Exposure of security flaws proves costly for whistle-blower
MONTGOMERY, Ala. — He was new on the job, trying to find out why morale was so low. In gathering two senior managers, he asked what they didn’t like about their work.
“I hate that we dump,” one of them confided.
“What do you mean?” Blake Percival asked.
The answer — that the company was cutting corners in making the background checks used in granting security clearances — put him on a collision course with his superiors and eventually turned him into one of the government’s most significant whistle-blowers in years.
That confrontation not only cost him his job and dignity, it left him in such financial distress that at the beginning of this week, he had just $54.51 in his bank account, hoping he’d make it to his next payday.
Redemption came Friday morning, four and a half years later, when his lawyer texted him to say the government had finally wired $6 million, their share of a $30 million settlement before taxes.
Percival called his wife and asked her, “How does it feel to be a millionaire?” he recounted in his first public comments about the case. They both were emotional — happy for the money, but mostly relieved that their odyssey was finally over.
The lawsuit, which alleged that his employer, USIS, had “dumped,” or failed to perform the required reviews of 665,000 investigations, touched off hearings in Congress and accusations that the company had not only defrauded the government but created a threat to national security.
USIS, the government contractor that had done the background checks on Edward Snowden and Navy Yard shooter Aaron Alexis, filed for bankruptcy and went out of business. And the federal government vowed to clean up the failed system that Percival, now 49, had brought to light.
But while he was celebrated as a whistle-blower who had exposed dangerous flaws in the nation’s security clearance system, Percival was struggling. He worked three low-paying jobs and was grateful that the grocery store where he stocked shelves allowed him to bring home expired meat to feed to his family.
He was proud of what he had done. But some days what he felt most was regret, he said.
The decision to become a whistle-blower came at a time when Percival and his family were at their most comfortable financially. Earlier in his life, things were not so easy. He worked as a police officer in West Virginia as he put himself through college, the money so tight that he stubbornly refused to pay the $25 it cost to receive his diploma.
His base salary as a rookie cop was $16,000 a year. He cut grass on the side to help cover the bills. Plus, he had spent all that money on the classes. Why pay for the piece of paper? He thought he was being principled. His friends said he was crazy.
“You don’t know how tight money is,” he’d tell them. “I have three kids.
“You’re an idiot,” they’d say. “You need that diploma on the wall.”
Two years later, he caved and paid.
The degree helped him land a job at USIS, which had been headquartered in Falls Church, Va. He didn’t wear a uniform, but he carried a badge and a sense of purpose. Investigating the backgrounds of the people applying for security clearances meant that he was the “front line of defense,” he said, a chance to make sure that those who had access to the nation’s secrets were trustworthy.
Not only that, he was good at it. Within a year, he was training other investigators, he said. And soon the promotions started coming, first to Virginia Beach, where the office he worked in was so fancy — all reflective glass and shiny steel — that his then-13-old-daughter stared at it and said, “Dad, the last time you were at a building like this it was to cut the grass.”
Next was Minneapolis, where he made about $80,000 a year, and then, in January 2011, he received a big title — director of fieldwork services — and salary, $110,000, with a 20 percent bonus and stock options. The company even paid him $40,000 to move from Minneapolis to Western Pennsylvania, where his office was large enough to hold a cherry wood wraparound desk, bookshelves and a conference table.
He and his wife, Melanie, made an offer on a house that had a pool and a hot tub and sat on the third hole of a country club. They were going to buy a horse for their youngest daughter, Artie, and keep it at the stables down the street. Their daughter wanted it to be white so she could name it Snow.
The Pennsylvania office building that Percival had been transferred to was dowdy, and morale was low. So he had the company paint the walls and buy a steam cleaner to return the blackish carpets to their original blue, and he started meetings in small groups with the staff to get a sense of why everyone was so down.
That’s when the senior manager told him about the dumping.
“One of USIS’ dirty little secrets is that we’re not reviewing every case we send to OPM,” she said.
OPM was the Office of Personnel Management, the federal agency that processed the majority of the country’s security clearances. It had hired USIS to perform not only the background checks, but a secondary review of those checks to make sure that no one who should not have access to state secrets slipped through the cracks.
The company was allegedly faking its reviews to meet revenue targets each month, the senior manager said. The more cases USIS completed, the more the company got paid.
Percival believed that was wrong.
“As of this moment, we do not dump,” Percival announced. “If anyone tells you to dump, you send them to me.”
He would show his bosses how to do it right. There would be overtime, competitions, pizza for those who had to stay late. It didn’t work. In February, they did not make their numbers. They missed again in March.
Percival claimed he was ordered to dump the cases. He refused.
