by David Phinney
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Slap on the Hands: List of Iraq-Related Contractors Receiving Penalties

by David Phinney

March 21, 2007 — Government investigators told the Senate Judiciary Committee on Monday that they were focusing on debarment and suspensions of individuals and companies as an approach to punishing wrongdoing by contractors in Iraq.

To Date: 14 individuals and companies have been suspended from future US government contracts and business, eight have been debarred entirely, and 12 are pending consideration for such punitive action, Special Inspector General for Iraq Reconstruction Stuart Bowen said. (See related story: A Billion Here, a Billion There….)


Although not comprehensive
, the list gives a flavor of the US Army’s effort in that arena and the kind of crimes that government investigators are tracking.

Most of the suspensions and debarments deal with bribery and fraud and are directed at individuals: A number were employees of Halliburton/KBR; others are military personnel. Some are related to lesser-known Kuwaiti companies.

More Aggressive: This list was compiled during a quick scan of reports on the Army Fraud Fighter’s Web site (expect possible lag time on link).

There is also a US government Excluded Parties List. Searches are based on individual names and companies.

It does appear the Army Procurement Fraud Branch (PRB) has been more active with fraud cases since the beginning of 2006.

PFB says it is working with the Special Inspector General for Iraq Reconstruction to coordinate suspension and debarment actions for Iraqi and third-party national companies for poor contract performance on several reconstruction contracts.

Bribery (International Zone, Iraq): On 13 April 2005, the Army SDO suspended Mr. Faheem Mousa Salam, an employee of KBR in the International Zone, Baghdad, Iraq. According to the complaint filed against him in the United States District Court for the District of Columbia, Mr. Salam offered payments to Iraqi police officials in exchange for contracts to supply the Civilian Police Assistance Training Team, Multi-National Security Transition Command – Iraq, with 1,000 protective vests and other equipment. Mr. Salam was charged with violation of the Foreign Corrupt Practices Act of 1977. Mr. Salam was acting independently from KBR at the time the alleged misconduct took place.

False Statement (Iraq): On 27 April 2006, the Army SDO suspended Mr. Mohammed Shabbir Khan (Mr. Khan). Beginning in October 2002, KBR hired Tamimi Global, Ltd (Tamimi), a subcontractor. Mr. Khan was employed by Tamimi as the Director of Operations for Kuwait and Iraq. The suspension is based upon a warrant of arrest issued on the basis of a one-count criminal complaint filed in the United States District Court, Central District of Illinois. Mr. Khan is alleged to have made a false statement during an interview with law enforcement agents.

Bribery (Kuwait): On 27 April 2006, the Army SDO suspended Mr. Stephen Lowell Seamans, a former Procurement Materials and Property Managerfor KBR (prime contractor) under LOGCAP III working in Kuwait. On 3 March 2006, Mr. Seamans pled guilty in the United States District Court, Central District of Illinois, to committing wire fraud and conspiracy to launder money. Mr. Seamans devised a scheme to defraud the Government by accepting kickbacks from a subcontractor.

Bribery (Kuwait): On 2 June 2006 the Army SDO debarred Jasmine International Trading and Service Company, a Kuwait-based wholesaler of durable and non-durable goods to U.S. military facilities in Kuwait, and its CEO, Mr. Diaa Ahmed Abdul Latif Salem. Mr. Salem provided gratuities to Army personnel assigned to the Camp Arifjan, Kuwait, finance office. Both Jasmine and Mr. Salem were debarred for a period of one year, concluding on 26 February 2007.

