Arranology

Case Against Custer Battles Dismissed by Reaganite Judge

with 2 comments


(cont’d from previous post)

Which brings us to Custer Battles.

On Tuesday, U.S. District Judge T.S. Ellis III, a Republican and Reagan appointee with a history we’ll get to a bit later, dismissed outright the case against Scott Custer and Mike Battles. In order to understand what level of judicial abortion this is, you first have to know a little about the case. Sydney Blumenthal explains.

Providing private military forces, or mercenaries, became a booming business overnight. One 33-year-old named Michael Battles, a one-time minor CIA employee and failed Republican candidate for Congress but with political connections to the White House, partnered with a former army ranger named Scott Custer to form a new security firm called Custer Battles. They had no experience in the field at all. “For us the fear and disorder offered real promise”, Battles explained. Their contacts won them a lucrative contract to guard the Baghdad airport.

Custer Battles became a front for an Enron-like scheme involving shell companies in the Cayman Islands and elsewhere that issued false invoices and engaged in other frauds. By the time the Pentagon eventually barred the company from further work for “seriously improper conduct”, it had raked in $100 million in federal contracts.

Scott Custer and Mike Battles walked into Iraq’s Green Zone to find themselves in the middle of what Blumenthal calls “neocon paradise”:

Hiring for the CPA staff was handled by the White House liaison at the Pentagon, James O’Beirne, who is also the husband of rightwing pundit Kate O’Beirne. He requested résumés from Republican congressional offices, activist groups and think-tanks. “They had to have the right political credentials”, said Frederick Smith, the CPA’s deputy director in Washington.

Senior civil servants were systematically denied positions. Applicants were questioned on their ideological loyalty and positions on issues like abortion. A youthful contingent, whose résumés had been stored in the Heritage Foundation’s computer file, was promptly hired and ran rampant in the green zone as the “brat pack”.

Bremer declared a flat tax, a constant Republican dream that could never be passed at home by Congress. He promulgated wholesale privatisation of state-owned industries, which created instant mass unemployment, without acknowledging any consequences. Peter McPherson, a former Reagan administration official close to Dick Cheney, was flown in to run the Iraqi economy. He stated his belief that looting was accelerating the process of privatisation – “privatisation that occurs sort of naturally.”

In this free-for-all atmosphere, there wasn’t much coming from the PTB at the CPA to discourage the boys from helping themselves. After all, everyone else was.

The hearings touched on a variety of outrages, including: Halliburton charging the Coalition Provisional Authority (CPA) for 42,000 daily meals for soldiers while only serving 14,000; the CPA’s Inspector General finding that the Iraqi ministry could account for only 602 of the 8,206 guards on payroll; and a truck driver for one company describing a policy of abandoning or torching $85,000 trucks if they had a flat tire or minor mechanical problem.

Bremer’s ideological Brat Pack seemed to be there for no other purpose than to smooth the way for wholesale theft by US companies. Remember those bricks of cash we spoke of in the previous post? Well, a few of them found their way to Mike Battles. Last April, Michael Hirsch reported in Newsweek:

[F]ormer CPA official [Franklin Willis] compares Iraq to the “Wild West,” saying he delivered one $2 million payment to Custer Battles in bricks of cash. (“We called Mike Battles in and said, ‘Bring a bag’,” Willis told Congress in February.)

Mother Jones reported in February of ’05 that Willis, in testimony before the Democratic Senate Policy Committee provided actual pictures of the exchange.

Frank Willis, a former senior official of the CPA, backed Grayson’s claim in the Senate hearings supplying pictures of the transfer of cash from the CPA to Custer Battles, remarking, “Yes. $100 bills in plastic wrap. We played football with the plastic wrapped bricks for a little while.”

Those darn kids. Such high spirits.

Back on Planet Earth, two ex-Custer Battles employees “charged that the company defrauded the CPA of millions of dollars during its time in Iraq”. Atty Alan Grayson brought the suit on their behalf, using Custer Battles’ own internal documents and memos. Hirsh again:

By many accounts, Custer Battles was a nightmare contractor in Iraq. The company’s two principals, Mike Battles and Scott Custer, overcharged occupation authorities by millions of dollars, according to a complaint from two former employees. The firm double-billed for salaries and repainted the Iraqi Airways forklifts they found at Baghdad airport—which Custer Battles was contracted to secure—then leased them back to the U.S. government, the complaint says. In the fall of 2004, Deputy General Counsel Steven Shaw of the Air Force asked that the firm be banned from future U.S. contracts, saying Custer Battles had also “created sham companies, whereby [it] fraudulently increased profits by inflating its claimed costs.” An Army inspector general, Col. Richard Ballard, concluded as early as November 2003 that the security outfit was incompetent and refused to obey Joint Task Force 7 orders: “What we saw horrified us,” Ballard wrote to his superiors in an e-mail obtained by NEWSWEEK.

Grayson says an examination of Custer Battles’ files shows a lot of double-invoicing, including charging for providing security at one airport no one was using, and at another – one that was guarded already by over 20,000 US Army troops – for guards who were never sent even though CB continued to bill the US govt as if they had been.

