$30 Million Whistleblower Settlement and a Case of National Security

A $30 million settlement was the result of a whistleblower case we handled that also involved matters of national security. The case shows the critical role of whistleblowers.

We often assume that those entrusted to keep us safe will do so, but that’s not always the case. It is especially scary when those involved in national security matters fail to protect us.

That is exactly what happened in a monumental case Beasley Allen lawyers W. Daniel “Dee” Miles, III, and Larry Golston handled against a client’s former employer, U.S. Investigations Services, Inc. (USIS). USIS formerly conducted background checks on federal employees and those applying for federal jobs.

The government once hired USIS to perform most of its background checks. Background checks performed by USIS included investigations into the backgrounds of Edward Snowden and Aaron Alexis before the government hired them. Snowden later gave away highly classified information about National Security Agency surveillance. Sadly, Alexis shot and killed 12 people at the Washington Navy Yard.   

Our client, Blake Percival, filed a lawsuit against USIS, accusing the company of violating the whistleblower, or qui tam, provision of the False Claims Act (FCA). In his complaint, Mr. Percival said that USIS ran improper background investigations on people asking for security clearances. From March 2008 until at least September 2012, USIS ran a scheme to bypass government requirements for background checks. This illegal activity profited the company. 

Mr. Percival claimed that USIS practiced “dumping” or “flushing.” This involved turning cases over to the Office of Personnel Management as though they were complete when, in fact, USIS performed very little or no investigation on the people it was supposed to clear. The lawsuit claimed that USIS failed to conduct thorough background checks on at least 665,000 of those requesting security clearances.

In qui tam cases, the government has the option to join the lawsuit. The U.S. Department of Justice (DOJ) decided to join Mr. Percival’s action in 2013. 

In 2015, Altegrity, USIS’s parent company, filed for bankruptcy. Bankruptcy would make it harder for the government to recover money USIS owed. It would also decrease Mr. Percival’s chance of receiving reward money. Under the FCA, whistleblowers may receive up to 30 percent of the funds recovered by the government. 

Despite this challenge, Dee and Larry pressed forward with the case. The DOJ also agreed to continue with the case. Our lawyers ultimately secured $30 million in settlement money when USIS canceled payments owed to the company.

“Mr. Percival is one of the most important whistleblowers in recent history,” Dee said. “USIS was a key part of this nation’s security procedures, and they were blatantly lying about having completed critical background checks on people who would receive top secret clearances. Mr. Percival put his future, his family’s future and years of hard work on the line in order to tell the truth. And as a result, the nation is safer. The importance of his actions cannot be understated.”

Larry added, “Being a whistleblower is not something Mr. Percival set out to do, but because of the enormous safety and national security concerns involved, he felt compelled to do so. He should be applauded for his efforts in bringing this national security issue to light. Hopefully, this case will embolden others who are aware of fraud being perpetrated against the government to come forward and tell their stories to assist the government.”