Waste of the Day: Throwback Thursday – In 2010, “Dick Clark’s Dumpin’ New Year’s Eve”

Topline: Millions of Americans watched the ball drop in Times Square on TV last night, including federal government employees out of the office to celebrate the New Year. Back in 2010, that left the government vulnerable to massive fraud. U.S. Investigations Services — a company hired to vet federal workers — was accused of “dumping” cases, or approving security clearance for employees without actually completing their background check.

The sordid story of U.S. Investigations Services

One worker even emailed his colleagues to make a joke out of the alleged crime: “Scalping tickets for ‘Dick Clark’s Dumpin’ New Year’s Eve!’ Who needs 2? Have a bit of a backlog building, but fortunately, most people are off this week so no one will notice!”

The company received over $820 million from the federal government between 2012 and 2014 before its contract was terminated. The money would be worth $1.1 billion today.

That’s according to the “Wastebook” reporting published by the late U.S. Senator Dr. Tom Coburn. For years, these reports shined a white-hot spotlight on federal frauds and taxpayer abuses. 

Coburn, the legendary U.S. Senator from Oklahoma, earned the nickname “Dr. No” by stopping thousands of pork-barrel projects using the Senate rules. Projects that he couldn’t stop, Coburn included in his oversight reports.   

Coburn’s Wastebook 2014 included 100 examples of outrageous spending worth billions of dollars, including the alleged New Year’s fraud.

Running half of all background checks

Key facts: In the early 2010’s, U.S. Investigations Services was responsible for roughly half of all background checks of federal workers. The company was paid based on how many background checks it completed, giving managers a perverse incentive to finish the checks as quickly as possible.

Director of Fieldwork Services Blake Percival filed a whistleblower lawsuit in 2011, alleging the company fired him for refusing to take part in its “dumping” scheme. The Department of Justice joined the lawsuit in 2013, alleging that the company had used computer software to forge 665,000 fake background investigations to boost the company’s revenue.

Emails submitted in court exposed the absurd puns USIS workers used to describe “dumping” and “flushing” their work, according to Coburn. One 2010 message read, “T’ is Flushy McFlushershon at his merry hijinks again!! **leprechaun dance** … I’m not tired.” 

In another message, the company’s director of national quality assurance wrote, “Shelves are as clean as they could get. Flushed everything like a dead goldfish.”

U.S. Investigations Services’ contract was not terminated until September 2014. In 2015, to settle the allegations that it violated the False Claims Act, the company agreed to forgo $30 million it said the DOJ owed in unpaid bills.

No convictions

U.S. Investigations Services as a company was never convicted of a crime, and the DOJ website notes the claims are “allegations only.” But by 2018, 27 employees had pleaded guilty to fraud for their work with U.S. Investigations Services or Key Point Solutions, another security company.

U.S. Investigations Services had granted security clearance to Edward Snowden, who famously leaked classified National Security Agency documents, and Aaron Alexis, the Navy worker who fatally shot 12 people in Washington, D.C., in 2013. Their clearance was not part of the lawsuit.

Search all federal, state and local salaries and vendor spending with the world’s largest government spending database at OpenTheBooks.com. 

Summary: With the federal government still losing up to $750 billion to fraud every year, Washington’s New Year’s resolution should be to significantly improve its oversight mechanisms. 

The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com.

This article was originally published by RealClearInvestigations and made available via RealClearWire.