For 11 years, prosecutors say, William Turley and two of his children used their Maryland manufacturing business to brazenly bill nearly $1.5 million in overcharges to a single customer: the National Security Agency.
The scam, described in a federal indictment, seems a foolish venture; after all, the NSA is the intelligence agency that helped find Osama bin Laden. Even more surprising — the scam is not unique.
The Turleys, who all pleaded not guilty this month in Baltimore's U.S. District Court, are just the latest in a string of people prosecuted by the Maryland U.S. attorney's office for similar crimes involving non-classified work for the NSA, records show.
The year 2006 was particularly rough: At least nine people were defrauding the nation's chief secret-keeper in three separate schemes.
"If it wasn't so sad it would be very funny," said Matthew M. Aid, author of "The Secret Sentry: The Untold History of the National Security Agency."
"This stuff goes on all the time. NSA is just so awash in money, and it has so few people who actually know how to manage programs" that the agency becomes a target for crooks, he said.
Some analysts who study the NSA say the crimes, which involve basic fraud, rather than stealing secrets, are symptomatic of an organization that grew too fast after the terrorist attacks of Sept. 11, 2001, and has repeatedly failed to repair management problems.
But the NSA says scams are rare, and Maryland's U.S. attorney says that the agency's pursuit of such criminal cases could show that it is adequately hunting out fraud.
The Baltimore Sun identified 11 defendants accused within the past five years of bilking the agency. Nine of the cases were filed in the past two years, even though some of the alleged crimes reach back to the late 1990s and mid-2000s.
All of the defendants, except for the Turleys, pleaded guilty, and at least one of them, Wayne Schepens of Severna Park, still touts his NSA experience in an online bio for his Canton-based companies: WayneWright Strategy and WayneWright Construction.
"Wayne Schepens brings a long record of distinguished government service," his websites state, neglecting to mention that he pleaded guilty in 2007 to using his job as an NSA employee to steer $770,000 in government contracts to companies he and his wife owned. Schepens did not return a message seeking comment.
Maryland U.S. Attorney Rod J. Rosenstein said it's a "priority" to pursue contract cases where government agencies work with businesses. His office handles most NSA-related matters, because the agency is based at Fort Meade in Anne Arundel County.
Less clear is how people were able to cheat the NSA so easily and for so long, and why they would even want to — it puts them at risk of losing their security clearances, careers and reputations. For some, greed played a likely role, while one man, who declined to be quoted, said illness was the impetus — depression and alcoholism that made it impossible for him to work.
In a written statement to The Sun, spokeswoman Judith A. Emmel said, "NSA takes its fiduciary responsibility seriously and works diligently to ensure that appropriate action is taken when violations are suspected. … The actions of a very few do not represent or reflect on the diligent work and extraordinary accomplishments of the thousands of men and women who serve across the NSA/CSS [Central Security Service, the cryptology side of the intelligence organization]."
And Rosenstein said the spate of prosecutions, initiated by the NSA's Office of the Inspector General, could signal that the agency is "on the ball and actually policing" its contractors and employees, while other agencies may not be.
Still, some outsiders say that mismanagement is to blame for the criminal opportunities.
"That's my money they're giving away," said John E. Pike, a national security analyst and director of GlobalSecurity.org, an online clearinghouse for defense information. The NSA is funded with U.S. tax dollars. "The bottom line was, nobody was paying attention."
Funds flowed into the military and intelligence communities for years after the bin Laden-led terrorist attacks — something William "Bill" Turley noticed, according to a Sun story from 2002. He told a reporter that business at his $14 million family business, Bechdon Inc., was up about 20 percent because of defense-related orders.
And the NSA, whose budget is as secret as the information it gathers, was one of the big beneficiaries of funds. By 2007, its budget doubled to roughly $8 billion, according to a Baltimore Sun estimate that year, and some analysts say it has nearly doubled again since then.
"Their problem is how to get rid of all this money, so I could imagine a certain laziness crept in and nobody cared" how it was spent, Pike said. He said the agency may have hired inexperienced people who didn't know what contracts should cost, a situation ripe for abuse.
The NSA has been accused of mismanagement before.
