that "insurgents could buy them and use them to attack U.S. soldiers."

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