Fraud (Iraq): On 19 July 2006, the Army SDO suspended Lieutenant Colonel (LTC) Bruce D. Hopfengardner, USAR, based on accusations that he engaged in wire fraud, wrongful conversion, interstate transportation of stolen property, conspiracy, and money laundering. Between January and July 2004, LTC Hopfengardner was deployed to the Coalition Provisional Authority — South Central Region (CPA-SC) as part of OPERATION IRAQI FREEDOM to assist in the reconstitution of the Iraqi police force. On 7 July 2006, an indictment against LTC Hopfengardner in the United States District Court for the District of Columbia was unsealed, alleging his actions in connection with a bribery and fraud scheme involving multiple contracts awarded by CPA-SC during his deployment. As part of this scheme, LTC Hopfengardner was allegedly involved in the fraudulent award of contracts and the authorization of cash payments, despite defective performance (or non-performance) of contract terms. Furthermore, LTC Hopfengardner is accused of stealing $120,000.00 in cash from CPA-SC, in cooperation with other co-conspirators, and subsequently smuggling it into the United States at the conclusion of his deployment to Iraq.

Fraud (Iraq): On 19 July 2006, the Army SDO suspended Lieutenant Colonel (LTC) Bruce D. Hopfengardner, USAR, based on accusations that he engaged in wire fraud, wrongful conversion, interstate transportation of stolen property, conspiracy, and money laundering. Between January and July 2004, LTC Hopfengardner was deployed to the Coalition Provisional Authority — South Central Region (CPA-SC) as part of OPERATION IRAQI FREEDOM to assist in the reconstitution of the Iraqi police force. On 7 July 2006, an indictment against LTC Hopfengardner in the United States District Court for the District of Columbia was unsealed, alleging his actions in connection with a bribery and fraud scheme involving multiple contracts awarded by CPA-SC during his deployment. As part of this scheme, LTC Hopfengardner was allegedly involved in the fraudulent award of contracts and the authorization of cash payments, despite defective performance (or non-performance) of contract terms. Furthermore, LTC Hopfengardner is accused of stealing $120,000.00 in cash from CPA-SC, in cooperation with other co-conspirators, and subsequently smuggling it into the United States at the conclusion of his deployment to Iraq.

Fraud (Iraq): On 15 September 2006, the Army proposed Mr. Christopher Joseph Cahill for debarment. Mr. Cahill pled guilty in the United States District Court, Central District of Illinois, to committing one count of major fraud against the United States. Mr. Cahill was employed by Eagle Global Logistics (EGL) as the Regional Vice President for the Middle East and India. In his capacity as vice president of this region, he committed fraud when he added a war risk surcharge of $0.50 for each kilogram of freight transported to Baghdad. EGL’s invoices, with the unauthorized surcharge, were submitted to Kellogg Brown and Root Services, Inc., which, in turn, passed the costs on to the Government for payment. (Ms. McCaffrey)

Bribery (Kuwait): On 5 September 2006, the Army SDO suspended Lieutenant Colonel (LTC) Marshall A. Gutierrez, United States Army, who was assigned to the U.S. Army Area Support Group Kuwait (ASG-KU), located at Camp Arifjan, Kuwait, as Director of Logistics. On 18 August 2006, LTC Gutierrez was arrested by CID agents based on allegations that between 1 July and 18 August 2006, he offered to disclose procurement-sensitive information to an employee of a contractor currently providing logistics support to the U.S. Army, in exchange for a cash payment of approximately $3,400. Immediately prior to his arrest, LTC Gutierrez was observed and recorded by CID agents receiving a cash payment of approximately $3,400 from the contractor. On 22 August 2006, the Commander, ASG-KU, preferred charges against LTC Gutierrez. (Mr. Persico) Bribery (Kuwait). On 11 September 2006, the Army SDO terminated the suspension of LTC Marshall A. Gutierrez, United States Army. On 5 September 2006, the Army SDO suspended LTC Gutierrez, who was assigned to the U.S. Army Area Support Group Kuwait (ASG-KU), based on allegations that, between 1 July and 18 August 2006, he offered to disclose procurement-sensitive information to an employee of a contractor providing logistics support to the U.S. Army, in exchange for a cash payment of approximately $3,400. LTC Gutierrez died on 5 September 2006.

Bribery (Kuwait): On 30 March 2006, the Army SDO suspended Gheevarghese Pappen, an Army Corps of Engineers civilian employee assigned to Camp Arifjan, Kuwait. According to the complaint filed against him in the United States District Court for the District of Columbia, Mr. Pappen allegedly received payments from a Kuwaiti national, for contracts to provide apartments in Kuwait City for Army personnel. Mr. Pappen was arrested upon his return to the United States on 17 March 2006 in Atlanta, GA, and charged with Bribery of Public Officials.

