Custer Battles fined $10m on Iraq contract

March 10, 2006 at 11:49 PM
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WASHINGTON, March 10 (UPI) -- A jury has ordered Custer Battles to pay $10 million for fraudulently billing the government on Iraq reconstruction contracts.

The jurors in the federal courthouse in Alexandria, Va., found Thursday that Custer Battles, a military contractor, and its owners, Scott Custer and Michael Battles, had overcharged the government on a contract to replace old Iraqi currency with new bills, GovExec.com reported Friday.

They also awarded William Baldwin, one of the whistle-blowers who brought the case, $230,000 in back pay for being demoted after complaining about Custer Battles' billing practices.

Damages were calculated at $3 million, an amount that gets tripled under federal law. Other penalties also were added, GovExec.com said.

Under the False Claims Act, private citizens can bring cases against companies they believe have defrauded the government, even if -- as in this situation -- the Justice Department decides not to pursue the case. Baldwin and his fellow whistle-blower Robert J. Isakson are eligible to receive 30 percent of the damages. The remaining 70 percent goes to the U.S. Treasury.

Baldwin worked for Custer Battles in Iraq and also worked for DRC Inc., a contractor that worked with Custer Battles. Isakson is managing director of DRC.

Sen. Chuck Grassley, R-Iowa, questioned the Justice Department's decision not to take on the Custer Battles case. "The jurors in this case listened to the arguments and sent back a strong statement of intolerance for fraud, waste and abuse of taxpayer dollars. I remain concerned as to why the Justice Department chose not to join this case," he said in a statement e-mailed to reporters Thursday.

In the complaint they filed, Isakson and Baldwin accused Custer Battles of "war profiteering" that resulted in tens of millions of dollars of damage and the deaths of four company employees as the result of faulty trucks.

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