A North Carolina man who was charged yesterday with accepting kickbacks and bribes as a comptroller and financial officer for the American occupation authority in Iraq was hired despite having served prison time for felony fraud in the 1990's.
The job gave the man, Robert J. Stein, control over $82 million in cash earmarked for Iraqi rebuilding projects.
Along with a web of other conspirators who have not yet been named, Mr. Stein and his wife received "bribes, kickbacks and gratuities amounting to at least $200,000 per month" to steer lucrative construction contracts to companies run by another American, Philip H. Bloom, an affidavit outlining the criminal complaint says. Mr. Stein's wife, who was not named, has not been charged with wrongdoing in the case; Mr. Bloom was charged with a range of crimes on Wednesday.
In the staccato language of the affidavit, filed in Federal District Court in the District of Columbia, Mr. Stein, 50, was charged with wire fraud, conspiracy, interstate transportation of stolen property and conspiracy to commit money laundering.
But the list of charges does little justice to the astonishing brazenness of the accusations described in the complaint, including a wire transfer of a $140,000 bribe, arranged by Mr. Bloom, to buy real estate for Mr. Stein in North Carolina. The affidavit also says that $65,762.63 was spent to buy cars for Mr. Stein and his wife (he bought a Chevrolet; she a Toyota), $44,471 for home improvements and $48,073 for jewelry, out of $258,000 sent directly to the Bragg Mutual Federal Credit Union into accounts controlled by the Steins.
Mr. Stein's wife even used $7,151.58 of the money for a "towing service," the complaint says. Much of this money was intended for Iraqi construction projects like building a new police academy in the ancient city of Babylon and rehabilitating the library in Karbala, the southern city that is among the holiest sites for Shiite Muslims.
After Mr. Stein awarded contracts for this work to Mr. Bloom, who eventually received at least $3.5 million himself, according to the complaint, the work often was not performed or was done shoddily, the prosecutors say.
Mr. Stein was arrested in North Carolina on Monday, the Justice Department said in a statement. He appeared in court on Tuesday, represented by Jane Pearce, an assistant federal public defender in North Carolina's Eastern District, said Elizabeth Luck, a spokeswoman for the office. The Eastern District includes Fayetteville, where Mr. Stein is listed as a homeowner.
Beyond confirming Mr. Stein's appearance in court, "we do not comment on pending litigation in this office," Ms. Luck said, adding that she could not say whether Mr. Stein planned to retain a private lawyer.
Little is known about Mr. Stein except that he served in the Army and was convicted in federal court in 1996 for "access device fraud," a felony. Court papers show he was sentenced to eight months in prison and ordered to pay $45,339.25 in restitution.
Mr. Stein's lawyer in that case was Richard B. Glazier, who was reached by phone at his home in Fayetteville. He could not recall the details of the case but said: "I recall it being a fairly basic case; I don't recall there being any substantial publicity with it."
The affidavit yesterday alleges that on Jan. 22, 2004, Mr. Stein transferred $200 of money obtained through bribes to the clerk of United States District Court in North Carolina's Eastern District.
The payment, the affidavit explains, was an installment on the restitution payment that Mr. Stein had been ordered to pay on his earlier felony conviction.
Mr. Stein worked for the Grundy Marine Construction Company, based in Ponte Vedra Beach, Fla., in 2001 and 2002, said the company's vice president, Pete Caruk, in a telephone interview. Mr. Stein was fired when he was found to be falsifying payroll records and making out false invoices for nonexistent purchases of materials for a construction job at an Air Force base, Mr. Caruk said.
The company later found, Mr. Caruk said, that Mr. Stein had also falsified elements of his résumé, like decorations he claimed to have won during his military service but had never received. The company lost about $1.5 million in the overbilling episode, and presented its case to the authorities, Mr. Caruk said, but Mr. Stein has not been prosecuted.
"This guy is a thief," Mr. Caruk said. "He's a con artist and a crook."
The Pentagon, which had authority over the Coalition Provisional Authority until it was dissolved in June 2004, said yesterday that it was receiving numerous press queries on Mr. Stein's background and the circumstances of his hiring. A spokesman at the Pentagon said the department was working to fulfill the requests.
The charges against Mr. Stein and Mr. Bloom have emerged from a sweeping probe of rebuilding contracts by a task force led by Stuart W. Bowen Jr., the special inspector general for Iraq reconstruction, and including investigators from the criminal investigations division of the Internal Revenue Service, the immigration and customs enforcement section of the Department of Homeland Security, and the State Department's inspector general.
"The reconstruction of Iraq is, and must be, built on a foundation of integrity and honest business dealings," said Assistant Attorney General Alice S. Fisher in a statement. "The Department of Justice will pursue and prosecute anyone who attempts to exploit this vital process for their own personal or financial gain."
Mr. Bowen said he hoped the charges would serve as "a deterrent to those who may want to abuse the reconstruction effort."
Ronald Dwight, who worked as a legal adviser in the Iraqi Transportation Ministry in January and February of 2004, said that there was a relatively small handful of comptrollers scattered through the occupation offices in major cities in Iraq.
"There was only one comptroller in the C.P.A. headquarters in Baghdad," Mr. Dwight said. "They were pretty powerful guys."
He said that while many occupation officials had come to Iraq for legitimately patriotic reasons, it was obvious that others had different goals. "My impression was that there were a lot of unscrupulous people pretending to be patriots there who were trying to get contracts for their friends," Mr. Dwight said.
Walter Slocombe, an under secretary of defense in the Clinton administration who served as an adviser in Iraq in 2003, said that the comptrollers were "people with considerable responsibility, but not very far up in the hierarchy."
Although Mr. Slocombe does not recall meeting Mr. Stein, he said that he did recall visiting the regional office in Hilla where Mr. Stein worked. Amid the privations and heat of Iraq, the office stood out vividly for a particularly simple reason, Mr. Slocombe said. "It was famous for its soft ice-cream machine," he said.
In the wake of the latest accusations, Mr. Slocombe said, he was wondering how the ice-cream machine had been paid for.
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