United States Investigation Services, a federally contracted background check company transitively owned by Corporation Fellow Jonathan Nelson ’77 P’07 P’09, is amidst a U.S. Department of Justice lawsuit for “taking shortcuts” on at least 40 percent of its cases.
The company handled background checks for Edward Snowden, the former Central Intelligence Agency employee famous for leaking National Security Agency secrets, and Aaron Alexis, who killed 12 people at the Naval Yard in Washington in September. The high-profile incidents have sparked media attention about USIS, though neither case is mentioned in the federal lawsuit.
Nelson is the founder and owner of Providence Equity Partners, a private equity firm that owns Altegrity, which is an information services company. USIS, located in Falls Church, Va., is one of Altegrity’s four businesses.
But Providence Equity Partners itself is not named in the Justice Department’s lawsuit. A spokesperson for the firm declined to comment.
As stated in a congressional report released Feb. 11, USIS accepted $16 million in rewards from the federal government while fraudulently failing to complete 40 percent, or at least 665,000, of its cases from 2008 to 2012, according to the Washington Post.
USIS was paid by the U.S. Office of Personnel Management based on the number of background checks completed, in an effort to increase efficiency, leading the company to close cases that were not finished or comprehensively researched, the New York Times reported.
After Altegrity was purchased by Providence Equity Partners in 2007, the firm implemented a new incentive structure intended to boost efficiency in 2008 — the same year the alleged corner-cutting began, the Post reported.
The Justice Department joined a “whistleblower’s lawsuit” in January, accusing USIS of “dumping” incomplete cases, the Post reported. “Flushed everything like a dead goldfish,” one USIS manager wrote in reference to the practice in a company email.
But USIS chief executive Sterling Phillips said Feb. 11 that the responsibility of granting security clearances “lies solely with the (NSA),” deflecting responsibility for the Snowden and Alexis cases, the Post reported.
Yet House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.) wrote that the “security clearances that both Snowden and Alexis received from the federal government enabled them to carry out their heinous acts” in a Nov. 20 letter to Katherine Archuleta, Office of Personnel Management director.
USIS has taken measures to comply with OPM standards in response to the allegations, including hiring new leadership and strenghtening “oversight procedures,” said a spokesperson in a statement, adding that the company will “remain focused on delivering the highest-quality service under our OPM contracts.”
The USIS leadership has seen 24 executive positions turn over since allegations began, including the chief executive, chief financial officer and head of the investigations services division, the Post reported.
USIS was suspected of fraud in 2011. Robert Calamia, vice president of field operations at USIS, received a letter from OPM questioning the reported completion of 13,000 reports by four investigators in one week. Calamia claimed this was an error at the time, the Post reported.
Providence Equity Partners was investigated for tax fraud in 2012, with a New York Attorney General subpoena potentially tying the company to an income tax-evasion investment scheme, The Herald reported at the time. The charges were later dropped.
“Jonathan Nelson is a valued member of the Brown University Corporation,” wrote Marisa Quinn, vice president of public affairs and University relations, in an email to The Herald this week.
Nelson personally donated $10 million to the University for the creation of the Jonathan Nelson ’77 Fitness Center and two new professorships in 2004.
A representative from USIS could not be reached for comment.
A previous version of this article misidentified Edward Snowden and Aaron Alexis as among the people whose cases are part of the Justice Department lawsuit. A previous version of this article also neglected to state that tax fraud investigations into Providence Equity Partners in 2012 were later dropped.