Iraq War Supplier Faces $10 Million in Fraud Damages
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ALEXANDRIA,VA. – A federal jury yesterday 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,” the lead attorney for two whistleblowers who brought the civil suit on behalf of the government, Alan Grayson, said. “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.
Retired Brigadier General Hugh Tant III told the court that Custer Battles’ fraud “was probably the worst I’ve ever seen in my 30 years in the Army.”
General Tant testified that in one case, Custer Battles contacted to supply trucks to the military and provided vehicles that did not run and had to be towed to the site. When confronted, Mike Battles is said to have responded: “You asked for trucks and we complied with our contract, and it is immaterial whether the trucks were operational.”
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.
Under federal law, the government can be awarded triple the amount of alleged fraud.
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 American government.
Whistleblowers Robert Isakson and William Baldwin were former business associates of Custer Battles.
Jurors also awarded $230,000 in back pay to Mr. Baldwin, who was demoted by Custer Battles. The two whistleblowers 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.
