From 2008 to 2012, about 40 percent of the company’s investigations were fraudulently submitted, the Justice Department said.Company officials issued a statement Thursday saying only a few individuals at the company were involved in the scheme, that it has fully cooperated with government prosecutors since "learning" of the allegations two years ago, and that it has made leadership and other changes since then.
According to The Wall Street Journal, USIS handles 45 percent of all background checks for the Department of Defense, Homeland Security and more than 100 other government agencies, 2.2 million such investigations every year. Over the past 10 years, it has been awarded $4 billion in government contracts, $253 million in 2012, and gets 90 percent of its business from the government.
USIS was established in 1996 as part of then-Vice President Al Gore's "reinvention" of a leaner civil service, the idea being that the private sector could better handle what had until then been done by the Federal Investigations Division of Office of Personnel Management. The newly privatized unit was originally called U.S. Investigations Services Inc. and employed some 700 investigators who had been government employees. USIS immediately obtained a no-bid, three-year contract with the Feds. It also was given access to government databases other companies were not.
Although it started out as an employee-owned operation, the Carlyle Group and Welsh, Carson, Anderson & Stowe invested in USIS in 2003 and sold it for $1.5 billion in 2007 to Providence Equity Partners.
Bloomberg News reported last September that of at least 10 background-check investigators working for private contractors who have been found guilty of falsifying records since 2006, eight had worked for USIS. Matt Apuzzo at the New York Times writes about dumping:
The government quoted from internal company emails to argue that the practice was widespread.Somebody obviously did notice. But it sure did take long enough. It would be a supreme exercise in gullibility to assume that USIS just started playing us for rubes a couple of years ago.
“Have a bit of a backlog building, but fortunately, most people are off this week so no one will notice!” one USIS employee wrote in 2010. [...]