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Cutting Costs, Bending Rules, And a Trail of Broken Lives
Ambush in Iraq Last November Left Four Americans Missing And a String of Questions About the Firm They Worked For

By Steve Fainaru
Washington Post Foreign Service
Sunday, July 29, 2007

BAGHDAD -- The convoy was ambushed in broad daylight last Nov. 16, dozens of armed men swarming over 37 tractor-trailers stretching for more than a mile on southern Iraq's main highway. The attackers seized four Americans and an Austrian employed by Crescent Security Group, a small private security firm. Then they fled.

None of the hostages has been found, eight months after one of the largest and most brazen kidnappings of Americans since the March 2003 invasion.

Crescent is shuttered, like dozens of other companies that have come and gone in Iraq's booming market for private security services. The firm leaves behind a trail of broken lives and a record of alleged misconduct. In March, the U.S. military barred Crescent from U.S. bases after it was found with weapons prohibited for private security companies, including rocket launchers and grenades, according to documents and interviews with former Crescent employees and U.S. officials.

An investigation by The Washington Post found that Crescent violated U.S. military regulations while being paid millions of dollars to support the U.S.-led mission in Iraq. The company routinely sacrificed safety to cut costs. On the day of the kidnappings, just seven Crescent guards protected the immense convoy as it drove through southern Iraq, a force that security experts described as inadequate to fend off a major attack.

Former senior managers with Crescent denied any wrongdoing and said the guards who were seized had been well equipped and simply failed to thwart the kidnappers.

"We pretty much catered to them. We spoiled them," said Scott Schneider, the company's former director of security. "You know, basically the operators screwed up," he added. "I mean, you hate to speak ill of people, but the way the situation transpired, they just made mistake after mistake" as the convoy came under attack.

Schneider oversaw Crescent's security operations for more than two years, despite having pleaded guilty, according to court records, to misdemeanor charges of breaking and entering and domestic violence in Michigan in the mid-1990s. Under U.S. law, it is a felony for domestic violence offenders to carry firearms, a prohibition that was adopted by the Defense Department for military and civilian personnel.

Crescent's managing partner, Franco Picco, said he fired Schneider, who earned $10,000 a month, after becoming aware of his criminal background shortly after the kidnappings.

Based in Kuwait City, about an hour from Iraq's southern border, Crescent was formed in 2003, part of a security industry that mushroomed overnight in Iraq in response to troop shortages and mounting insurgent attacks. By this year, the Private Security Company Association of Iraq, a trade group based in Baghdad's Green Zone, listed 177 active foreign and Iraqi security companies. The Pentagon has said that some 20,000 security contractors support the U.S.-led coalition, although some estimates are considerably higher.

The industry is largely unregulated by the U.S. and Iraqi governments, leaving companies to establish their own standards for operating on the battlefield.

This article is based on two eyewitness accounts of the ambush, company documents and interviews with former Crescent employees, including the four missing Americans. Two weeks before they were taken, the men expressed growing concern for their personal safety to a reporter traveling with them in Iraq.

"We're not the badasses we used to think we were," said one of them, Paul Reuben, now 40, a former Marine from Buffalo, Minn., sitting in his Kuwait City dormitory on the eve of a convoy mission. "I realize I'm vulnerable."

The guards have not been seen since the Jan. 3 airing of a video made by their captors. Picco said he is convinced that the men are still alive. He said he has spent more than $300,000 seeking information about their fate and blamed U.S. and British authorities for failing to follow up leads that he believes would have led to their release.

"Alive or dead, I will bring them back," Picco said during an interview this month in Kuwait City, where he continues to run logistics and catering businesses. "Whether it takes me 10 years or a month. That's just the moral thing to do. . . . These guys are part of me."

Relatives of the missing men have begun to speak out publicly, providing some details about them and the ambush in newspaper articles and on Web sites. The families have offered a $150,000 reward for information leading to release of the men.

