In what is expected to be the first of a series of criminal charges against officials and contractors overseeing the rebuilding of Iraq, an American has been charged with paying hundreds of thousands of dollars in bribes and kickbacks to American occupation authorities and their spouses to obtain construction contracts, according to a complaint unsealed late yesterday.
The man, Philip H. Bloom, who controlled three companies that did work in Iraq in the multibillion-dollar reconstruction effort, was charged with conspiracy, wire fraud, conspiracy to launder money and interstate transportation of stolen property, all in connection with obtaining up to $3.5 million in reportedly fraudulent contracts.
The complaint, unsealed in the Federal District Court of the District of Columbia, also cites two unnamed co-conspirators who worked in the Coalition Provisional Authority, the American administration that governed Iraq when the contracts were awarded in early 2004. These were the officials who, with their spouses, allegedly received the payments.
"This is the first case, but it won't be the last," said Jim Mitchell, a spokesman for the Special Inspector General for Iraq Reconstruction, an independent office. Mr. Mitchell said as many as a dozen related cases had been referred to the Justice Department for possible prosecution.
Mr. Bloom's lawyer, Robert Mintz of Newark, said he still knew little about the case beyond what was in the complaint. "The complaint and the supporting affidavit were unsealed for the first time today and we're in the process of reviewing the allegations," he said.
Mr. Bloom, who lived in Romania for many years, appeared in court yesterday, Mr. Mintz said. He was arrested recently at Newark Liberty International Airport, the lawyer added.
The complaint says that in order to obtain lucrative reconstruction contracts, Mr. Bloom paid at least $200,000 a month to an unspecified number of coalition authority officials, including the two co-conspirators and their spouses. Neither co-conspirator is named in the complaint, although it indicates that one is cooperating with the prosecution.
The other co-conspirator, the complaint says, held the position of comptroller and financing officer for "C.P.A. South Central Region in Iraq," which included Hillah. This person controlled $82 million "to be used for payment of contract services rendered in Al Hillah, Iraq, including contracts awarded to Bloom," the complaint asserts.
A United States government official said this person was named Robert J. Stein.
The complaint says the contracts Mr. Bloom obtained "were purported to be for the rebuilding and stabilization of Iraq" in Hillah and Karbala, a holy city in the south. The work included "the renovation of the Karbala Public Library; demolition work related to, and construction of, the Al Hillah Police Academy; the upgrading of security of the Al Hillah Police Academy, and the construction of the Regional Tribal Democracy Center."
With the assistance of the alleged co-conspirators and others, the document says, Mr. Bloom submitted multiple bids on the same contracts, using the names of different companies that were either controlled by Mr. Bloom or did not exist. Once there were sufficient bids to satisfy United States government regulations, the co-conspirators, including Mr. Stein, would ensure that the contract went to one of the companies, the complaint says.
"The value of these contracts ranged up to $498,900," the complaint says. "Co-conspirator 1's approval authority for awarding contracts was limited to contracts less than $500,000."
The complaint contends that the monthly bribes to coalition officials have been corroborated by an Iraqi witness, one of the conspirators "and other persons with personal knowledge of the payments, and through reviewing various financial records."
In one case Mr. Bloom, "who paid the aforementioned bribes, kickbacks and gratuities," the complaint says, "caused the transfer of funds totaling more than $267,000 from foreign bank accounts to accounts in the United States in the name of Co-conspirator 1 and/or his spouse." Other transfers came from banks in Kuwait, Switzerland, the Netherlands and Romania to accounts controlled by the alleged conspirators, the complaint says. Some transfers also went to jewelers, automobile dealerships and a realty firm, all apparently for the benefit of the fellow conspirators.
"I believe that the financial and monetary transactions described above are part of a conspiracy to violate United States law," wrote Patrick McKenna Jr., a special agent for the inspector general's office, as part of the complaint.
Little information was immediately available about Mr. Bloom or Mr. Stein. But the inspector general previously noted that in the rush to start reconstruction projects in south central Iraq, contracts were handled sloppily and oversight was minimal.
The charges are likely to fuel further criticisms of the rebuilding effort in Iraq, which has largely failed to live up to the hopes of United States officials. Large amounts of the money appropriated for rebuilding have been spent on securing projects and repairing sabotage, both results of insurgent activity. The effort has also been criticized for failing to take into account the problems faced by any building project in Iraq, including the difficulty of visiting project sites.
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