Akal Security Inc., one of the largest contract security providers in the country, will pay the United States $18 million to resolve allegations that it violated the terms of its contract to provide trained civilian guards at eight U.S. Army bases, the Justice Department announced today. According to the settlement, some of the supplied security guards allegedly failed to satisfy weapons qualification requirements and receive other training, and the contractor allegedly failed to satisfy contractual man-hour requirements.

In September 2003, the U.S. Army awarded a series of contracts for security guards to the Espanola, N.M., company for bases in Kansas, Washington, Texas, Georgia, North Carolina and Alabama. The company agreed at that time to provide fully trained personnel who were weapons qualified in accordance with military police firearms requirements.

In October 2004, three company employees, who worked as security guards at Ft. Riley, Kan., filed a qui tam or whistleblower suit against the company on behalf of the United States in U.S. District Court for the District of Kansas. Under the qui tam statute, a private party, known as a “relator,” can file an action on behalf of the United States and receive a portion of the recovery. The relators in this case will receive a share of the settlement that has yet to be determined.

“Today’s settlement illustrates the Justice Department’s determination to recover paid out funds where terms of government contracts are not met,” said Peter D. Keisler, Assistant Attorney General for the Civil Division.

The settlement resolves Akal’s potential liability under the False Claims Act arising from the complaint. The litigation and settlement of the case was conducted by the Department’s Civil Division along with the U.S. Attorney’s Office for the District of Kansas, as well as the U. S. Attorney’s Offices for the Western District of Kentucky, the Eastern District of Kentucky, the Western District of Washington, the Western District of Texas, the Southern District of Georgia, the Northern District of Alabama, and the Eastern District of North Carolina. The case was investigated by the Department of Defense’s Defense Criminal Investigative Service Office of the Defense Inspector General, and the U.S. Army Criminal Investigation Command.

Attorney General Alberto R. Gonzales, Assistant Attorney General for National Security Kenneth L. Wainstein and FBI Director Robert S. Mueller, III today announced a series of comprehensive measures to significantly enhance national security oversight and compliance at the Justice Department and FBI.

Among the primary components of this oversight effort, which has been in the works for months, are the proposed launch of two offices to conduct reviews, compliance activities, and training. The first is a dedicated Oversight Section within the Justice Department’s National Security Division. The second is a proposed Office of Integrity and Compliance at the FBI.

The oversight and compliance programs run by these offices will be at the forefront of the Justice Department’s ongoing efforts to ensure that national security investigations are conducted in a manner consistent with the nation’s laws, regulations, and policies, including those designed to protect the privacy interests and civil liberties of U.S. citizens.

“The top priority of the Department is to protect the nation from terrorist attack. At the same time, we have an important obligation to make sure the tools we use to prevent terrorism also protect the civil liberties of our citizens,” said Attorney General Gonzales. "This effort helps us achieve these objectives by enhancing internal controls over the Department’s national security activities.”

“The changes we announcing today are historic in nature. The FBI is instituting one of the first, agency-wide internal compliance programs in the federal government, and, for the first time, Justice Department attorneys will have a comprehensive mandate to examine all aspects of the FBI’s national security program for compliance with laws, regulations, and guidelines,” said Assistant Attorney General Wainstein.

“The FBI is charged with the mission to protect and defend the United States against terrorist and foreign intelligence threats and to enforce the nation's criminal laws, while upholding the fundamental protections provided by the Constitution,” said FBI Director Robert S. Mueller, III. “That requires striking a sometimes delicate balance, and the establishment of a compliance program marks another important step toward ensuring we fulfill our mission with an unswerving commitment to the rule of law.”

These measures build upon past Department improvements in national security oversight as counter-terrorism efforts have expanded. Last September, for instance, the Department created a National Security Division, in part, to enhance oversight of FBI and Department national security activities. In 2005, the FBI created a National Security Branch to centralize and coordinate FBI national security programs. Over the past several years, the Department has also expanded its reviews of FBI use of Foreign Intelligence Surveillance Act (FISA) authorities.

