Here are two articles aboutt the lawsuit brought by two former employees of Blackwater / Xe private military company accusing the company of defrauding the government and hiring prostitutes with government funds.   Two former Blackwater workers allege:

a Filipino prostitute in Afghanistan was put on the Blackwater payroll under the “Morale Welfare Recreation” category, and that the company had billed the prostitute’s plane tickets and monthly salary to the government.

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http://www.nytimes.com/2010/02/11/us/11suit.html

2 Ex-Workers Accuse Blackwater Security Company of Defrauding the U.S. for Years

By MARK MAZZETTI

Published: February 10, 2010

WASHINGTON — Two former employees of Blackwater Worldwide have accused the private security company of defrauding the government for years by filing bogus receipts, double billing for the same services and charging government agencies for strippers and prostitutes, according to court documents unsealed this week.

In a December 2008 lawsuit, the former employees said top Blackwater officials had engaged in a pattern of deception as they carried out government contracts in Iraq and Afghanistan, and in Louisiana in the aftermath of Hurricane Katrina.

The lawsuit, filed under the False Claims Act, also asserts that Blackwater officials turned a blind eye to “excessive and unjustified” force against Iraqi civilians by several Blackwater guards.

Blackwater has earned billions of dollars from government agencies in the years since the Sept. 11 attacks, when the company won contracts to protect American diplomats in Iraq and Afghanistan. The former employees who filed the lawsuit, a married couple named Brad and Melan Davis, said there was little financial oversight of the money.

Last year, an audit by the special inspector general for Iraq reconstruction and the State Department’s inspector general found that the State Department had overpaid Blackwater $55 million because the company had failed to adequately staff its teams assigned to protect American diplomats in Iraq.

The documents detailing the Davises’ accusations were unsealed after the Justice Department declined to join in the case against Blackwater, which last year changed its name to Xe Services. A Xe spokeswoman did not return a message seeking comment about the case.

In an interview on Wednesday, Ms. Davis said that she and her husband had decided to proceed with the case because “it’s the right thing to do,” and that it was time for “the truth from inside the company” to be made public. If the government is able to recover money from Blackwater as a result of the lawsuit, the Davises could claim a percentage as whistleblowers.

Mr. Davis, a former Marine, performed a number of jobs for the company, including working as a private security guard in Iraq.

Ms. Davis was fired from the company, and she is challenging the legality of her dismissal. Mr. Davis voluntarily resigned from the company.

According to the lawsuit, Ms. Davis raised concerns about the company’s bookkeeping with her bosses in March 2006, when she was handling accounts for the company’s contracts with the Federal Emergency Management Agency and the Department of Homeland Security. The lawsuit claims she was told to “back off,” and that she “would never win a medal for saving the government money.”

Ms. Davis also asserts that a Filipino prostitute in Afghanistan was put on the Blackwater payroll under the “Morale Welfare Recreation” category, and that the company had billed the prostitute’s plane tickets and monthly salary to the government.

She also said Blackwater management used a subsidiary company, Greystone Ltd., to double bill the government for plane tickets between the United States and Amman, Jordan, which served as a transit point for the company’s employees in Iraq.

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http://www.washingtonpost.com/wp-dyn/content/article/2010/02/11/AR2010021100232.html

Former Blackwater employees accuse security contractor of defrauding government

By Carol D. Leonnig and Nick Schwellenbach

Friday, February 12, 2010

This report is a collaboration between the Center for Public Integrity and The Washington Post.

Two former employees of Blackwater Worldwide have accused the private security contractor of defrauding the government for years through phony billing, including charging taxpayers for alcohol-filled parties, spa trips and a prostitute.

In court records unsealed this week, a husband and wife who worked for Blackwater said they have firsthand knowledge of the company falsifying invoices, double-billing federal agencies and improperly charging the government for personal expenses. They said they witnessed “systematic” fraud in the company’s security contracts with the State Department in Iraq and Afghanistan, and with the Department of Homeland Security and the Federal Emergency Management Agency in Louisiana after Hurricane Katrina.

Blackwater is the State Department’s largest security contractor, and a State Department spokesman said Thursday that his agency and the Justice Department reviewed the allegations in 2008, when the lawsuit was filed under seal in federal court in Virginia. The spokesman, P.J. Crowley, could not determine what came of the review.

Brad Davis, a former Marine, served as a Blackwater team leader and security guard, including in Iraq. His wife, Melan Davis, worked as a finance and payroll employee, starting in Louisiana. Their lawsuit was filed under the False Claims Act, which allows whistle-blowers to win a portion of any money the government recovers as a result of the information. However, the Justice Department has chosen not to join them in pursuing their lawsuit, a decision that led to the suit being unsealed this week.

The company changed its name to Xe Services LLC last year. Xe spokeswoman Stacy DeLuke said Thursday that the Davises’ allegations are false. “The allegations are without merit and the company will vigorously defend against this lawsuit,” she said. “It is noteworthy that the government has declined to intervene in this action.”

After the attacks of Sept. 11, 2001, Blackwater became the largest of the State Department’s private security contractors. It has since been paid billions of dollars to protect diplomatic employees in Iraq and Afghanistan and for other agencies’ security missions. The company also became a major source of anti-American sentiment in Iraq because of repeated deadly shootings involving its guards.

Iraq moved to expel Blackwater after a September 2007 incident in which witnesses told the FBI that the company’s security guards fired guns without provocation into a busy intersection, killing at least 14 Iraqis. The Justice Department charged six Blackwater guards in that incident. One pleaded guilty, and a judge dismissed the charges against the five others in December.

In their suit, the Davises assert that Blackwater officials kept a Filipino prostitute on the company payroll for a State Department contract in Afghanistan, and billed the government for her time working for male Blackwater employees in Kabul. The prostitute’s salary was categorized as part of the company’s “Morale Welfare Recreation” expenses, they alleged.

Melan Davis said in court papers that while working in Blackwater’s finance department, she questioned how the company could bill the government for its workers’ travel expenses to and from Iraq when it lacked the documentation for those trips. She said she later traveled to a hotel in Amman, Jordan, where Blackwater personnel often stopped en route to Iraq. While there, she said, corporate officers directed her and two co-workers to generate reams of false invoices for plane travel at inflated rates, so her Blackwater bosses could overcharge the government.

In one instance, the Davises allege, the company was paying inflated prices to a vendor whose work was billed to the Department of Homeland Security for services related to security after Hurricane Katrina. They said the overpayments allowed the vendor to provide a barbecue pit for Blackwater staff parties.

Melan Davis argues that Blackwater terminated her in February 2008 because she questioned fraudulent billing. Brad Davis resigned.

Schwellenbach works for the Center for Public Integrity. Staff writer Jerry Markon contributed to this report.