A second man has been charged in a scheme that saw a U.S. businessman pay hundreds of thousands of dollars to U.S. occupation authorities in Iraq to get reconstruction contracts worth more than $13 million, federal authorities said Thursday.
Robert J. Stein Jr., who worked for the Coalition Provisional Authority in Iraq, and his wife paid for real estate, cars, jewelry and home improvements with money he received from Philip H. Bloom, a U.S. citizen who has lived in Romania for many years, according to federal affidavits made public Wednesday and Thursday. Stein, 50, of Fayetteville, N.C., appeared in U.S. District Court in Fayetteville, N.C., on Tuesday and his case has been transferred to Washington, according to court records.
Bloom, 65, paid at least $630,000 in kickbacks to Stein, other occupation officials and their spouses, according to the affidavit supporting the criminal complaint against him. One person who received payments is a Defense Department employee, according to a government official who spoke on condition of anonymity because the investigation is ongoing.
Both men face conspiracy and money laundering charges. Stein, who was convicted on a federal fraud charge in 1996, also is charged with wire fraud and interstate transportation of stolen property, according to court records and the affidavits.
Justice Department officials said more charges are expected from an investigation that was spurred by an inspector general’s audits of Iraqi reconstruction projects.
'There will be more'
“This is the first case and there will be more,” said Jim Mitchell, spokesman for the Special Inspector General for Iraq Reconstruction, adding that this is the result of a nearly yearlong investigation involving millions of dollars. He could not estimate how much money is involved overall.
U.S. Immigration and Customs Enforcement agents arrested Bloom recently at Newark International Airport in New Jersey. He made a brief appearance Wednesday in U.S. District Court in Washington and remains in federal custody.
Prosecutors at the court hearing did not detail the charges against Bloom, but U.S. Magistrate Judge Deborah Robinson said they involve money laundering and conspiracy to defraud the government. The charges remained under seal.
The U.S. is spending tens of billions of dollars to rebuild Iraq. The award of more than $10 billion to Halliburton Co. and its subsidiaries in 2003 and 2004, some of it in no-bid contracts, has drawn criticism from lawmakers and others concerned about lax oversight of contractors.
Justice Department officials said they are unaware of previous indictments arising from contracting fraud in postwar Iraq.
The charges against Bloom stem from a series of audits by Inspector General Stuart W. Bowen Jr. that found indications of potential fraud.
A government affidavit says Bloom conspired with officials of the Coalition Provisional Authority and the U.S. military to rig bids for contracts in Al-Hillah and Karbala, two cities 50 to 60 miles south of Baghdad. In some cases, Bloom’s companies performed no work, Patrick McKenna Jr., an investigator in the inspector general’s office, said in the affidavit.
Bloom or companies he controls made bank deposits of $353,000 on behalf of at least two CPA officials and bought them real estate in North Carolina, vehicles and jewelry worth more than $280,000 in 2004 and 2005, McKenna said.
Stein was the comptroller and funding officer for the CPA’s South Central Region. Bloom transferred $140,000 to a North Carolina realty firm in March 2004 on Stein’s behalf, the affidavit said.
The second person, who also worked on contracts in that office, has been cooperating with investigators, as is an Iraqi business owner who worked in Al-Hillah. The CPA ran Iraq from just after the invasion in 2003 until June 2004.
At one point, Bloom was paying at least $200,000 a month to CPA officials and others, although the affidavit does say for how long.
Projects won by Bloom’s companies included a new police academy for Al-Hillah and renovation of the public library in Karbala. Bloom’s Romanian-based companies are Global Business Group, GBG Holdings and GBG-Logistics Division, the affidavit said.
It did not include the entire value of all contracts awarded to Bloom’s companies, but said he received at least $3.5 million between January and June of last year.
Bloom is described on a Web site for one of his companies as a former PepsiCo executive in Europe and an early Peace Corps volunteer who has lived in Romania for many years.
“Bloom and his staff ... are at the center of the Iraq Reconstruction effort, providing the utmost performance in brokering, contracting, creating and developing projects for the cream of the crop,” according to the Web site for Baltazar, Bloom and Pirvulescu, a Romanian financial consulting firm.