A pair of 1999 NSA studies concluded that the agency had a "poorly communicated mission and vision." Lawmakers later set a December 2002 deadline for the agency to put its books in order. But "insufficient progress" was made, according to the Senate Armed Services Committee, leading Congress to strip some of NSA's procurement power in 2003.
In early 2006, The Sun published several articles about mismanagement in a $1.2 billion technology program known as Trailblazer. (Thomas Andrews Drake, a former NSA employee, is being prosecuted for allegedly violating the Espionage Act in part by retaining classified documents to give to the news media.)
Shortly thereafter, in 2007, an internal NSA task force concluded that there was no "unity of purpose" at the agency. "What we need is fundamental change in the way we manage NSA," members said.
"NSA has really a horrendous track record when it comes to managing contracts," said Aid, the author. "And the fact that the intelligence community thrives behind a veil of secrecy just makes these problems worse because there's not transparency."
While some prosecutions, such as Drake's, raise secrecy and national security issues, most are "routine fraud cases," Rosenstein said.
Four of the 11 defendants identified by The Sun pleaded guilty to making false statements to inflate the time they worked for the NSA as employees, contractors or subcontractors from 2004 through last year. Combined, they said they worked 3,208 hours more than they did and overcharged the NSA about $303,000, according to court records.
One of them, subcontractor employee Ann Warwick of Columbia, has yet to be sentenced for overbilling the agency nearly $109,000. The other three received relatively light terms: straight probation, six months' home detention and 30 days in federal prison. All were ordered to pay restitution.
Baltimore attorney Steven F. Wrobel has represented two people accused separately of committing crimes against the NSA: Schepens and James Jackson of Glen Burnie, who worked for subcontractor Northrup Grumman.
Jackson pleaded guilty in 2009 to inflating his hours to prime contractor Computer Sciences Corp., which then billed the NSA. On appeal, he argued that he never submitted time sheets to the NSA itself, so there was no federal crime.
But the U.S. Court of Appeals for the 4th Circuit rejected the argument, paving the way for more prosecutions, Wrobel said. "I think that the government has been emboldened … because the 4th Circuit has decided that you don't need to present your time sheets to the government, as long as the government can trace the money back to that individual."
The Turleys — William Turley, 70, of Annapolis; Donald Turley, 53, of Owings Mills; and Christina Turley Knott, 50, of Edgewater — are also accused of overbilling, though on a larger, and lengthier, scale.
William Turley founded Bechdon, based in Upper Marlboro, in 1966. It specializes in making metal and plastic parts for aerospace and defense companies, and has produced items for the NSA since 1997 — overbilling the entire time, prosecutors say.
William Turley was the company president, his son was a program manager, and his daughter did the books. All three are accused of telling employees to inflate the hours they worked for the NSA by $1,455,174, while Turley Knott is also accused of stealing from her co-defendants, according to the May 10 indictment.
Court papers claim that Turley Knott left the company in 2005, after her brother and father discovered that she had embezzled $4.5 million. The men never turned her in, "out of fear that she would reveal the scheme to defraud," the indictment says.
Instead, the men revealed it themselves. To bid on classified NSA contracts, they applied for security clearances in 2006 and 2007, a process that included undergo interviews and polygraph exams.
On March 26, 2006, William Turley admitted to "moving time around" on NSA contracts, in an effort to pass the polygraph test, the indictment says. A year later, his son admitted to inflating his own hours, and telling employees to do the same, according to court records. They both quit the company in 2008.
The men, charged with conspiracy to commit wire fraud and three counts of wire fraud, face up to 80 years in prison and a $1 million fine if convicted. Turley Knott is charged with conspiracy to commit wire fraud, which carries a maximum prison term of 20 years and a fine of up to $250,000, and with filing a false tax return, which is punishable by three years in prison and another $250,000 fine.
The Turleys and their attorneys declined to comment after a May 20 hearing. A message left with Bechdon's current president was not returned.
The longest sentence handed out on a recent NSA scam is a year and a day, given to Jeffrey Mark Harmon, president of Berg Bros. Recycling in Baltimore. He pleaded guilty to bribing an NSA employee, who then allowed him and one of Berg's owner's, Adam Berg, to steal valuable materials from a storage area, including copper communications cable.
