From Government Accountability Project: http://www.whistleblower.org/template/index.cfm

Lawsuit Details Security Company's Shortcomings at U.S. Embassy in Kabul
Former Program Managers for Private Security Company ArmorGroup Detail their 2007 Fight to Ensure Adequate Protection
Last week, GAP and a private law firm filed a federal lawsuit on behalf of two program managers who worked for the private security company ArmorGroup. That company was responsible for ensuring security for the U.S. Embassy in Kabul. The managers were fired in June 2007 for raising concerns about the integrity of the security program and for disclosing those concerns to the State Department.
Our clients have not been given detailed information by the State Department as to whether corrections to the problems they reported have been made.
The lawsuit was filed against ArmorGroup North America (AGNA) and its parent company, ArmorGroup International (AGI) of Britain. AGI is an international private security company that provides protection for government facilities, institutions and personnel around the world. The lawsuit alleges that AGNA won the security contract by significantly overstating its capabilities, and overall put profit concerns ahead of the security needs of the Embassy and its personnel.
Click here for the ABCNews.com article detailing the lawsuit
Click here for a copy of the lawsuit

Just Between Us
By Michael Isikoff and Mark Hosenball
Newsweek
Wednesday 30 April 2008
Telecoms and the Bush administration talked about how to keep their surveillance program under wraps.
The Bush administration is refusing to disclose internal e-mails, letters and notes showing contacts with major telecommunications companies over how to persuade Congress to back a controversial surveillance bill, according to recently disclosed court documents.
The existence of these documents surfaced only in recent days as a result of a Freedom of Information Act lawsuit filed by a privacy group called the Electronic Frontier Foundation. The foundation (alerted to the issue in part by a NEWSWEEK story last fall) is seeking information about communications among administration officials, Congress and a battery of politically well-connected lawyers and lobbyists hired by such big telecom carriers as AT&T and Verizon. Court papers recently filed by government lawyers in the case confirm for the first time that since last fall unnamed representatives of the telecoms phoned and e-mailed administration officials to talk about ways to block more than 40 civil suits accusing the companies of privacy violations because of their participation in a secret post-9/11 surveillance program ordered by the White House.
At the time, the White House was proposing a surveillance bill - strongly backed by the telecoms - that included a sweeping provision that would grant them retroactive immunity from any lawsuits accusing the companies of wrongdoing related to the surveillance program.
Although a version of this proposal has passed the Senate, it has so far been blocked in the House by Democrats who are demanding greater public disclosure about the scope of the administration's post-9/11 surveillance of individuals inside the United States. Negotiations between House Democrats, the Senate and administration representatives over a possible compromise have made little progress so far. Capitol Hill officials now say Congress may not get around to final action on new surveillance legislation until right before a one-year temporary law expires in August - right before the presidential nominating conventions.
The recent responses in the Electronic Frontier Foundation lawsuit provide no new information about the administration's controversial post-9/11 electronic surveillance program itself, but they do shed some light on the degree of anxiety within the telecom industry over the litigation generated by the carriers' participation in the secret spying. One court declaration, for example, confirms the existence of notes showing that a telecom representative called an Office of Director of National Intelligence (ODNI) lawyer last fall to talk about "various options" to block the lawsuits, including "such options as court orders and legislation." Another declaration refers to a letter and "four fax cover sheets" exchanged between the telecoms and ODNI over the surveillance matter. Yet another discloses e-mails in which lawyers for the telecoms and the Justice Department "seek or discuss recommendations on legislative strategy."
The declarations were filed in court by government lawyers only after U.S. Judge Jeffrey White in San Francisco, who is overseeing the case, ordered them to fully process the Electronic Frontier Foundation's FOIA request for documents showing lobbying contacts by the telecoms. The government initially resisted even responding to the FOIA request, but White found that disclosure was in the public interest because it "may enable the public to participate meaningfully in the debate over" the pending surveillance legislation.
