Background investigation firm U.S. Investigation Services Inc. (USIS) and its parent company, Altegrity Inc., agreed to a settlement with the Justice Department whereby the company forgoes at least $30 million owed by the U.S. Office of Personnel Management (OPM), the Justice Department announced Wednesday.
The settlement is tied to allegations USIS violated the False Claims Act (FCA) for contract work for background investigations with OPM. USIS and Altegrity agreed to forego the money owed by the government in exchange for a release from liability under the FCA.
USIS was the company that conducted background investigations of NSA leaker Edward Snowden and Washington Navy Yard shooter Aaron Alexis.
The federal government alleged that starting at least March 2008 and continuing through September 2012 USIS deliberately avoided contractually required quality reviews of completed background investigations to increase the company’s profits. USIS provided background investigation services for OPM from 1996-2014.
USIS is specifically accused of creating a practice called “dumping,” or “flushing.” This involves releasing cases to OPM and representing them as complete when not all reports of investigations comprising those cases had received a contractually-required quality review, the Justice Department said.
The government said that relying on the false representations on USIS, OPM issued payments and contract incentives to the company that it would not have otherwise issued if OPM knew the investigations did not go through contractually mandated quality review process.
“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,” Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, said in a statement.
“Contractors who do business for the federal government have a responsibility to provide the goods and services that they promise. This particular company failed to meet its obligations of comprehensively reviewing the backgrounds of current and prospective federal employees,” Acting U.S. Attorney Vincent H. Cohen, Jr., of the District of Columbia, added.
“We will continue to vigorously pursue all fraud against the government in order to restore and safeguard funds paid by our citizens,” U.S. Attorney George L. Beck, Jr., of the Middle District of Alabama, said.
Altegrity, USIS, and company affiliates filed for Chapter 11 bankruptcy in Delaware in February. This FCA settlement is part of a larger settlement with the government related to the bankruptcy proceeding.
The FCA lawsuit was originally filed under a whistleblower provision of the act by Blake Percival, a former USIS executive. Under that provision, a private party may file a suit on behalf of the government and share in any recovery. Percival’s share of the settlement had not yet been determined, the announcement said.
The settlement was coordinated by the Civil Division’s Commercial Litigation Branch, U.S. Attorney’s Office of the District of Columbia, U.S. Attorney’s Office of the Middle District of Alabama, OPM< and the Inspector General of OPM.