Oversight Program within DOJ’s National Security Division

The National Security Division plans to broaden the scope of its national security oversight well beyond the Department’s traditional oversight role, which was primarily focused on the FBI’s use of FISA authorities. For the first time, Justice Department attorneys will have the clear mandate to examine all aspects of the FBI’ national security program for compliance with laws, regulations, and policies.

Dedicated Oversight Section -- To accomplish the expanded mandate spelled out above, the Department is standing up a dedicated Oversight Section within the National Security Division. This section will consist of attorneys and staff members specifically dedicated to ensuring that the Department fulfills its national security oversight responsibilities. Until recently, the Department’s national security oversight largely focused on the FBI’s use of FISA authorities, with the Department conducting accuracy reviews to ensure the accuracy of FBI declarations to the Foreign Intelligence Surveillance Court (FISC) and minimization audits to ensure FISA information is handled appropriately. The Oversight Section will expand this focus beyond FISA to include all aspects of the FBI’s national security program and its use of national security tools.

Comprehensive National Security Reviews – The Oversight Section will exercise its oversight functions by conducting regular reviews of national security activities at FBI field offices and FBI Headquarters national security units. These reviews, which have already begun, are staffed by career Department attorneys with years of law enforcement and intelligence experience from the National Security Division and the FBI’s Office of General Counsel, along with officials from the Department’s Privacy and Civil Liberties Office. These reviews are not limited to the FBI’s use of FISA or National Security Letters, but examine all national security activities to ensure compliance with all applicable laws, guidelines and policies. Since establishing this review process in April 2007, the Division has completed national security reviews in four FBI field offices and plans to complete a total of 15 such reviews by the end of the year.

Reviews of Intelligence Oversight Board Referrals – As directed by the Attorney General in March 2007, the National Security Division will also be responsible for reviewing all referrals by the FBI to the Intelligence Oversight Board (IOB). This review process will focus on whether these referrals indicate that a change in policy, training, or oversight mechanisms is required. The Oversight Section will report to the Attorney General twice a year on such referrals and inform the Department's Chief Privacy and Civil Liberties Officer of any referrals that raise serious civil liberties or privacy issues.

Training and Outreach -- In addition, the National Security Division will provide training on legal and regulatory compliance issues for its lawyers and FBI agents and analysts, as well as conduct outreach to the rest of the intelligence community.

Office of Internal Compliance and Oversight at the FBI

The second key portion of this oversight and compliance initiative will be the FBI’s Office of Integrity and Compliance, which was recently proposed by the FBI Director. While compliance programs have long been a staple of private corporations, this effort would represent one of the first times a federal agency established an agency-wide compliance program. The creation of this office and the implementation of a new FBI-wide compliance program would represent a substantial innovation in the way the FBI does business. The office will work to ensure compliance not only in national security activities, but in all FBI activities.

Mission -- The mission of the FBI’s proposed Office of Integrity and Compliance is to develop, implement, and oversee a program that ensures there are processes and programs in place that promote FBI compliance with both the letter and spirit of all applicable laws, regulations, and policies. The office would cultivate an environment committed to these principles and assist FBI management at all levels foster and maintain a culture where ethics and compliance are paramount considerations in decision making.

Structure -- The proposed Office of Integrity and Compliance would be headed by a career Assistant Director who will report directly to the FBI’s Deputy Director, providing direct access to the top decision makers within the FBI. The management structure would include a Steering Committee, chaired by the FBI Director, and five Executive Management Committees, which would examine compliance in different of portions of the FBI, including the National Security Branch, Criminal Investigations, investigative support, administrative and information technology.

