Capt. gets 30 months for war-zone fraud - Army News | News from Afghanistan & Iraq - Army Times

Capt. gets 30 months for war-zone fraud

A captain who stole $690,000 in Iraq reconstruction cash was creating a secret fund to make unauthorized condolence payments on behalf of Iraqi allies, according to a federal prosecutor.

But Capt. Michael D. Nguyen’s plan unraveled when his fund outgrew the need for such payments. To avoid accounting for the surplus, Nguyen shipped the cash home and spent it on flashy cars, flat-screen televisions, laptop computers and leather furniture.

“He ended up with an excess of funds and was faced with some challenging decisions on how to account for that and what to do with it,” said Susan Russell, Nguyen’s defense attorney. “He made a terrible decision in acting with those excess funds that had accumulated in appropriating them to himself.”

Nguyen, a 28-year-old West Point graduate stationed at Fort Lewis, Wash., was sentenced to 30 months in prison on May 3 in a Portland, Ore., federal court. He previously pleaded guilty to stealing government property and structuring financial transactions.

Judge Ancer L. Haggarty watched two short videos Nguyen created, one a montage of reconstruction projects Nguyen shepherded and the other a tribute to 16 soldiers in Nguyen’s unit killed in Muqdadiyah, Iraq, a city northeast of Baghdad.

Haggarty allowed Nguyen to address the court, and he recounted the brutal defense of his thesis at West Point. His mentor and thesis adviser, he said, barely passed him and admonished him to take responsibility for his actions.

“I know he would today be ashamed of what has become of me, but he would understand and accept that I’m taking responsibility for my actions,” Nguyen said. “I hope I do him justice in the future.”

Nguyen was the civil affairs officer for Headquarters Company, 2nd Battalion, 23rd Infantry Regiment, “Tomahawks” 4th Stryker Brigade Combat Team, as the unit worked to oust insurgents from Muqdadiyah, then a Sunni stronghold.

From April 2007 to June 2008, Nguyen used money from the Commander’s Emergency Response Program to hire local Sunni militias, known as the “Sons of Iraq,” and for reconstruction projects — a school, a medical facility and a dairy were among other projects depicted in the video.

CERP, to which Congress has given $4.6 billion as of fiscal 2008, is meant to give commanders in Iraq and Afghanistan a tool for aiding urgent reconstruction and security projects. However, it suffered in its early days from gaps in oversight, according to recent audit by the Office of the Special Inspector General for Iraq Reconstruction.

Russell, said that Nguyen was placed solely in charge of $11 million with little training or supervision. He worked under “very, very dangerous and challenging circumstances,” and struggled with the loss of his fellow soldiers, which contributed to his “terrible error in judgment in this case.”

Russell and Assistant U.S. Attorney Scott Asphaug told Army Times that Nguyen tucked away CERP cash for an unauthorized use, to make condolence payments on behalf of the “Sons of Iraq,” and that the need was ultimately less than the amount Nguyen cached.

U.S. forces can make condolence payments to compensate the families of civilians killed by American troops, but typically do not do so for those killed by foreign troops.

“Captain Nguyen went through some novel efforts to supplement outside the lines in order to protect U.S. interests, in order to maintain security and in order to ensure that the civil population continued to work with the U.S. Army [to identify] threats to U.S. Army and its personnel,” Russell said.

As Nguyen’s deployment wound down, between June 2008 and February 2009, he mailed the cash to his Oregon home. Back in the U.S., he tried to elude IRS reporting rules by spreading small deposits among various banks, and he made a number of purchases: a 2009 Hummer H3T, a 2008 BMW M3, a Bowflex set and a PlayStation 3, among other items.

The Portland IRS office noticed Nguyen’s purchases and deposits, and Nguyen was arrested in March 2009.

Asphaug conceded that Nguyen “did a lot of good” in Iraq, but ultimately failed a test of integrity. He said military personnel, including West Point graduates, have called him and expressed a “sense of betrayal.”

“That is what he learned at West Point and that is, in essence, his integrity,” Asphaug said. “The temptation was too great. He stole almost $700,000 in money — of the government’s. He sent it home. He spent it foolishly.”

Nguyen was cooperating to give the money and property to the government. In court, Asphaug said funds will be returned to the Defense Department.

Nguyen is expected to begin his sentence Sept. 1 at Federal Correction Institution Sheridan.

He told the court that he planned to resign his commission: “I would like to quickly resign and move on,” Nguyen said. Ë