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Blackwater USA triggered a major battle in the Iraq war in 2004 by sending an unprepared team of guards into an insurgent stronghold, a move that led to their horrific deaths and a violent response by U.S. forces, says a congressional investigation released Thursday.

The private security company, one of the largest working in Iraq and under scrutiny for how it operates, also is faulted for initially insisting its guards were properly prepared and equipped. It is also accused of impeding the inquiry by the Democratic staff of the House Oversight and Government Reform Committee.

The results of the staff inquiry come less than a week before Erik Prince, a former Navy SEAL and Blackwater's founder, is scheduled to testify before the committee, which is chaired by Rep. Henry Waxman, D-Calif., a longtime critic of Blackwater.

The March 2004 incident involving Blackwater was widely viewed as a turning point in the Iraq war after images of the mutilated bodies of the four guards were seen around the world. Four days after the Blackwater guards were killed, a major military offensive, known as the Battle of Fallujah, began.

The combat lasted almost a month in Fallujah, which is 40 miles west of Baghdad. At least 36 U.S. military personnel were killed along with 200 insurgents and an estimated 600 civilians, the congressional investigation found.

In a statement, Blackwater spokeswoman Anne Tyrrell called the report a "one-sided version" of a tragic incident. She said the committee has documents that show the Blackwater team was "betrayed" and steered into "a well-planned ambush."

The report does not acknowledge "that the terrorists determined what happened that fateful day in 2004," Tyrrell said. "The terrorists were intent on killing Americans and desecrating their bodies."

David Marin, the committee's Republican staff director, criticized the Democratic staff for reaching conclusions before the committee could dig deeper for answers.

"We certainly don't get there in this plaintiff's road map masquerading as an investigative report," Marin said.

Donna Zovko, whose son, Jerko "Jerry" Zovko, died in the Fallujah incident, said she hopes the staff report will lead to more oversight and more discussions about the use of contractors.

"Congress can't change anything for my son. He is gone and nothing can bring him back," Zovko said. "But let's see what they can do for the others out there because someone needs to care for these contractors. Blackwater cares about nothing but the mighty dollar."

The families of the four slain contractors filed suit against the company in January 2005, saying Blackwater's cost-cutting measures led to the deaths. That lawsuit is still pending as a federal judge tries to determine whether it should be heard in arbitration or in open court.

Blackwater has argued in court that it is immune to such a lawsuit because the company operates as an extension of the military and cannot be responsible for deaths in a war zone.

The results of the Democratic staff's probe cast Blackwater in a more negative light.

On Sept. 16, 2007, 11 Iraqis were killed in a shoot-out involving Blackwater guards protecting a U.S. diplomatic convoy in Baghdad.

The State Department, one of Blackwater's largest customers, has opened an investigation into the incident. Deputy Secretary of State John Negroponte told Congress on Wednesday that the Baghdad incident was tragic but that private security companies like Blackwater were essential to operations in Iraq.

At the same time, a panel ordered by Secretary of State Condoleezza Rice to review U.S. diplomatic security practices in Iraq will leave next week to begin assessing how the State Department protects its employees and other civilian government officials.

Rice on Thursday instructed the team, led by Patrick Kennedy, one of the most senior management experts in the Foreign Service, to present an interim report by Oct. 5, State Department spokesman Sean McCormack said.

"Pat Kennedy will lead a small team to Iraq early next week to begin establishing some baseline set of facts about these contractor operations and provide Secretary Rice with an interim report no later than next Friday," McCormack said.

He quoted Rice as saying she wanted Kennedy's assessment to "be 360 (degrees), to be serious, and to be really probing."

The congressional report called Blackwater an "unprepared and disorderly" organization on the morning of March 31, 2004, when Zovko, Wesley Batalona, Michael Teague, and Scott Helvenston were riding in Mitsubishi Pajeros and guarding a supply convoy.

Although warned by other contractors that it was dangerous to drive through Fallujah, the Blackwater guards "seemed unaware of the potential risk," the report says.

Prior to the team's departure, two members were cut from the mission, leaving the vehicles without rear gunners. The report says they were needed to perform administrative duties elsewhere.

Blackwater "consistently delayed and erected impediments" to the investigation by claiming information was classified and "asserting questionable legal privileges," the report says.