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  Kickbacks, Smuggling and Sexual Favors
US Army Reserve Officer Pleads Guilty in Iraq Case

Reuters | August 25, 2006

Washington - A U.S. Army Reserve officer pleaded guilty on Friday to improperly steering millions of dollars in Iraq reconstruction contracts as part of a conspiracy involving kickbacks, smuggling and sexual favors.

Lt. Col. Bruce Hopfengardner, 46, of Frederick, Virginia, was the first military office to admit taking part in the scheme to defraud the U.S.-led occupation authority.

He pleaded guilty to conspiring to commit wire fraud and money laundering in U.S. District Court for the District of Columbia, the Justice Department said in a statement.

Hopfengardner, who had been a police chief in California, served as an adviser to the Coalition Provisional Authority.

His duties included recommending spending for law enforcement projects related to rebuilding Iraq, including a police academy in the south-central city of Al-Hillal, the government said in court papers.

Prosecutors said he and others plotted to steer millions of dollars to Philip Bloom, a U.S. citizen with businesses in Romania and postwar Iraq. In exchange, they received money, plane tickets, jewelry, alcohol, cigars and sexual favors from women provided by Bloom at his villa in Baghdad and at least one other place, the government said.

Robert Stein, a former U.S. Defense Department contract employee, pleaded guilty on February 5 to related charges. He controlled the spending of about $82 million in CPA funds reserved for reconstruction projects in south-central Iraq.

Bloom pleaded guilty on April 18 to conspiracy, bribery and money laundering.

The government said Hopfengardner, Stein and others sought to hide Bloom's submission of multiple bids on the same CPA contract. The bids included both the "low" bid as well as several higher "dummy" bids that set the stage for improperly awarding millions of dollars to Bloom and his companies, the government said.

It alleged that Bloom sent about $175,000 in laundered funds to Hopfengardner from February 2004 to July 2004 as kickbacks. Hopfengardner admitted in court to smuggling stolen currency into the United States in March 2004.

Hopfengardner faces up to 20 years in prison and a fine of $500,000. An Army spokesman, Paul Boyce, said the Army has been working closely with the Justice Department and would act swiftly on any related personnel matter.

Two other Army Reserve lieutenant colonels were arrested last year in connection with the investigation.




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