U.S. accuses background check firm of massive fraud

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The Justice Department has accused a background check firm, including managers at its Butler County office, of bilking the government out of millions by billing for incomplete work.

Government lawyers filed a complaint this week in an Alabama court against U.S. Investigations Services, claiming the company engaged in a practice called "dumping" in which it failed to perform quality-control reviews on more than 600,000 background investigations as a contractor for the Office of Personnel Management.

U.S. Investigations, based in Virginia, is the largest background check company in the country, handling about 45 percent of all government background checks for federal agencies. Last year it brought in about $195 million.

The alleged fraud was first revealed in a federal whistle-blower lawsuit filed in 2011 in Montgomery, Ala., by Blake Percival, a former employee who said the company, in an effort to maximize profits, used a software program called Blue Zone to automatically send background investigations to OPM even though they hadn't been finished or reviewed.

The Justice Department joined the suit and is seeking triple damages against the company.

According to the complaint, the fraud was carried out by eight managers at various locations, none of them named.

The actual "dumping" occurred at the Butler County office, the suit said, and was carried out by the quality control manager and the workload manager in that office.

The suit cites several emails sent by the managers detailing the fraud.

"Tis Flushy McFlusherson at his merry highjinks again!!**leprechaun dance**" wrote the workload manager in one email from October 2010.

In another from April of that year, the workload leader wrote, "Shelves are as clean as they could get. Flushed everything like a dead goldfish."

Another email from May 25, 2010, involving the same group of managers reads: "We dumped all we could to try and hit the 1100 mark but fell short."

At one point, the vice president of field operations wrote to colleagues that "We all own this baby, and right now we are holding one ugly baby."

The workload leader in Butler County replied that the company should either hire more people or keep flushing files, according to the suit.

"I don't know if there's any other levers left to flip other than dumping everything we know is bad," the manager wrote, adding that more dumping will "only make that ugly baby even uglier."

Despite the widespread fraud, the complaint said the government awarded the company more than $11 million in bonuses for its work from 2008 through 2010.

U.S. Investigations Services said that all the managers involved have since left the company.

"The behavior by a small number of employees alleged in the complaint is completely inconsistent with our company values, culture and tradition of outstanding service to our government customers," the company said in a statement. "We appointed a new leadership team, enhanced oversight procedures, and improved control protocols. From the outset, we have fully cooperated with the government's investigation and remain focused on delivering the highest quality service under our OPM contracts."

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