Dyman & Associates Risk Management Projects: US brings fraud charges against background check company

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The Justice Department filed a civil complaint Wednesday against the company that handled the background checks of National Security Agency leaker Edward Snowden and Navy Yard shooter Aaron Alexis for allegedly submitting thousands of unfinished investigations as complete, and then attempting to conceal their actions after government officials caught wind of what they were doing.

At least 665,000 investigations – or 40 percent of cases submitted to the government over a four-year period – were affected by U.S. Investigations Services’ (USIS) actions, the Justice Department said. The alleged fraud continued through at least September 2012.

The complaint said that USIS engaged in a practice known inside the company as "dumping" or "flushing." It involved releasing incomplete background checks to the government but claiming they were complete in order to increase revenue and profit. The company did so knowing that there could potentially be quality issues associated with those reports, the government alleged.

USIS was involved in a background investigation of Snowden in 2011, but his particular job doesn't factor into the lawsuit. The government has contracted USIS since 1996 to vet individuals seeking employment with federal agencies.

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The Falls Church, Va.-based company conducts hundreds of thousands of background checks for government employees and has more than 100 contracts with federal agencies.

In response to the complaint, USIS officials said that integrity and excellence are core values at USIS, which has 6,000 employees.

The government paid the company $11.7 million in performance awards for the years 2008, 2009 and 2010, according to the Justice Department court filing.

USIS senior management "was fully aware of and, in fact, directed the dumping practices," the government complaint said. Beginning in March 2008, USIS' president and CEO established revenue goals for the company. USIS's chief financial officer determined how many cases needed to be reviewed or dumped to meet those goals, the complaint added, and conveyed those numbers to other company leaders.

According to one internal company document, a USIS employee said, "They will dump cases when word comes from above,” such as from the president of the investigative service division and the president and CEO.

The background investigations that were dumped spanned most government agencies – including the Justice Department, the Department of Homeland Security, the Defense Department, the Defense Intelligence Agency, the Department of Health and Human Services, the Transportation Department and the Treasury Department.

In one example, the federal Office of Personnel Management (OPM) in April 2011 had raised concerns with USIS after tests showed that a large number of investigation reports were identified as complete when computer metadata revealed that the reports had never been opened by a reviewer. In a response to OPM, USIS falsely attributed the problems to a variety of software issues, said the Justice Department filing.

In addition, USIS ensured that all dumping practices stopped when OPM was on site conducting audits – and then resumed after OPM's auditors were gone, the government alleged.

"Most of the September miss should `flush' in October," an email from USIS's chief financial officer said to the vice president of the investigative service division.

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