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Espanola, New MexicoOct 8 2012—Few security companies have benefited as much from the surge ofSept. 11-related government contracts as Akal Securities, a New Mexico-basedcompany controlled by American converts to a Sikh religious sect.
The company launched in 1980 with small contracts to protectgrocery stores and bars and now has 10,000 employees who stand guard at federalcourthouses in 40 states, Army bases, airports,
U.S. embassies and federalimmigration detention centers. It has won more than $3 billion in federalcontracts since Sept. 11, 2001 and has become the largest courthouse securitycontractor in the country.
But along with its phenomenal growth comes mounting legal problems.
Akal is the subject of dozens of legal cases pursued byfederal officials, whistle-blowing employees and others with wide-rangingallegations, including many wrongful terminations. The company itself disclosed134 "pending, or current litigation matters" throughout the countryto a
Washington D.C. federal court last year. A competitor,Walden Security disclosed 12 such matters to the same court. Walden employs3,000.
Just last month, Akal agreed to pay $1.9 million to settleJustice Department allegations that it falsified firearms training test forguards at several federal courthouses in northern California.
Akal's president Daya Khalsa said his company faces no morelegal problems than other similar-sized companies.
The overwhelming majority of Akal employees, he said, areperforming admirably and that the mistakes of a few workers are blown out ofproportion in costly lawsuits that are largely meritless.
"We are in a legal system in our country and aregulatory system that encourages a tremendous amount of litigation,"Khalsa said in a phone interview from his
New Mexico office. "We don't considerit to be a large number."
Khalsa said the company settled the gun-range allegations onSept. 28 to avoid further financial exposure and the company feared an evenbigger financial loss if it fought the allegations before an unpredictablejury.
Specifically, gun range operators were accused of allowingsome guards to complete target shooting tests beyond the allotted time limitand then telling the Marshals Service they passed.
"They were simply wrong," he said. "Everycourt security officer is fully and properly trained."
Founded in 1980 with a $1,200 loan, Akal is owned by thenonprofit religious organization Sikh Dharma created in the early 1970s by acharismatic Sikh leader named Yogi Bhajan. Bhajan died in 2004.
It's now one of the Southwest's biggest business successstories, ranking as the second-biggest U.S. Department of Justice contractorand claiming $500 million annual revenues.
The company's name (pronounced a-CALL) is a Sanskrit wordmeaning "undying" or immortality and it was a battle cry of Sikhwarriors. The Sikh religion is 500 years old and claims 26 million followersworldwide.
The Sikh Dharma organization is the largest Sikhorganization in the west. Its male followers almost always adopt the name"Khalsa," which means "purity," and wear turbans, robes,beards and long hair that is never cut.
By Bhajan's death, Sikh Dharma had under its aegis myriadcharities, schools and religious nonprofits.
It also controlled two profitable companies, Akal and amanufacturer and distributor of tea and cereal products, Golden Temple Inc. Thecompanies' contributed significant sums to the organization.
But then a bitter legal dispute over control of Sikh Dharmabroke out in 2007 after Akal agreed to pay an $18 million fine to settle afederal lawsuit that claimed the company had failed to hire enough properlytrained guards.
The company could no longer contribute to the religiousorganization.
Sikh Dharma then undertook a complex corporatereorganization that further complicated "a Russian nesting doll ofnonprofit and for-profit entities," the
Oregon state judge overseeing the legaldispute noted in December.
The state attorney general intervened, joining a lawsuitfiled by dissidents against the board of directors who controlled Sikh Dharmaand Akal. It accused the board of self-dealing, conflict of interest and otherdishonest acts.
The beleaguered board agreed in August to quit en masse andwas replaced by a fresh group of Khalsas, who vowed to run the organizationbetter and more openly.
"Our community can move forward in unity and put ourefforts into serving our mission, managing and growing our businesses,spreading the teachings and creating prosperity for our future," GurujotKaur Khalsa, the new secretary general wrote in announcing the settlement.
Akal has over the last several years also paid out tens ofmillions of dollars to settle lawsuits alleging that it treated its pregnantworkers shabbily and provided poorly trained guards to watch over army bases.It has run into legal hassles with the union representing the guards andindividual employees who alleged they were wrongly terminated.
Akal in 2010 paid an undisclosed amount of money to settle alawsuit filed in San Francisco Superior Court that accused the company ofretaliating against three guards who reported alleged misconduct by colleagues,including on-duty drug-use, drinking and romantic liaisons between guards andcourt clerks.
A similar lawsuit was settled for an undisclosed amount in
Sacramento.
In 2007, the company paid the Department of Justice $18million to settle allegations that some of its guards at U.S. Army bases"allegedly failed to satisfy weapons qualification requirements andreceive other training, and the contractor allegedly failed to satisfycontractual man-hour requirements," according to a DOJ statement at thetime.
The
U.S.Marshals Service last year awarded Akal $1.6 billion over five years to guardfederal courthouses in 11 of the country's 12 federal districts. The MarshalsService didn't respond to requests for comment.
Khalsa said the company's rapid growth after the Sept. 11terrorist attacks may have also contributed to Akal's legal woes. "We grewtremendously," he said, adding, "Some of our growth got ahead of oursystem and quality controls."
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