SAN FRANCISCO — Few security companies have benefited as much from the surge of Sept. 11-related government contracts as Akal Security, the Española-based company controlled by American converts to a Sikh religious sect.
The company launched in 1980 with small contracts to protect grocery stores and bars and now has 10,000 employees who stand guard at federal courthouses in 40 states, Army bases, airports, U.S. embassies and federal immigration detention centers. It has won more than $3 billion in federal contracts since Sept. 11, 2001 and has become the largest courthouse security contractor in the country.
But along with its phenomenal growth comes mounting legal problems.
Akal is the subject of dozens of legal cases pursued by federal officials, whistle-blowing employees and others with wide-ranging allegations, including many wrongful terminations. The company itself disclosed 134 “pending, or current litigation matters” throughout the country to a Washington D.C. federal court last year. A competitor, Walden Security disclosed 12 such matters to the same court. Walden employs 3,000.
Just last month, Akal agreed to pay $1.9 million to settle Justice Department allegations that it falsified firearms training test for guards at several federal courthouses in northern California.
Akal’s president Daya Khalsa said his company faces no more legal problems than other similar-sized companies.
The overwhelming majority of Akal employees, he said, are performing admirably and that the mistakes of a few workers are blown out of proportion in costly lawsuits that are largely meritless.
“We are in a legal system in our country and a regulatory system that encourages a tremendous amount of litigation,” Khalsa said in a phone interview from his New Mexico office. “We don’t consider it to be a large number.”
Khalsa said the company settled the gun-range allegations on Sept. 28 to avoid further financial exposure and the company feared an even bigger financial loss if it fought the allegations before an unpredictable jury.
Specifically, gun range operators were accused of allowing some guards to complete target shooting tests beyond the allotted time limit and then telling the Marshals Service they passed.
“They were simply wrong,” he said. “Every court security officer is fully and properly trained.”
Founded in 1980 with a $1,200 loan, Akal is owned by the nonprofit religious organization Sikh Dharma based in Sombrillo near Española that was created in the early 1970s by a charismatic Sikh leader named Yogi Bhajan. Bhajan died in 2004.
It’s now one of the Southwest’s biggest business success stories, ranking as the second-biggest U.S. Department of Justice contractor and claiming $500 million annual revenues.
The company’s name (pronounced a-CALL) is a Sanskrit word meaning “undying” or immortality and it was a battle cry of Sikh warriors. The Sikh religion is 500 years old and claims 26 million followers worldwide.
The Sikh Dharma organization is the largest Sikh organization 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 myriad charities, schools and religious nonprofits.
It also controlled two profitable companies, Akal and a manufacturer and distributor of tea and cereal products, Golden Temple Inc. The companies’ contributed significant sums to the organization.
But then a bitter legal dispute over control of Sikh Dharma broke out in 2007 after Akal agreed to pay an $18 million fine to settle a federal lawsuit that claimed the company had failed to hire enough properly trained guards.
The company could no longer contribute to the religious organization.
Sikh Dharma then undertook a complex corporate reorganization that further complicated “a Russian nesting doll of nonprofit and for-profit entities,” the Oregon state judge overseeing the legal dispute noted in December.
The state attorney general intervened, joining a lawsuit filed by dissidents against the board of directors who controlled Sikh Dharma and Akal. It accused the board of self-dealing, conflict of interest and other dishonest acts.
The beleaguered board agreed in August to quit en masse and was replaced by a fresh group of Khalsas, who vowed to run the organization better and more openly.
“Our community can move forward in unity and put our efforts into serving our mission, managing and growing our businesses, spreading the teachings and creating prosperity for our future,” Gurujot Kaur Khalsa, the new secretary general wrote in announcing the settlement.
Akal has over the last several years also paid out tens of millions of dollars to settle lawsuits alleging that it treated its pregnant workers shabbily and provided poorly trained guards to watch over army bases. It has run into legal hassles with the union representing the guards and individual employees who alleged they were wrongly terminated.
Akal in 2010 paid an undisclosed amount of money to settle a lawsuit filed in San Francisco Superior Court that accused the company of retaliating against three guards who reported alleged misconduct by colleagues, including on-duty drug-use, drinking and romantic liaisons between guards and court clerks.
A similar lawsuit was settled for an undisclosed amount in Sacramento.
In 2007, the company paid the Department of Justice $18 million to settle allegations that some of its guards at U.S. Army bases “allegedly failed to satisfy weapons qualification requirements and receive other training, and the contractor allegedly failed to satisfy contractual man-hour requirements,” according to a DOJ statement at the time.
The U.S. Marshals Service last year awarded Akal $1.6 billion over five years to guard federal courthouses in 11 of the country’s 12 federal districts. The Marshals Service didn’t respond to requests for comment.
Khalsa said the company’s rapid growth after the Sept. 11 terrorist attacks may have also contributed to Akal’s legal woes. “We grew tremendously,” he said, adding, “Some of our growth got ahead of our system and quality controls.”