Prosecutor Alleges Money Laundering
Friday, August 4, 2006; 3:58 PM
-- The wife of a disgraced American contractor moved at least $2 million into overseas bank accounts to hide her husband's money, according to a letter from a German prosecutor, which was provided to the Associated Press.
In March, a U.S. jury ordered contractors Mike Battles and Scott Custer to pay $10 million for swindling the U.S. government in Iraqi rebuilding projects. Their company is also the subject of ongoing criminal investigations in the United States.
Battles' wife, Jacqueline, who lives outside Darmstadt, Germany, became the focus of the German money laundering investigation after she opened several bank accounts under her maiden name of Vihernik, according to the letter written by Darmstadt public prosecutor David Kirkpatrick.
"Mrs. Battles received a minimum of ($2 million) from her husband," Kirkpatrick said in the letter written July 27. "The way the money was transferred shows that she is informed about the suspicious background of those transactions ... obviously, she is trying to channel the money."
The letter was sent to American attorney Alan Grayson, who represented two whistleblowers who sued Battles, Custer and their firm Custer Battles LLC.
A federal jury in Virginia ordered the contractors to pay $10 million to the government and the whistleblowers in what was the first civil fraud verdict arising from the Iraq war. Jurors upheld the lawsuit's accusations that Custer Battles LLC overcharged the Coalition Provisional Authority, which ran Iraq after the 2003 invasion, by as much as $50 million.
A federal criminal investigation into the contracts is ongoing, and Custer Battles is also being investigated for two shooting incidents in which Iraqi civilians and soldiers were injured.
Custer and Battles have appealed the judgment, and claimed they don't have enough assets to pay it. Jacqueline Battles was not part of her husband's firm.
Grayson said Friday that he has provided German prosecutors with documents describing how Battles and Custer cheated millions from Iraqi rebuilding projects.
"They are ill-gotten gains because Battles stole the money from the government and tried to hide it by sending it to Germany with his wife," Grayson said.
According to Kirkpatrick's letter, German authorities have seized nearly $1 million from the bank accounts Jacqueline Battles opened.
Kirkpatrick declined to comment when contacted by the AP in Germany. There was no phone listing for Jacqueline Battles. The current whereabouts of Mike Battles and Custer aren't known, according to Grayson. The Custer Battles office phone has been disconnected.
One of the two whistleblowers who won the March verdict, Robert Isakson, is a plaintiff in a second lawsuit that accuses two former Pentagon officials of scheming with Custer and Battles to form sham companies that sold illegal weapons on Iraq's black market where they could be bought by insurgents, the AP reported last month.
The two defendants, former acting Navy Secretary Hansford T. Johnson and top aide Douglas Combs, now run global contractor Windmill International Ltd., based in Amissville, Va.
That company was also named in the lawsuit. A company spokesman denied it was involved in any wrongdoing.
Associated Press writer Melissa Eddy contributed to this story from Berlin.