Washington ( CNN ) -- Two ex-Blackwater Worldwide employees allege the company charged the government for a prostitute and strippers and kept incompetent personnel for financial reasons , part of what they call a systematic pattern to defraud authorities . The accusations come in a lawsuit filed by Brad and Melan Davis -- who said the fraudulent activity , such as double billing and submitting false invoices , occurred while the security firm , now known as Xe , carried out its work in Iraq , Afghanistan and in Louisiana during Hurricane Katrina 's aftermath . Melan Davis , who was involved in record-keeping , said Blackwater billed the government for prostitution services in Afghanistan from a Filipino female , whose name was on Blackwater 's payroll roster under a category called `` Morale Welfare Recreation . '' She said Blackwater billed the woman 's plane tickets and monthly salary to the United States . The lawsuit also said a vendor being paid for `` cleaning services '' in Louisiana was providing strippers . Another accusation in the suit was that Melan Davis was wrongfully dismissed after raising the issue of `` fraud and abuse . '' Xe on Friday responded to the suit . `` The allegations are without merit and the company will vigorously defend against this lawsuit . It is noteworthy that the government has declined to intervene in this action , '' Xe said in a statement to CNN . The married couple filed suit in December 2008 in U.S. District Court for the Eastern District of Virginia under the False Claims Act . It was unsealed this month . Blackwater became the target of widespread Iraqi outrage after its contractors were involved in the September 2007 shooting in Baghdad 's Nisoor Square that left 17 civilians dead . That outrage was renewed in December when a U.S. judge dismissed manslaughter charges against five guards involved in the shootings on constitutional grounds . In the fraud suit , Brad Davis , an ex-Marine who worked as a security guard for Blackwater , said he `` personally observed '' three instances where personnel `` intentionally used excessive and unjustified deadly force '' and the suit said Blackwater refused to fire such `` unqualified people . '' Blackwater would continue to retain `` wholly incompetent '' personnel so they could pay their tuition bills to the company 's private training facility , the suit said . In Louisiana , where Blackwater was contracted to supply security services after Katrina , employees there `` submitted a variety of bogus receipts , '' the suit said . `` For example , Blackwater employees , when filling up Blackwater vehicles at commercial gas stations , would simply pick up the receipts that were left behind by other customers . They would then submit these receipts and be paid in cash by Blackwater . '' At the same time , the suit said , Blackwater failed to provide the services set down under its contract with Louisiana and the Federal Emergency Management Agency . It said Blackwater did n't monitor the `` deadly weapons '' it provided employees and `` lost track of countless weapons . '' The suit said Blackwater overbilled for travel expenses and `` created phone invoices to obscure the fact that Blackwater had failed to keep any of the necessary contemporaneous documentation on travel . '' The suit said Melan Davis attempted `` to blow the whistle on the fraud and abuse occurring in New Orleans '' and was told in 2006 she `` needed to back off . '' The suit said she was fired in 2008 when `` she was on leave battling cancer . '' Blackwater had about 1,000 contractors working in Iraq at the height of its involvement , guarding diplomatic convoys and supply vehicles after the U.S. invasion in 2003 . At least 10 of its employees were killed , including four whose burned and mutilated bodies were dragged through the streets of Falluja after an ambush in 2004 .
Two ex-Blackwater Worldwide employees sue , allege pattern of fraud , abuse against firm . Score: 6 Suit alleges firm charged government for prostitution , strippers . Actions allegedly occurred in Iraq , Afghanistan and Louisiana after Hurricane Katrina .