[JURIST] US District Judge T. S. Ellis III has set aside the $10 million verdict [JURIST report] against private military contractor Custer Battles [corporate website], ruling that the former Coalition Provisional Authority (CPA) [official website] in Iraq could not be considered a US government entity. Custer Battles was sued for defrauding the US government under the False Claims Act [text] and a federal jury found the company guilty of 37 fraudulent acts against the CPA, including establishing shell companies, forging invoices, inflating charges, and stealing equipment in an attempt to loot millions of dollars. The civil lawsuit was the first application of the Civil War-era False Claims Act to Iraq war contractors.

A lawsuit under the False Claims Act requires plaintiffs to prove that the defendant presented false claims against the US treasury. The US Justice Department had argued that because US government and military officials distributed CPA funds, fraud against the CPA is tantamount to fraud against the US government [JURIST report]. The jury determined that the False Claims Act applied to the US-financed CPA, but Ellis disagreed in an opinion last week, ruling that the plaintiffs in the lawsuit "failed to prove that the claims were presented to the United States." Ellis instead said that the CPA should be considered an international entity. The New York Times has more.