But while complying with the judge's order to confirm the existence of some documents, administration officials have told the judge they cannot actually disclose the documents themselves, in part because to do so would undermine national security. Even to confirm the identity of any of the carriers with whom administration officials have discussed the surveillance issue would implicitly identify the carriers that participated in the program and therefore "would provide our adversaries with a road map" that would help them thwart surveillance against them, according to a court declaration filed by Lt. Gen. Ronald L. Burgess, director of the ODNI's intelligence staff.
Spokesmen for the Justice Department and ODNI today declined comment to NEWSWEEK on the grounds that neither agency will talk about pending litigation.
The revelation of the existence of the documents comes at a time when Congress is bracing for what is expected to be a grueling summerlong debate over the surveillance measure. Administration officials say that unless Congress acts by this summer, existing court orders permitting surveillance of suspected overseas terrorists will expire, threatening the U.S. government's ability to keep track of potential plots against the homeland. If new legislation is not enacted before the current stop-gap law expires, Republicans may try to use this as an election issue against Democrats.
The debate over a new surveillance authorization is likely to be complicated by figures showing sharp increases in the government's electronic eavesdropping on U.S. citizens. One report filed with the office of the administrator of the U.S. Courts shows that standard wiretaps approved by federal and state courts jumped 20 percent last year, from 1,839 in 2006 to 2,208 in 2007. Later this week another report is expected to also show increases in secret wiretaps and break-ins approved by the Foreign Intelligence Surveillance Court (FISC) in terror and espionage cases. But even these secret wiretaps and break-ins - estimated to be about 2,300 - tell only part of the story. They don't include other secret methods the government uses to collect personal information on U.S. citizens.

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How Fraud Fueled the Mortgage Crisis
By Mary Kane
The Washington Independent
Thursday 01 May 2008

Brokers pushed borrowers to lie, lenders misled and ratings agencies looked the other way. The debate over what caused the mortgage mess and how best to fix it is now taking a sharp turn, as new problems surrounding liar's loans and payment-option mortgages reveal the pervasive fraud, lying and deceit that permeated the market at its height. As loans made to borrowers with decent credit begin to fail at a surprisingly rapid rate, it's becoming clear that widespread fraud helped support the entire mortgage system - from borrowers who lied on their loans, to brokers who encouraged it, to lenders who misled some low income borrowers, to the many lenders, investors and ratings agencies that conveniently and deliberately looked the other way as profits rolled in. Despite its widespread role, fraud hasn't yet been at the forefront of proposed rescue plans, which center on refinancing people out of loans now resetting to higher rates. That may begin to change as the mortgage market continues a meltdown that seems to have no end. As fraud becomes a focus, the question of who did most of the lying and cheating will be crucial in deciding who deserves help in any housing rescue plan. And the search for causes of the crisis may challenge long-held but erroneous beliefs about what homeowners did and why. Many people think borrowers got in trouble by buying bigger houses than they could afford, but the numbers show the majority were refinancing their homes. Fraud problems drew headlines this week, as Countrywide Financial Corp., announced an $893 million first quarter loss and a 36 percent delinquency rate on subprime loans. The lender that once led the subprime market is facing a federal probe involving allegations that sales executives purposely allowed for inflated income figures on many mortgage applications, The Wall Street Journal said Wednesday. At the same time, delinquency rates are climbing for payment-option mortgages, or adjustable rate loans that allowed the borrower to choose the size of the monthly payment, the Journal said. Countrywide and other lenders are being hit by state investigations and lawsuits from borrowers who contend they were misled into taking out the complicated loans, which sometimes result in monthly payments going up even as house prices decline. Lenders deny responsibility, saying borrowers knew what they were getting into. The meltdown of these mortgages is prompting a new spotlight on the extensive role that fraud played in loans gone bad, and who was responsible for it. Lending that required little proof clearly opened the door to widespread cheating, by borrowers who inflated their incomes, or by brokers who did it for them, with or without their knowledge. A landmark study by the Mortgage Asset Research Institute concluded that almost 60 percent of stated income loans it examined were exaggerated by at least 50 percent. "They