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Federal judge refuses to dismiss Iraq contract fraud case under False Claims Act

[JURIST] US District Judge T.S. Ellis Monday denied a motion by US-based security firm Custer Battles [corporate website] to invoke the False Claims Act [text] to dismiss a lawsuit brought by two former employees alleging that the Rhode Island security firm defrauded the US government of millions under its contract to guard Baghdad Airport [Custer Battles press release]. Ellis did, however, eliminate claims related to work paid for with Iraqi oil money, limiting the company's potential liability to work paid for from seized and vested Iraqi funds, not money paid out of the Development Fund for Iraq [Iraq CPA backgrounder]. Ellis' decision leaves open the question of whether the US-led occupation authority that managed the fund (now managed by the Iraqi Transitional Government), was subject to US law. Custer Battles denies all allegations [press release]. Reuters has more.

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