updated 1/10/2008 8:59:28 PM ET 2008-01-11T01:59:28

Two former employees of Blackwater Worldwide, the beleaguered contractor whose practices in Iraq are under federal scrutiny, were sentenced to probation Thursday on gunrunning charges.

Blackwater, the largest private security firm in Iraq, has been under scrutiny as a federal grand jury in Washington investigates the company's involvement in the shooting deaths of 17 Iraqi civilians. The firm is also under investigation for possible weapons smuggling allegations — which the firm strongly denies.

The two men were granted leniency because they have been helping federal investigators for more than a year, and neither prosecutors nor defense attorneys would confirm the men are involved in the smuggling investigation.

Kenneth Wayne Cashwell, of Virginia Beach, Va., and William Ellsworth "Max" Grumiaux, of Clemmons, were sentenced to three years probation and a $1,000 fine on charges of possession of stolen firearms that had been shipped in interstate or foreign commerce, and aiding and abetting another in doing so.

The details of what information the two men are giving to prosecutors was kept secret by Chief U.S. District Judge Louise Wood Flanagan, who invited attorneys to the bench to quietly share details of what she called "extensive cooperation."

"I believe the matters in this case should be kept under seal," Flanagan said.

'I've dishonored myself'
An Associated Press reporter in the courtroom unsuccessfully objected to the private discussion. U.S. Attorney George Holding did not immediately return a call seeking comment on why part of the sentencing hearing should be held in private.

Cashwell also was sentenced to three months of house arrest. Both men had faced up to 10 years in prison and a $250,000 fine, but federal prosecutors asked Flanagan to approve the lighter sentence in light of their cooperation.

"I'm sorry for what I've done," Grumiaux said during the hearing. "I feel like I've dishonored myself, having served in the military, and that's a burden I'll have to bear for the rest of my life."

Little is known about the weapons investigation, which became public in September when Howard Krongard — then the State Department's Inspector General — mentioned that he "made one of my best investigators available to help assistant U.S. attorneys in North Carolina in their investigation into alleged smuggling of weapons into Iraq by a contractor."

Blackwater is the only private security contractor working for the State Department that is subject to the jurisdiction of federal prosecutors in North Carolina. The others, Dyncorp and Triple Canopy, are based in Washington's northern Virginias suburbs.

Blackwater spokeswoman Anne Tyrrell did not immediately return a call seeking comment, but the company has strongly denied involvement in weapons smuggling, noting it turned the two men in to authorities in 2005.

The company has said it immediately fired the men after learning they were stealing from the company and invited the federal Bureau of Alcohol, Tobacco, Firearms and Explosives to investigate.

Federal officials confirmed in 2005, when the men were fired, that Blackwater came forward and asked authorities for help. Flanagan said Thursday that Cashwell was in possession of as many as 50 weapons stolen from Blackwater's campus in northeastern North Carolina.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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