Lawsuit claims politically connected firm defrauded millions in Iraq

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http://www.realcities.com/mld/krwashington/9872416.htm

By Seth Borenstein
Knight Ridder Newspapers

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WASHINGTON - A politically connected start-up firm, awarded a no-bid contract to provide security for Baghdad's airport, defrauded U.S. taxpayers of tens of millions of dollars, two top former workers charge in a lawsuit unsealed Friday.

The Bush administration decided not to join the whistleblowers' civil suit alleging fraud against the company, run by a former Republican congressional candidate. The whistleblowers' attorney said a Justice Department lawyer told him the reason was that the alleged victim was the U.S.-financed and led Coalition Provisional Authority, not the U.S. government.

Justice Department spokesman Mark Corallo said the department didn't comment on why it declined to join such suits.

It's unusual for the Justice Department to decline to join a suit that has a load of documents and when criminal prosecution is likely, said Patrick Burns, a spokesman for Taxpayers Against Fraud, a group that monitors citizen suits.

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Isakson, at the time the managing director for Custer Battles' partner DRC Inc., helped Custer Battles set up operations in Iraq. When he told the company that a cost-plus contract wouldn't bring much profit in a war zone because such contracts generally are capped at around 5 percent, he said, the firm's officials told him they planned to form shell companies and buy or lease products from them to Custer Battles at higher prices.

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