US: Former Official in Iraq to Plead Guilty to Contract Fraud

A former American occupation official in Iraq is expected to plead guilty to bribery, conspiracy, money laundering and other charges in federal court on Thursday for his actions in a scheme to use sexual favors, jewelry and millions of dollars in cash to steer reconstruction work to a corrupt contractor, according to papers filed with the court.
The official, Robert J. Stein Jr., served as a comptroller and funding officer in 2003 and 2004 for the Coalition Provisional Authority, which governed Iraq after the American-led invasion. Four Americans, including Mr. Stein and the contractor, Philip H. Bloom, have been arrested in the case. Mr. Stein's plea, apparently with the understanding that he will cooperate with prosecutors, is the first to be made public.

The court papers depict a sordid exercise in greed and corruption that was spread much more widely that previously known. Including the four people already arrested, the papers indicate that a minimum of three other still unnamed co-conspirators also played a role in the scheme. In order to give more than $8 million in contracts and millions more in stolen cash to Mr. Bloom, the papers say, the conspirators accepted bribes, valuable goods and other favors.

Two of the Americans already arrested, Lt. Col. Debra Harrison and Lt. Col. Michael Wheeler, are senior Army reserve officers. The court papers indicate that the remaining unnamed co-conspirators are also Army reserve officers, for a total of at least five officers involved. But the papers suggest that others, identified only by opaque designations like "person H," may also have been involved in one way or another.

The goods included first-class plane tickets, watches and other jewelry, alcohol and cigars, the court papers say. They add that Mr. Bloom kept a villa in Baghdad where women dispensed "sexual favors" in exchange for official actions in his favor or for refraining from exposing the scheme.

Mr. Stein is accused of stealing outright at least $2 million in cash of American taxpayer money and Iraqi money that had been set aside for the reconstruction of Iraq by the American occupation. He also accepted more than $1 million in bribes and at least $600,000 of additional goods and cash that were the property of the C.P.A., the papers say.

The actions took place in a vast territory surrounding the Iraqi city of Hilla, south of Baghdad, where Mr. Stein was put in charge of at least $82 million of reconstruction money despite a previous conviction for felony fraud, which his Pentagon background check apparently missed. Mr. Bloom and some of the others wired money back to the United States to buy weaponry like grenade launchers and machine guns that Mr. Stein was prohibited from owning because of his conviction or that were illegal in themselves.

The court papers indicate that Mr. Stein has agreed to plead guilty in Federal District Court in Washington to counts of conspiracy, bribery, money laundering conspiracy, a felon in possession of a firearm and possession of a machine gun.

The e-mail exchanges between Mr. Stein and Mr. Bloom, as detailed in the papers, are remarkable in their illustration of the daily business of apparently greed and graft. "I love to give you money," Mr. Stein wrote on Jan. 3, 2004, as he began steering work on an Iraqi police academy to Mr. Bloom.

At other times, Mr. Stein warns Mr. Bloom about others who are threats to expose their scheme or may want to get in on it themselves. "I will warn you to be very careful what you say around him," Mr. Stein writes on Jan. 27, 2004, about someone identified only as person D. "If he ever knows what we are doing he will want 'his cut!' "

Other exchanges show the day-to-day realities of doing business in Iraq with Westerners who are far from the routine pleasures of home. "Thanks for the booze," Mr. Stein wrote on Jan. 27. "That will give me some bargaining material here and there."

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