Ex-Blackwater executives finger CIA in weapons trial

Cross Posted from Civilian Contractors

Several other lawsuits filed by Contractor Employers will expose the extent to which Civilian Contractors were actually working for the CIA and the State Department in capacities that are not known to the public.

It is known that Ronco Consulting has worked for/with the CIA via the State Department .

The Virginian Pilot  June 2, 2012

Five ex-Blackwater executives, facing federal firearms charges in connection with a gift of weaponry to a Middle Eastern monarch, have come up with a new explanation for how it occured:

It was a CIA operation.

In court papers filed last month in Raleigh, the defendants say the gift of five guns to King Abdullah II of Jordan during a royal visit to Blackwater’s Moyock, N.C., headquarters in March 2005 was requested, directed and authorized by the Central Intelligence Agency.

Attorneys for the five have filed declarations from two retired CIA officials, including a former Jordan station chief, who say they are familiar with the circumstances of the king’s visit and would be willing to testify about it.

The CIA did not respond to a request for comment.

It’s a new wrinkle in a case that dates to April 2010, when the five security company executives were indicted on a variety of felony firearms charges. One key section of the indictment involved King Abdullah’s 2005 visit to Moyock, during which the monarch was presented a Bushmaster M4 rifle, a Remington shotgun and three Glock handguns.

Please read the entire article here

Judge Denies Blackwater’s Motion for Arbitration

Law Offices of Scott J Bloch  May 23, 2012

WASHINGTON, DC (May 23, 2012) – Blackwater Industries, which changed its name to Xe Services, and now has changed it yet again to Academi LLC, lost its initial bid to have the $240 million suit for employee misclassification sent to arbitration and dismissed from federal court in Washington, D.C.

Scott Bloch filed an amended complaint (see link above) in the class action lawsuit on behalf of four former security specialists, who were injured while working for Blackwater, in order to recover their payment of social security, unemployment insurance, and unpaid benefits and state and local withholding and unemployment insurance, and other unspecified damages. The action seeks $240,000,000 in damages for lost benefits, overtime, treble damages and punitive damages, as well as additional amounts as proved for the class of specialists.

The court has rejected that motion filed by Blackwater and required it to file another motion to determine if the same Plaintiffs agreed to have an arbitrator determine if the agreements were unconscionable, procured by duress, fraud and undue influence.

“Blackwater acted illegally and unconscionably toward these brave individuals,” said Bloch. ”Through their fraud as pointed out in the Amended Complaint, they avoided overtime for security workers who worked sometimes 12-16 hours a day 6 days a week. They were forced to sign agreements they never read and were not given time to read and not given copies, which took away valuable rights and were unlawful in their terms. Now the court has rejected their initial motion and required Blackwater to seek the same relief if they can prove that the Plaintiffs who never were allowed to read the original agreements agreed to have an arbitrator determine whether they properly agreed to anything. We continue to assert the illegality of the agreements and the actions of Blackwater.”

Read Xe’s Arbitration Bid Denied in Misclassification Suit here.

Tax and DBA Insurance Fraud, Misrepresenting Employee’s as Contractors

Some Contract Companies avoid paying Medicare and Social Security Taxes on their employees by classifying them as independent contractors or consultants.  The IRS considers this to be Fraud.

These same companies claim these same independent contractors/consultants to be employee’s for the purposes of acquiring mandated Defense Base Act Worker’s Compensation Insurance.  Even going so far as to have workers sign and back date employee contracts after they have been injured so they will be covered.

See more on Misclassification of Employee’s as Contractors at Overseas Contractors Tax Information where you will also find a link to the IRS Form SS-8

Following is a recent SS-8 Determination which confirms the Misclassification and opens up the company to an investigation of Tax and Insurance Fraud and US Labor Law Violations.

Blackwater Contractor in Iraq Cannot Exclude Compensation Under § 112

From Tax Professor Blog

The Tax Court yesterday held that a Florida man who earned $98,400 in 2005 working for Blackwater (since renamed Xe) providing security services to the U.S. Army in Iraq could not exclude the compensation from income under § 112 as “combat zone compensation of members of the Armed Forces.

” Holmes v. Commissioner, T.C. Memo. 2011-26 (Jan. 31, 2011).

The Tax Court concluded that the taxpayer did not serve in the Armed Forces of the United States but instead was a private citizen hired by and paid by a private company (Blackwater). The Tax Court refused to impose a penalty because the taxpayer relied on an IRS memorandum wrongly stating that civilian personnel in direct support of combat zone military operations qualified for the § 112 exclusion. (Hat Tip: Bob Kamman.)  Please see the original here

Tax Time 2009 Civilian Contractor’s Overseas and Injured

Following are answers to our most commonly asked tax questions.

If you received monthly payments from the DBA insurance company they are not taxable.  This is no great gift, it is part of why your benefits are only figured on two thirds of your Average Weekly Wage.

If you were covered under DBA insurance in 2009 you were an employee of the company you worked for unless they misrepresented you as an employee in order to qualify for the insurance.

If your company misrepresented you as an independent contractor for tax purposes you will need to file

Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding Form SS-8

Also see Misrepresenting Employee’s as Contractors

The limit on excludable income for 2009 is  $91,400.00

Social Security and has a limit of   $102,000 for 2008      $110,100 for 2012

See Publication 15

All covered Wages are subject Medicare Taxes

Foreign Earned Income and Housing: Exclusion – Deduction

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