earned their name," MARI's Merle Sharick said of liar's loans. Fraud concerns escalated recently when a task force of states attorneys general and the Conference of State Banking Supervisors found widespread mortgage fraud at the end of the housing boom. Their report said some 28.5 percent of subprime loans that don't face even their first reset to higher rates until next year are already delinquent. In addition, some 70 percent of subprime borrowers seriously delinquent on their loans aren't involved in any effort with lenders to modify the terms to prevent foreclosures. The report urged servicers to work harder on modifications and loan workouts. At the influential housingwire site, publisher Paul Jackson pointed out that only massive fraud could be responsible for loans going sour so quickly, and that it's unfair to blame servicers for loan workout problems. Borrowers who may have cheated or lied to get a mortgage aren't going to be eager to call up their lender. "What incentive to they have?" Jackson asked. "Offering strong and credible proof that they were party to mortgage fraud?" He represents a growing belief that mortgage fraud is a major problem yet to be recognized in the housing mess, and one that has been overshadowed by the attention to adjustable rate mortgages that reset to higher rates. Until the scope of the fraud is understood, adequately addressing the market's troubles isn't possible, according to Jackson: It's time borrowers, consumer groups and erstwhile working groups stop floating a revisionist history of the "hapless borrower" - you know, the one where greedy, mean lenders duped those innocent and pure borrowers? - as a substitute for what's really going on in the real world. Others familiar with the mortgage industry contend that pervasive fraud was, indeed, a problem - on the lender's side. At the peak of the housing boom, they say, the nation's mortgage system was set up to promote and encourage outright fraud in order to close a loan - and everyone, from brokers to loan officers to Wall Street, looked the other way. Borrowers also were put into products like payment-option arms that were unsuitable - and lenders knew it. "They were pushed like Vioxx, with very little regard for their dangers," said Kathleen Keest, senior policy counsel with the Center for Responsible Lending, a research group that investigates predatory lending. Patrick Madigan, an Iowa assistant attorney general who has investigated mortgage fraud, said it makes no sense to conclude that lenders are somehow victims. Madigan's office engineered a settlement two years ago with Ameriquest over its subprime practices, including high-pressure "boiler room" sales tactics. Regardless, Madigan said, there is a movement to "blame the borrower." "There's a perception out there that there's this hapless lender who got duped by middle class and lower income subprime borrowers," Madigan said. "It's ridiculous. Our investigations have shown that most of the fraud happens at the suggestion and direction of the loan originator, who had significant financial incentives to close the loan, no matter what misconduct was required." The question of fraud and responsibility matters because it can tilt the direction of any plans to rescue the housing market from its freefall. So far, the largest government effort has been FHA Secure, which is supposed to help subprime borrowers facing higher rate resets get refinanced into new mortgages. But with loans going bad even prior to their rates going up, the program doesn't address fraud as the true cause of failing loans, noted Robert Simpson, president of Investors Mortgage Asset Recovery Co., in Irvine, Calif. "These problems are not related to reset issues," he said. "That's a ruse." As the debate over bailout plans continues on Capitol Hill, borrowers perceived as victims of predatory lending might be more likely to be seen as sympathetic and in need of help than borrowers who took part in lying to buy an expensive house. Lenders under pressure to modify more mortgage loans might get themselves off the hook a bit if borrowers take the hit for lying on liar's loans. If lenders are looked at as the perpetrators of fraud, there might be support for ideas like the one just proposed by Federal Deposit Insurance Corp Chairwoman Sheila Bair, who wants the Treasury Department to make loans directly to troubled borrowers. If the whole mortgage market is viewed as riddled with fraud on both ends, some, like Simpson, argue that nothing should be done except letting those house prices that have been artificially propped up because of inflated incomes begin to fall - and enduring the economic pain that will result. Even if fraud has become a larger part of the mortgage meltdown picture than first realized, it's not simple to figure out who should take most of the blame. Many people point the finger at investors playing the market or homeowners who bought more expensive houses than they could afford - the "irresponsible" borrowers cited by both President George W. Bush and probable Republican nominee Sen. John McCain (R-Ariz.). But the numbers don't exactly tell that story - which proves that much in this crisis taken as fact is poorly