Ryan
Custer Battles has the dubious distinction of being the first Iraq war contractor to be found guilty of fraud. In March 2006, a jury ordered Custer to pay damages in excess of $10 million for 37 counts of fraud, including what the judge called “false and fraudulently inflated invoices.” While Custer wriggled out of serious penalties on a technicality (the Coalition Provisional Authority is not part of the U.S. Government and therefore crimes against it cannot be tried under U.S. law), the whole ordeal has muddied the company’s reputation greatly, possibly beyond repair. It also seems to have opened the floodgates for similar cases of contractor fraud. As of fall 2006, a backlog of 70 fraud cases were pending against Iraq contractors doing all manner of work.
During the trial, a retired Army general testified that the inflated invoice scandal stood out to him as “probably the worst I’ve ever seen in my 30 years in the Army.”
