State Acts In Security Guard Scandal

Attorney General Spitzer and Comptroller H. Carl McCall today announced a lawsuit against a national security guard company for a series of security breakdowns at state facilities.

The action against International Protective Services, Inc. ("IPS") follows a four-month investigation and alleges that the company defrauded the state by supplying unqualified personnel, some of whom actually had criminal convictions, to guard sensitive state facilities.

The lawsuit seeks to bar IPS from doing further business in New York and also seeks to recover the millions of dollars illegally obtained by IPS. The action alleges that IPS knowingly and intentionally supplied unqualified guards and seeks punitive damages.

In a related development, the Department of State began administrative proceedings seeking to revoke IPS' s license to do business in New York.

"It is unconscionable that a national company like IPS would knowingly jeopardize the security of state facilities and defraud state and local governments. We will not allow such behavior to continue," said Spitzer.

Comptroller McCall said: "My auditors found that IPS violated the terms of its contract with the state. More importantly, we found that IPS and the lack of oversight from the administration may have put the safety of New Yorkers at risk."

"The guards were just not qualified," McCall said. "Despite the heightened concerns about security, at the beginning of this year a significant portion of the company's workforce in New York had not been registered or screened as required by law. This company must be replaced by one that is committed to ensuring that all of its guards are qualified to protect New Yorkers."

IPS' misconduct was first uncovered in an audit by the Office of the Comptroller reviewing IPS's compliance with specifications of a State Office of General Services contract through which they had been paid $956,000. The audit revealed that a majority of the guards supplied by IPS did not meet contract requirements calling for additional screening and training for those protecting state facilities.

IPS received millions of dollars from state and local agencies for supplying security guards to various facilities, including Camp Smith, a New York State military instillation housing arms and munitions in Westchester County.

The Comptroller's audit revealed that IPS failed to secure necessary reference or credit checks and had proof of mandated drug testing for less than half the guards employed under the contract with the state. When drug testing did occur, it was not within the required time frame; on average drug tests were done 285 days after hiring.

The audit showed that none of the guards checked at Camp Smith had met the special requirements set by the state for guards at that high security location. In fact, two of the guards at that location had DWI convictions, one of whom was also convicted for leaving the scene of an accident.

IPS also supplied guards to homeless shelters in New York City. More than 200 of these guards were not even registered with the New York State Department of State as required by law. This means that criminal background checks were not performed on those employed to guard and keep the peace at these shelters.

Since investigation began, IPS has been replaced as a state contractor by State Office of General Services.

The Attorney General's office and the Office of the State Comptroller are continuing a broad joint investigation of other security companies.

IPS is a California based company with $85 million in revenues in 2001. IPS also supplies guards through contract with the federal Department of the Interior to guard the Statue of Liberty and Ellis Island.

The Attorney General acknowledged the cooperation of the Department of State, Office of General Services and federal Parks Service.

For the Attorney General's Office, this matter was handled by Mark G. Peters, Chief of the Public Integrity Unit and Zachary Weiss, Deputy Chief of the Criminal Prosecutions Bureau.

McCall said: "It is incumbent upon the administration to do a better job of oversight on sensitive contracts like this. I am confident that this wake-up call will result in better oversight of private security guards hired by the state."


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