Security Firm Is in Smuggling Probe

Federal prosecutors are investigating whether employees of the private security firm Blackwater USA illegally smuggled into Iraq weapons that may have been sold on the black market and ended up in the hands of a U.S.-designated terrorist organization, officials said yesterday.

The U.S. Attorney's Office in Raleigh, N.C., is handling the investigation with help from Pentagon and State Department auditors, who have concluded that there is enough evidence to file charges, the officials said. Blackwater is based in Moyock, N.C.

A spokeswoman for Blackwater did not return calls seeking comment yesterday. The U.S. attorney for the eastern district of North Carolina, George Holding, declined to comment, as did Pentagon and State Department spokesmen.

Officials with knowledge of the case said it is active, although at an early stage. They spoke on condition of anonymity because of the sensitivity of the matter.

The News & Observer of Raleigh reported today that two former Blackwater employees -- Kenneth Wayne Cashwell of Virginia Beach and William Ellsworth "Max" Grumiaux of Clemmons, N.C. -- are cooperating with federal investigators.

Both men pleaded guilty in January to possession of stolen firearms that had been shipped in interstate or foreign commerce. The men agreed to testify in any future proceedings.

Officials said the investigation into U.S. weapons that had gone missing in Iraq gained steam after Turkish authorities protested to Washington in July that they had seized American arms from the outlawed Kurdistan Workers' Party, or PKK, rebels.

The PKK, which is fighting for an independent Kurdistan, is banned in Turkey and is considered a "foreign terrorist organization" by the State Department. That designation bars U.S. citizens or those in U.S. jurisdictions from supporting the group in any way.

The North Carolina investigation was first brought to light by State Department Inspector General Howard Krongard. He alluded to it Tuesday while denying he had improperly blocked fraud and corruption probes in Iraq and Afghanistan.