Defense Base Act Compensation Blog

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2 Ex-Workers Accuse Blackwater Security Company of Defrauding the U.S. for Years

Posted by defensebaseactcomp on February 11, 2010

Interesting that the Justice Dept chose not to investigate these charges
Published: February 10, 2010

WASHINGTON — Two former employees of Blackwater Worldwide have accused the private security company of defrauding the government for years by filing bogus receipts, double billing for the same services and charging government agencies for strippers and prostitutes, according to court documents unsealed this week.

In a December 2008 lawsuit, the former employees said top Blackwater officials had engaged in a pattern of deception as they carried out government contracts in Iraq and Afghanistan, and in Louisiana in the aftermath of Hurricane Katrina.

The lawsuit, filed under the False Claims Act, also asserts that Blackwater officials turned a blind eye to “excessive and unjustified” force against Iraqi civilians by several Blackwater guards.

Blackwater has earned billions of dollars from government agencies in the years since the Sept. 11 attacks, when the company won contracts to protect American diplomats in Iraq and Afghanistan. The former employees who filed the lawsuit, a married couple named Brad and Melan Davis, said there was little financial oversight of the money.

Last year, an audit by the special inspector general for Iraq reconstruction and the State Department’s inspector general found that the State Department had overpaid Blackwater $55 million because the company had failed to adequately staff its teams assigned to protect American diplomats in Iraq.

The documents detailing the Davises’ accusations were unsealed after the Justice Department declined to join in the case against Blackwater, which last year changed its name to Xe Services. A Xe spokeswoman did not return a message seeking comment about the case.

In an interview on Wednesday, Ms. Davis said that she and her husband had decided to proceed with the case because “it’s the right thing to do,” and that it was time for “the truth from inside the company” to be made public. If the government is able to recover money from Blackwater as a result of the lawsuit, the Davises could claim a percentage as whistleblowers.

Mr. Davis, a former Marine, performed a number of jobs for the company, including working as a private security guard in Iraq.

Ms. Davis was fired from the company, and she is challenging the legality of her dismissal. Mr. Davis voluntarily resigned from the company.

According to the lawsuit, Ms. Davis raised concerns about the company’s bookkeeping with her bosses in March 2006, when she was handling accounts for the company’s contracts with the Federal Emergency Management Agency and the Department of Homeland Security. The lawsuit claims she was told to “back off,” and that she “would never win a medal for saving the government money.”

Ms. Davis also asserts that a Filipino prostitute in Afghanistan was put on the Blackwater payroll under the “Morale Welfare Recreation” category, and that the company had billed the prostitute’s plane tickets and monthly salary to the government.

She also said Blackwater management used a subsidiary company, Greystone Ltd., to double bill the government for plane tickets between the United States and Amman, Jordan, which served as a transit point for the company’s employees in Iraq.

2 ex-employees say Blackwater billed government for prostitute

Washington Post Staff Writer
Thursday, February 11, 2010; 3:23 AM

Two former employees of Blackwater Worldwide have accused the private security contractor of defrauding the government for years with phony billing, including charging for a prostitute, alcohol and spa trips.

In newly unsealed court records, a husband and wife who once worked for Blackwater said they had personal knowledge of the company falsifying invoices, double-billing federal agencies and charging the government for personal and inappropriate items whose real purpose was hidden. They said they witnessed “systematic” fraud on the company’s security contracts with the Department of State in Iraq and Afghanistan, and with the Department of Homeland Security and Federal Emergency Management Agency in Louisiana after Hurricane Katrina.

After the terrorist attacks of Sept. 11, Blackwater rose to become the largest of the State Department’s private security contractors and has since been paid billions of dollars to protect diplomatic employees in Iraq and Afghanistan and for other agencies’ security missions. The company became a major source of anti-American sentiment in Iraq because of repeated, deadly shootings involving its guards. Iraq moved to expel Blackwater after a September 2007 incident, in which witnesses told the FBI that the company’s guards shot without provocation into a busy intersection, resulting in the deaths of 17 Iraqis.

Brad and Melan Davis worked in various Blackwater locations. Brad Davis, a former Marine, served as a team leader and security guard, including in Iraq. His wife, Melan Davis, worked as a finance and payroll employee, starting in Louisiana. They have filed their allegations that Blackwater defrauded the government as part of a false claims lawsuit, which allows the whistleblowers to win a portion of any public money that the government recovers as a result of the information. However, the Justice Department has chosen not to join them in pursuing their civil suit, a decision that led to the Davises’ claims being unsealed this week in a Virginia federal court.

The Davises assert that Blackwater officials kept a Fillipino prostitute on the company payroll for a State Department contract in Afghanistan, and billed the government for her time working for Blackwater male employees in Kabul. The alleged prostitute’s salary was categorized as part of the company’s “Morale Welfare Recreation” expenses, they said.

Melan Davis said that while working in Blackwater’s finance department, she questioned how Blackwater could bill the government for its workers’ travel expenses to and from Iraq when it lacked the documentation for those trips. She said in court papers that she later traveled to a hotel in Amman, Jordan, where Blackwater personnel were often housed en route to Iraq. She said that while there, she and two co-workers spent numerous hours generating reams of false invoices for plane travel at inflated rates, so that her Blackwater bosses could overcharge the government for the travel.

In one instance, the Davises claimed the company was paying inflated prices to a vendor whose work was billed to the Department of Homeland Security for services related to post-Hurricane Katrina security. They said the overpayments allowed the vendor to provide a barbecue pit grill for Blackwater staff parties.

Melan Davis argues that Blackwater terminated her in February 2008 as a result of her questioning fraudulent billing.

Original Story at WaPo

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