RALEIGH, N.C. (AP) -- The federal prosecution of five former employees of the private security firm Blackwater has crumbled after the defendants said they were acting at the behest of the CIA by providing five guns as gifts to King Abdullah II of Jordan.
Federal prosecutors indicted former Blackwater president Gary Jackson and four others in 2010 on a long list of felony firearms violations involving dozens of weapons, including 17 M-4 military assault rifles and 17 Romanian-made AK-47s.
All charges against three of the accused were dismissed Thursday at the request of prosecutors after a federal judge ruled earlier this month to reduce several of the felony charges to misdemeanors.
Under a plea agreement, Jackson and former company vice president William Matthews admitted guilt Thursday on misdemeanor charges related to record keeping violations, resulting in $5,000 fines and four months house arrest. They had originally faced decades in prison on 12 felony charges each.
"At the time the Department of Justice brought this case I don't think they knew all of the facts," Kenneth Bell, Jackson's lawyer, said Friday. "Through three years of discovery and litigation, I think they came to know the facts, and did the right thing once they understood the facts."
Thomas Walker, a U.S. attorney for eastern North Carolina, stressed that the case did result in guilty pleas.
"Accountability is important even if it was the former president and vice president of Blackwater," Walker said. "At the end of the day, no one is absolved from properly reporting the movement of firearms and the defendants' pleas of guilty stand for that proposition."
Thursday's guilty pleas ended one of several criminal cases and lawsuits filed in the last decade against Blackwater, which was founded in 1997 in North Carolina by former Navy SEAL Erik Prince and awarded massive no-bid security contracts from U.S. government at the beginning of the Iraq War.
The company's overseas operations became the focus of international scrutiny when Blackwater guards were involved in a series of high-profile overseas shootings, the most notorious being the 2007 shootings in Nisoor Square in Baghdad that left 17 Iraqis dead. Five former Blackwater employees currently face federal manslaughter charges stemming from the shootings.
Agents from the Bureau of Alcohol, Tobacco and Firearms raided Blackwater's 7,000-acre training compound in Moyok, N.C., in 2008, seizing the automatic weapons. The company, which was registered with the ATF as a federal firearms dealer, claimed it was simply storing the guns owned by the Camden County Sheriff's Office, which had only a handful of deputies.
The company was limited by its federal firearms license in how many automatic weapons it could legally own. But law enforcement agencies are not. Blackwater contracted a sheriff's department employee as a "weapons custodian" at the company's compound, where the assault rifles were routinely used in training exercises with Blackwater's clients. Prosecutors said the arrangement was intended to subvert the federal restrictions on how many automatic weapons could be at the company's facility.
Several of the federal charges were related to a Bushmaster M4 rifle, three Glock handguns and a Remington shotgun presented to King Abdullah and his traveling entourage during a 2005 visit to Blackwater's headquarters. Prosecutors said the weapons were part of a bid for Blackwater to land a lucrative security contract with Jordan and that registration records tracking the guns were later falsified to claim the weapons were sold to individuals.
Though many documents in the court file are still under seal for national security reasons, it appears the government's case began to unravel last year when defense lawyers produced sworn statements from two retired CIA officials who said they knew about the weapons presented to the king.
John Macguire, who described himself as a CIA officer for 23 years ending in 2005, and Charles Seidel, who said he was CIA station chief in the Jordanian capital of Amman in 2005, said they would be willing to testify about their knowledge of government involvement if the spy agency allowed it.
"I have information related to the transfer of firearms to the King of Jordan described in numerous counts of the indictment and how the U.S. government's authorization for the transfer of those weapons took place," Maguire said in a statement filed with the court.
A group of investors bought Blackwater in December 2010 from Prince, renaming the company Xe. It changed names again the following year, becoming ACADEMI.
On Friday, company spokeswoman Kelly Gannon said none of the former Blackwater executives worked for ACADEMI or the current ownership.