Custer Battles, a U.S. security firm that is accused of settling up sham companies in a fraud scheme in Iraq, says that it cannot be sued under the False Claims Act because the money involved belonged to Iraqis, not Americans.
Attorneys for the company say that the Coalition Provisional Authority, the body that ruled occupied Iraq, was not a U.S. agency and that the money involved was Iraqi money and not subject to suit under the False Claims Act.
The issue has not yet been decided but if the judge finds that the False Claims Act does not apply, the fraud may go unpunished.
The Department of Defense has suspended Custer Battles from future U.S. government contracts and a criminal investigation of the company's actions continues.
The Los Angeles Times article was reprinted in the December 20, 2004 issue of the Pioneer Press.