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If it's more than 30 minutes old, it's not news. It's a blog.

Monday, March 12, 2007

Massive Auditing Scandal Linked With DoJ IG NSL Findings

DoJ IG hit pay dirt. They've shown the auditors connected with the NSA and the warrant process have been missing something. This many indicators and problems with internal controls suggests the auditing community has been complicit with this failure. The auditing industry appears to have suffered a massive auditing failure on a scale not seen since Enron.

Ref Former US government auditor comments on leadership problem.

Ref This is the Verizon internal e-mail which links them to this problem; also includes intellistrategies, and the intermediaries who handled the warrants.

Ref DoJ's internal control problem, as highlighted with the NSLs, touches the Small Business contracts division in DoJ which includes Abraxas.

Ref US government "can't afford" auditors.

The same types of violations of DOJ Staff counsel under the attorney standards of conduct appear to dwarf the scope of auditing malfeasance which exists under the AICPA standards applicable to CPAs. The scope of the auditing industry failure is on a scale never before seen.

Auditors appear to be complicit with war crimes, and did not fully assert their freely chosen professional standards to report internal control problems related to war crimes detection. Ask Viet Dinh about the procedures he put into place inside DOJ as they related to auditors, reviews, and oversight of the NSLs: [ Ref ] Illegal activity cannot be lawfully classified, especially when it support "Pre-emption" which is illegal under Geneva.

There are too many auditing indicators which auditors should have detected showing there were massive problems within the NSA-JTTF-connected contractors for them not to realize that there were major internal control problems. It appears the auditors have not adequately increased audit scope as required under SAS99, possibly exposing the auditors to massive financial liabilities for their apparent complicity with war crimes, illegal activity, and violations of the US Constitution.

The boards of directors on these NYSE-listed firms have working papers and should have known there were internal control problems, and risks associated with this uncovered cooperation with DoJ.

All claims that the State Attorney General have with Verizon appear to have been thwarted using dubious information. There appears to have been massive fraud committed on the courts by DoJ Staff counsel in re claims of privilege and classification for things they were personally involved with, and knew were illegal.

DOJ Staff counsel assigned to the litigation division appear to have been personally involved, or should have known, and would have known the basis for the court filings were dubious, illegal, and not connected with bonafide claims. The DOJ Staff counsel working papers and their filing with the court appear to be largely connecgted with deliberate efforts to commit fraud upon the courts, hide illegally classified evidence, and thwart lawful inquiry in violation of Brady. It remains to be seen how many DoJ-JTTF-related convictions may be overturn because of the massive illegalities in evidence preparation and fraud under this President.

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DoJ Targeted Their Own: It means Nothing To Target POWs

The abuse this President, Attorney General, and Members of Congress imposed on US Attorneys should give the public pause: The POWs were not treated any better.

Geneva requires POWs to be free from threats. Once the President, Attorney General, and Members of Congress assented to illegal abuse of US Attorneys, it raises the real prospect – even if the evidence is destroyed – that all POW claims of abuse are more likely than not true.

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Once DOJ IG reviewed the communications between the Attorney General and the phone companies, and found that there had been illegal conduct; and that DoJ Staff counsel did not ensure that the activity fully complied with the law, then all claims that the operation is “classified” fall apart. It is illegal for any of this information about the DOJ Staff counsel’s reckless disregard for the FISA requirements to have been classified.

There is no merit to any DOJ Staff counsel motion before any court that the surveillance activity is classified.

Once DoJ IG found evidence of criminal activity, all Presidential arguments that the activity is classified or privileged fall apart. There I no merit to any of the DOJ Staff counsel argument that the President’s illegal FISA violations cannot be reviewed; nor is there any credible argument before any court that the State level concerns with privacy violations cannot be reviewed. They must.

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DoJ IG report is preliminary. It only narrowly looked at the NSLs. However, the scope of the illegal activity, reckless disregard for procedures indicates that audit scope must be increased under Statement of Accounting Standards 99.

Please encourage members of Congress to immediately contact Certified Fraud Auditors, request their perspective of the SAS99 standards in the context of the NSLs; and have them present a discovery-audit plan to specifically scope the extent of the fraud within DoJ and the White House.

Also, work with the Securities sand Exchange Commission to identify the specific fraud indicators that auditors should have noticed; and direct the SEC IG to review whether the SEC enforcement division has been threatened as were the US Attorneys. It needs to be understood which auditors provided funds to the GOP; and to what extent they were promised cursory reviews or less than full oversight by the Accounting Division within the SEC.

