It's from 2002, but i've never heard this
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At the height of the summer, as talk of invading Iraq built in Washington like a dark, billowing storm, the US armed forces staged a rehearsal using over 13,000 troops, countless computers and Dollars 250m. Officially, America won and a rogue state was liberated from an evil dictator.
What really happened is quite another story, one that has set alarm bells ringing throughout America's defence establishment and raised questions over the US military's readiness for an Iraqi invasion. In fact, this war game was won by Saddam Hussein, or at least by the retired marine playing the Iraqi dictator's part, Lieutenant General Paul Van Riper.
In the first few days of the exercise, using surprise and unorthodox tactics, the wily 64-year-old Vietnam veteran sank most of the US expeditionary fleet in the Persian Gulf, bringing the US assault to a halt. What happened next will be familiar to anyone who ever played soldiers in the playground. Faced with an abrupt and embarrassing end to the most expensive and sophisticated military exercise in US history, the Pentagon top brass simply pretended the whole thing had not happened. They ordered their dead troops back to life and "refloated" the sunken fleet. Then they instructed the enemy forces to look the other way as their marines performed amphibious landings. Eventually, Van Riper got so fed up with all this cheating that he refused to play any more. Instead, he sat on the sidelines making abrasive remarks until the three-week war game - grandiosely entitled Millennium Challenge - staggered to a star-spangled conclusion on August 15, with a US "victory".
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Rest at
http://www.globalsecurity.org/org/news/2002/020906-iraq1.htm