[Paleopsych] WP: In Age of Security, Firm Mines Wealth Of Personal Data

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In Age of Security, Firm Mines Wealth Of Personal Data
http://www.washingtonpost.com/ac2/wp-dyn/A22269-2005Jan19?language=printer

    By Robert O'Harrow Jr.
    Washington Post Staff Writer
    Thursday, January 20, 2005; Page A01

    It began in 1997 as a company that sold credit data to the insurance
    industry. But over the next seven years, as it acquired dozens of
    other companies, Alpharetta, Ga.-based ChoicePoint Inc. became an
    all-purpose commercial source of personal information about Americans,
    with billions of details about their homes, cars, relatives, criminal
    records and other aspects of their lives.

    As its dossier grew, so did the number of ChoicePoint's government and
    corporate clients, jumping from 1,000 to more than 50,000 today.
    Company stock once worth about $500 million ballooned to $4.1 billion.

    Now the little-known information industry giant is transforming itself
    into a private intelligence service for national security and law
    enforcement tasks. It is snapping up a host of companies, some of them
    in the Washington area, that produce sophisticated computer tools for
    analyzing and sharing records in ChoicePoint's immense storehouses. In
    financial papers, the company itself says it provides "actionable
    intelligence."

    "We do act as an intelligence agency, gathering data, applying
    analytics," said company vice president James A. Zimbardi.

    ChoicePoint and other private companies increasingly occupy a special
    place in homeland security and crime-fighting efforts, in part because
    they can compile information and use it in ways government officials
    sometimes cannot because of privacy and information laws.

    ChoicePoint renewed and expanded a contract with the Justice
    Department in the fall of 2001. Since then, the company and one of its
    leading competitors, LexisNexis Group, have also signed contracts with
    the Central Intelligence Agency to provide public records online,
    according to newly released documents.

    Attorney General John D. Ashcroft and other government authorities
    have said these new tools are essential to national security. But
    activists for civil liberties and privacy, and some lawmakers, say
    current laws are inadequate to ensure that businesses and government
    agencies do not abuse the growing power to examine the activities of
    criminals and the innocent alike.

    These critics said it will soon be hard for individuals looking for
    work or access to sensitive facilities to ever shake off a criminal
    past or small transgression, such as a bounced check or minor arrest.

    Chris Hoofnagle, associate director of the Electronic Privacy
    Information Center, a nonprofit group in the District, said
    ChoicePoint is helping to create a " 'Scarlet Letter' society."

    The information industry has traditionally fought regulations, arguing
    that it can police itself. But hoping to avoid a regulatory backlash
    that could curtail his company's access to information, ChoicePoint
    chief executive Derek V. Smith said he'll be reaching out to Capitol
    Hill in the coming months to promote the industry's benefits -- and
    express his willingness to work with lawmakers to develop new
    regulations.

    "We have a new responsibility to society, and we want to make sure
    that's legitimized," Smith said. "We'd like everybody to play by the
    same rules and standards that society believes are correct."

    An entire industry has mushroomed during the past decade because of
    extraordinary increases in computing power, the expansion of
    telecommunications networks and the ability of companies like
    ChoicePoint to gather and make sense of public records, criminal
    histories and other electronic details that people now routinely leave
    behind.

    Some of these companies -- including the three major credit bureaus --
    have become multi-pronged giants that regularly refresh information
    about more than 200 million adults and then sell that data to police,
    corporate marketers, homeland security officials and one another.

    In doing so, they wield increasing power over the multitude of
    decisions that affect daily life -- influencing who gets hired, who is
    granted credit or who can get on an airplane.

    ChoicePoint is not alone in eyeing the government for new business.
    LexisNexis and others also work closely with national security and
    intelligence officials. To compete in the homeland security market,
    LexisNexis paid $775 million last year for Seisint Inc., a rival
    company with a supercomputer and a counter-terrorism system dubbed
    Matrix.

    ChoicePoint, though, has distinguished itself through 58 acquisitions
    in recent years. Those purchases have recently been companies that
    have close ties to the government or have products that will sate the
    demand for more refined details about people and their activities.

    One ChoicePoint acquisition last year, Alexandria-based Templar Corp.,
    was initially conceived by the departments of Defense and Justice to
    improve information sharing. Templar's system helps draw information
    together instantly from multiple databases. A District firm called
    iMapData Inc., also acquired by ChoicePoint last year, creates
    electronic maps of "business, economic, demographic, geographic and
    political" information. Its customers include intelligence and
    homeland security agencies.

    ChoicePoint, Templar and iMapData help operate a fledgling law
    enforcement network in the Hampton Roads region of Virginia called the
    Comprehensive Regional Information Management and Exchange System, or
    CRIMES. A similar system operates in south Florida. ChoicePoint
    officials hope the system will be a model for a national
    information-sharing network mandated last fall when Congress approved
    intelligence reform legislation.

    In marketing materials distributed to government officials,
    ChoicePoint says the system offers investigators "the ability to
    access all relevant information with a single query."

    Two weeks ago, ChoicePoint also completed the acquisition of i2 Ltd.,
    a British technology firm with a subsidiary in Springfield, i2 Inc.,
    that creates computer software to help investigators and intelligence
    analysts in the United States and scores of others countries finds
    links among people, their associates and their activities.