understood. That also makes a difference, when it comes to deciding whether it makes sense to bail out the market. At the request of The Washington Independent, the trade industry publication Inside Mortgage Finance in Bethesda, Md., ran some numbers and analyzed the resulting data. Did most people simply buy big homes they couldn't afford? In 2007, 62 percent of all securitized Alt-A loans involved refinances, and 38 percent were for home purchases. In the subprime market, 64 percent were refinances and 36 percent, home purchases. The percentages were the same in 2006. Those borrowers may have been tapping equity for reasons as varied as fancy vacations to overdue medical bills, but the majority were not buying new homes. Were they just trying to make a quick buck? Regarding investors versus homeowners, in 2007, about 5 percent of all securitized subprime loans and 14 percent of Alt-A loans were reported as investor loans. That compares to 5 percent of subprime loans and 13 percent of Alt-A loans in 2006. These numbers don't include second homes, so the percentages are probably higher, but not significantly so. Then there's the question of who really lied on the liar's loans. Madigan, the Iowa assistant attorney general, cites repeated cases where borrowers were encouraged by brokers to suddenly create businesses in their basements, like day care centers, to boost their incomes. If they questioned it, brokers would say that lenders required it, or not to worry. Still, borrowers signed on the bottom line, some knowing the information was false. Consider this borrower's account in the San Francisco Chronicle of a sales conversation with a broker: " He didn't say anything illegal out loud," she said. "He didn't say 'lie,' he just made a strong suggestion. He said, 'If you made $60,000, we could get you into the lowest interest level of this loan; did you make that much?' I said, 'Um, yes, about that much.' He went clickety clack on his computer and said, 'Are you sure you don't remember any more income, like alimony or consultancies, because if you made $80,000, we could get you into a better loan with a lower interest rate and no prepayment penalty.' It was such a big differential that I felt like I had to lie, I'm lying already so what the heck. I said, 'Come to think of it, you're right, I did have another job that I forgot about.'" Countrywide, for example, had a loan program called "Fast and Easy" that required no pay stubs, tax forms or employment verification. The FBI investigation is finding extensive fraud on loans across the board at Countrywide that didn't require full documentation, The Wall Street Journal reported. "It really is a case of everybody's at fault on this," said Guy Cecala, publisher of Inside Mortgage Finance. "There's clearly plenty of blame to go around." The result is a housing market that still has a long way to go to reach the bottom. A report by Barclays Capital on Tuesday warned that half of all subprime and Alt-A borrowers soon could owe more than their homes are worth - meaning delinquencies are likely to increase, regardless of whether some loans reset. How those delinquencies will influence the politics of any possible mortgage bailout is anyone's guess, especially as fraud and its part in the meltdown begin to draw more attention. As Cecala points out, finding the right people to blame can be a complicated issue. In some ways, he says, "it's just next to impossible" to solve a crisis that so many had a hand in creating. whether they are willing to admit to it or not. -------

House Committee Threatens Rove With Subpoena
By Ben Evans
The Associated Press
Friday 02 May 2008

Washington - The House Judiciary Committee threatened Thursday to subpoena former White House adviser Karl Rove if he does not agree by May 12 to testify about former Alabama Gov. Don Siegelman's corruption case.
In a letter to Rove's attorney, committee Democrats called it "completely unacceptable" that the Republican political strategist has rejected the panel's request for sworn testimony even as he discusses the matter publicly through the media.
"We can see no justification for his refusal to speak on the record to the committee," the letter states. "We urge you and your client to reconsider ... or we will have no choice but to consider the use of compulsory process."
Committee Democrats are investigating whether Rove and Republican appointees at the Justice Department influenced Siegelman's prosecution to kill his chances for re-election. It is part of a broader inquiry into whether U.S. attorneys were fired for not aggressively pursuing cases against Democrats.
Siegelman, a Democrat who served one term as governor after being elected in 1998, was convicted in 2006 on bribery and other charges and sentenced to more than seven years in prison. He was recently released on bond pending appeal.
Last year, Alabama attorney and one-time Republican campaign volunteer Jill Simpson, told the committee under oath that she heard conversations among GOP operatives in 2002 suggesting that Rove was pushing the Justice Department to pursue a conviction against Siegelman. She also has said Rove asked her in 2001 to find evidence that Siegelman was cheating on his wife.
