U.S. goes after reconstruction theft, bribery

April 12, 2009|By Kim Murphy | Kim Murphy,Los Angeles Times

LAKEWOOD, Wash. - Capt. Michael Nguyen had a profitable tour of duty in Iraq - so profitable, in fact, that soon after returning to this working-class neighborhood near Fort Lewis, he was parking a Hummer H3T outside his apartment.

Then a $70,000 BMW M3 showed up. People notice cars like that on a street filled with pickup trucks, old Chevys and low-end sport utility vehicles. "I spent 10 years in the military, and I can tell you, nobody's giving me bailouts like that," said Mark Smith, who lives across the street.

The big-ticket cars raised eyebrows in more places than the neighborhood.

Federal investigators found Nguyen's $6,169-a-month Army paychecks untouched in the bank since his return from Iraq in June while he was paying credit card bills for three flat-screen TVs, two desktop computers, a laptop, several iPods, a PlayStation 3 and a dozen combat video games, refrigerator, new living room and dining room furniture, a Nikon camera and two high-powered handguns.

In a federal indictment last month, prosecutors alleged that Nguyen managed to skim more than $690,000 in cash while acting as the civil affairs officer responsible for overseeing millions of dollars intended for reconstruction projects and payments to private Iraqi security forces northeast of Baghdad.

Nguyen, 28, a West Point graduate, is accused of packing stacks of cash into boxes and mailing them to his family's home.

His indictment is one of the latest prosecutions emerging from the tangled and expensive postwar reconstruction in Iraq and Afghanistan. The Justice Department has secured more than 36 bribery-related convictions in the awarding of reconstruction contracts; at least 25 theft investigations are under way.

The prosecutions reveal the extent to which the Pentagon's money-use policies have left soldiers vulnerable to the lure of cash that has washed over the battlefields.

"This was more cash than Donald Trump had ever seen in his life," said Robert J. Stein, a Coalition Provisional Authority official in the Iraqi city of Hilla who was convicted in 2006 and given nine years in prison for his role in a bribery, theft and money-laundering case.

"When you work around money like that," he told investigators, it becomes, 'So what, it's just paper.' "

A Defense Department review of the program that provides field commanders with cash to help build community relief projects, aid families and pay civilian security forces found in 2007 that none of the 15 pay agents surveyed who handled cash in Afghanistan had appropriate security for storing it.

The audit also found that disbursement officers did not always use the correct exchange rate when doling out local currency, which could allow manipulation.

"What happens is, if people that know the system and how it operates decide to commit a fraud, it is very difficult to detect," said David Warren, audits director for the Special Inspector General for Iraq Reconstruction. "Because they are the people that are, in essence, the control system that is in place."

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