    In 2001, the FBI announced a $2 million deal to buy i2 software over
    three years. Company officials said their software was used by the
    military to help find Saddam Hussein in Iraq.

    In an interview, i2 Inc. President John J. Reis said analysts
    increasingly use the software to head off crimes or attacks, not just
    investigate them after the fact. "We are principally a company whose
    focus is all about converting large volumes of information into
    actionable intelligence," he said.

    Police, lawyers, private investigators, reporters and many others have
    been using commercial information services for years, as the
    availability of personal information skyrocketed during the 1990s. But
    those commercial services did not play such an important role in the
    secretive, high-technology realm once dominated solely by the National
    Security Agency and other members of the government intelligence
    community.

    The government still maintains some of the world's most sophisticated
    eavesdropping and spy gear. But officials often depend on commercial
    systems for public records, identity verification and automated
    analysis, such as finding anomalous personal information that might
    suggest a person has hidden ties to risky groups. Growing numbers of
    commercial systems offer "scoring" services that rate individuals for
    various kinds of risks.

    To expand its presence in the intelligence community, ChoicePoint
    hired a team of prominent former government officials as homeland
    security advisors in late 2003. They included William P. Crowell Jr.,
    the former deputy director of the National Security Agency; Dale
    Watson, a former FBI executive assistant director of counter-terrorism
    and counterintelligence, and Viet D. Dinh, a former assistant attorney
    general and primary author of the USA Patriot Act.

    Current and former government officials praise the new services as
    important to efforts to investigate criminal and terrorist activity
    and to track down people who pose a threat. But some of those same
    officials, including Pasquale D'Amuro, an assistant director at the
    FBI and head of its New York office, also expressed qualms about
    whether ChoicePoint and other information services operate with enough
    supervision.

    "There are all kinds of oversight and restrictions to the federal
    government, to Big Brother, going out there and collecting this type
    of information," he said. "Yet there are no restrictions in the
    private sector to individuals collecting information across this
    country, which potentially could be a problem for the citizens of this
    country."

    Hoofnagle, the privacy activist, recently filed a complaint with the
    Federal Trade Commission claiming that ChoicePoint has worked hard to
    avoid triggering oversight under existing laws, including the Fair
    Credit Reporting Act. If ChoicePoint's reports about people are not
    legally considered consumer reports under the act, Hoofnagle said in
    the letter, then the law should be expanded to include them.

    Hoofnagle's letter, co-authored with George Washington University law
    professor Daniel J. Solove, described the Fair Credit Reporting Act as
    a "landmark law that ensures that compilations of personal information
    used for many different purposes are accurate, correctable, fairly
    collected."

    In a response, ChoicePoint said the thrust of Hoofnagle's letter was
    baseless. The Fair Credit Reporting Act was "not meant to be omnibus
    privacy legislation," the company's letter said. "Information used for
    investigative, law enforcement or governmental purpose is not
    regulated in the same manner as the information used to make decisions
    related to credit, insurance, or employment."

    ChoicePoint started as a spin-off from Equifax Inc., the credit bureau
    and information service. It was considered an underperforming
    division, with its main source of revenue coming from the insurance
    industry. ChoicePoint examined credit records and other personal
    information to help top insurers assess customers and vet insurance
    applications for signs of fraud.

    Smith and other ChoicePoint executives wanted much more. Intent on
    becoming a national data and analysis clearinghouse, the company went
    on a buying spree. ChoicePoint bought one company that screens new
    employees for signs of illicit drug use. It purchased another that
    specializes in the use of DNA to identify people, living or dead. In
    2002, it bought VitalChek Network Inc., a Nashville company that
    provides the technology and networks to process and sell birth, death,
    marriage and divorce records in every state.

    It collected data in other ways, too. Through an employee screening
    system called Esteem, the company compiles reports from dozens of
    retailers such as Target, Home Depot and others about employees who
    have admitted to, or been convicted of, shoplifting.

    For a time in 2003 and last year, ChoicePoint even offered a
    background-check-in-a-box sold on the shelves of Sam's Club. The
    $39.77 package included a "How To Hire Quality Employees" handbook, a
    CD containing an online background screening package and one
    complimentary drug test.

    By 2003, ChoicePoint could claim to have the leading background
    screening and testing business in the nation, analyzing job
    applicants, soccer coaches, day-care workers and Boy Scout volunteers.
    About 5 million criminal records searches that year turned up almost
    400,000 applicants or others who had recent criminal records.

    Since its inception, Smith said, his company has focused primarily on
    making the country a safer place, especially in the wake of the Sept.
    11, 2001, terrorist attacks.

    Smith said he recognizes that there have to be limits on what his
    company can do, if only to maintain the trust of the many millions of
    people whose information fuels his business.

    "Whatever the country decides to do, I'm willing to accept, as long as
    it's done in an enlightened way," Smith said. "The stakes have
    escalated since 2001."

    Some reporting for this story was done for Robert O'Harrow's book, "No
    Place to Hide," published by Free Press, copyright 2005. O'Harrow also
    received financial assistance from the Center for Investigative
    Reporting.

    O'Harrow will be online at 11 a.m. tomorrow to talk about this article
    and his book. Go to [3]www.washingtonpost.com/technology.