Bribery (Kuwait): On 12 January 2006, the USAREUR SDO debarred Dan Trading, a Kuwaiti subcontractor, until 15 November 2006, and Mr. Amro Al Khadra, manager and director of sales for Dan Trading, until 15 November 2008. Mr. Al Khadra signed a bogus “loan contract” to assist CW2 Robert Wiesemann deal with German tax authorities in exchange for the CW2 Wisemann’s agreement to work Mr. Al Khadra. Based on Mr. Al Khadra’s lack of integrity, and willingness to resort to deception to further his own goals, he was debarred.

Bribery (Kuwait): On 6 March 2006, the USAREUR SDO debarred CW2 Robert Wiesemann from contracting with the US Army until 4 December 2008. CW2 Wiesemann was debarred for integrity problems arising from his improper relationship with TWI and Dan Trading, two contractors. CW2 Wiesemann was charged with graft and bribery. He has since resigned with an Under Other Than Honorable Conditions discharge.

Fraud (Iraq): On 27 February 2006, the Army SDO suspended Eagle Global Logistics, Inc. (EGL) and its former Vice President of operations in Dubai and the Middle East, Mr. Christopher Joseph Cahill. On 16 February 2006, Mr. Cahill pled guilty to a criminal information filed against him in the United States District Court, Central District of Illinois, charging him with committing Major Fraud against the United States. EGL was a subcontractor of Kellogg, Brown & Root providing air-freight forwarding services to transport U.S. military equipment from Dubai to Baghdad.

Fraud (Rock Island): On 16 February 2006, the Army SDO debarred Mr. Glenn Allen Powell, a procurement official and an employee of KBR, until 14 September 2009. On 19 August 2005, Mr. Powell pled guilty to Major Fraud against the United States in the United States District Court, Central District of Illinois. He was sentenced to 15 months incarceration and ordered to pay $90,973.99 in criminal restitution to HQ, U.S. Army Operations Support Command, Rock Island Arsenal, Illinois.

Major Fraud, Kickbacks (OSC, Rock Island): On 14 September 2005, the Army SDO suspended Glenn Allen Powell, a former employee of Kellogg Brown & Root (KBR), for receiving kickbacks from an Iraqi company. Mr. Powell pled guilty to a criminal information in the United States District Court, Central District of Illinois.

Failure to Perform a Contract (Iraq): On 29 September 2005, the Army SDO debarred DXB International, a Kuwaiti company, and its chief operations officer, Steven Ludwig, until 25 July 2008 based on their failure to perform a contract for the delivery of ice to Army troops in Iraq. The proposed debarment of Sidney Loggins was terminated.

Major Fraud by Former Halliburton-KBR Employee and Subcontractor (Kuwait): On 18 March 2005, the Army SDO suspended a former procurement employee of Halliburton-KBR (KBR), the managing partner of the Kuwaiti company, LaNouvelle, and LaNouvelle General Trading & Contracting Company following an indictment filed in the Eastern District of Illinois. The indictment charges four counts of major fraud and six counts of wire fraud. The contract involved in this action is LOGCAP III. The two individuals devised a scheme whereby the KBR employee improperly influenced the award of contracts for the storage and dispersal of fuel in Kuwait. This criminal activity was originally brought to the attention of investigators by KBR.

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6 Responses to “Slap on the Hands: List of Iraq-Related Contractors Receiving Penalties”

  1. Lu says:

    This is barely touching the problem. What about the Dyncorp Scam? And all the contractors including myself that have reported illegal activity and lost our jobs over it.

