CORPORATE CRIME REPORTER
Federal
Judge Throws Out False Claims Act Jury Verdict Against Custer Battles
20 Corporate Crime Reporter 33(1), August 18, 2006
A federal judge in Alexandria, Virginia has thrown out a False Claims Act jury
verdict against Iraq defense contractor Custer Battles and its two principals
– Scott Custer and Mike Battles.
In March 2006, the jury hit the Rhode Island based defense contractor with a
$10 million verdict for ripping off the federal government on Iraq contracts.
The case was filed under the False Claims Act by Robert J. Isakson and William
D. "Pete" Baldwin – two whistleblowers who used to work for
Custer Battles.
Isakson and Baldwin were represented by Alan Grayson.
But in an opinion dated March 16, 2006 and released today, federal judge T.S.
Ellis threw out the verdict.
In a 23-page opinion, Judge Ellis ruled that Custer Battles did not violate the False Claims Act.
The judge found that the Coalition Provisional Authority is not part of the
U.S. government – and therefore the False Claims Act doesn’t apply.
“Although the CPA was principally controlled and funded by the U.S., this
degree of control did not rise to the level of exclusive control required to
qualify as an instrumentality of the U.S. government,” Judge Ellis wrote.
Judge Ellis did uphold the jury’s finding that Custer Battles engaged
in a retaliatory discharge against one of the whistleblowers – Pete Baldwin.
The jury awarded Baldwin $165,000 for that discharge.
Custer Battles attorney David Douglass, a partner at Porter Wright in Washington,
D.C., said that his clients will probably not appeal Judge Ellis’ decision.
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