Rove, who frequently worked in Alabama politics before orchestrating President Bush's White House campaigns, has denied having anything to do with the case. In a recent magazine article, he called Simpson a "complete lunatic" and said he had never heard of her.
The career prosecutors who handled Siegelman's case also have denied any political influence.
Thursday's threat marks the latest development in a lengthy standoff between President Bush and Congress over testimony from current and former White House staffers.
The committee has issued or threatened subpoenas to more than half a dozen administration officials and is suing White House Chief of Staff Josh Bolten and former presidential counsel Harriet Miers for refusing to comply with subpoenas on the U.S. attorney firings.
The White House has generally maintained that their testimony is off-limits from congressional oversight under executive privilege.
Rove's attorney, Robert Luskin, maintains that Rove must defer to that position. But as the White House has offered on other matters, Luskin wrote the committee this week that Rove would discuss the Siegelman case on the condition that his comments not be under oath and not be transcribed.
Judiciary Committee Chairman John Conyers, D-Mich., and several other lawmakers rejected the offer, saying such an interview "will not permit us to obtain a straightforward and clear record."
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EPA Official Ousted While Fighting Dow
By Michael Hawthorne
The Chicago Tribune
Friday 02 May 2008

Saginaw, Michigan - The battle over dioxin contamination in this economically stressed region had been raging for years when a top Bush administration official turned up the pressure on Dow Chemical to clean it up.
On Thursday, following months of internal bickering over Mary Gade's interactions with Dow, the administration forced her to quit as head of the U.S. Environmental Protection Agency's Midwest office, based in Chicago.
Gade told the Tribune she resigned after two aides to national EPA administrator Stephen Johnson took away her powers as regional administrator and told her to quit or be fired by June 1.
The call came as the Tribune was preparing to publish a story about the dioxin issue and Gade's crusade.
Jonathan Shradar, an EPA spokesman in Washington, said Gade has been placed on administrative leave until June 1. He declined further comment, saying the agency does not publicly discuss personnel matters.
Gade has been locked in a heated dispute with Dow about long-delayed plans to clean up dioxin-saturated soil and sediment that extends 50 miles beyond its Midland, Mich., plant into Saginaw Bay and Lake Huron. The company dumped the highly toxic and persistent chemical into local rivers for most of the last century.
Many local residents see Dow as a lifeline in region plagued by plant closings and layoffs. But all along the two wide streams that cut through this old industrial town, signs warn people to keep off dioxin-contaminated riverbanks and to avoid eating fish pulled from the fast-moving waters. Officials have taken the swings down in one riverside park to discourage kids from playing there. Men in rubber boots and thick gloves occasionally knock on doors, asking residents whether they can dig up a little soil in the yard.
Gade, appointed by President Bush as regional EPA administrator in September 2006, invoked emergency powers last summer to order the company to remove three hotspots of dioxin near its Midland headquarters.
She demanded more dredging in November, when it was revealed that dioxin levels along a park in Saginaw were 1.6 million parts per trillion, the highest amount ever found in the U.S.
Dow then sought to cut a deal on a more comprehensive cleanup. But Gade ended the negotiations in January, saying Dow was refusing to take action necessary to protect public health and wildlife. Dow responded by appealing to officials in Washington, according to heavily redacted letters the Tribune obtained under the Freedom of Information Act.
Regional EPA administrators typically have wide latitude to enforce environmental laws, but in April Gade drew fire from officials in Washington after she sent contractors to test soil in a Saginaw neighborhood where Dow had found high dioxin levels. The levels in one Saginaw yard were nearly six times higher than the federal cleanup standard, and 65 times higher than what Michigan considers acceptable.
On Thursday, Gade said of her resignation: "There's no question this is about Dow. I stand behind what I did and what my staff did. I'm proud of what we did."