U.S. officials in Baghdad said the investigation is still open. "We have no information to indicate they are not alive, but we are concerned about their health and welfare," said U.S. Embassy spokesman Philip Reeker. "Efforts toward their safe recovery are a high priority for the United States."

There has been no communication from the captors, according to U.S. officials, Crescent and the families.

The attack and seizure have spotlighted Crescent's low-budget approach to private security and raised questions about whether the company was vulnerable to such an attack. Another missing guard, Jonathon Cote, now 24, a former Army paratrooper from Buffalo, N.Y., described Crescent as "ghetto" because of its relatively low pay, its minimal hiring standards and what he and other guards described as management's willingness to bend rules and cut corners.

"I've worked for a billion companies, and this is the worst I've ever worked for," said Brad Ford, a former Crescent guard who now works in Afghanistan for another security firm. "I couldn't believe how they were getting away with all the stuff they were getting away with."

Crescent crafted its own military identification badges to enable its employees -- including unscreened Iraqis -- to gain admittance to U.S. bases, according to several former guards, two of whom provided copies of the badges. Some guards smuggled weapons and liquor across the Iraq-Kuwait border in secret compartments they referred to as stash boxes, the former employees said. As attacks became more frequent and lethal, Crescent continued to armor its gun trucks -- black Chevrolet Avalanches with belt-fed machine guns mounted in back -- with steel plates welded inside the doors, even though some guards had requested additional protection.

The company often hired guards with little or no experience. Reuben, the company medic, was a self-described alcoholic who was not certified as an emergency medical technician and had resigned as a suburban Minneapolis police officer in 2003 after a drunk-driving violation. David Horner, 54, a truck driver from Visalia, Calif., said Crescent hired him over the Internet in 2005 and put him to work immediately, even though he had not served in the military since 1973 and had never picked up an AK-47, the automatic assault rifle used by many of the company's guards.

On Nov. 16, Crescent's trucks pushed into Iraq without any of the firm's Iraqi guards, leaving the ill-fated convoy severely undermanned. The company also had not filed paperwork with the ground-control center in Baghdad that monitors nonmilitary convoys, according to those authorities, who still do not list the Crescent hostages among their casualty figures for killed, wounded and missing because the convoy was unregistered. That oversight limited Crescent's communication with the command center responsible for coordinating the military's emergency response to attacks on civilian convoys.

Security experts described the lapses as unconscionable. "It's insane. I don't know how you could sleep," said Cameron Simpson, country operations manager for ArmorGroup International, a British firm that protects one-third of all nonmilitary convoys in Iraq. ArmorGroup normally assigns 20 security contractors to protect no more than 10 tractor-trailers.

Picco said employees such as Reuben, who had previously worked for two other security companies, were presumed to have been vetted before joining Crescent. He said the company shunned fully armored trucks, not to save money but because guards preferred vehicles that allowed them to return fire and maneuver more easily. Picco's deputy, Paul Chapman, said the Italian military, which held the contract, was responsible for monitoring the convoy, even though private companies provided the trailers as well as security.

"We tried to be 110 percent legal in everything we did," Chapman said, adding that Crescent was licensed by the Iraqi Interior Ministry.

Picco said the team leader that day, John Young, 44, an Army veteran and carpenter from Lee's Summit, Mo., made the decision to leave a team of Iraqis behind without the company's knowledge and went into Iraq with just seven Western guards to protect the 37 trailers. "I think complacency set in," Picco said. "Why would you leave a complete team behind?"

But Andy Foord, a Crescent guard from Britain who was left bound inside a truck as the kidnappers fled, said in an interview that none of the Iraqi guards had reported for work that morning. He said Young informed Crescent's operations center in Kuwait City that the undermanned convoy intended to proceed into Iraq. "They knew, because John called them from the Iraq border," Foord said.

Several former Iraqi employees of Crescent were spotted among the kidnappers, according to Foord and a written report by Jaime Salgado, another guard who was left behind and later freed. Foord said he believes the attack was set up by an Iraqi interpreter who had advance knowledge of the mission.

