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There were insults, accusations of theft, and even a dirty joke, but in the end a jury found last week that Iraq contractor Custer Battles had defrauded the government, and it ordered the company to pay more than $10 million in fines. Filed under the False Claims Act in the U.S. District Court for the Eastern District of Virginia, the suit, brought by two of the company’s former workers, charged Custer Battles with bilking the government out of millions by inflating its costs through the use of bogus receipts and offshore shell companies. The company had won a $20 million contract with the Coalition Provisional Authority in 2003 to provide trucks, cabins, and other logistical support to the CPA in its efforts to distribute Iraq’s new currency. Colorful language abounded at trial. Alan Grayson, a lawyer for the whistle-blowers, called Custer Battles’ two co-founders “war whores.” Defense attorney David Douglass of the D.C. office of Porter Wright Morris & Arthur responded by comparing Grayson to the mythical Bigfoot. “When the facts are all in, it’s just a guy in a suit trying to mislead people,” Douglass said. Nor was the trial without its moments of levity. When asked by Judge T.S. Ellis III to speedily question a witness, Grayson responded, “Your Honor, I’m very quick. Just ask my wife.” That drew a rebuke from Ellis, who ruled that “I will decide when it’s appropriate to make humorous remarks.” Under the False Claims Act, the whistle-blowers are eligible for 25 percent to 30 percent of the award, with the government collecting the rest. Attorneys for the whistle-blowers from McLean, Va.’s Grayson & Kubli were also awarded legal fees and expenses. A second trial between the two parties, over accusations of fraud in a separate CPA contract, is scheduled to start later this year.
Jason McLure can be contacted at [email protected].

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