US charges five with contract fraud scheme in Iraq

Feb 7, 2007, 23:23 GMT

Washington - Three former US Army officers and two civilians have been charged with stealing reconstruction funds for Iraq and taking bribes from a contractor in a scheme involving millions of dollars, the US government said Wednesday.

A grand jury in Trenton, New Jersey, indicted the defendants on charges of bribery, fraud and money laundering in the scheme they allegedly ran in south-central Iraq from December 2003 to December 2005, the Justice Department said.

Working out of the Hillah branch of the former Coalition Provisional Authority (CPA) in Iraq, the three officers and others awarded more than 8.6 million dollars in rigged rebuilding contracts to an associate in return for more than 1 million dollars in bribes, the indictment alleges.

The contractor, US citizen Philip H Bloom, also laundered more than 2 million dollars in cash earmarked for Iraq reconstruction that the defendants and others stole from the CPA, the indictment says.

Bloom is accused of handing out more than 1 million dollars in cash and items such as sports cars, jewelry, computers, airline tickets and liquor to the others.

'This indictment alleges that the defendants flagrantly enriched themselves at the expense of the Iraqi people ­ the very people they were there to help,' said US Deputy Attorney General McNulty, the nation's number-two law enforcement official.

The CPA was set up by the United States after the March 2003 US- led invasion of Iraq to run the country after the ouster of Saddam Hussein. It has been widely accused of waste and mismanagement.

Defendants include US Army Colonel Curtis G Whiteford, once the Hillah office's second-most senior official; Lieutenant Colonel Debra M Harrison, who once oversaw spending of the office's reconstruction funds; and Lieutenant Colonel Michael B Wheeler, an adviser for CPA reconstruction in Iraq.

Also indicted were Harrison's husband William Driver, who allegedly laundered money in the scheme, and Michael Morris, a US citizen in Romania who runs a Cyprus-based financial services firm.

Morris was arrested by Romanian authorities Tuesday, the Justice Department said.

In the scheme, Harrison and Driver allegedly received a Cadillac SUV as a bribe and used tens of thousands of dollars for improvements to their home in Trenton. Whiteford allegedly received at least 10,000 dollars in cash, a 3,200-dollar watch and a job offer from Bloom, the Justice Department said.

No trial date has been set for the five defendants.

Bloom pleaded guilty last year to conspiracy, bribery and money laundering. He is due to be sentenced on February 16.