Crescent is "blaming these boys, and they're not here to answer about it themselves," said Sharon DeBrabander, the mother of Young, the missing team leader. "I don't think that's right. They're covering up their butts, that's what they're doing."

'I Only Came Over Here For the Money'

"War is inevitable. You cannot cancel it. You can only postpone it to your advantage." That message was scrawled on a dry erase board in Picco's Kuwait City office.

Picco, 38, who was born in Italy and reared in South Africa, formed Crescent in 2003, initially to protect trucks belonging to his shipping company, Mercato del Golfo.

"Everyone knew when Iraq opened up there was going to be money to be made," he said.

As business boomed but security deteriorated, Crescent expanded. The company gained a reputation for traveling to the riskiest destinations, often for half as much as its competitors. At its peak, it earned $600,000 to $800,000 a month providing convoy protection, according to Picco, and was profiled in a 2006 book on private security contracting, "A Bloody Business," by Gerald Schumacher, a retired U.S. Special Forces colonel.

"We protect the military. Isn't that mind-boggling?" Picco said in an interview last November. "And I'm talking about escorting soldiers, as well. Isn't that frightening?"

Most of Crescent's employees were military and law enforcement veterans willing to accept extreme risk in exchange for fast money and adventure. Crescent handed out monthly pay in envelopes stuffed with Kuwaiti dinars. The guards took the money to currency exchange houses, which transferred the funds into their bank accounts.

"All you're thinking about is the money," said Chris Jackson, 28, a former Marine from Salem, N.H. "You have $50,000 in the bank, and all you're thinking about is, 'Another month and I'll have $57,000, another month and I'll have $64,000.' " By the end of last year, Jackson said, he had saved $55,000, even after splurging on Las Vegas vacations and a $5,000 Panerai watch.

"I hate to say it, but I am so thankful for this war," he said. "I only came over here for the money, and I didn't even know I could do this job until two years ago. I didn't know it was available to me."

Crescent's Iraqi employees were recruited by word of mouth; most lived around the southern city of Basra, a hotbed of Shiite militias, and were largely unknown to the company. Crescent used a two-tiered pay scale. Guards from the United States, Britain and other Western countries earned $7,000 a month or more. Iraqi guards earned $600 -- roughly $20 a day -- but performed the most dangerous work, including the manning of belt-fed machine guns while exposed in the back of the Avalanches.

Picco said the system was not ideal but was necessary to hold down costs. "To put 12 white people on a team, it's not economically viable," he said.

Before the attack, relations between the Western and Iraqi guards had deteriorated. Foord said the Iraqis were refusing to man the machine guns. After a rash of thefts, Crescent fired a group of Iraqi guards on his recommendation, Foord said.

One month before the kidnappings, Crescent's entire stockpile of weapons -- dozens of AK-47s, PKM machine guns, grenade launchers, thousands of rounds of ammunition, body armor -- disappeared from locked shipping containers at a compound across the border in Iraq, Picco and several former employees recalled.

Picco said he sent out one of his Iraqi employees with $50,000 to buy new weapons on the black market. Some of the guns came back with serial numbers matching those on the stolen weapons.

'There Was No Place They Couldn't Go'

Last August, three months before the attack, a Crescent-led convoy was transporting trucks to an Iraqi army compound in Numaniyah, about 50 miles southeast of Baghdad. On an isolated stretch of Main Supply Route Tampa, the principal highway in southern Iraq, a bomb struck a Crescent gun truck carrying three Iraqi guards. One died within minutes. Another was pinned inside the truck, his hands severed and his femur protruding from his pants-leg.

Reuben, the former suburban Minneapolis police officer who served as the company medic, reached for his trauma kit. But Crescent had failed to provide him with tourniquets and morphine, Reuben recalled before he was seized, so he tried to stanch the bleeding with swatches of fabric he tore from his armored vest. The driver remained conscious for 45 minutes but bled to death, Reuben said. "If they saw what I saw, they would get what we need," he said.