Then in June, he was fired. The reason, he said he was told, was his management style. But he suspected it was because he wasn’t playing along. He had pen in hand, about to sign a severance, which would have given him 20 weeks of pay, or $42,000, but he noticed some legalese about waiving his right to file a False Claims Act lawsuit. He paused and called a friend, who was also an attorney, who told him, “Don’t sign a thing.”
Percival moved his family back to Montgomery, where they had relatives. Then a friend set up a meeting with lawyers from Beasley Allen, a powerhouse law firm that had helped Alabama recover money in the BP oil spill case.
Percival was sitting at the far end of a conference table and started to explain the dumping, how the company was not fulfilling its contract to meet increasingly ambitious revenue goals.
“When I started telling them, you could almost see the saliva coming out of their mouths.”
The lawsuit was filed within weeks.
Two years later, in 2013, the Justice Department joined the suit and filed an amended complaint that instantly made headlines. It alleged that 665,000 cases had been dumped between 2008 and 2012. Internal documents “confirmed that USIS senior management was aware of and directed the dumping practices,” it asserted. The alleged motive was simple greed: “This practice was followed in order to meet USIS’ internal goals for completed cases and, therefore, to increase the company’s revenue and profits.”
The suit cited emails from executives detailing the alleged practice, such as the one that proclaimed: “Shelves are clean as they could get. Flushed everything like a dead goldfish.”
And it documented how USIS raked in bonuses for turning around the cases quickly: $11.7 million between 2008 and 2010. A subsequent congressional investigation found that OPM seemed to be aware of the practice, and in 2011 staff members sent a letter to USIS’ vice president of field operation, asking him to explain how four investigators could have completed more than 13,000 reports — and average of 3,278 cases per employee — in one week.
At the time, USIS said the allegations did not reflect its core values.
“The alleged conduct referenced in the civil complaint is contrary to our values and commitment to exceptional service,” the company said. “These allegations relate to a small group of individuals over a specific time period and are inconsistent with the strong service record we have earned since our inception in 1996.”
USIS’ parent company, now known as Corporate Risk Holdings, did not immediately respond to a request for comment Friday.
The Justice Department’s involvement gave Percival’s case a significant boost, and his attorneys seemed confident. As a whistle-blower in what is called a False Claims Act lawsuit, he would be eligible for a significant portion of the money recovered by the government. Given the lucrative contracts USIS held, that could be millions. But nothing was guaranteed, and Percival’s life had taken a significant turn since he was fired.
Not knowing where else to go, he, Melanie and their youngest daughter moved into his mother’s house in Montgomery. Their daughter took the guest bedroom. He and Melanie bunked up in the living room, tacking a sheet to the entryway for privacy.
Percival applied for unemployment, $400 every two weeks. He knew that he had stood up for what was right. But lying in bed one night next to his wife, he felt more shame than pride.
“I bet you never thought you’d end up 45 years old living in my mother’s living room,” he said to her.
Last spring, Percival received a troubling call from one of his attorneys, who told him USIS had filed for bankruptcy, meaning it could make it more difficult to collect a reward. But the attorney said they would argue the case should keep going.
In other words, the past several years may all have been for naught.
He wondered whether he should have kept his mouth shut. If he had signed a release saying that he wouldn’t sue, USIS would have given him severance and he could have moved on, he said.
Instead, he was holding together a series of low-paying jobs, including stocking shelves and working as a city court magistrate and a contract investigator for one of USIS’ competitors, making about a third of what he took in at USIS.
Then in June, the Justice Department announced that it would not give up on the case. In court filings, it argued that the bankruptcy plan of USIS’s parent company, Altegrity, should not preclude Percival from collecting damages.
In August, the department and Altegrity reached a settlement when Altegrity agreed to forgo $30 million in payments that the government owed it. It then took months to negotiate the percentage of Percival’s reward.
Even when a figure was reached, the money was slow to arrive. Last week, Percvial was told it would be wired Tuesday, which slipped to Wednesday. Then Thursday, the money still wasn’t there, but Melanie wanted to go Christmas shopping for their 2-year-old grandaughter. They bought her a gloworm and a kickball, but Percival, sure the money would come through soon, urged her to wait: “On Monday, your budget changes.”
Finally, on Friday, the government wired $6,015,783.70 to Percival’s attorneys, according to the settlement document. After the attorneys’ cut, Percival’s share before taxes would be $3.3 million, he said.
Now Percival plans to do three things.
First, quit his job.
Second, throw out the rest of the expired meat that had been stored in the freezer.
Third, buy an RV and hit the road with his wife and daughter.
They’d like to find a new place to live. Somewhere quiet, near water. Somewhere safe and remote, where they could start over. Like an island.