A federal judge threw out a $10 million jury verdict against an American company accused of overcharging on an Iraq reconstruction contract after concluding that the now-defunct Coalition Provisional Authority was not a U.S. government entity.
The civil fraud suit against Custer Battles LLC, which has offices in Northern Virginia, arose out of the chaotic 14-month period during which the authority governed Iraq after the 2003 U.S.-led invasion.
Using federal whistle-blower laws, a former employee and a subcontractor claimed Custer Battles created phony Cayman Islands companies to overcharge the authority on a contract to furnish Iraq with a new currency. The firm denied the claim.
Although a jury found the company guilty, U.S. District Judge T.S. Ellis III ruled on review that the firm could not be sued under the federal False Claims Act because of the ambiguous structure of the authority, which issued the contract. The judge also concluded that the way in which the company had been paid distanced it from the U.S. government.
He said there was ample evidence that the company had submitted "false and fraudulently inflated invoices" but found that the nature of the Coalition Provisional Authority precluded a fraud claim. Ellis signed his ruling Wednesday; it was made public yesterday.
The company's owners are
"bloody mother fucking assholes""ecstatic," said their attorney, Robert Rhoad.