Video: Corruption charges in Iraq rebuilding

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updated 11/17/2005 7:26:37 PM ET 2005-11-18T00:26:37

Thursday, the first corruption charges came against an American official involved in the rebuilding of Iraq.

The charges involve millions of dollars in allegedly rigged contracts to build a regional democracy center in southern Iraq, a police academy and a public library in Karbala.

Federal officials charge Robert Stein, a former U.S. contracting official in Iraq, with taking more than $400,000 in “kickbacks and bribes” in a scheme that involved “fake or excessive bids.”

“There was jewelry, there were car payments, there were house payments being made in exchange for contracts for Iraq reconstruction,” says Ginger Cruz of the Coalition Provisional Authority's inspector general’s office.

Neighbors say Stein was arrested at his girlfriend’s house in North Carolina on Monday night.

The complaint says at least $100,000 of the alleged bribes went into the bank account of Stein's wife, Cynthia, from whom he is separated. She is not charged with any crime. 

“Then he came back, and the money still kept coming in,” she says. “That's when it raised red flags.”

Stein was allegedly paid off by an American businessman, Philip Bloom, who was also charged this week. Bloom, who received $13 million in Iraq contracts, boasts on his Web site that he has “an uncanny knack for finding business, almost psychic in nature.”

The complaint indicates that at least one other U.S. official — and perhaps more — also took money from Bloom.

“We have over 50 investigations ongoing at the moment, says the CPA’s Cruz, “And we don't believe this will be the last charge that will be brought. We believe there will be others.”

Beyond the alleged corruption, Thursday’s charges raise another embarrassing question. Why did the U.S. government hire Stein to handle millions of dollars? He was a convicted felon who was sentenced to eight months in jail in 1996 for credit card fraud.

Lisa Myers is NBC’s senior investigative correspondent.

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