IRAQ: Businessman Pleads Guilty in Iraq Scheme

WASHINGTON -- With millions of dollars in Iraqi reconstruction contracts to be had, Philip H. Bloom offered up money, cars, premium airline seats, jewelry, alcohol, even sexual favors from women at his villa in Baghdad.

For a while, the kickback scheme worked. Bloom, a U.S. businessman who saw opportunity in Iraq, paid more than $2 million in bribes to U.S. officials who directed more than $8.6 million in contracts to companies he controlled.

After the inspector general for reconstruction projects began auditing contracts, the system crumbled.

Bloom is facing up to 40 years in prison and nearly $8 million in penalties after pleading guilty to conspiracy, bribery and money laundering, according to court documents made public Tuesday.

He is one of four people charged so far in a scheme that included the theft of $2 million in reconstruction money and the illegal purchase of machine guns and other weapons.

Robert J. Stein, a former contract official for the U.S.-led occupation forces in Iraq, pleaded guilty in February to his role in the scheme. Two lieutenant colonels in the U.S. Army Reserve also have been arrested, while three other officers have been implicated but not charged.

Bloom, who lived in Romania for many years, has been in custody since his arrest in November upon his return to the United States.

He secretly pleaded guilty in February and has been cooperating with investigators since. It was not clear why the plea was made public Tuesday. His lawyers did not immediately comment.

E-mails that prosecutors included in the court documents show that Bloom directed his employees to spare no expense in satisfying the officials who controlled contracts in the Coalition Provisional Authority's South Central region office in Hillah, about 50 miles south of Baghdad.

One official requested a blue Nissan 350Z sports car, which cost more than $30,000. "It appears that there are only two ... in the western United States," an employee wrote Bloom in June 2004.

In January 2004, Bloom ordered business-class plane tickets for an Army Reserve officer and his wife. "Very important to us ... I want to make sure its done right," Bloom wrote.

Bloom benefited from an elaborate bid-rigging scheme in which he would submit several bids for companies he controlled and others that did not exist. Some of the bids were high, while others were low.

All the bids came in under $500,000 each because that was the limit of Stein's authority to award a contract.

Bloom's companies won contracts for a police academy for Hillah and renovation of the public library near Karbala.

The criminal charges have their roots in audits performed by Inspector General Stuart W. Bowen Jr.

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