Three U.S. Army Reserve officers and two U.S. civilians have been charged with taking or helping funnel more than $1 million in cash, sports cars, jewelry and other items as bribes to rig bids on Iraqi reconstruction contracts, U.S. officials said on Wednesday.

They said the five have been indicted by a federal grand jury in New Jersey in a scheme that involved the theft of millions of dollars of Iraqi reconstruction money and the awarding of contracts to Philip Bloom, who doled out the bribes.

The officials said the agency in charge of Iraqi reconstruction lost more than $3.6 million because of the corrupt scheme that began in December 2003 and lasted two years.

Bloom, who has already pleaded guilty, received more than $8.6 million in rigged contracts, the officials said.

They said more than $500,000 was smuggled into the United States, with some of the money going for a deck and hot tub at the New Jersey home owned by two of the defendants.

“They stole the money in Iraq and them smuggled vast sums into the United States to support lavish lifestyles,” Mark Everson, the Internal Revenue Service commissioner, said at a news conference to announce the charges.

The charges were announced the day after Democrats at a House hearing sharply questioned the former Coalition Provisional Authority head about the lack of oversight for $12 billion in money that was disbursed.

The 25-count indictment charged U.S. Army Col. Curtis Whiteford, U.S. Army Lt. Col. Debra Harrison and Lt. Col. Michael Wheeler, and civilians Michael Morris and William Driver.

Whiteford once was the second most senior official at the Coalition Provisional Authority for the South Central Region in Iraq, while Harrison was its acting comptroller. Wheeler was an advisor for Iraqi reconstruction projects.

Driver, one of the civilians, is married to Harrison. Morris, who was living in Romania, was accused of helping Bloom funnel money to the military officials.

According to the indictment, Harrison and her husband received a Cadillac Escalade as a bribe and used tens of thousands of dollars for improvements to their home in Trenton, including a deck and hot tub.

“This indictment alleges that the defendants flagrantly enriched themselves at the expense of the Iraqi people,” Deputy Attorney General Paul McNulty said.

Stuart Bowen, the special inspector general for Iraq, vowed to root out waste, fraud and abuse in Iraq. He said 80 cases are under investigation.

Copyright © 2007 Reuters Limited

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