NBC News and news services
updated 2/7/2007 4:08:31 PM ET 2007-02-07T21:08:31

Three Army Reserve officers and a U.S. contractor were indicted Wednesday as part of a bid-rigging scam that steered millions of dollars of Iraq reconstruction projects to a contractor for cash, luxury cars, jewelry and other pricey goods.

The husband of one of the military officials also was charged with helping to smuggle at least $10,000 into the United States that the couple used to pay for improvements to their New Jersey house.

The scam was outlined in a 25-count indictment filed Wednesday in U.S. District Court in New Jersey.

The reservists are charged with pushing the contracts to companies hired for working on nearly 30 reconstruction projects. They included work to build police stations, libraries, and a shelter for women who were victims of domestic violence.

"These defendants actually took bricks of stolen cash and smuggled them out of Iraq and back to the United States for their own personal use," said Paul McNulty, the deputy attorney general.

"These individuals were placed in positions of trust and used Iraq reconstruction funds as their own personal ATM machines," he said.

Lavish gifts alleged
The three Army Reserve officers were responsible for supervising how the U.S.-managed Coalition Provisional Authority spent an estimated $2.1 billion available for reconstruction projects.

The indictment says the three officers — Col. Curtis G. Whiteford of Utah, Lt. Col. Debra M. Harrison of New Jersey and Lt. Col. Michael B. Wheeler of Wisconsin — directed at least $8 million to a construction and services company. In return, they allegedly demanded cash, a Nissan sports car, a Cadillac SUV, real estate, a Breitling watch, business-class plane tickets and other items.

The contractor, identified in the indictment as Seymour Morris Jr., allegedly acted as a go-between for the military officers and the construction company by illegally wiring money and securing the goods. Morris is a U.S. citizen who lived in Romania, and owned and operated a Cyprus-based financial services business.

Last week, a former Pentagon contractor was sentenced to nine years in prison for helping steer millions in Iraq rebuilding funds to a company operated by U.S. citizen and businessman Philip H. Bloom. Bloom already has pleaded guilty to the scam and awaits sentencing.

Justice Department officials say the contract fraud scheme cost nearly $3.6 million, of which nearly $2 million has been recovered.

The break in the case, according to Stuart Bowen, the special inspector general for Iraq, came three years ago when a whistle-blower reported concerns about contracting. An audit was launched.

Wednesday's indictments were announced the day after House Democrats grilled the former U.S. occupation chief in Iraq over how he doled out up to $12 billion in Iraqi money without accounting for it.

Firing back in a House Committee on Oversight and Government Reform hearing Tuesday, L. Paul Bremer III insisted that he did the best he could in the middle of a war and repeatedly said he had spent Iraqi — not U.S. — money. Bremer ran the country for 14 months.

The Associated Press and NBC's Pete Williams and Mike Kosner contributed to this report.

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