___ Why are US Attorneys being threatened on incitements; but we are to believe that the same abuses were not occurring to deflect needed attention into the auditing areas?

___ Which specific auditors paid to play with Abramoff; and how much money have they provided with the understanding that they would be rewarded for not conducting thorough audits of the internal control issues if the NSA contractors?

___ Which of the SEC-affiliated contractors are covered by the securities litigation; have had repeat audit failures; and have an interest to provide consulting services to the telecoms; but have remained quite about the internal control problems DOJ IG discovered?

The telecoms have legal requirements to comply with FISA. Once they knew that the subpoenas were not forthcoming as required, this should have raised some red flags. Judiciary and the Banking Committees need to immediately find out what these auditors’ working papers were; and the internal audit risks they identified; and to what existent the boards of directors in these firms knew or should have known that the legal requirements were not being met. It is meaningless that the firms appear to have endorsed, supported and been complicity with illegal activity. The boarder issue is: If these firms, as it appear to be the case, were silent about illegal use of NSA information to support Geneva violations, then the Boars of Directors on these telecoms may be complicit with illegal war crimes. They have an interest in paying off the auditors, destroying the working papers, and shifting the attention away from the SAS99 indicators which the auditors and internal audit committee should have discovered.

* * *

The scope of the illegal activity within the telecoms industry – to put this DoJ NSL activity into place == is wide. The boards of directors have been through one round under the SEC to ensure heir internal audit committees were doing their job. We’ve see what boards of directors will do when they want to plug leaks at CNET. There’s no telling what kind of retaliation auditors, company employees, and day to day workers in American corporations have been subject to.

This does not mean that they were victims. Rather, it remains to be understood to what extent the employees in these NYSE-listed corporations should have taken a step back; inquired into the lack of subpoenas; and to what extent they were reckless in not refusing to cooperate with DoJ illegal activity. Something broke down.

IT remains to be understood what kind of reward DoJ gave cooperating contractors; what kind of cursory oversight they were rewarded with; and despite IT program management problems, to what extent the recklessness of various software development companies was not sufficient sanctioned because DoJ wanted support for other illegal activity.

Give the OMB oversees this process and there is a common Federal Acquisition Regulation crossing DoD and DOJ; on top of the A-76, it’s likely that the same types of contract abuses we’ve seen in Iraq and Katrina are well entrenched in DoJ: Meaningless oversight, worthless companies with standards, and likely intimidation and threats against contracting personnel who dared to raise concerns about the performance problems.

* * *

There appears to be a very large mess that the US Congress may wish to bring in some outside observers from the CFE and auditing communities. Preferable, people who have an adversarial approach. Let Congress sort through the evidence. There’s little reason to believe the IGs, with this apparent huge pile of recklessness, know where to start. Someone needs to be brought into the IG offices and run some sampling and audit tests to find out which of the IGs have most likely been reckless in not doing their job; and come to an understanding of the threats they’ve faced, as were the US Attorneys.

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____ Review SAS 99

____ Get with the CFE

____ Engage with the SEC Enforcement division to determine audit problems, indicators, and other things which related to NSA contractors

____ Assess scope of IG backlog, threats

____ Identify likely threats against SEC Staff Counsel

____ Identify which NSA contractors are NYSE-listed; the auditors; and capture the auditor’s working papers

___ Capture board of direct meeting minutes, budgets, signed policy memos

___ Capture the internal audit committee communications with the auditors; and determine whether there were specific risk areas they were avoiding

___ Capture the communications between the NSA contractors and DOJ

____ Determine which specific things AG Gonzalez and the President were blocking DOJ OPR from reviewing; and the basis for the President to know which specific things he suspected DOJ OPR was attempting to investigate

____ Review Geneva; consider the abuses against US Attorneys; ask why anyone should believe that the POWs were treated any batter. Threats against US Attorneys means that POWs, contractors, and legal counsel were subjected to abuse which is prohibited under Geneva; and appears to be linked with specific decisions by this President. The activity appears to have enabled war crimes.

____ Review ORCON: Reconsider the evidence provided to the Courts in re State concerns over NSA privacy violations: DoJ Staff counsel claims that the information is “classified” do not stand up given the DOJ IG NSL findings. Fraud appears to have been committed upon the court; and the claim of privilege was based on information which has bee illegal classified.