Defense firm pans ex-worker

RENO -- A Nevada-based defense contractor has branded as "despicable" allegations that a former employee conspired with others to steal U.S. military ammunition in Iraq and then sold it back to Iraqis and U.S. forces.

Robert Killion, vice president of Security Operations Consulting of Minden, said Sunday that employee Chad Eric O'Kelley was discharged in 2007 shortly after the allegations surfaced.

Killion said the allegations were reported by another employee, and the company then notified law enforcement authorities. The company has since assisted federal authorities in the investigation, he added.

"He was put on administrative leave during the initial phase of the investigation, and it became obvious to us early on that he wasn't someone we wanted to represent us," Killion said.

"Certainly the despicable business he was involved in -- and the company obviously doesn't support it -- prompted us to discharge him immediately. We've had no contact with him since," he added.

There's no home phone number listed for O'Kelley, and employees at a Carson City gym that he co-owns said he would not be available for comment until he returned to work on today.

O'Kelley, 40, was released on his own recognizance after being arrested at his Carson City home and making an initial appearance Thursday in U.S. District Court in Reno.

He faces charges of conspiracy to defraud the U.S. government and money laundering. O'Kelley also was ordered to appear in federal court in Texas, where he used to live in El Paso. No date was set for that appearance.

The assistant federal public defender who represented him at Thursday's hearing, Ramon Acosta, did not return phone calls. It was unclear whether O'Kelley has a new attorney.

A federal grand jury indictment alleges O'Kelley was a manager in Baghdad with Security Operations Consulting in early 2007 when he conspired with others to steal and sell the ammo and send cash shipments to the United States via Federal Express or couriers.

The indictment claims he made four structured cash deposits totaling $34,600 into an El Paso bank account to avoid financial transaction reporting requirements.

The total amount of money involved in the scheme, which reportedly ended in 2008, has not been publicly disclosed.

O'Kelley, who was charged with ensuring that all bases of operation in Iraq under contract with Security Operations Consulting had ammunition and other supplies, also is accused of selling some of the ammunition back to the U.S. military and coalition forces, meaning the government paid for the ammo twice, federal prosecutors contend.