In October, we wrote about the government’s intention to intervene in a pending whistleblower case against USIS, a security background check firm that is now accused of submitting hundreds of thousands of flawed background investigations. The Department of Justice has filed its complaint, which provides further insight into the allegations.
DOJ Complaint in Whistleblower Case Against Background Check Firm
According to the complaint, between March 2008 and September 2012, USIS released at least 665,000 background investigations as complete. However, they had not received required levels of quality review. These “dumped” cases represented most government agencies, including the DOJ, DHS and the Defense Intelligence Agency.
USIS management was acutely aware that the firm’s practice of dumping cases. For example, one manager allegedly said they, “flushed everything like a dead goldfish.” Government contracts represent about 90% of USIS’s work. These contracts are worth more than $4 billion in total.
USIS was responsible for several high profile security checks. For example, Aaron Alexis, the defense contractor responsible for last September’s shooting spree at the Washington Naval Yard. USIS also performed the check for Edward Snowden, the infamous NSA leaker. However, the complaint does not allege that either of these checks were compromised.
Original Whistleblower Allegations Against Background Check Firm
Blake Percival, a longtime employee at USIS, was the original whistleblower that helped bring the background check allegations to light. He alleges that USIS created a special software program called “Blue Zone” to assist in dumping practices by sending cases to the government even when they had not undergone proper review. The company’s officials allegedly received close to $12 million in bonuses from the federal government, although USIS says it has replaced all officials implicated in the scheme.
In addition to alleging violations of the FCA, the United States’ complaint alleges USIS breached its contract with the Office of Personnel Management. This claim gives the United States a fallback in case it cannot prove the requisite scienter under the FCA. However, breach of contract (like other common law claims) would only permit the United States to recover single damages plus interest, not the treble damages and civil penalties that are possible under the FCA. Common law claims can only be pursued by the United States; private citizen whistleblowers lack standing to bring such claims.
We also wrote last year about the government’s parallel criminal investigation of USIS. There is still no further news on that front, but we will update you when there is.