His two co-defendants, the NSA employee and Berg, also pleaded guilty and are scheduled for sentencing this week.
Overcharging the National Security Agency has a history in Maryland, where the country's "first successful prosecution" of a contractor doing classified work occurred in 1990, a former Maryland U.S. attorney once said.
DEFENDANT: Wayne J. Schepens, of Severna Park, NSA employee
CHARGE: Conflict of interest, for using his official position from March 2003 to July 2005 to steer government contracts worth more than $770,000 to companies he and his wife owned. He also admitted billing two U.S. military agencies separately for the same service.
OUTCOME: Guilty plea
SENTENCE: 6 months home detention, 1.5 years probation, $100,000 fine, 50 hours community service. He ultimately served about a year of probation and was allowed to take several business trips during the home detention period.
DEFENDANT: Robert W. Lucas of Pasadena, NSA employee
CHARGE: Making false statements by submitting inflated time sheets between March 2006 and March 2007, adding 786 hours to his work tally, worth $37,060.09.
OUTCOME: Guilty plea
SENTENCE: Sentenced to 6 months home detention and 2.5 years probation. Also ordered to pay $37,060.09 in restitution and to perform 100 hours of community service.
DEFENDANT: James Jackson of Glen Burnie, NSA subcontractor (worked for Northrup Grumman, which worked for main contractor, Computer Sciences Corp.)
CHARGE: Making false statements by inflating the number of hours he worked from September 2004 through January 2007, claiming he worked 834 hours more than he did, worth $75,150.
OUTCOME: Pleaded guilty to 3 of 20 counts in an indictment
SENTENCE: Total of 30 days imprisonment (three concurrent 30 day sentences), 2 years probation, restitution of $74,346.
DEFENDANT: Donna Mitchell of Crownsville, worked full-time for subcontract companies Dragon Development Company (owned by CACI International Inc.)
CHARGE: Making false statements by inflating the hours she worked for an NSA contractor, claiming she worked 752 hours she didn't, worth $81,859, from January 2006 through December 2007.
OUTCOME: Guilty plea
SENTENCE: Three years probation, $3,000 fine and restitution of nearly $82,000
DEFENDANTS: Adam Wayne Berg of Stevenson and Jeffrey Mark Harmon of Windsor Mill, employees of Berg Bros. Recycling; Robert Barry Adcock of Parkville, NSA employee.
CHARGE: Bribery, theft and conspiring to defraud the NSA. Adcock, an NSA civilian employee responsible for a waste removal contract, accepted $110,000 in bribes from Harmon and Berg, who ran Berg Bros. Recycling in Baltimore, from March 2004 to June 2006, in return for valuable recyclable metals from NSA.
OUTCOME: Harmon pleaded guilty to conspiring to bribe an NSA official, Berg pleaded guilty to making an illicit payment to a government official, and Adcock pleaded guilty to conspiring to obtain payment.
SENTENCE: Harmon was sentenced to one year and a day prison, 6 months home detention, 1.5 years probation, 100 hours community service, $25,000 fine, $4,929 restitution. Berg and Adcock are scheduled for sentencing this week.
DEFENDANT: Ann Warwick of Columbia, employee for Business Consulting Technology LLC, a subcontractor providing intelligences analyst services for the NSA
CHARGE: Making false statements by inflating time she worked for the NSA by 836 hours, worth $108,780, from August 2009 to July 2010
OUTCOME: Guilty plea
SENTENCE: Scheduled for the end of August.
DEFENDANT: William Turley of Annapolis; Donald Turley of Owings Mills; and Christina Turley Knott of Edgewater.
CHARGE: All three are charged with conspiracy to commit wire fraud for allegedly overbilling the NSA by $1.5 million over an 11-year period, while the two men are also charged with three counts of wire fraud, and Turley Knott is accused of filing a false tax return.
OUTCOME: All of the defendants have pleaded not guilty. A trial is pending
SOURCE: U.S. District Court Records, the Maryland U.S. attorney's office