George Lee, a Kuwait-based U.S. defense contractor who was reaping millions as America’s quagmire in Iraq deepened, sent an e-mail to an Army major who awarded bids in Baghdad, warning her not to visit him.
“None of us want Uncle Sam, or anyone else, looking where they should not be looking,” he wrote in one of the trove of messages and intercepted phone calls that exposed the biggest fraud conspiracy from the wars in Iraq and Afghanistan.
So far, 22 people have been indicted and $67 million has been recovered in that single scheme, which remains under investigation.
But the little-known agency that uncovered the scam is about to close its doors, even though Lee remains a fugitive and 91 additional criminal investigations into the disappearance of Iraq reconstruction funds remain unsolved.
The mandate and funding of the Special Inspector General for Iraq Reconstruction, which was established in October 2004 and is known as SIGIR, expires in March. It will mark the end of an effort to document and fix the myriad failings of the most ambitious U.S. rebuilding effort since the Marshall Plan. The extent to which U.S. military personnel abused their positions during the war is a part of the legacy of the deeply unpopular conflict that has gone largely unnoticed.
“This is a tiny if disgraceful minority,” Stuart W. Bowen, the head of the agency said. “A lot of these cases came to light deep into the reconstruction experience, which by then had been recognized to have fallen short of its goals.”
The Kuwait scheme became the agency’s landmark case. But SIGIR investigators uncovered scores of other plots that could be turned into thrillers. There were corrupt officers ratted out by spurned wives. Military officials accepted first-class tickets from contractors so they could hide their exploits in bank accounts in the Cayman Islands and Thailand. One soldier mailed stolen cash wrapped in American flags. Another particularly clever attempt to haul stacks of stolen cash to the United States involved stitching them into a Santa Claus costume.
SIGIR’s criminal investigations, conducted with help from the FBI, the IRS and other federal agencies, have resulted in 81 convictions, including 47 military personnel. A few defendants are awaiting trial. Authorities have recovered more than $189 million.
Anyone who worked in Iraq during the heyday of reconstruction spending is unlikely to be surprised that many people were tempted to steal. U.S. officials came to see cash as a “weapon system” that could buy goodwill, forge alliances and alienate insurgents. There was loads of it, in bags, boxes and chests. With a widespread perception that oversight was lax, many saw the chance of a lifetime.
“There was so much money to be made at the time,” said Daniel F. Willkens, the agency’s head of investigations.
Maj. Gloria Davis was among those tempted, according to investigators and court documents. The Army officer met George Lee in Kuwait in 2003, soon after she was assigned to award military contracts for Iraq and he was trying to get a foothold in the rapidly expanding war economy. They became close after she awarded his company a contract for buses in January 2004.
That summer, their relationship grew so cozy that he paid for her spa treatments in Kuwait City and offered her son a job. That fall, after Davis awarded Lee two multimillion-dollar contracts for bottled water maintenance services, he flew her to Thailand, where she opened a bank account into which he soon wired $80,000.
Days after her son started his job in Kuwait, Davis thanked Lee in an e-mail on Jan. 3, 2005, according to Lee’s indictment, writing that she appreciated “everything you have done for me and my family,” and offering to do her share to “on this end to help the business.”
Help she did, putting Lee and his son Justin, a business partner, in touch with other contracting officers amenable to kickbacks. Justin Lee heaped praise on Davis for her help, saying in another e-mail that they wanted her to be “as kept a woman as the princess herself.” Among Davis’s colleagues, the most audacious, investigators said, was Maj. John L. Cockerham. He became a ringleader among a cadre of contracting officers trained at Fort Sam Houston in Texas who gave preferential treatment to the Lees in exchange for kickbacks.
As the money rolled in, the Lees were enthralled by their booming business. After purchasing a first-class ticket for an officer involved in the scheme, Justin Lee wrote that Col. Kevin Davis “thought he had died and gone to heaven relative to his first first class travel.” Lt. Col. Levonda J. Selph, who also accepted a free trip to Thailand, wrote to George Lee that they could discuss business deals over “a glass of champagne,” and offered to do “everything I can barring going to jail” to get him more deals.
In 2006, Davis returned to Baghdad for a new deployment, not realizing that federal investigators had been tipped off by a competitor about irregularities in Lee’s business practices. After she admitted to agents in December 2006 that $225,000 in an offshore bank account came from bribes, Davis returned to her room and fatally shot herself in the head.
Cockerham was arrested the following year. The former officer pleaded guilty to bribery, money laundering and conspiracy in January 2008, admitting he took more than $9 million in bribes. Davis, the most senior officer convicted in the case, pleaded guilty in April 2010 to accepting illegal gratuities. Selph pleaded guilty to bribery in 2011 and unsuccessfully sought to get the Federal Bureau of Prisons to incarcerate her alongside the former officer’s pet chihuahua, Buffy. Justin Lee pleaded guilty to bribery in July. Investigators believe his father remains in Kuwait, along with much of the stolen cash.
Authorities also convicted civilians in notable cases. Robert N. Boorda, a former head of the Baghdad office of the U.S. Institute of Peace, which is funded by Congress, pleaded guilty to wire conspiracy last year after admitting he received a purported $20,000 monthly fee in 2009 from an inflated security contract submitted to his headquarters. Last year, Jill Ann Chapia, a U.S defense contractor, had to give up her job at a U.S. military base in Afghanistan after pleading guilty to lying to federal investigators who determined that she received more than $1.2 million after submitting phony invoices for work she was hired to do in Iraq in 2008.
Some of the open probes may lead to indictments before SIGIR shuts down, officials said. The agency said it is working with lawmakers in the House and Senate in hopes Congress will find the money to preserve its 21-person investigative team for the remainder of this year. If that effort fails, several of the open cases are likely to stall because they are unlikely to become priorities for federal law enforcement agencies.