Picco said Crescent gave Reuben all the medical supplies he asked for, suggesting that any shortages stemmed from his own failure to ask.

A friendly, heavy-set man who turned 40 shortly after he was kidnapped, Reuben wore an EMT cap but said his training came mostly from first-aid courses and books. He said he now drank alcohol only occasionally. Schneider, Crescent's former director of security, said that the company was aware of Reuben's history of alcoholism but added that Reuben had been "cleaning himself up."

"In this job, as long as you have people willing to work for the money, you don't need a medic," said Cote, the missing former paratrooper. "The military is different, because you care about your soldiers, and they're doing it for service and commitment. For us, it's like a paycheck. I still think you should have some necessities, but you don't always get those."

For employees unable to obtain the military identification badges needed to gain access to U.S. bases, Crescent created its own Italian security cards in Kuwait City, according to former employees.

"This thing was used by the Iraqis, mainly, to get them on base and get them in the commissaries," said Horner, one of the guards. "It worked sometimes -- s ometimes. They could flash this Italian logistics security card, and depending on how sharp the guard was decided whether they could go in."

Horner said the Iraqis were instructed to identify themselves as Egyptians to avoid arousing suspicion. He said the Iraqis and some Western contractors used the ID cards to gain admittance to the Green Zone in Baghdad; Camp Victory, near Baghdad International Airport; and Logistics Support Area Anaconda, the largest U.S. base in Iraq.

"There's no place they couldn't go," Horner said of the Iraqis. "They could have been mapping the whole damn place, and we never would have known."

Schneider acknowledged that Crescent made its own badges but said they were used only in Italian-run sectors. "We made them up, but they were recognized, so I guess you could call them official," he said. Picco said that the Italian military had authorized Crescent to make its own badges and that he had distributed them judiciously.

The badges were not fake, he said, even though Crescent guards referred to them as fake IDs.

"That's not a fact, it's just an expression," Picco said.

'You Are Going to Die'

The route scheduled for Nov. 16 was regarded as safe by the Crescent guards. They made the run almost daily, part of a long-standing contract to assist the Italian military, which was withdrawing its troops and equipment from Tallil Air Base near Nasiriyah, where Picco also operated a restaurant and a pizza joint for soldiers.

The mood at the border had been tense for months. Iraqi border police had confiscated trailers from several convoys, including Crescent's. Foord, the British guard, said that the week before, he had resisted border police officers' efforts to steal a truck, sparking a confrontation in which an Iraqi officer pointed a gun at his head. The incident closed the border for six hours, Foord said.

Crescent normally traveled with at least two or three Iraqi guards in each vehicle. The Iraqis would join the convoy at Wolf's Den, a border compound named after a Crescent employee who was killed in 2004.

On the day of the kidnapping, the Crescent team crossed the border two hours early and found just one Iraqi waiting for them. He was Wissam Hisham, an interpreter nicknamed "John Belushi" because of his resemblance to the late actor.

The rest of the Iraqi team wasn't there. "We tried to contact them, but we couldn't get through on the phones," Foord said. "That usually means that they don't want to run that day. It wasn't the first time they hadn't shown up. The team made a decision just to roll with it and hopefully hook up with the Iraqi team later." Foord said he believed the guards had become complacent about the run to Tallil, which Crescent had made hundreds of times without incident.

According to Picco, a team of Iraqi guards was in fact waiting. He first said the Iraqi team had 11 experienced members, then later said there were only seven.

"There was only one -- John Belushi," Foord said, adding that he believes the interpreter set up the ambush. "Not 11, not seven, just Belushi."

The trucks snaked past Safwan, an Iraqi border city, and continued north before approaching an overpass known as Bridge 3. The point vehicle, occupied by Cote and Joshua Munns, a 24-year-old former Marine from Redding, Calif., sent word over the radio that a police checkpoint was blocking the road.

Foord stopped his Avalanche in the middle of the highway at the rear of the halted convoy. An unmarked truck suddenly roared up beside him carrying 10 armed men. One stuck an AK-47 inside the passenger door and fired, narrowly missing him as he threw his head back, according to an 11-page account he gave military investigators after the kidnapping.

