Judge: Former Blackwater head can remain free

U.S. Magistrate James Gates on Wednesday denied the government's request to set a bond for the suspects, including a proposed $250,000 bond for former Blackwater President Gary Jackson. Gates did order all five defendants to turn over their passports and refrain from possessing guns.

The 52-year-old Jackson left the Moyock-based company, which is now known as Xe, last year in a management shake-up.

The charges against Jackson include a conspiracy to violate firearms laws, false statements, possession of a machine gun and possession of an unregistered firearm. Also indicted were former Blackwater general counsel Andrew Howell, 44; former executive vice president Bill Mathews, 44; former procurement vice president Ana Bundy, 45; and former weapons manager Ronald Slezak, 65.

The case stems in part from a raid conducted by federal agents at the company's headquarters in 2008 that seized 22 weapons, including 17 AK-47s.

Jackson's attorney, Ken Bell, said repeatedly in court that a government agency knew about Blackwater's dealings and might have even asked the company to obtain the weapons. He refused to identify the agency involved or elaborate on the allegation after the court hearing.

Bell dismissed the charges as nothing more than "regulatory offenses."

"At most, certain forms were not filled out," he said.

Assistant U.S. Attorney John Bowler said no government agency condoned Blackwater's actions.

"It is just another display of sheer arrogance and scofflaw attitude," Bowler said.

Blackwater officials enticed the Camden County Sheriff's Office to pose as the purchaser of 34 automatic weapons that would be stored on the company's campus, something prosecutors called a straw purchase, according to the indictment, which was handed down last week. The sheriff's office provided blank letterhead to the company, which then used the stationery to prepare letters ordering weapons.

Federal law prohibits licensed firearms dealers like Blackwater from having more than two of the same style of machine gun. Law enforcement agencies can have fully automatic weapons.

Hoping to land a lucrative overseas contract, company officials also presented the king of Jordan with five guns as gifts before realizing that they were unable to account for where the weapons went, prosecutors said. To cover it up, they falsified four federal documents "to give the appearance that the weapons had been purchased by them as individuals," according to the indictment.

Prosecutors also focused on Blackwater's supply of short-barrel rifles, which dealers must register. The company purchased 227 short barrels and installed them on long rifles without registering them, and officials shipped the weapons with the barrels detached so that they could be reassembled overseas without facing the charge of exporting regulated weapons, according to the indictment.