In a significant move reflecting heightened concern over the protection of sensitive government data, the U.S. Treasury Department announced on Monday the termination of federal contracts valued at $21 million with Booz Allen Hamilton. This decision came after the revelation that a previous employee at Booz Allen unlawfully accessed and disseminated sensitive tax information pertaining to President Donald Trump and numerous affluent taxpayers.
The official statement from Treasury Secretary Scott Bessent made specific mention of Charles Littlejohn, a former Booz Allen contractor now serving a five-year prison sentence for his role in the unauthorized acquisition and disclosure of confidential IRS tax return data. Littlejohn's actions have been characterized as a major breach of trust involving taxpayer information of high-profile individuals.
Secretary Bessent emphasized the administration's commitment to eliminating waste, fraud, and abuse within federal operations, noting that canceling the contracts with Booz Allen is a critical step towards restoring public confidence in government data security practices. According to Bessent, Booz Allen did not effectively enforce the necessary safeguards to protect the sensitive data accessed through their contracts with the Internal Revenue Service, including highly confidential taxpayer information.
In response, a spokesperson for Booz Allen Hamilton issued a statement challenging several of the claims made by the Treasury Department. The company maintained that it fully cooperated with government investigations and that Booz Allen received gratitude for aid leading to Littlejohn’s prosecution. The firm’s representative also emphasized their readiness to engage with Treasury officials regarding this matter.
The Booz Allen spokesperson clarified that Littlejohn's illicit activities occurred on government-operated systems rather than those owned or operated by Booz Allen itself. They further stated that Booz Allen does not store taxpayer data on its systems and lacks the capacity to monitor activity on government networks where the breach took place.
Legal proceedings culminated in Littlejohn’s 2023 guilty plea to a charge of unauthorized disclosures of income tax returns. The tax details of former President Trump were leaked to media outlets The New York Times and ProPublica, outlining his nearly non-existent federal income tax payments for several years prior to his presidency. The leaks also encompassed thousands of other wealthy individuals.
The case drew attention to the seriousness of the data breach, with the sentencing judge labeling Littlejohn’s actions as the most significant theft in the history of the IRS. The Treasury Department provided an estimate that the breach affected the confidential taxpayer information of over 400,000 individuals. Importantly, the Justice Department undertook the prosecution during the Biden administration.
Available federal records indicate that Littlejohn is currently incarcerated in a medium-security federal prison located in southern Illinois. His scheduled release date is set for October 2027, marking the end of his five-year sentence.
Following the Treasury’s announcement of contract cancellations, Booz Allen Hamilton shares experienced a roughly 10% decline in value. This market response highlights investor unease regarding the implications of the contract terminations and the associated reputational impact on the company.