Foord said he accelerated and raced to the front of the convoy in the southbound lane while the gunmen pumped rounds into his truck with their automatic weapons.

When he reached the front of the convoy, the rest of the Crescent guards were lined up on their knees by the side of the road, Foord said. But Hisham, the interpreter, appeared to be participating in the kidnapping, according to Foord's account. Foord said Hisham accused him of shooting one of the Iraqi gunmen and screamed: "You are going to die . . . now you are going to die."

A man in civilian clothing intervened and forced Foord to his knees near the other Crescent guards -- Cote, Munns, Young, Reuben and Bert Nussbaumer, 25, an Austrian. Foord said he spotted "30-40" armed men, including at least four wearing suits who appeared to be in charge. The gunmen bound the guards with handcuffs, cloth tape and a power cord and began to load them into vehicles.

Crescent guard Salgado, a Chilean who later gave a one-page statement in fractured English, said he recognized "4 of the guys" participating in the attack as former Crescent employees.

Foord and Salgado were placed together in Salgado's GMC Yukon. Salgado said the attackers were unable to locate the keys to his truck.

"Suddenly they get a telephone call and start to move fast," Salgado's account said. As the attackers began to flee, a white pickup packed with gunmen roared up beside the two men, according to Foord's report. But it had no room for them.

"Jaime and myself appeared to have been left behind because they had lost the keys to his Yukon and had no space in any of the other vehicles," Foord said. The abductors roared off.

Several minutes later, two American Humvees approached from the south.

"I was still waiting for the bullet in the back of the head," Foord said.

The Americans cut loose Foord and Salgado and escorted the tractor-trailers back to the border. Most of the drivers that day were Pakistani. Nine drivers were seized and almost immediately released. Nineteen trailers were taken; some were recovered. Crescent sent out a team to retrieve the company's vehicles.

There has been no word about the hostages since the Jan. 3 video showing the five Crescent guards. The video opened with an image of the Koran and a map of Iraq, then the words, "The National Islamic Resistance in Iraq: The Farqan (Quran) Brigades takes responsibility for the kidnapping in Safwan, Basra."

In January, Crescent made a lump-sum payment of $3,500 -- half a month's pay -- to each of the missing men's families. The company said it has set aside three months' salary for each guard, to be paid on their release.

'This Will Never Happen Again'

After the kidnappings, Picco moved Crescent to Tallil Air Base. The company cut its staff and ran occasional security missions while waiting for news about the hostages.

On Feb. 1, U.S. military police entered Crescent's living quarters and found 143 cans of beer, illegal steroids and an assortment of weapons that private security companies are prohibited from possessing under U.S. military regulations, including seven fragmentation grenades, a Bushmaster rifle with its serial number removed and four antitank weapons known as LAW rockets, according to a memorandum the military later sent to Crescent.

A month later, the military opened shipping containers belonging to Crescent and found more banned weapons, including four .50-caliber machine guns, 2,200 rounds of .50-caliber ammunition and nine more LAWs.

The Army informed Picco and Crescent Security that the company had been banned from U.S. bases "due to blatant disregard" of the arming guidelines for U.S. and Iraqi private security companies, according to the memorandum.

Picco protested that the weapons were legal and that Crescent was being targeted for unknown reasons, possibly related to the November ambush and seizure. But on March 6, before closing Crescent down, he signed a brief statement.

"I accept full responsibility for my company's non-compliance with established guidance and understand that any future infractions will result in additional barment from this installation," the statement said. "I assure you this will never happen again."

Crescent's vehicles, including Andy Foord's bullet-pocked Avalanche, sit idle in a dirt parking lot outside Kuwait City. The company continues to maintain a Web site, still featuring its motto: "Integrity-Commitment-Success."

Tomorrow: Why they came to Iraq.

Staff researcher Julie Tate in Washington contributed to this report.

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