5 Indicted in Probe of Iraq Deals
Thursday, February 8, 2007
Three Army Reserve officers and two civilians were indicted yesterday on federal charges of participating in a wide-ranging bribery and contract-rigging scheme involving millions in Iraq reconstruction funds.
The 25-count indictment handed up by a Trenton, N.J., grand jury expands a probe that has resulted in three guilty pleas. Those indicted yesterday were accused of participating in a scheme to funnel $8.6 million in reconstruction contracts to an American businessman in exchange for cars, $3,200 Breitling watches, plane tickets, $3,000 Toshiba laptop computers, weapons and stolen money. Named in the indictments were Col. Curtis G. Whiteford; Lt. Col. Debra M. Harrison and her husband, William Driver; Lt. Col. Michael B. Wheeler; and Michael Morris.
"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 Paul J. McNulty, U.S. deputy attorney general.
Three of the central characters in the scheme have pleaded guilty. Robert J. Stein, a former Coalition Provisional Authority employee, was sentenced last month to nine years in prison and ordered to forfeit millions of dollars for his role in steering contracts to businessman Philip H. Bloom. Lt. Bruce D. Hopfengardner also admitted to steering contracts to Bloom for money and a Harley-Davidson motorcycle. Bloom pleaded guilty to conspiracy, bribery and money-laundering charges last year.
The alleged fraud scheme is the largest to emerge out of the Iraq reconstruction effort. In the indictment and in interviews, federal prosecutors described a series of grand scams designed to plunder a reconstruction program funded by the United States and with money collected from the sale of Iraqi oil. Over time, Bloom and his alleged confederates discussed setting up a private security company and an Iraqi airline to snag more work.
The reconstruction program often distributed funds in cash, handing out blocks of currency known as "bricks," and the indictment described how participants in the scam smuggled the bulk back into the United States.
Morris, who was charged with conspiracy and wire fraud, was arrested in Romania Tuesday, and federal officials said they would attempt to extradite him. Messages left for Driver, Wheeler and Harrison were not returned. A woman who answered the phone at Whiteford's home hung up.
In one case, Harrison and Wheeler smuggled at least $330,000 in stolen authority funds from Iraq to New York using commercial business-class tickets purchased by Bloom, according to the indictment. In a January 2004 e-mail, Stein proudly told Bloom that he and Wheeler had secured another contract for him.
"I will give you 200K sometime tomorrow afternoon! I love to give you money," the e-mail said. Wheeler, the CPA's deputy chief of staff in the Al Hillah region, also accepted bottles of liquor for his efforts.
Later that year, Bloom discussed opening an Iraqi airline company and a private security company to be named Anaconda. The "objectives of the company are making money while allowing us to look cool and have cool stuff. That ought to be easy to do," Whiteford said of the private security company in an e-mail.
Bloom also handed out expensive cars as rewards for help, including a Cadillac Escalade for Harrison, who served as acting comptroller for the CPA office. In an e-mail, Bloom told Stein that Hopfengardner would receive a GMC Yukon but that Whiteford was only getting a Nissan 350 Z because he "had not been able to get Bloom all the aviation licenses necessary to startup Bloom's airline company," the indictment said.
Meanwhile, Whiteford, the second-most-senior CPA official in the region, was very specific about the type of sports car he wanted: a touring model with manual transmission, a cargo convenience package and other high-end vehicle options. He also accepted a $3,200 watch, $10,000 and round-trip tickets home to Utah, according to the indictment.