Torrance security firm got L.A. County contracts despite troubled history

Los Angeles County awarded millions of dollars in contracts to a Torrance security firm even though federal and state investigations dating back more than a decade found problems with the company’s practices.

The contracts, which include providing security guards for the sheriff’s and fire departments, came to light after the head of International Services Inc. was charged last week with workers’ compensation fraud.

The firm continued to do business with the county even after a 2005 report to the Board of Supervisors by County Auditor-Controller Tyler McCauley found that the firm’s license had been pulled by New York state after allegations emerged that the company employed 200 unregistered guards, including convicted felons.

McCauley’s report also said New York state auditors found that the company, run by Ousama “Sam” Karawia, had “compliance discrepancies” related to training, drug testing and hiring, which eventually led to the revocation of the firm’s license there.

The company has been the subject of investigations and enforcement actions by the U.S. Department of Labor dating back to the mid-1990s for alleged violations of federal pay and contract laws, a review of official records shows.

International Services Inc. was placed under a federal consent decree in 2001 and, following noncompliance with the order, was barred in July 2005 from doing business with the U.S. government for three years, documents show. Labor Department spokeswoman Deanne Amaden said the department had no record of a current federal contract with the firm.

Despite this record, the Sheriff’s Department named Karawia a reserve deputy in 2006. Sheriff Lee Baca also appointed Karawia to the Sheriff’s Department’s Homeland Security Support Unit. Karawia was removed after sheriff’s officials learned of his alleged misconduct.

Karawia’s firm continued to get contracts. The California Highway Patrol signed a three-year, $2-million agreement with the firm in 2007 to provide security services at state buildings on an as-needed basis through 2010. The state also has a $705,000 contract with the firm to provide security for the Public Utilities Commission.

Last year, the L.A. County Office of Public Safety signed a three-year, $2.7-million contract.

Prosecutors charged Karawia last week with multiple felony counts, including grand theft, insurance fraud and illegal gun possession, in connection with an alleged scheme to withhold $9.5 million in payments to the State Compensation Insurance Fund.

Karawia, 45, has pleaded not guilty to the charges and has been released on $2-million bail. Two other International Services Inc. executives, Larry Finley and Allan Bailey, have also been charged, and pleaded not guilty, in connection with the case.

Karawia’s criminal attorney did not return calls seeking comment. Peter Rugato, vice president of marketing and sales for International Services, declined to comment on specifics but called the allegations against Karawia and two other executives “unsubstantiated.”

It is unclear what county agencies knew about International’s past problems when they granted the contracts.

Steve Whitmore, a Sheriff’s Department spokesman, said Karawia’s firm was contracted to provide security guards for county courthouses on an “as-needed basis” and at the Whittier sheriff’s facility known as Star Center.

The contract -- a three-year deal, with options to renew each of two subsequent years -- was worth between $500,000 and $1 million annually, running through 2010, Whitmore said.

Whitmore described Baca’s relationship with Karawia as “professional” and said “it had nothing whatsoever to do with the contract his firm had with the Sheriff’s Department.”

“International Services Inc. had the lowest responsible bid of three security firms that originally submitted bids,” Whitmore said. “The negotiations did not involve Mr. Karawia. They were made between the department and other officials with the company.”

The disclosure letter submitted at the beginning of the bidding process identified Sam Karawia as a reserve deputy for the L.A. County Sheriff’s Department, Whitmore said. In the letter, the firm informed sheriff’s officials “that Mr. Karawia would be excluded from the day-to-day operations of this Los Angeles County effort.”

Whitmore said the letter stated specifically that that was done to “preclude any possible conflicts of interest” and said that Karawia “has never asked the sheriff or the Sheriff’s Department for any favors.”

Asked about whether the Sheriff’s Department had properly vetted International Services in light of its past problems, Whitmore said the department’s process “is exacting and thorough.”

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andrew.blankstein @latimes.com