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Top Executive at Security-Check Firm USIS Resigns
February 14, 2014 posted by Steve Brownstein
A top executive at the company that performed the most recent background check of former intelligence contractor Edward Snowden resigned after he was barred by the U.S. government from overseeing federal business that is now the focus of a fraud investigation.
The surprise departure of Johnny Tharp, who served as president of the investigations services division at US Investigations Services LLC, raised new questions about the company's efforts to overhaul its management team amid allegations by the U.S. Justice Department that former officials systematically submitted flawed background investigations for years to secure taxpayer-funded bonuses.
Mr. Tharp's resignation came to light Tuesday as U.S. lawmakers criticized USIS and challenged its president, Sterling Phillips, at a congressional hearing on flaws in the government's security screening process.
Katherine Archuleta, director of the U.S. Office of Personnel Management, told The Wall Street Journal that Mr. Tharp had been barred from working on the USIS background-check contract after she received new information about his actions from her agency's fraud investigators.
She didn't provide any details.
After being suspended last week from the USIS contract, Mr. Tharp resigned as president of the company's largest division, according to Mr. Tharp's attorney, Christopher B. Mead.
Mr. Mead said his client decided to leave USIS because of the surprise suspension.
"He realized he could not function effectively with that hanging over his head," said Mr. Mead. "He denies any wrongdoing and hopes he gets to respond to OPM before there is any further damage to his reputation."
At a hearing, Rep. Carolyn Maloney (D., N.Y.), asked federal officials why USIS was allowed to continue carrying out background checks after being accused of defrauding the government.
"They've created a national-security threat and I would call that very serious," she said during the House Oversight Committee hearing.
"Does anyone think that USIS has been a responsible bidder in any way, shape or form?"
Speaking publicly for the first time about his company's problems, Mr. Phillips, the USIS chief, told lawmakers USIS had moved quickly to clean house and remove top officials suspected of defrauding the government.
"Over the past two years, the company has taken aggressive, effective action to increase controls, enhance procedures, put new leadership in place and today the USIS is a strong, responsible contractor providing a cost-effective, high-quality service," said Mr. Phillips, who took over last year as USIS president and chief executive officer.
USIS is the focus of criminal and civil investigations of its role as the biggest contractor carrying out background checks of people working in classified government settings.
The Justice Department has accused former USIS officials of submitting more than 660,000 flawed background checks between 2008 and 2012. USIS has said it is cooperating with investigators, and that the alleged fraud related to a small number of officials over a limited period.
In new allegations Tuesday, a top federal official accused USIS of falsifying records to hide the alleged fraud.
"They circumvented our oversight process and they falsified records to help do that," Merton Miller, associate director of Federal Investigative Services at the Office of Personnel Management, said in an interview with committee researchers that was released at the hearing.
Mr. Phillips didn't address Mr. Tharp's departure in his testimony and declined to comment on it after the hearing.
He also declined to comment on the allegations made by Mr. Miller.
One person familiar with Mr. Tharp's resignation said federal officials didn't raise concerns about his work and that the federal Office of Personnel Management didn't object to his executive role with USIS after the fraud allegations emerged in 2011.
"If there was any evidence that he had done anything wrong, he would have been so far gone," the person said. USIS has faced scrutiny because it carried out what investigators concluded was a flawed 2011 background check of Mr. Snowden, who used his security clearance and job at the National Security Agency to reveal secrets about global U.S. surveillance programs.
USIS also carried out a 2007 check of Aaron Alexis, a defense contractor who used his security clearance to bring a gun onto the Washington Navy Yard last fall and kill 12 people before being shot dead by police. USIS has defended its work on the Snowden and Alexis background checks.
