Custer Battles

Custer Battles, LLC was a defense contractor headquartered in Newport, Rhode Island, with offices in McLean, Virginia. The company now appears to be out of business. At one time the company offered services that include security services, litigation support, global risk consulting, training and business intelligence, but had no background or track record in offering any of these services.^[1]

In June 2003, Custer Battles took its services to Iraq and became a minor contractor supporting the Coalition Provisional Authority and the U.S. government. In October 2004, the company was sued under the False Claims Act. As this was the first lawsuit concerning contractors in Iraq, the company received significant attention throughout the media. In March 2006, a jury ruled against Custer Battles, but the verdict was set aside by a District Court judge. That decision was appealed, and, in April 2009, the Fourth Circuit reversed the district court judge and reinstated the fine.

According to Iraq War documents leak, a Custer Battles convoy went on a shooting spree in Umm Qasr in 2004, shooting out the tire of a civilian car that came close, and firing five shots into a crowded civilian minibus. The shooting stopped only after the Iraqi police, port security and a British military unit finally caught up with the convoy. Custer Battles employees handed over cash to avoid disciplinary action.^[2]

Background

Custer Battles was founded in October 2001. The company was named after its founders, Scott Custer and Michael Battles. Custer is a former Army Ranger and defense consultant, while Battles is a former Army officer and CIA intelligence officer who ran unsuccessfully for the United States Congress in Rhode Island in 2002.

From 2001-2003, Custer Battles provided crisis management and security assistance to humanitarian organizations working in high-risk conflict areas throughout the world. They were one of the first companies to establish a presence in Kabul, Afghanistan in January 2002, working for various NGOs as well as the Afghan Ministry of Transportation. Domestically, they also provided critical infrastructure protection in the United States, with focus on water security. They had at least four state-wide contracts in 2002 (New Hampshire, Rhode Island, Maine, Nevada), as well as contracts with various municipalities along the eastern seaboard.

In May 2003, Custer Battles established a presence in Baghdad, Iraq. In June 2003, Custer Battles was competitively awarded a contract to secure the Baghdad International Airport. The 12-month contract with the Coalition Provisional Authority was worth $16.8 million. The company continued to expand its business in Iraq, and became a minor subcontractor operating in the country.

The company continued to expand its operations in Iraq through 2003 and 2004. Their clients included the Coalition Provisional Authority, Bearing Point, Washington Group International, Parsons, Halliburton and the U.S. Army. In early 2004, the Department of Defense initiated an investigation into one of Custer Battles' contracts with the CPA, resulting in the company being suspended from future contract considerations by the Department of the Air Force. In early 2005 Custer Battles ceased operations in Iraq.

Allegations of fraud in Iraq

CPA case

In October 2004, a qui tam^[3] lawsuit by Robert Isakson and William Baldwin was unsealed against Custer Battles. The suit, brought under the False Claims Act, alleged massive overbilling on two contracts with the Coalition Provisional Authority in Iraq in 2003.^[4]

In July 2005, Judge T.S. Ellis III ruled that allegations of false claims in Custer Battles' contracts with the CPA were actionable under the False Claims Act, denying Custer Battles' lawyers claims that the company had no contract with the US government. The Judge also ruled that money paid for by the Development Funds for Iraq (DFI) could not be prosecuted under the False Claims Act, as the US government was not involved in administering these funds.

In March 2006, a jury found Custer Battles liable for the submission of 5 false claims, each one of which is subject to a US$5,000 -11,000 civil fine, as well as 26 false statements supporting the 5 false claims. However, in August 2006, Judge Ellis, of the Federal District Court in Alexandria, Va overturned the verdict as a matter of law. Judge Ellis's ruling was, in turn, reversed by the Fourth Circuit in April 2009, in effect reinstating the jury verdict. The Fourth Circuit also ruled that Judge Ellis had erred in limiting the scope of the damages on the dinar exchange contract, and gave the plaintiffs the option of seeking a new trial for additional damages.^[5], but reinstated the claims relating to the dinar-exchange contract and reversed the order limiting them to $30 million in damages.

Baghdad Airport case

Another trial, with the same set of whistleblowers, concerned a separate $16.8 million contract awarded to Custer Battles to provide security at Baghdad International Airport. As this contract was paid for by seized Iraqi funds, Judge Ellis ruled that the entire contract was susceptible to the False Claims Act, and not just part of it in the previous case. The basic allegations were that Custer Battles had failed to provide adequate security staffing under its Firm-Fixed Price contract of $16.8 million. In January 2007, Judge Ellis granted Custer Battles' motion for summary judgment, finding that there was no evidence of the submission of false claims in this case. In April 2009, the 4th Circuit appeals court affirmed summary judgment for Custer Battles on the Baghdad airport contract.

Custer Battles files conspiracy lawsuit

In April 2005, Custer Battles filed conspiracy and breach of contract lawsuits against Robert Isakson and William Baldwin, the same individuals who had previously accused Custer Battles of submitting false claims. The lawsuit also included Isakson and Baldwin's companies, DRC Inc and American Iraqi Solutions Group, both of Alabama. According to court documents filed in the U.S. District Court for the Eastern District of Virginia, Mr. Isakson breached his contract with Custer Battles when he brought his 12-year old son to Iraq with $9,000 in cash strapped to his chest.^[6]

Custer Battles also alleged that Isakson and Baldwin conspired to start a new company, American Iraqi Solutions Group (AISG) and stole Custer Battles clients. This case was eventually moved from the US District court in Virginia to the US District Court for the Southern District of Alabama. Before going to trial, a settlement was reached and Custer Battles dismissed the charges. The amount of money paid by DRC, Isakson and Baldwin has been kept confidential.

