Settlement possible in military contractor fraud case

For the fifth time on Friday, Public Warehousing Co. was granted a continuance of its criminal arraignment. At a brief hearing, U.S. Magistrate Christopher Hagy said he was told by one of the company's lawyers that a reason the company requested the delay is because of ongoing negotiations.

But Hagy, who rescheduled the arraignment until Feb. 8, expressed impatience with the company's continued requests to postpone the hearing.

"There's a point at which this stops," Hagy said.

"It is our hope that it goes forward," Assistant U.S. Attorney Barbara Nelan replied.

By agreement, Public Warehousing's attorneys did not have to attend the hearing. Contacted later, Atlanta lawyer Richard Deane, one of the company's attorneys, declined to comment.

In Nov. 9, a federal grand jury in Atlanta indicted the Kuwaiti firm on charges it gouged the U.S. government by overcharging on its contract to supply food to American troops in Iraq.

Public Warehousing now does business as Agility and has been the prinicpal provider of food to the U.S. military in Iraq and Kuwait since 2003.

The company "grossly overcharged" the Defense Department for the delivery of food and other goods, Nelan said during a press conference announcing the indictment. This included inflated charges for delivery and the company keeping rebates from food supplies that should have been given to the Defense Department, she said.

The government became aware of the alleged fraud through a whistleblower, Kamal Mustfa Al-Sultan. He filed a lawsuit against the company in 2005, saying Public Warehousing and other companies illegally inflated bills to the government by up to 70 percent. The lawsuit contended the government had been defrauded out of at least $1 billion.

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