U.S.A.: Custer Battles Drops Plans for Training Center

The company's plans for a state-of-the-art security training center in North Carolina have gone awry as it is caught in a swarming cloud of suspicion, lawsuits and accusations alleging fraud, kidnapping and more.
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The Pilot

The sun shines bright on hills just outside Carthage, but no dust rises from backhoes or bulldozers. Custer Battles has struck out.

The company's plans for a state-of-the-art security training center there have gone awry. Custer Battles is caught in a swarming cloud of suspicion, lawsuits and accusations alleging fraud, kidnapping and more.

The storm might have killed the land deal an elderly local property owner was counting on.

Army veterans Scott Custer and Michael Battles started operations in Afghanistan following the 2001 fall of Kabul. They won a $16.5 million contract from occupation authorities to provide security for the Baghdad airport in June 2003, and business really took off.

They made a deal with DRC, an Alabama-based disaster services firm headed by a former FBI agent Robert "Bob" Isakson. That's when things started to go wrong, and the two former partners are headed for court.

A lawsuit filed by Isakson and William Baldwin, a former employee of the company who managed one of its Iraq security contracts, accuses Custer Battles of cheating the government out of tens of millions of dollars. As "whistle-blowers," Baldwin and Isakson stand to get a percentage of any recovered moneys and fines.

DRC has accused Custer Battles officials of kidnapping Isakson and his 14-year- old son at gunpoint and of cheating the Coalition Provisional Authority out of millions of dollars using offshore shell companies.

Last month, Custer Battles fired back with a countersuit against Isakson, making similar claims of fraud and double-dealing against DRC.

According to court documents filed April 1, "DRC, Inc., and its managing director, Robert J. Isakson, defrauded Custer Battles by intentionally misrepresenting their business record in order to gain a business foothold in postwar Iraq, when in fact, DRC and Isakson had previously committed fraud on the United States Government. This misrepresentation caused Custer Battles to subcontract DRC to provide important services which DRC was unable to satisfactorily supply."

Lurid accounts in press stories worldwide described company agents pointing submachine guns at Isakson and his son Bobby.

"Custer Battles terminated DRC and Isakson for their incompetence and poor judgment, including Isakson's reckless decision to bring his 14-year-old minor son to postwar Iraq without informing Custer Battles," the company said in a press release.

Those suits are now to go before a federal judge in a Virginia court.

Last November, the Moore County planning board approved Custer Battles' preliminary plan, granting a conditional-use permit for a proposed Tarheel Security Training Center about six miles north of Carthage. It would have had firing ranges, driving tracks and other facilities on 222.43 acres off Cool Springs Road.

That site is in Deep River township in the Carthage Fire District.

The company's legal troubles would not affect Custer Battles' Moore County plans, said Jack Donovan, who was director of training at the time. But by the first of this year he was calling everything off.

One of the landowners involved in the land deal is John Burns of Sanford. He'd hoped to sell that property, was counting on Custer Battles.

"I am 75 years old, and got lymphoma," Burns said. "I am fighting to stay alive right now. This land is some stuff I am trying to get rid of."

The deal fell through in January. Donovan called Burns with bad news.

"They decided that they were not going to take that property right now," Burns said. "He said if I had a chance to sell it to somebody else, go ahead. That's all I've heard from Donovan. I guess he was working with Custer Battles at the time. It has been a couple of months ago."

Then Custer Battles simply vanished from Carthage.

Donovan himself stayed on, now part of an entirely new company called Tarheel Training. His Custer Battles office in the old town hall became his Tarheel Training office.

Nobody at the Carthage municipal building realized Tarheel Training was a different company when Donovan called town treasurer Linda Phillips to change billing.

"He just telephoned and said to send bills to Tarheel Training instead of Custer Battles," Phillips said.

Donovan followed that call up with a letter and a check for $1,740.52 covering rent and the cost to refill the heating fuel tank.

"We understand we will only be charged for the heating fuel that we consume as tenants," he wrote.

The town later found a permanent tenant for the building, which is now the home of Moore Buddies. Tarheel Training moved to offices farther south on U.S. 15-501. Donovan is out of town on vacation and could not be reached for comment.

"We are not affiliated with Custer Battles in any way," said Thomas Carlin, chief of operations and chief security officer of the new company.

Nobody bothered to say anything to Kathy Liles at the Moore County planning office, either. She had worked with Donovan on the conditional-use permit. A textual change in the code was needed and passed, to make the training center conditional use permissible.

"I didn't think anything of it," she said. "Sometimes it takes time to take care of issues like getting a federal firearms license, or permits from the Fire Department for storage of munitions. If the area of disturbance is over an acre, they would need a sedimentation and erosion control plan."

That conditional-use permit is still valid, even if Custer Battles has no plans to buy the property or build anything there.

"Conditional use goes with the property, not the owner," Liles said.

The conditional-use permit applies no matter who owns the property. It might make the property more valuable, in case Burns can find another buyer with similar plans.

Tarheel Training is probably not that buyer, according to Carlin. It is a certified law-enforcement training company and has no plans at present to build a center like the one Custer Battles wanted.

The new company donated its services to Moore County Sheriff Lane Carter for help in a recent exercise.

"We didn't charge a cent," Carlin said. "Would it have been nice to be paid? Yes, of course; but we gave it to them."

As for the approved site, he doesn't know whether Tarheel Training would ever be interested in using it.

"Moore County is a great place for training," he said. "Considering the number of experienced military people who live here, its background in training special forces, and its proximity to Fort Bragg - which is a national first responder - it would be a logical place to do it."

With more than 200 acres in the middle of the county already zoned for security training, Burns could yet find his buyer.

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