U.S. Investigations Services $30 Million Government Contract Fraud Settlement

A $30 million False Claims Act settlement was announced today in the U.S. Investigations Services (USIS) whistleblower initiated lawsuit that accused USIS and Altegrity, its parent company of fraudulent conduct as reported by former USIS executive Blake Percival under the whistleblower provisions of the act.

U.S. Investigations Services $30 Million Government Contract Fraud Settlement

Blake Percival filed a lawsuit alleging that USIS violated the FCA by committing government contract fraud, breaching the terms of their contract to provide background checks for the U.S. Office of Personnel Management (OPM). USIS provided background checks for OPM from 1996 until September 2014. The suit alleged that between at least March 2008 and September 2012, USIS failed to adhere to contractually promised quality reviews of these background checks. 

USIS Executive Blake Percival Says Fired for Reporting Fraud 

Mr. Percival was an executive at USIS, working for the company from 2001 to June 2011, most notably as the Director of Fieldwork Services. Percival further alleged that he was fired in retaliation for refusing to have those employees under his supervision participate in fraudulent activity.  

According to the lawsuit, USIS employees participated in “dumping,” which is the term USIS used for releasing background checks to OPM and being paid for these checks as though they were complete, when in reality, as alleged in the suit, the background checks had not been subjected to the quality reviews required by the contract.

FCA Suit Claims Faulty Background Checks Including Edward Snowden’s

The government alleges that OPM paid for a large number of background checks they would not have paid for if they were not falsely led to believe that quality reviews were being performed, and that the background checks were as thorough and accurate as the contract between OPM and USIS mandated. The False Claims Act clearly prohibits such false claims for government money.

An interesting detail of this case is that one of the many background checks performed for OPM by USIS was for Edward Snowden, the notorious former government contractor and CIA employee who leaked classified national security information in the 2013 WikiLeaks incident. USIS conducted a background check on Snowden for OPM in 2011.

While this case was initiated by Percival under the whistleblower provisions of the FCA, it has was taken over by the Department of Justice for prosecution. USIS agreed to settle for $30 Million. In recompense for bringing this fraud to light as a whistleblower, Blake Percival will likely receive 10-30% of the total settlement amount as mandated in the whistleblower award provision of the FCA. His exact share has not yet been determined.

Department of Justice says Unacceptable Shortcuts on Background Checks

In a press release issued by the Department of Justice, Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, stated that “Shortcuts taken by any company that we have entrusted to conduct background investigations of future and current federal employees are unacceptable. The Justice Department will ensure that those who do business with the government provide all of the services for which we bargained.”

U.S. Attorney Vincent H. Cohen Jr. also weighed in on this case, noting that “Contractors who do business for the federal government have a responsibility to provide the goods and services they promise. This settlement demonstrates our commitment to holding government contractors accountable.”

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