Allegations of unrestrained force

In February 2005, Lisa Myers of MSNBC News reported a story concerning allegations of unrestrained force on the part of Custer Battles security operators in Iraq. In the story, four former Custer Battles employees are quoted as witnessing an incident where a Custer Battles vehicle rolled over a civilian vehicle and injured the occupants inside. The employees also detail an incident where Kurdish guards shot indiscriminately towards Iraqi civilians. According to one of the employees, Bill Craun, "what we saw the American public wouldn't stand for."

In response to the allegations, Ms. Myers interviewed the country director and convoy leader for Custer Battles. The convoy leader, Shawn Greene, adamantly denied that any of these incidents occurred, and detailed the exact incident in which he ordered the Custer Battles truck to hit and forcibly move a civilian vehicle. According to Greene, while his vehicle did damage the civilian car, there were no injuries. Paul Christopher, the Custer Battles country director, provided NBC News access to the company's mission logs, which detailed the event of hitting a civilian vehicle, the subsequent investigation with photos, and the documentation from the driver and witnesses that no one was injured. Both Greene and Christopher did detail accounts of actual combat situation of Custer Battles personnel where their vehicles were attacked by insurgents and Custer Battles personnel were forced to defend themselves through the use of deadly force.^[7]

Jacqueline Battles arrested trying to secret funds

In September 2006, Jacqueline Battles, the wife of Michael Battles, was arrested in Germany after a German bank informed authorities about "suspicious transactions" on her accounts. German investigators seized about US$1 million from her accounts. Ms. Battles was subsequently released and no charges were filed.^[8]

External links

Website

• Custer Battles, LLC, viewed April 9, 2004 and defunct as of 2009.

Articles

• "Court Revives Suit Over Iraq Work", Ellen Nakashima, Washington Post, April 11, 2009, viewed June 2, 2009
• "I'm From the Private Sector and I'm Here to Help", an episode of NPR's This American Life featuring Custer Battles
• "Contractor Faces False Claims Act Liability for Payments Made by Iraq’s Coalition Provisional Authority", Laura Thomson, Construction Weblinks, April 20, 2009, viewed June 2, 2009
• "Cleared of war profiteering, he fights to restore honor", John Mulligan, Providence Journal, February 22, 2007, viewed February 22, 2007
• "Judge Clears Contractor of Fraud in Iraq", Dana Hedgepeth, Washington Post,viewed February 22, 2007
• "Military Contractor Exonerated", Washington Times, February 9, 2007, viewed February 10, 2007.
• "Judge Sets Aside Verdict of Corporate Fraud in Iraq", Eric Eckholm, New York Times, August 18, 2006, viewed February 10, 2007.
• "Memos Warned of Billing Fraud by Firm in Iraq", Eric Eckholm, The New York Times. Late Edition - Final , Section A , Page 1 , Column 1. Oct 23, 2004. Retrieved May 2, 2005.
• "Contractor accused of fraud in Iraq", T. Christian Miller, Los Angeles Times. October 9, 2004, The Seattle Times. Retrieved May 2, 2005.
• "Small Business Succeeds Amid Chaos and Danger" , Neil King Jr., Wall Street Journal, August 2004, viewed February 10, 2007
• "Security worker killed in Iraq", BBC News, April 9, 2004, viewed April 9, 2004.

Television reports

• Daylight Robbery: fleecing Iraq and the USA. BBC Aired June 10, 2008.
• Billions Wasted In Iraq? By Jennifer MacDonald/Ira Rosen ©MMVI, CBS Broadcasting Inc. All Rights Reserved. Aired Feb 12, 2006
• "U.S. contractors in Iraq allege abuses: Four men say they witnessed brutality". By Lisa Myers & the NBC investigative unit. NBC Nightly News. Updated: 4:15 p.m. ET Feb. 17, 2005. Video available. Retrieved May 2, 2005.

Documents

• United States Ex Rel. Drc, Inc., Robert J. Isakson And William V. Custer Battles, Llc Et Alia. Case No.: CV-04-199-A Text of qui tam filing against Custer Battles.
• Senate Democratic Policy Committee Hearing - “An Oversight Hearing on Waste, Fraud and Abuse in U.S. Government Contracting in Iraq” Statement of Senator Byron L. Dorgan February 14, 2005
• Senate Democratic Policy Committee Hearing - Transcript
• [1]

References

1. ^ Custer Battles
2. ^ http://www.nytimes.com/2010/10/24/world/middleeast/24contractors.html?_r=1&hp
3. ^ http://democrats.senate.gov/dpc/hearings/hearing40/isakson.pdf
4. ^ NPR: Contractor Alleges Firm Defrauded Iraq Occupation Authority
5. ^ http://www.washingtonpost.com/wp-dyn/content/article/2009/04/10/AR2009041003448.html?hpid=topnews
6. ^ CorpWatch : U.S.A.: Custer Battles Fights Back
7. ^ U.S. contractors in Iraq allege abuses - Lisa Myers & the NBC News Investigative Unit - MSNBC.com
8. ^ http://www.washingtonpost.com/wp-dyn/content/article/2006/08/04/AR2006080400978.html