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Friday, January 22, 2010
Former U.S. Army Officer Sentenced to 42 Months in Prison for Bribery and Weapons Conspiracy

Michael Wheeler, a former lieutenant colonel in the U.S. Army Reserves, was sentenced late yesterday to 42 months in prison for his participation in a wide-ranging bribery conspiracy involving the U.S. government, the Republic of Iraq and the Coalition Provisional Authority - South Central Region (CPA-SC) in Al-Hillah, Iraq, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division. Wheeler was also sentenced by U.S. District Court Judge Mary L. Cooper for the District of New Jersey - Trenton Division to serve three years of supervised release following his prison term and to pay $1,200 in restitution.

Wheeler, 50, of Amherst Junction, Wis., was charged in a 25-count indictment unsealed on Feb. 7, 2007, along with former U.S. Army Colonel Curtis G. Whiteford, former Lt. Col. Debra M. Harrison, and civilians William Driver and Seymour Morris Jr., with various crimes related to a scheme to defraud the CPA-SC. Wheeler was an adviser and project officer for CPA reconstruction projects.

According to testimony at trial, Wheeler, along with Whiteford and Harrison, conspired from December 2003 to December 2005 with at least three others—Robert Stein, at the time the comptroller and funding officer for the CPA-SC; Philip H. Bloom, a U.S. citizen who owned and operated several companies in Iraq and Romania; and former U.S. Army Lt. Col. Bruce D. Hopfengardner—to rig the bids on contracts being awarded by the CPA-SC so that more than 20 contracts were awarded to Bloom. In total, Bloom received approximately $8 million in rigged contracts. Testimony revealed that Bloom, in return, provided Whiteford, Harrison, Wheeler, Stein, Hopfengardner and others with more than $1 million in cash, SUVs, sports cars, a motorcycle, jewelry, computers, business class airline tickets, liquor, promise of future employment with Bloom and other items of value.

Bloom admitted he laundered more than $2 million in currency that Whiteford, Harrison, Wheeler, Hopfengardner, Stein and others stole from the CPA-SC that had been designated for the reconstruction of Iraq. Bloom then used his foreign bank accounts in Iraq, Romania and Switzerland to send some of the stolen money to Harrison, Stein, Hopfengardner and other Army officials in return for them awarding contracts to Bloom and his companies.

"These defendants betrayed the trust and confidence placed in them by both the U.S. government and the people of Iraq," said Assistant Attorney General Lanny A. Breuer.  "By using their positions to line their own pockets, they made it more difficult for others to carry out the legitimate goals of rebuilding and reconstruction.  We will continue to vigorously investigate and prosecute this kind of corruption, wherever it occurs and no matter who commits it."

At trial, Wheeler was convicted of conspiracy to commit bribery, honest services wire fraud, the interstate transport of stolen property (ITSP) and the possession of unregistered firearms. Whiteford was convicted at trial of conspiracy to commit bribery and ITSP, and Driver pleaded guilty to money laundering on Aug. 5, 2009. Morris was acquitted.

"This sentence illustrates that even military officers are not above the law and will be brought to justice for their participation in defrauding efforts to support Iraqi reconstruction, no matter how complex the fraud scheme," said Acting Assistant Director in Charge John G. Perren of the FBI’s Washington Field Office.

"The sentencing of Michael Wheeler marks the culmination of SIGIR’s lengthy investigation into a wide-ranging bribery, contract fraud, and kickback scheme that occurred in Hilla, Iraq, during 2003-2004" said Stuart W. Bowen Jr., the Special Inspector General for Iraq Reconstruction (SIGIR). "In concert with our partner law enforcement agencies, SIGIR will continue to pursue vigorously its many other ongoing cases to hold accountable those who took advantage of the Iraq reconstruction program to criminally enrich themselves."

"Wheeler and the others abused their positions of trust to line their own pockets," said Homeland Security Assistant Secretary for Immigration and Customs Enforcement (ICE) John Morton. "We hope these sentences deter others from attempting to scheme the government for their own advantage ."

"As a project officer of government contracts, Mr. Wheeler was entrusted to oversee contractors and ensure taxpayer money was spent wisely," said Victor S.O. Song, Chief, Internal Revenue Service Criminal Investigation.  "He broke that trust to enrich himself at the expense of the American taxpayers.  IRS Criminal Investigation is committed to exposing public corruption at any level by following the money from the crime to the criminal."

On Jan. 29, 2007, co-conspirator Stein was sentenced to nine years in prison for related charges of conspiracy, bribery and money laundering, as well as weapons possession charges, for his role in the same scheme. Stein was also ordered to forfeit $3.6 million for his role in the bribery and money laundering scheme.

On Feb. 16, 2007, co-conspirator Bloom was sentenced to 46 months in prison for related charges of conspiracy, bribery and money laundering for his role in the scheme. Bloom was also ordered to forfeit $3.6 million for his role in the bribery and money laundering scheme.

On June 25, 2007, Hopfengardner was sentenced to 21 months in prison for conspiracy and money laundering related to this scheme. Hopfengardner was also ordered to forfeit $144,500.

On Dec. 8, 2009, Whiteford was sentenced to 60 months in prison for conspiring to commit bribery and ITSP. He was also ordered to forfeit the things of value he received from Stein and others, including a Breitling watch, a Toshiba laptop computer and $10,000 in cash.

On June 4, 2009, Harrison was sentenced to 30 months in prison and ordered to pay $366, 640 in restitution. Harrison pleaded guilty on July 28, 2008, admitting that she took more than $300,000 from the CPA-SC while she was deployed there and that she used some of the stolen money to make improvements at her home. Harrison also admitted that she received a Cadillac Escalade from Bloom and that she helped to move unregistered firearms from a hotel in North Carolina to Stein’s home.

On Dec. 10, 2009, Driver was sentenced to six months home confinement and ordered to pay $36,000 in restitution for his role in laundering portions of stolen CPA money brought from Iraq back into the United States by Harrison, his wife.

These cases are being prosecuted by Trial Attorneys John P. Pearson and Kevin Driscoll of the Criminal Division’s Public Integrity Section, as well as Trial Attorney Ann C. Brickley. The cases are being investigated by the IRS Criminal Investigation; the Special Inspector General for Iraq Reconstruction; ICE; and the FBI-Washington Field Office.

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