New Policies and Risk Assessments -- The Office of Integrity and Compliance would begin establishing policies on compliance standards, training, communications, and risk assessments for the FBI. The office would support the implementation of the FBI’s overall compliance policies and standards within FBI Divisions, monitor the FBI-wide compliance program, ensure that necessary audits are performed, and deliver an annual report to key stakeholders. The office would also work closely with the FBI Inspections Division to identify high-risk areas, amend inspection protocols to include compliance risk, and ensure that compliance monitoring is carefully planned and executed.

Another co-founder, Stephen Lawrence, previously pleaded guilty to criminal conspiracy. In a plea deal, Mr. Lefebvre agreed to cooperate with prosecutors and testify if necessary. He also agreed to be partly responsible for the $100 million the government is seeking in restitution.

Although the conspiracy charge carries a potential prison term of up to five years, cooperation in the case is likely to greatly reduce any potential sentence.

The government has said that nearly all of the $5.1 billion in transactions processed in the first half of 2006 involved online gambling, and most of the revenue was generated by American customers.

"The laws authorizing NSLs, as well as specific rules set down by the FBI and by me, established strict policies for how they would be issued and carried out....

I was upset when I learned this, as was Director Mueller.  To say that I am concerned about what has been revealed in this report would be an enormous understatement.

Failure to adequately protect information privacy is a failure to do our jobs. And although I believe the kinds of errors we saw here were due to questionable judgment or lack or attention, not intentional wrongdoing, I want to be very clear: there is no excuse for the mistakes that have been made, and we are going to make things right as quickly as possible.

I have told the Director that I will not accept the problems identified in the report, and I will not be satisfied until procedures and policies that should have been followed are being followed, to the letter."

Read the full speech here.

DOJ spinmeisters are already trying to smooth things over, claiming that it was unclear whether Gonzales had actually read the reports about legal violations and civil liberties abuses. All the abuses reported to Gonzales were, however, grave enough to also be submitted to an independent intelligence oversight board designed to safeguard civil liberties. A story today in the Washington Post quoted DOJ spokesman Brian Roehrkasse as saying that just because a violation is reported to the oversight board "does not mean that a USA Patriot violation exists or that an individual's civil liberties have been abused."

But Caroline Fredrickson, the Director of the ACLU's Washington Legislative Office condemned Gonzales' actions today in a statement:

"Congress has been hoodwinked by the Attorney General and it's time for consequences.  From the US Attorney scandal to warrantless wiretapping, this administration has misled the American people time and again.  We know now that Mr. Gonzales provided false testimony in order to build a case for reauthorization of the Patriot Act.  It is now apparent that Congress and the public simply cannot afford to take anything this administration says about the war on terror at face value.

No government should have these broad powers in the first place and it has become painfully obvious that our government cannot be trusted to police itself.  This administration seems to think that the end justifies the means and when it comes to the means, it's anything goes.  Without Mr. Gonzales' false testimony, the Patriot Act may not have been authorized in its current form.  Now, more than ever, is the time to reopen and re-examine the Patriot Act."

Congress may also decide it's time to re-examine the possibility that Gonzales shut down a DOJ probe into the administration's NSA warrantless wiretapping program because he knew it would target his actions as former White House counsel. Murray Waas of the National Journal first reported the story here.

As expected, Democratic lawmakers are outraged. Rep. Jerry Nadler (D-New York), the chairman of the House Judiciary Subcommittee on the Constitution, Civil Rights and Civil Liberties, quickly called for Gonzales' resignation, along with the appointment of a special prosecutor to investigate Gonzales' statements to Congress and whether the AG and other officials broke the law with the NSA wiretapping program.

"Attorney General Gonzales has shown an apparent reckless disregard for the rule of law and a fundamental lack of respect for the oversight responsibilities of Congress," Nadler said. "The man entrusted with enforcing our nation's laws must also abide by them, and Mr. Gonzales has apparently failed in that duty. Providing false, misleading or inaccurate statements to Congress is a serious crime, and the man who may have committed those acts cannot be trusted to investigate himself."

