WASHINGTON – U.S. occupation officials gave a man with a federal fraud conviction control of millions of dollars for Iraqi reconstruction. Now the man is charged with accepting kickbacks to steer contracts to a businessman.

Robert J. Stein Jr., 50, of Fayetteville, N.C., used some of the kickback money to make a restitution payment for his earlier conviction and his wife used some to pay federal taxes, according to a federal affidavit.

Stein faces conspiracy, money laundering, wire fraud and other charges stemming from his alleged role in helping Philip H. Bloom, a U.S. citizen who has lived in Romania for many years, get contracts in Iraq worth more than $13 million, federal authorities said yesterday.

Prosecutors say Bloom, 65, paid kickbacks of more than $630,000 to Stein and others. Bloom has been charged with conspiracy and money laundering stemming from an investigation that Justice Department officials say could result in additional charges against others.

Stein, who worked for the Coalition Provisional Authority in Iraq, and his wife bought real estate, cars, jewelry and home improvements with the money, according to federal affidavits made public Wednesday. He and other CPA officials allegedly helped rig bids for Bloom and three companies he controlled for contracts to do work in Al-Hillah and Karbala, two cities 50 to 60 miles south of Baghdad.

Bloom was arrested Sunday at New Jersey’s Newark International Airport, while Stein was arrested Monday in Fayetteville, authorities said. They are being held in federal custody, pending hearings in U.S. District Court in Washington beginning next week.

Robert A. Mintz, Bloom’s lawyer, said he is reviewing the allegations against his client and had no comment. Stein was represented by a federal public defender in a brief appearance Tuesday in U.S. District Court in Fayetteville. Elizabeth Luck, a spokeswoman for the public defender’s office, declined to comment on Stein’s case.

Stein was the comptroller and funding officer for the CPA’s South Central Region.

Court records show he was convicted in 1996 for defrauding a financial institution. He pleaded guilty and was sentenced to eight months in prison and three years of supervised release. He also was ordered to repay the unidentified institution $45,000.

According to the affidavit supporting the latest charges, he used $200 of the money from Bloom to make a restitution payment. His wife used another $5,821 to pay 2001 federal taxes – a payment made in January 2004, the affidavit said.

It is unclear whether CPA officials knew about his prior conviction.

The U.S. -controlled CPA ran Iraq from shortly after the March 2003 invasion until June 2004. It had final say over spending from the Development Fund for Iraq, made up mainly of Iraqi oil revenues.

“Now that there is concrete evidence of fraud involving U.S. officials and the Development Fund for Iraq, we have an obligation not to avert our oversight,” Waxman wrote Rep. Chris Shays, R-Conn., chairman of a House Government Reform subcommittee that has examined fraud allegations in the U.N. Oil-for-Food program.

“This is the first case and there will be more,” said Jim Mitchell, the inspector general’s spokesman, adding that this is the result of a nearly yearlong investigation involving millions of dollars. He could not estimate how much money is involved overall.

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