  2. Stephen says:

    How can i become a saint?
    😉

  3. Steve Ludwig says:

    What a surprise to find out from my brother-in-law that my name is on your site. I did not even know your site existed. He just happened to be surfing your site and stumbled upon the DXB story. Thank God I have tremendous integrity and my family and others who know me knew something was not right. Glad I get to set the record straight.
    With regard to DXB, the contract was a Firm Fixed Price (FFP) contract to provide and distribute 250,000 lbs of ice to 30 or so military camp locations in the greater Baghdad area for a period of 6 months. DXB provided all equipment to include all refrigeration trailers, power generation, water storage facilities, ice factory production machinery, chillers etc. Essentially, all required elements to produce the ice were provided on time to the location specified in the contract. The Government was to furnish the potable water and real estate.
    Initially, DXB was directed to establish the factory at Camp Dogwood. All equipment was brought in to that location and after a week or so, the Government decided that they wanted the location moved to what was the old Iraqi Ministry of Transportation facility that was then being used as a US military camp. The camp was much more centrally located and the facilities were in much better condition.
    After re mobilizing all equipment to the new site, DXB began preparing the building to be utilized (an old maintenance facility that one-half of which was being used as a bulk laundry operation by another contractor). By now, the schedule had already slipped a couple of weeks due to no fault of DXB, but solely due to the decisions by the military. DXB established the factory and was prepared to produce ice on schedule (except for the delay caused by the Government) and in compliance with the contract requirements. The Government had both equipment and water production problems at the new site and was not able to provide the potable water as required in the contract. After several weeks of trying to resolve the problem DXB was informed that the Government no longer wished to have the factory at that location as they were unable to resolve the water issue.
    DXB was then directed to relocate the facility to an area on Camp Victory near to where the bulk water issue point was. A building was designated and DXB mobilized all equipment again to the new site. A political battle ensued among military commanders over the use of the building. After several more weeks of Government infighting, DXB was told they could not use that facility as it was going to be converted into the new postal headquarters. DXB was directed to hold tight until another facility could be determined.
    By this time, over a couple of months had already passed since the start date stated in the contract. After several more weeks of DXB’s equipment just sitting on the ground in the middle of Camp Victory, a new site on Camp Victory was finally selected. Again, DXB mobilized virtually all of their equipment when, once again, the Government came back and told DXB that the site would not be able to be used as they would not be able to bring in a military unit capable of providing the Reverse Osmosis Processing Unit (ROPU) to furnish the water as required by the contract. Sounds like a comedy of errors? Keep on reading.
    Again, DXB’s equipment sat for weeks waiting for the military to determine a new location. Finally, a new site was selected and this time it was over at one of the camps on Baghdad International Airport (BIAP). Once again, DXB mobilized nearly all equipment to the new site when once again they were informed that while the new site did have an operation ROPU it was incapable of handling the volume of water required to produce the ice and still meet all of its other obligations. Now DXB’s equipment was spread out among two locations (Victory and BIAP) and once again sat idle due to no fault of their own. By now, approximately 4 out of the 6 months had gone by and the Government had still failed to furnish either the real estate or the potable water as required by the contract. This dilemma continued for several more weeks when finally the Government decided to terminate the contract for the convenience of the Government (T4C). The Government was never able to figure out a way to provide a combination of appropriate real estate coupled with the required amount of potable water.
    Keep in mind that DXB had been prepared to execute all along and only due to the Government’s errors and delays, was no ice being produced. All the while, DXB continued to incur all the costs for leasing all of the equipment required to produce the ice. As this was an FFP contract, DXB had all the right in the world to bill the Government the full monthly price as stated in the contract. Instead, DXB actually invoiced the Government substantially less than the contract price in an effort to demonstrate good will. Because DXB did not have to pay for fuel for the power generation or the labor to run the production line or the fuel and drivers for the trucks and distribution, the invoice price to the Government was reduced by some 15%. Again, keep in mind that this was not required as it was an FFP contract, NOT a cost contract and as such, the contractor takes on the burden of virtually all risk and also had the complete right to bill the Government in full. Had it been a cost contract, the Government would have still been required to pay all costs associated and would still not had received a single ice cube due to its own actions, inactions, ineptness, negligence or whatever else you want to call it.
