A pyramiding of profit

I love this one. Josh Marshall's organization filed a Freedom of Information Request with the State Department to get a copy of the Inspector General's 2005 report on the Blackwater contract in Iraq. The report was eventually provided, and it shows that Blackwater's accounting for billing purposes was totally unacceptable. Among other things, the Blackwater billing counted the company's profits as an expense to be billed in its contracts. As TPM Muckraker puts it:

It also found that Blackwater cited its profit from the contract as a cost it incurred, and billed the government for it -- resulting in what the report called "a pyramiding of profit."

What a neat trick. The more you make, the more you can bill, so you can make even more, and bill even more, and make even more, and bill even more ... ad infinitim.

I seem to recall a case I worked on some years ago where the plaintiff was claiming damages that included interest on the interest on the interest on the interest on the interest he claimed he was due. It took what might have been an actual loss of several thousand dollars and turned it into something like $14 million. Every time he filed a revised damage calculation, he would add another round of interest on it.