Call it "The Halliburton Defense"

Also known as the "it was IRAQI money" argument:

A federal judge issued a ruling yesterday that will limit the applicability of a critical antifraud statute against corporate contractors in Iraq.

Judge T. S. Ellis III of Federal District Court in Alexandria, Va., held that the False Claims Act does not apply to the many contractors who were paid by the American occupation authority using Iraqi oil money...

Yesterday's ruling, the first to provide guidelines in what has been a legal void, could derail some whistle-blower lawsuits that are in their early stages and under seal, experts in procurement law said.

In the chaotic year after the 2003 invasion, the coalition authority used billions of dollars in Iraqi funds, along with Congressionally appropriated money, to pay for reconstruction projects and vital imports.

Judge Ellis said the civil suit before him, involving allegations of sham billing by the security company Custer Battles, could go to trial under the False Claims Act because the company was mainly paid with confiscated Iraqi money that had become legal United States property...

Legal experts said there appeared to be little doubt that fraud involving appropriated United States funds - Congress has directed more than $20 billion to Iraqi reconstruction - would be subject to the False Claims Act. But many of the contracts signed in 2003 and 2004 were partly or wholly paid using Iraqi money.

Lawyers for Halliburton celebrated by lighting cigars with $100 dollar bills...which, they assured reporters were "most definitely" 'Iraqi' funds.