Even as they face fraud allegations in federal court in Virginia, a pair of former military officers ran afoul of a federal magistrate judge in Mobile this week.
The Virginia case -- the first civil lawsuit related to the reconstruction of Iraq to reach a jury -- began Wednesday.
That Virginia trial pits Custer Battles LLC against former employee William Baldwin and Mobile resident Robert "Bob" Isakson, a former FBI agent whose disaster services firm worked as a subcontractor. The two sued under the False Claims Act, a Civil War-era statute that allows private citizens to collect part of damages awarded against defendants who defraud the federal government.
Scott Custer, a former Army Ranger, and Michael Battles, a former Ranger who also served in the CIA, formed Custer Battles in 2002 and won contracts to provide security for the Baghdad airport and supply some American troops.
Witnesses testifying this week in Virginia accused Custer and Battles of delivering trucks that did not work and failing to perform adequately in supplying cabins, mattresses, generators and Internet service.
On Tuesday, the day before that trial began, a lawyer for Custer Battles was in Mobile federal court, explaining why Custer and Battles did not show up last month to answer questions of opposing lawyers in a separate fraud lawsuit involving Isakson's company, DRC Inc.
DRC's lawsuit accuses Custer Battles of fraud and kidnapping. Custer Battles and its two officers have denied those allegations and responded with a countersuit, accusing DRC of fraud. The counterclaim was the subject of the Tuesday hearing in Mobile.
U.S. Magistrate Judge William Cassady ruled at Tuesday's hearing that Battles' and Custer's absence from a Jan. 23 deposition was a "willful failure to obey" a court order. But he refused a DRC request to dismiss the Custer Battles suit, saying it's not clear that he has the authority to take such action after one violation of a court order.
"What is clear is if there is a second failure to comply, they get what they ask for," he said.
Cassady ordered Custer and Battles to show up for a deposition in Mobile on March 21 or face a contempt-of-court charge.
Isakson has accused Custer Battles' officials of kidnapping him and his 14-year-old son at gunpoint and using offshore shell companies to bilk the Coalition Provisional Authority out of millions of dollars. The authority was the American-run agency that governed Iraq immediately following the 2003 invasion.
The countersuit against DRC accuses Isakson and his company of overbilling Custer Battles for work that wasn't done and overstating DRC's financial and personnel resources, among other allegations.
Lawyers for DRC have described the allegations as baseless. "We are very suspicious about the motivation for filing this lawsuit," attorney Louis Braswell said at Tuesday's hearing.
Attorneys for Custer and Battles said their clients were unable to attend the Jan. 23 deposition because they needed to testify at a hearing in Virginia on the False Claims Act case.
Braswell told Cassady that he was suspicious of this explanation, as well.
"We have suspected all along that these plaintiffs have been attempting to avoid their depositions," he said. "This wasn't an evidentiary hearing. There was no chance they'd be called to testify. We think that it's a ruse to avoid appearing for the deposition."
Separately, lawyers for Custer Battles have asked the judge to dismiss the company's two founders as plaintiffs, leaving only the company as plaintiff. Lawyers for DRC contend that is yet another attempt by Custer and Battles to avoid giving depositions in the case.
Braswell said the entire case should be dismissed. "We have egregious conduct here," Braswell said in court this week.
- 174 War & Disaster Profiteers Campaign