March 20 (Bloomberg) -- FBI Director Robert Mueller has ordered an inspection of 56 field offices to determine how many secret subpoenas for telecommunications and financial records were illegally issued, the bureau's top lawyer said.

The inspections, which follow a more limited inspector general audit that found widespread violations, will also try to determine whether disciplinary actions are warranted against any federal agents, the Federal Bureau of Investigation's general counsel, Valerie Caproni, told a U.S. House committee hearing.

``There's no doubt that there was colossal failure on our part to have adequate internal controls,'' Caproni told the House Judiciary Committee in Washington today. ``We got an F report card.''

She also said that the abuses, made possible by lax oversight, may extend to other programs. She didn't provide specifics.

Mueller ordered the inspections after Department of Justice Inspector General Glenn Fine found what he called ``widespread and serious misuse'' of the so-called national security letters, which are allowed by law to be issued without court review.

The FBI's authority to issue the letters to gather material on suspected terrorists or spies without a judicially approved subpoena was expanded under the 2001 USA Patriot Act, and their use soared, Fine said today. More than 140,000 letters were sent to telephone companies, Internet providers and financial institutions between 2003 and 2005, his March 9 report said.

U.S. Citizens

About half the records sought during that period pertained to U.S. citizens, Caproni said today. Phone companies that cooperated with the FBI under contract were AT&T Inc. and Verizon Communications Inc., she said.

Walt Sharp, a spokesman for San Antonio-based AT&T, issued a statement: ``AT&T has a practice of complying in good faith with emergency requests from the FBI for information. We do that to help protect innocent life and prevent criminal or terrorist acts. We've always insisted any of these emergency requests be followed up by some sort of legal process, such as a subpoena, warrant or national security letter.''

Peter Thonis, a spokesman for New York-based Verizon, declined to comment on Caproni's statement. Instead, he read a statement that said: `Every day, Verizon's subpoena unit responds to emergency requests from federal, state and local law enforcement for particular calling records. After 9/11, of course Verizon responded to FBI emergency requests in terrorist matters, and we had every reason to believe they were legitimate emergency situations.''

While Fine's report said that none of the violations was intentional, he backed off that statement today and said the bureau's inspection had to make that determination. ``It is incumbent on the FBI to ask people why they did what they did,'' he said.

Violations

Fine estimated today that there might have been several thousand violations of federal rules and laws, including about 600 serious breaches. The more serious possible violations included obtaining full credit reports in counterintelligence probes, an action that is not authorized by law, and issuing letters unconnected to any active investigation, Caproni said.

Democrats and Republicans criticized the FBI for misleading Congress in recent years about the number of letters issued. One Republican today also expressed skepticism that the FBI's inspection would produce results.

``If you find out your source has given you false information, you're required to be skeptical about anything else they tell you,'' Representative Louie Gohmert, a Texas Republican, said in an interview.

Gohmert also said that if the inspection finds that violations were intentional, agents or their supervisors ``should get more than a wrist slap.'' He said he wants the committee to hold follow-up hearings to find out what the FBI's inspection found.

To contact the reporter on this story: Neil Roland in Washington at nroland@bloomberg.net

Last Updated: March 20, 2007 15:52 EDT