A former Alaska lawmaker was convicted Monday of taking thousands of dollars from a corrections company consultant in exchange for his help in the Legislature.

"I'm devastated," former state Rep. Tom Anderson said after the federal jury announced its bribery verdict.

Anderson, 39, was accused of conspiring to take money he thought was coming from a private prison firm, Cornell Industries Inc.

The money was supplied by the FBI through an informant working for Cornell who secretly recorded his conversations with Anderson and a coconspirator, former municipal lobbyist Bill Bobrick.

Anderson was one of four current or former state lawmakers facing federal bribery indictments. The other three face trial this fall for charges related to Anchorage-based oil field services company VECO Corp.

"I think the prosecution has criminalized being a legislator over the last year," Anderson said. "I think I fell victim to that."

Minutes after Anderson's conviction, Gov. Sarah Palin signed into law an ethics reform package for state officials was signed into law.

Palin said the law will help re-establish the public's trust, noting Anderson's case revealed a broader problem with public officials.

"I believe it could be a precursor for what's to come, and it's unfortunate," she said.

Anderson's family, including his wife, state Sen. Lesil McGuire, were not present for the verdict.

Anderson said they couldn't get to the downtown Anchorage courthouse in time after it was announced the jury had reached a verdict.

Judge John Sedwick ordered Anderson to surrender his passport and scheduled sentencing for Oct. 2.

Anderson was arrested Dec. 7 and charged with seven felonies, including conspiracy, bribery, money laundering and interfering with commerce, a charge connected to a demand for payments. He faces a maximum penalty of 115 years in prison and a $1.75 million fine.

Department of Justice officials in Washington said Anderson was held accountable for his crimes.

Anderson "corrupted his elected office when he took official actions in exchange for bribery payments," Assistant Attorney General Alice S. Fisher said. "His illegal conduct impaired the integrity of the oath he took to represent citizens of the state of Alaska."

Bobrick pleaded guilty in May to bribing Anderson. He agreed to testify against Anderson in exchange for prosecutors' request for lenience at sentencing.

Anderson was accused of accepting nearly $26,000 he thought was coming from Cornell through Frank Prewitt, a former corrections department commissioner and an FBI informant was a $150,000-per-year consultant for Cornell.

The Houston-based company operated halfway houses in Alaska and hoped to build a private prison and a juvenile psychiatric treatment center in Alaska.

The defense argued that Anderson backed Cornell without being on the take and that Prewitt wore a wire to bag a legislator and deflect investigators from his legal problems.

Prosecutors contend Bobrick and Anderson trolled for cash in conversations with Prewitt, using a phony Web-based newsletter as a front for Cornell to funnel payments to Anderson.

Anderson, finishing his first term as a Republican legislator from east Anchorage, was strapped for cash, prosecutors said, as he romanced McGuire, who was then a state representative.

He owed child support payments and was looking for a payoff of about $3,000 per month when the Legislature was not in session.

The complaint alleges that, between January 25, 2006 and July 27, 2006, Plexus failed to disclose that the company’s position in the defense market was weakening and that operations in the United Kingdom would have to be reorganized. Because of this information, Plexus lacked a “reasonable basis” for the positive statements it made during that period about the company’s future growth.

According to the complaint, Plexus “shocked investors” when, on July 27, 2006, the company lowered its earnings outlook for the year, based in part on limited revenue growth. The plaintiff alleges that this news caused shares of the company’s stock to fall $10.71 per share, or approximately 32 percent, to close at $22.89 per share.

The complaint alleges that, in a conference call following the July 26 quarterly report, Dean Foate, president, CEO and chairman of the board of directors, said that fourth quarter revenue outlook was softer than had been previously implied.
Foate and F. Gordon Bitter – chief financial officers – and John Nussbaum, who also served as chairman of the board, are all named individually as defendants.

