Blackwater USA is accusing an ex-employee of stealing trade secrets in a case featuring allegations of false imprisonment, gun-waving commandos, cloak-and-dagger contracts and a late-night police raid.
The lawsuit, nearing trial in a North Carolina federal court, was originally filed Feb. 21, 2006, in Camden County Superior Court. In it, Blackwater claims that a former employee, Curtis Smith, gave confidential information to Covenant Special Projects, a start-up security company based in Northern Virginia.
Blackwater, the Moyock, N.C.-based private military company, fired Smith in January 2006. Smith now works for Covenant, which is also named as a defendant in the case.
The day after the lawsuit was filed, Virginia Beach police raided Smith's home on San Jose Court in the Lago Mar neighborhood off Sandbridge Road. According to a search warrant obtained by the police, the 11:45 p.m. raid yielded a computer, related equipment and papers. No one was home at the time.
A neighbor, who spoke on condition of anonymity because he fears retaliation, said the police gained entry by removing an air conditioner from a garage window and forcing the interior garage door open. He said the door was dented and the doorjamb was splintered.
"We tried to go in with the least amount of damage that we could," said Maj. Jon Worthington of the Camden County Sheriff's Office, the lead investigator in the case. "I tried to do it when he was home, but he wouldn't return my calls."
The search warrant was issued on suspicion of computer fraud and computer trespass, which are criminal offenses. But 15 months later, Smith has not been charged with any crime.
The investigation is continuing as the civil case unfolds, Worthington said.
Worthington moonlights as an instructor on Blackwater's 7,000-acre Moyock compound, and the Virginia Beach Police Department leases a training facility
If any criminal charges are brought, they will be determined by the evidence, Worthington said: "I'm not going to do something just because Blackwater said so."
Smith, 49, a former Marine budget officer, worked for Blackwater as a cost analyst. The company alleges that he gave pricing models used in bidding for government contracts to Paul Mullis, another former Blackwater employee who quit in mid-2005 to join Covenant.
Mullis, who is also a defendant in the case, worked at Blackwater as a program manager for "Other Government Agency" programs. That term, often referred to by the acronym OGA, is a code name for clandestine agencies such as the CIA.
Blackwater has received hundreds of millions of dollars' worth of federal contracts for security work in Iraq and Afghanistan, some of it classified.
The day he was fired, Smith signed an affidavit admitting that he passed confidential pricing models to Mullis.
After Blackwater filed suit, Smith countersued Blackwater and its executive vice president, William Mathews, alleging that his affidavit was extracted under duress.
Neither Blackwater nor Smith responded to requests for comment.
In court papers, Smith says he was confined in a conference room against his will and not allowed to leave until he signed the incriminating statement. Mathews, a former Navy SEAL, allegedly "began a tirade, sitting close to Smith and leaning toward him in a menacing manner."
Mathews is alleged to have "had a reputation for wild and violent behavior and was known to carry concealed weapons. A year earlier, during Smith's job interview, Mathews had waved two handguns in the air."
In addition, Smith says, Mathews brought two other ex-SEALs into the room, both "capable of inflicting serious bodily injury with their bare hands."
Blackwater denies that Smith was confined against his will. In a deposition, however, Mathews made it clear that he took a hard line with Smith.
"I kind of poo-pooed him, 'Ah, shut up. You're stealing stuff. Sign what I put in front of you,' was effectively my tone with him," Mathews said. "I didn't want any backtalk from him."
Smith says that price modeling is a generic technique using simple accounting principles and that he gave up no confidential information. Moreover, he says, Blackwater has made it difficult for him to defend himself by failing to specify the trade secrets he is alleged to have stolen, saying the information is classified.
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