Reporting from Washington — Five former Blackwater security firm executives were charged Friday in North Carolina with illegally acquiring automatic weapons and filing false documents in a scheme to obtain government contracts.
The company, now known as Xe Services, continues to do work for the federal government and has bid on contracts for more.
But prosecutors issuing a federal indictment Friday in Raleigh, N.C., said that the company officials attempted to gain a competitive bidding advantage by amassing high-powered weapons, which they used for training and, in one case, as gifts to the king of Jordan.
The 15-count indictment accused Gary Jackson, the company's former president, and four others of conspiracy to violate firearms laws, making false statements and possession of unregistered firearms between 2003 and 2009.
Company employees converted as many as 227 weapons into short-barrel rifles without registering them, as required by law, prosecutors said. They also bought other restricted firearms by using the stationery of a local sheriff's department, the indictment charged.
The indictment is the latest in a mounting series of legal difficulties for the company, which prospered with the proliferation of government contracts for security and other paramilitary services since 2001. Blackwater has faced intense scrutiny for its security work in Iraq and Afghanistan.
The firm has "sort of become the poster child for the industry and all the controversy that surrounds it," said Peter Singer, author of a 2003 book about the private security industry.
Blackwater is perhaps best known for a September 2007 shooting in Baghdad's Nisoor Square in which 17 civilians were killed. In December a federal judge dismissed criminal charges against five former Blackwater guards in connection with the shootings, and the Justice Department has appealed the dismissal.
But the firm has continued to work for the government. One Xe subsidiary, U.S. Training Services, held $354 million in contracts last year, according to government records, mostly for guard services.
At times, however, the company has confronted difficulty obtaining new business. In March, the Government Accountability Office overturned U.S. Army plans to award a $1-billion contract to the firm to train Afghan police officers, concluding that other companies were unfairly excluded from bidding on the job.
Friday's indictment alleged that the former Blackwater executives wanted to acquire fully automatic weapons and short-barrel rifles -- both of which are restricted under federal firearms laws -- to improve its chances of winning and keeping contracts with the U.S. and foreign governments.
"The object of the conspiracy was to gain an advantage over competitors in the defense contracting field and thereby profit from obtaining and keeping government contracts," the indictment stated.
The indictment charges that Blackwater enlisted the Camden County, N.C., sheriff's office, near its headquarters, in a scheme to acquire the weapons.
Prosecutors did not accuse the department of wrongdoing.
Prosecutors said the company used the weapons in carrying out government contracts to train security personnel.
The indictment refers to a March 2005 visit by King Abdullah II of Jordan to the company's 7,000-acre complex in Moyock, N.C., which includes classrooms, offices, shooting ranges, an armory and an airstrip.
The visit, which apparently was not previously reported, came days after Abdullah visited then-President George W. Bush at the White House. Prosecutors did not specify the purpose of the king's trip.
Prosecutors said Jackson and the others presented the Jordanian monarch or his entourage with five firearms "to gain favor" with them.
After presenting the weapons as gifts, executives later realized they were unable to comply with federal laws requiring disclosure of where the weapons went, prosecutors said.
To cover up the lapse, prosecutors allege, the executives filed false federal firearms forms claiming they had purchased the weapons.
George E.B. Holding, the U.S. attorney for North Carolina's eastern district, stressed that the Jordanian officials were not suspected of any wrongdoing.
In 2008, investigators raided the company's Moyock headquarters, seizing 22 weapons, including 17 AK-47 assault rifles.
Charged along with Jackson in the 15-count indictment were the company's former general counsel, Andrew Howell; former executive vice president William Mathews; former vice president of logistics and procurement Ana Bundy; and former weapons specialist Ronald Slezak.
Attorneys for Jackson, Mathews and Howell told the Associated Press that their clients are innocent, and they criticized the government investigation. A spokesman for Xe would say only that the company has cooperated with the investigation.