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Retired FBI agent arraigned in Afghan scheme uncovered in Utah

Retired FBI agent arraigned in Afghan scheme uncovered in Utah

By Paul Foy, Associated Press | Posted - Oct. 30, 2012 at 8:59 p.m.

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SALT LAKE CITY (AP) - A recently retired FBI agent pleaded not guilty Tuesday to charges of trying to derail an investigation into a defense contract scandal in exchange for promises of riches that apparently never materialized.

Prosecutors say Robert G. Lustyik Jr. was a counterintelligence officer based in White Plains, N.Y., who agreed to "blow the doors off" a federal investigation for a share in the business of Boston-based American International Security Corp., a defense and security firm. The case got its start in Utah as a money-laundering probe after a company associate was questioned about taking large amounts of cash out of a St. George credit union.

Lustyik appeared convinced his lifetime in law enforcement was about to pay off last June when he offered $1 million to a friend as a gift, court records say.

"I've made us all stinking rich!!!" Lustyik wrote the friend, according to an email intercepted by the government. "For 30 years I've sacrificed to get to this point."

An affidavit filed by the Justice Department's Office of Inspector General showed the lengths Lustyik went to interfere in an investigation into $54 million in Army contracts used to equip and train Afghan commandos.

Three others, including the head of AISC and a retired Army lieutenant colonel, have been charged with illegally obtaining the contracts through insider bidding and pocketing $20 million.

Lustyik sought to designate AISC chief Michael L. Taylor, 51, of Boston, a counter-intelligence source and created a dossier of staged interviews with current and retired government agents and prosecutors who knew him. The efforts were meant to keep federal prosecutors in Utah from being able to indict a supposedly valuable confidential source, they said.

Lustyik claimed to a Utah-based FBI agent that Taylor had provided information leading to the capture of a significant terrorist. He didn't specify which one and meanwhile was telling Taylor he would "crush the Utah case agent," according to emails obtained by the government.

"I will not stop in my attempt to sway this your way," wrote Lustyik, of Sleepy Hollow, N.Y., who retired from the FBI on Sept. 20.

The former agent appeared in federal court Tuesday in Salt Lake City on 11 charges of fraud, conspiracy and obstruction of justice. His lawyer, Raymond Mansolillo, dismissed the "snippets of email" as an incomplete story.

"We feel confident we're going to be exonerated," he said.

Johannes W. Thaler, 49, of New Fairfield, Conn., earlier pleaded not guilty to charges he acted as a messenger between the FBI agent and Taylor.

Thaler is a childhood friend of Lustyik, according to an indictment.

The government's affidavit contains no indication Taylor delivered on any of the riches in such promising emails to the two men as one that read: "I'll make you guys more money than you can believe, provided they don't think I'm a bad guy and put me in jail."

Taylor has pleaded not guilty to a 72-count indictment in the Afghan contract scheme and is being held in Utah on additional charges of allegedly trying to corrupt the investigation. Taylor pleaded not guilty to those charges in court Tuesday.

A recently retired Army officer, David Young, of Hernando Beach, Fla., has been released on contract-fraud charges. His lawyer, Brett Tolman, has disputed the government's contention that Young was a procurement official who leaked bid information to Taylor.

Young had no ability to award the contract, performed no services for it and had millions of dollars wrongfully seized by the federal government from other business dealings with the defendants, said Tolman, a former U.S. attorney for Utah.

The government seized another $5 million from a bank account of Taylor's that it traced to the Afghan contract. Prosecutors said the Sept. 8, 2011 seizure marked the start of Taylor's efforts to quash the investigation.

Christopher Harris, who worked for the company in Afghanistan, also has pleaded not guilty in the bid scheme. Court records indicate Harris helped prosecutors build their case after he raised suspicions by withdrawing amounts from a Utah credit union just under the federal reporting limit of $10,000.

(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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