Custer Battles

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Custer Battles, LLC is a defense contractor headquartered in Newport, Rhode Island, with offices in McLean, Virginia. The company offers services that include security services, litigation support, global risk consulting, training and business intelligence.[1] Prior to June 2003, the company specialized in crisis management training and consulting to humanitarian organizations, as well as conducting critical infrastructure protection and training for high-value infrastructure in the United States.

In June 2003, Custer Battles took its services to Iraq and became one of the larger contractors supporting the Coalition Provisional Authority and the U.S. government. In October 2004, the company was sued under the False Claims Act. As a result of this being the first lawsuit concerning contractors in Iraq, the company received significant attention throughout the media. In February 2007, the allegations of fraud were dismissed.

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[edit] Background

Custer Battles was founded in October 2001. The company was named after its founders, Scott Custer and Michael Battles. Custer is a former Army Ranger and defense consultant, while Battles is a former Army officer and CIA intelligence officer who ran unsuccessfully for the United States Congress in Rhode Island in 2002.

From 2001-2003, Custer Battles provided crisis management and assistance to humanitarian organizations working in high-risk conflict areas throughout the world. Their clients included some of the largest non-governmental organizations (NGOs) in the world. Specific services of Custer Battles for these NGOs included kidnap and ransom assistance, crisis management, pre-deployment training and security training. In 2003, Custer Battles was competitively awarded several large state contracts to provide counter-terrorism and vulnerability assessments to protect drinking water infrastructure. These contracts were with the states of Maine, Nevada, New Hampshire and Rhode Island.[2]

In June 2003, Custer Battles was competitively awarded a contract to secure the Baghdad International Airport. The 12-month contract with the Coalition Provisional Authority was worth $16.8 million. The company continued to expand its business in Iraq, and became one of the larger defense contractors operating in the country. By some accounts, they had more than 1000 staff on the ground in Iraq.[3] According to an article in the Boston Globe, Custer Battles offered its services to the United Nations just prior to the bombing of the UN headquarters in Iraq which killed 23 people including the senior UN diplomat.[4]

The company continued to expand its operations in Iraq through 2003 and 2004. In early 2005 Custer Battles, in the midst of several lawsuits and a decreasing security situation, ceased operations in Iraq.

[edit] Allegations of fraud in Iraq

[edit] CPA case

In October 2004, a qui tam [5] lawsuit by Robert Isakson and William Baldwin was unsealed against Custer Battles. The suit, brought under the False Claims Act, alleged massive overbilling on two contracts with the Coalition Provisional Authority in Iraq in 2003. [6]

In July 2005, Judge T.S. Ellis III ruled that Custer Battles' contracts with the CPA were prosecutable under the False Claims Act, denying Custer Battles' lawyers claims that the company had no contract with the US government. The Judge also ruled that money paid for by the Development Funds for Iraq (DFI) could not be prosecuted under the False Claims Act, as the US government was not involved in administering these funds.

In March 2006, a jury found Custer Battles liable for the submission of 30 false claims, each one of which is subject to a US$5,000 -11,000 civil fine. However, in August 2006, Judge Ellis, of the Federal District Court in Alexandria, Va overturned the verdict on a technical grounds. While Judge Ellis had previously concluded that specific CPA funds were fair game for False Claims Act prosecution, he found that the Relators in this case had failed to prove the Custer Battles actually submitted the claims for payment. This case made huge headlines across the nation.

[edit] Baghdad Airport case

Another trial, with the same set of whistleblowers, concerned a separate $16.8 million contract awarded to Custer Battles to provide security at Baghdad International Airport. As this contract was paid for by seized Iraqi funds, Judge Ellis ruled that the entire contract was susceptible to the False Claims Act, and not just part of it in the previous case. The basic allegations were that Custer Battles had failed to provide adequate security staffing under its Firm-Fixed Price contract of $16.8 million.

In February 2007, Judge Ellis dismissed the case and ruled that there was no evidence of fraud on Custer Battles part. "Judge Ellis found that Custer Battles never specified how many security personnel it would provide. He said Custer Battles initially provided more than 138 workers and received glowing performance evaluations."[7] The Relators are planning to appeal the decision to the 4th Circuit Court of Appeals.

[edit] Custer Battles files conspiracy lawsuit

In April 2005, Custer Battles filed conspiracy and breach of contract lawsuits against Robert Isakson and William Baldwin, the same individuals who had previously accused Custer Battles of submitting false claims. The lawsuit also included Isakson and Baldwin's companies, DRC Inc and American Iraqi Solutions Group, both of Alabama. According to court documents filed in the U.S. District Court for the Eastern District of Virginia, Mr. Isakson breached his contract with Custer Battles when he brought his 12-year old son to Iraq with $9,000 in cash strapped to his chest.[8]

Custer Battles also alleged that Isakson and Baldwin conspired to start a new company, American Iraqi Solutions Group (AISG) and stole Custer Battles clients. This case was eventually moved from the US District court in Virginia to the US District Court for the Southern District of Alabama. Before going to trial, a settlement was reached and Custer Battles dismissed the charges. The amount of money paid by DRC, Isakson and Baldwin has been kept confidential.

[edit] Allegations of unrestrained force

In February 2005, Lisa Myers of MSNBC News reported a story concerning allegations of unrestrained force on the part of Custer Battles security operators in Iraq. In the story, four former Custer Battles employees are quoted as witnessing an incident where a Custer Battles vehicle rolled over a civilian vehicle and injured the occupants inside. The employees also detail an incident where Kurdish guards shot indiscriminately towards Iraqi civilians. According to one of the employees, Bill Craun, "what we saw the American public wouldn't stand for."

In response to the allegations, Ms. Myers interviewed the country director and convoy leader for Custer Battles. The convoy leader, Shawn Greene, adamantly denied that any of these incidents occurred, and detailed the exact incident in which he ordered the Custer Battles truck to hit and forcibly move a civilian vehicle. According to Greene, while his vehicle did damage the civilian car, there were no injuries. Paul Christopher, the Custer Battles country director, provided NBC News access to the company's mission logs, which detailed the event of hitting a civilian vehicle, the subsequent investigation with photos, and the documentation from the driver and witnesses that no one was injured. Both Greene and Christopher did detail accounts of actual combat situation of Custer Battles personnel where their vehicles were attacked by insurgents and Custer Battles personnel were forced to defend themselves through the use of deadly force. [9]

[edit] External links

[edit] Website

[edit] Articles

[edit] Television reports

[edit] Documents

[edit] References

  1. ^ Custer Battles
  2. ^ Custer Battles - Press, Press Releases
  3. ^ Running a Home Business - Running a Small Business - Running Your Own Business
  4. ^ Custer Battles - News Story
  5. ^ http://democrats.senate.gov/dpc/hearings/hearing40/isakson.pdf
  6. ^ NPR: Contractor Alleges Firm Defrauded Iraq Occupation Authority
  7. ^ http://washingtontimes.com/national/20070208-105824-4456r.htm
  8. ^ CorpWatch : U.S.A.: Custer Battles Fights Back
  9. ^ U.S. contractors in Iraq allege abuses - Lisa Myers & the NBC News Investigative Unit - MSNBC.com