[JURIST] A federal jury has found private military contractor Custer Battles [corporate website] guilty of 37 fraudulent acts against the US Coalition Provisional Authority [official website] in the first application of the federal False Claims Act [text] against an Iraq war contractor. The jury found the company guilty of establishing shell companies, forging invoices, inflating charges, and stealing equipment in an attempt to loot millions of dollars and awarded more than $10 million in damages to be divided between the US government and two former employees, Robert Isakson and William Baldwin, who acted as whistleblowers and filed the suit [JURIST report]. The Civil War-era False Claims Act allows private citizens to sue on behalf of the government and to receive a portion of any money recovered. The US Justice Department allowed the suit to go ahead but declined to join it directly.

Lawyers for Custer Battles say their appeal will focus on whether the provisional authority in Iraq was a US agency subject to US law. During the trial, key Custer Battles employees blamed the discrepancies on subordinates, and contended that the company lost money on the $21.4 million contract to help distribute the new Iraqi currency. The Los Angeles Times has more.