Fraud alleged over troop food : A Kuwaiti company is indicted on charges that it overcharged for meals provided to the military overseas.

A Kuwait-based company that is the principal food supplier to the U.S. military in Iraq has been indicted on charges that it defrauded the U.S. government in a series of alleged schemes that, by one account, have cost American taxpayers more than $1 billion.

The six-count criminal indictment was unsealed Monday in U.S. District Court in Atlanta against the company, Public Warehousing Co., or PWC, which in 2006 changed its name to Agility. Among other things, the complaint accuses the company of filing false invoices, failing to pass discounts along to the federal government, and asking vendors to decrease the amount of products in their packages “for no reason other than to charge the United States more for the same amount of product.”

The indictment is a potentially serious blow to a company that has become deeply involved in America’s overseas military effort. The publicly traded, multinational company has a number of other contracts with the Defense Department, including agreements to operate distribution depots in Kuwait and Guam, manage operations and security at overseas Air Force fuel facilities, and deliver electronic repair parts to the Army.

On Monday, the Defense Department’s logistics agency issued suspension notices to the company, which bar it from receiving new government contracts pending the outcome of the case. However, the current contracts will continue to be honored. The company’s multibillion-dollar food contract lasts until December 2010; other contracts do not expire until 2013 or 2014, said Dennis J. Gauci, spokesman for the Defense Logistics Agency.

The government has “no legal basis to discontinue the contracts,” said Gauci, who added that other companies could step in if the company is found guilty.

According to its website, Agility has 37,000 employees in 120 countries; the headquarters of its commercial division for the Americas is in Irvine.

In a statement Monday, the company said it was “surprised and disappointed” by the indictment, and said that the allegations would be proven to be without merit. It also noted that more than 30 company employees have been killed carrying out the “extremely dangerous work of providing food for U.S. troops in a war zone.”

At a news conference, prosecutors said no employees or officers of the company had been arrested. They also emphasized that the investigation was ongoing.

“Others who have engaged in similar conduct should beware,” said F. Gentry Shelnutt, who is serving as acting U.S. attorney in the case. “This indictment is only the first step.”

In 2005, a federal whistle-blower lawsuit known as a qui tam action was filed under seal against PWC and others in U.S. District Court in Atlanta. The plaintiff in this civil case is a Kuwaiti resident, Kamal Mustafa Al-Sultan, a relative of the head of Agility, Tarek Abdulaziz Sultan Al-Essa. According to court documents, the plaintiff’s company entered into a partnership in 2002 with the company that would become Agility to provide services to the Defense Department.

In an amended complaint last month, Al-Sultan alleged that the damages to the U.S. government exceeded $1 billion, and that the “fraud continues unabated.” In the news conference, prosecutors declined to put a total dollar amount on the alleged fraud.

The Justice Department has chosen to join in the civil whistle-blower action as a plaintiff, said Patrick Crosby, a spokesman for the department. This action is in addition to the criminal complaint.

Under the criminal charges, the company faces potential fines of up to twice the amount it allegedly obtained through fraud, or twice the loss to the United States, said Barbara E. Nelan, assistant U.S. attorney and a lead prosecutor on the case.

If the ongoing investigation reveals illegalities performed by company employees, they could be individually charged, she said.

An initial appearance and arraignment for the company is set for Nov. 20 before U.S. Magistrate Judge Janet F. King in Atlanta. Prosecutors said they were unsure who would be representing the company in that proceeding.

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richard.fausset@latimes.com