The complaint alleges that because Foate, Bitter and Nussbaum controlled the contents of the company’s reports to the Securities and Exchange Commission and the public, they had the opportunity to correct the statements. According to the plaintiff, the defendants knew that the statements made by Plexus were “materially false and misleading.” 
The suit also accuses corporate officers and board members of insider trading, alleging that company officers were motivated to misrepresent revenue growth to allow company insiders to “sell 664,666 shares of their personally-held Plexus common stock for gross proceeds in excess of $26.3 million.”

The suit claims that Foate, Bitter and Nussbaum all benefited from selling stock during this period, as well as executive officers Michael Verstegen, Joseph Kronser, Thomas Czajkowski, David Clark, Paul Ehlers, David Rust, Joseph Kaufman, Simon Painter and George Setton and board members Ralf Boer, David Drury and Thomas Prosser.

The second lawsuit, filed June 29 by the Alan M. Ozell Trust, reasserts the accusation that Plexus withheld relevant information that caused the stock price to drop, but does not accuse anyone in the company of insider trading.

Both lawsuits request compensation for all damages in an amount to be proven at trial, as well as costs and expenses.
Plexus issued a statement on June 25 acknowledging that a class action complaint had been filed against the company, though Plexus claimed it had not yet received a copy of the complaint.

“Plexus believes that all of its public statements were correct and properly made; it thus intends to defend itself vigorously in this litigation,” according to the statement.

Angelo Ninivaggi, vice president, general counsel and secretary for Plexus, did not return a call requesting an updated statement.
The law firms of Ademi & O’Reilly, LLP and Lerach Coughlin Stoia Geller Rudman & Robbins LLP are representing the plaintiffs in both cases. The lawsuits were filed in the U.S. District Court for the Eastern District of Wisconsin.

The court did not rule on the spying program's legality. Instead, the decision found that the American Civil Liberties Union, academics, lawyers and journalists who brought the case did not have standing to sue because they could not demonstrate that they had been direct targets of the clandestine surveillance.

The decision vacates a ruling in the case last August by a U.S. District Court judge in Detroit, who found that the administration's program to monitor private communications violated the Bill of Rights and a 1970s federal law, the Foreign Intelligence Surveillance Act.

Friday's action in the 6th Circuit means that the principal remaining legal challenge to the NSA's Terrorist Surveillance Program is a group of cases pending before a U.S. District Court judge and the U.S. Court of Appeals for the 9th Circuit in California.

The primary issue before that appeals court, differing somewhat from that in

the Michigan case, is whether the administration may claim that a privilege covering state secrets precludes the litigation.
In January, after Democrats gained control of Congress, the administration abruptly shifted its position. Attorney General Alberto Gonzales announced that the surveillance program would start to be overseen by a court established to hear FISA cases.

But administration officials have not described critical details of the new approach, including whether a separate warrant is required for each instance of monitoring. Aides to Bush also have asserted that the president still retains the authority to conduct surveillance without court permission.

Judge Ronald Lee Gilman, a Democratic appointee, disagreed in a dissenting opinion in which he concluded the plaintiffs were entitled to sue because they felt a need to alter their communications after the program was disclosed. Gilman also wrote that the case was not moot because "the president maintains that he has the authority to 'opt out' of the FISA framework at any time," and he agreed with the lower court judge that the program violates federal law.

Administration officials lauded the 6th Circuit's decision. Deputy White House press secretary Tony Fratto called the lower court finding that the program was unconstitutional "wrongly decided." Fratto said the appellate court "properly determined that the plaintiffs had failed to show their claims were entitled to review in federal court."

The ACLU's legal director, Steven Shapiro, said, "As a result of today's decision, the Bush administration has been left free to violate the Foreign Intelligence Surveillance Act, which Congress adopted almost 30 years ago to prevent the executive branch from engaging in precisely this kind of unchecked surveillance."

Shapiro said the ACLU was examining its legal options, including the possibility of an appeal to the Supreme Court.