Judge dismisses Blackwater founder from lawsuit

June 24, 2011 - 4:00 PM

ALEXANDRIA, Va. (AP) — A federal judge dismissed Blackwater founder Erik Prince from a civil lawsuit alleging his former security firm cheated the government in bills it submitted for protecting government employees in Iraq and Afghanistan, in a ruling made public Friday.

Former Blackwater employees Brad and Melan Davis sued Prince and his company in 2008, alleging the company overbilled the government for its work.

In his ruling, U.S. District Judge T.S. Ellis III said there is no evidence Prince participated or had direct knowledge of any of the allegedly false billing invoices.

The case is still scheduled to go to trial next month, with the company itself remaining as a defendant. But the judge has tossed out some of the lawsuit's claims, including a salacious allegation that Blackwater was billing the government for prostitutes under the category of "morale, welfare and recreation."

After ruling in May that significant parts of the case should go to trial, Ellis in recent weeks has chipped away at some of the plaintiffs' claims, tossing out specific allegations and most recently now by dismissing Prince as a defendant.

But key aspects of the case remain on track for trial, including an allegation that Blackwater billed the State Department for bribes that employees paid to Afghan officials. Blackwater lawyers have asked the judge to place court documents detailing that particular allegation under seal.

Prince's lawyer, Victoria Toensing, said Friday she was pleased with the court's ruling. The Davises' lawyer, Susan Burke, declined comment.

The exact amount of the alleged overbilling on the $1 billion security contract is not clear, but the Davises allege that Blackwater overbilled the State Department for security it provided in Iraq and Afghanistan. The contract allowed Blackwater to bill a specific amount for personnel in the country on any given day. Spreadsheets showing who was in the country do not match the bills submitted by Blackwater, and employees were ordered to alter paperwork to ensure that "no money was left on the table," Burke said at a pretrial hearing.

Prince, meanwhile, no longer is associated with Blackwater, which now operates under the name Xe. He no longer lives in the U.S. Earlier this year, Prince helped a contractor in the United Arab Emirates establish a permanent force of about 800 foreign fighters to supplement the Emirati military. A spokesman for Prince, Mark Corallo, said Prince is doing a variety of security consulting work, including natural resource and agriculture security.

The Davises' lawsuit is one of several legal battles that Blackwater has fought following its contract work in Iraq and Afghanistan. The company has been trying to rehabilitate its image since a 2007 shooting in Baghdad that killed 17 people, outraged the Iraqi government and led to federal charges against several Blackwater guards.

Those accusations were thrown out after a judge found prosecutors mishandled evidence, but the case was resurrected by a federal appeals court.