As Grayson told Mother Jones, “This is the strongest cases of fraud, in terms of proving it to a jury, that I’ve seen in my entire life. We have e-mails, we have order reports, we have spreadsheets, we have witnesses, we have whistle-blowers, we have every conceivable kind of evidence that these people have committed fraud…

But despite all that evidence, Judge Ellis found that there had been no fraud. How could he do that in the teeth of the overwhelming paper trail?

Funny you should ask.

1. There was no fraud….

First, said Judge Ellis, he just flat didn’t see any, explaining that:

Custer Battles never specified how many security personnel it would provide. He said Custer Battles initially provided more than 138 workers and received glowing performance evaluations in its first few months on the job.

The whistleblowers’ attorney, Alan Grayson, said Ellis’ ruling ignored evidence that Custer Battles later diverted airport security workers to other contracts it obtained from the Coalition Provisional Authority, and illegally double-billed the government for those employees’ work.

He cited testimony from CPA inspector general Richard Ballard, who said Custer Battles left the airport woefully understaffed, resulting in long lines at checkpoints and, at times, vehicles being waved through checkpoints without inspection.

“The judge never even bothers to mention (the inspector general’s testimony) in his decision,” Grayson said Thursday.

Well, it was, um, inconvenient.

This is Judge Ellis following Gingrich’s Law of Cherrypicking: when Republicans are involved, pick the evidence that exonerates them and ignore any that doesn’t. If Democrats are involved, do the opposite. The idea that no fraud was perpetrated because no specific number of personnel CB was to supply was put into the contract is pure BushThink and as thin as a miser’s heart. It’s like saying that a loan shark who doesn’t tell you precisely which bones he will have his enforcer break if you don’t pay up hasn’t committed a crime.

This isn’t the first time Ellis has done Mike and Scotty the favor of getting them off the hook, which leads us to the much more dangerous:

2. …and even if there was, it doesn’t count.

The most damning part of Judge Ellis’ decision is the part that, if upheld, gets everybody who stole money in Iraq off the hook. Everybody. In that previous instance I just mentioned, Ellis’ argument went like this:

Last year, Ellis threw out a separate case against Custer Battles, after a jury awarded a $10 million judgment against the company over its work on a contract to replace the old Iraqi currency. Ellis ruled that any fraud was perpetrated on the CPA rather than the U.S. government, even though the U.S. government ultimately footed the bill. (emphasis added)

As MoJo explains, this is a dubious and contradictory argument.

Assistant U.S. Attorney Richard Sponseller had told Grayson that the DoJ declined to get involved because the White House had decided that cheating the CPA was not the same as cheating the U.S. government. This seems to be pretty bizarre reasoning considering that, back in November 2003, President Bush signed an “executive order declaring the CPA “an entity of the United States government.” …Custer Battles is…claiming that the company is not subject to U.S. law because the CPA was effectively a sovereign entity. Grayson countered, “In the law, nobody could argue that the CPA was a sovereign state. All they’ve done is basically concoct this argument so that they can change the subject.”

But Grayson is wrong about that. Scott and Mikey didn’t think this up all by themselves. It happens to be the Bush Administration’s position.

In recent months…Ellis…has twice invited the Justice Department to join the lawsuit without response. Even an administration ally, Sen. Charles Grassley, demanded to know in a Feb. 17 letter to Attorney General Alberto Gonzales why the government wasn’t backing up the lawsuit. Because this is a “seminal” case—the first to be unsealed against an Iraq contractor—”billions of taxpayer dollars are at stake” based on the precedent it could set, the Iowa Republican said.

Why hasn’t the administration joined the case? It has argued privately that the occupation government, known as the Coalition Provisional Authority, was a multinational institution, not an arm of the U.S. government. So the U.S. government was not technically defrauded.

So Ellis, even though he couldn’t convince Gonzales or the adnministration to take any part in the case, dutifully followed the position he knew they had taken and used it, as he had before, to dismiss this case, too, even though the White House has never rescinded the executive order (pdf. file) that says otherwise. Not suprising, perhaps, for a judge with a history of dutiful party loyalty. At least, sometimes….

On Thursday, May 18, 2006 Ellis dismissed a lawsuit filed by Khalid El-Masri, a German citizen, against the CIA and three private companies allegedly involved with his kidnapping, transport, and torture in Kabul. Ellis explained his belief that a public trial would “present a grave risk of injury to national security”.

Uh-huh. This even though in his decision he admitted that “El-Masri has suffered injuries as a result of our country’s mistake and deserves a remedy.”

It’s a fine line.

By ignoring the evidence – never mind the law – in the Custer Battles case, Ellis has set himself up as you might expect a Reaganite judge would: if the law (the executive order amounts to that in the absence of a Congressional bill) is different from a Republican administration’s position, pretend it doesn’t exist.

If his decision holds up, Halliburton, KBR, and all the other private companies who used Iraq as an excuse to steal us blind, will get away with it.

Written by Mick

February 10, 2007 at 11:35 pm

2 Responses

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  1. [...] 3rd, 2007 · No Comments US District Court Judge TS Ellis III, who recently dismissed the corruption suit against Custer Battles on the fairly specious grounds that the CPA was not a “US govt entity” without [...]

  2. [...] Custer Battles, a security company with ties to the RNC, received a $$100Mil$$ contract to provide security for the Baghdad airport, already guarded by Army troops, then another $$50M$$ to supply forklifts. It simply painted the forklifts that were already there with its logo and sent in its bill. [...]


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