Dioxin, measured in trillionths of a gram because it is so toxic, was a manufacturing byproduct of the herbicide Agent Orange and other chlorinated chemicals. Company documents show Dow knew by the mid-1960s that it could make people sick or even kill them. Citing years of independent studies, the EPA says dioxin causes cancer and disrupts the immune and reproductive systems, even at very low levels.
Concerns about dioxin contamination were behind two of the most infamous environmental disasters in U.S. history: the evacuations of the Love Canal neighborhood in upstate New York and the entire town of Times Beach, Mo.
But in the Saginaw area, cleanup remains stalled, mainly because Dow asserts the contamination does not threaten people or wildlife.
"There is all of this mystique about dioxin," said John Musser, a Dow spokesman. "Just because it's there doesn't mean there is an imminent health threat."
Dow says it has agreed in principle to restore polluted areas but is contesting how it should be done - which critics view as more stalling.
"Denial and delay has been part of Dow's game plan for years," said Michelle Hurd Riddick, a Saginaw nurse and member of the Lone Tree Council, a local environmental group. "They still haven't delivered."
Dow was forced to stop releasing dioxin into waterways in the mid-1980s. But when high levels of dioxin were found in fish from Saginaw Bay around the same time, Dow repeatedly claimed it wasn't responsible, saying the chemical had settled into the water from air pollution caused by forest fires and wood-burning fireplaces.
Dow and Michigan officials took until 2003 to negotiate legal guidelines for a comprehensive cleanup. The company later paid to scour the interiors of more than 300 homes and spread wood chips outside to reduce exposure to contaminated soil. At the same time, Dow's political allies tried to relax the state's dioxin standards.
More recently, Dow financed a University of Michigan study that the company and its supporters say shows dioxin in soil and sediment has little to do with levels of the chemical in people. The EPA cautions the study hasn't been peer-reviewed and appears to underestimate health risks.
"Dow has powerful sway in that area and in the state as a whole," said Dave Dempsey, a former Michigan activist who was environment adviser in the 1980s to then-Gov. James Blanchard. "But with all of the information out there about dioxin, it's becoming increasingly difficult for them to avoid doing something."
At the center of the latest dispute was Gade, who as a corporate attorney had represented big companies like Dow against environmental regulators. Her aggressive action against Dow surprised the company, local activists and her Washington bosses. But she still won high marks from EPA officials during her last performance evaluation.
The steps Gade took were influenced in part by her experience as an EPA staffer during the early 1980s, when the agency's top official in Washington was forced to resign after he allowed Dow to censor an EPA study documenting dioxin's dangers.
"We have a responsibility to make sure people are living in a healthy and safe environment," Gade said. "This problem has been out there for more than 30 years, and it's unconscionable that action hasn't been taken."
"We know Dow is responsible," said Ralph Dollhopf, associate director of the EPA's regional Superfund office. "The question now is when something will finally be done about it."
In Saginaw, some are reluctant to question one of the area's biggest employers and benefactors. They tout Dow's 3,100 manufacturing jobs and its donations to community and arts groups, including its sponsorship of a struggling civic arena, now known as the Dow Event Center.
Bob VanDeventer, president of the Saginaw County Chamber of Commerce, said local leaders are trying to fight the perception that dioxin makes the area unsafe. He argued "not one illness" can be attributed to dioxin and insisted the only way someone could be exposed to dioxin is if they "eat the dirt."
"Michigan is in the tank economically already," VanDeventer said. "For us, this situation certainly creates more uncertainty as long as it remains unresolved."
Others who were drawn to living along the picturesque Tittabawassee and Saginaw Rivers fear the contamination will make it impossible to sell their homes or will get them sick.
For more than 40 years, Lloyd and Joy Cooper have lived in a cottage near where the tree-lined rivers meet. Contractors for the EPA and Dow have tested their yard at least four times in two years.
In February Dow told federal regulators they had found dioxin levels of 5,900 parts per trillion in the Collins' neighborhood, above the federal cleanup standard of 1,000 parts per trillion. Michigan's far more stringent limit is 90 parts per trillion.
"It gets pretty frustrating," said Lloyd Cooper, a retired contractor. "It seems like they're dragging this out as long as they can. If they're going to do something, do it and get it over with for good."
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