    Also keep in mind, that DXB was in constant (almost daily) contact and coordination with the military representatives assigned to the contract. When DXB invoiced the Government each month, they were required to get the military customer’s approval and signature by having the Government’s Contracting Officer’s Representative (COR) sign off on the DD 250 receiving report. The COR was not some lackey squirreled away in some remote camp that DXB never saw, but rather a Lieutenant Colonel (LTC) who DXB met with at BIAP (located right next to Camp Victory) on virtually a weekly basis throughout the contract duration. DXB’s daily on the ground point of contact was a First Lieutenant (1LT) who took his direction and guidance directly from the LTC. Again, these were no lackeys, but commissioned officers with additional training in managing Government contracts on behalf of the Contracting Officer
    As each month passed, the military knew that they were paying out somewhere around 85% of the contract monthly value and were not receiving any ice. Again, this was due to all parties involved (including the contracting officer) understanding that this was an FFP contract, that DXB was prepared to execute the contract and was incurring all associated costs, and due to no fault of their own but rather solely due to the Government’s own errors and negligence, no ice could be produced.
    A few months later after all of this transpired, DXB was contacted by Joint Contracting Command – Iraq at Camp Victory that they were placing DXB on “Administrative Hold” pending investigation by Criminal Investigation Division (CID) into fraudulent invoices. Essentially the claim was that DXB was contracted to produce ice and never produced any ice yet billed the Government for it anyway. DXB categorically AGREED with the allegation. However, this was not a criminal matter of fraud but rather a contractual matter of the Government’s inability to meet it’s obligations under the contract. It was the Government’s negligence that caused DXB to not be able to produce the ice when DXB was fully prepared to do so. Virtually all the cost to DXB associated with producing the ice was in the leasing of the equipment which was for the same 6 month period that the Government had contracted for. Remember, it was NOT a cost contract yet DXB never charged the Government for operating expenses even though it had the right to do so under an FFP contract. In any event, the matter was taken over by an Air Force LTC Contracting Officer who was the Deputy Commander for the Joint Contracting Command – Iraq. After all parties were brought to the table and all matters bearing on the facts were brought to light, the “Administrative Hold” on DXB was lifted and a verbal apology given to DXB by the Deputy Commander.
    DXB considered the matter closed and went about its business. By the way, during the period of the Administrative Hold, DXB was prohibited from competing for any Government contracts and all payments due to DXB from other contracts were placed on hold. The period lasted for about one and one-half months and DXB experienced tremendous opportunity costs as a result.
    Not that long ago, DXB found out indirectly that an “Army Agency” had placed it on the debarred list along with Steven Ludwig for the Ice Factory “fiasco”. Apparently, the Joint Contracting Command – Iraq, never coordinated the lifting of the “Administrative Hold” correctly and as a result DXB was placed in the EPLS system for failure to perform. DXB has tried to resolve this matter with the Army but the releasing of the “Administrative Hold” document issued to DXB by Joint Contracting Command – Iraq does not state the contract number or even what the contract was for. All the document states is that the Administrative Hold on DXB is lifted along with the effective date. DXB continues to try to get the EPLS listing removed for both the Company and Mr. Ludwig, but does not hold out much hope as the Bureaucratic Machine is slow, sluggish and virtually unresponsive to all attempts to right the wrong. Mr. Loggins name was removed from EPLS as he worked for DXB prior to the beginning of the execution of the contract and therefore was not party to any of the matters.

  4. Frank says:

    So, what do you think about
    last comments ?

  5. Undisclosed says:

    Dave, your comment on DXB International – the investigation was actually based on false invoices – the company said they would provide ice and never produced a singele ice cube yet invoiced the government for over $1(+) MILLION – Steve Ludwig signed the contract and invoiced the government but the real culprit is a fellow named Kyle Thayer, aka Khalid Al Zayher (Zaher), of Palestinian origin and living in Dubai. DXB is actually a Dubai based company, owned by Al Zaher and (Thayer) was the guy cashing the checks. According to my source Sidney Loggins was not part of the company at the time and so was not debarred. I got this from another Palestinian fellow in Jordan.

  6. James Cate says:

    These are only the tip of the iceberg; you should be here on the ground and see what is really going on !!!!!!!

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