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Some U.S. troops tempted by reconstruction cash

The Justice Department has secured more than three dozen bribery-related convictions in the awarding of reconstruction contracts in Iraq and Afghanistan. At least 25 theft investigations are underway.

April 12, 2009|Kim Murphy

LAKEWOOD, WASH. — Capt. Michael Dung Nguyen had a profitable tour of duty in Iraq -- so profitable, in fact, that soon after returning to this working-class neighborhood near the Ft. Lewis Army base, 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 mostly with pickups, 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 lying untouched in the bank since his return from Iraq last June, while he somehow 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, a 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 as the civil affairs officer overseeing millions of dollars intended for reconstruction projects and payments to private Iraqi security forces northeast of Baghdad. The 28-year-old West Point graduate is accused of packing cash into boxes and mailing them to his family's home in Beaverton, Ore.

His indictment is one of the latest in a wave of prosecutions emerging from the tangled and expensive reconstruction in Iraq and Afghanistan.

The Justice Department has secured more than three dozen bribery-related convictions in the awarding of reconstruction contracts; at least 25 theft probes are underway.

The prosecutions reveal the extent to which troops have been tempted by the Pentagon's "money as a weapon system" policy, which has left battlefields awash in cash.

"This was more cash than Donald Trump had ever seen in his life," said Robert J. Stein Jr., a Coalition Provisional Authority official in the Iraqi city of Hillah, who was convicted in 2006 and sentenced to 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.' "

Former Army Capt. David Gilliam was indicted in February on charges of stashing more than $400,000 in his luggage when he came home from his assignment as a disbursement officer in Kandahar, Afghanistan.

In October, former Capt. Lee W. Dubois pleaded guilty to helping steal $39.6 million in fuel from the Army's Camp Liberty in Iraq and selling it on the black market -- a scheme that netted him at least $450,000.

And two senior Army officers were convicted in November in the Hillah case, which began with the disappearance of nearly $2 million in reconstruction money.

A Defense Department review of the program -- which gives field commanders an arsenal of cash to help build community relief projects, aid families and pay civilian security forces -- found in 2007 that all 15 pay agents surveyed who handled cash in Afghanistan did not have "appropriate physical security" for storing the money. No instances of theft were found.

The audit also found that disbursement officers did not always use the correct exchange rate when doling out local currency. Manipulating the exchange rate, authorities allege, was how Gilliam amassed cash.

"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 Office of the Special Inspector General for Iraq Reconstruction. "Because they are the people that are in essence the control system that is in place."

Through the end of last year, $3.5 billion had been pumped into the Commander's Emergency Response Program, an attempt to use humanitarian aid and community reconstruction projects to combat the Iraqi insurgency.

The program also has allowed coalition commanders to hire Sunni Arab gunmen, often former insurgents, as security officers with the U.S.-allied forces known as the Sons of Iraq.

During Nguyen's tenure with the 4th Stryker Brigade combat team in Muqdadiya, in Diyala province, where he helped oversee disbursement of emergency response program funds, the program paid for $68,000 in school supplies as well as a new municipal garage and renovations to the market, courthouse and hospital.

The farming hamlets and date-palm groves of the Diyala valley, where Al Qaeda fighters had set up strongholds after largely being driven out of Anbar province, had become among the toughest enclaves of the insurgency.

"We were called in because the situation was so bad in Muqdadiya and we had lost so many soldiers out of it," said Command Sgt. Maj. Gregory Frias, who served in Nguyen's unit.

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