UPDATE: This story has now hit CNN, which has more details. The Justice Department's inspector general says the FBI is guilty of "serious misuse" of National Security Letters and that use of them may be underreported by as much as 20%. The audit found that more than half of NSLs were used to get information about U.S. citizens.
CNN reports 26 violations, of which 22 were the FBI's fault and 4 were caused by errors by the recipients of the National Security Letters.
UPDATE (March 10, 2007): FBI Director Robert Mueller and Attorney General Alberto Gonzales have acknowledged that the FBI broke the law, apologized, and promised to stop further such intrusions. Gonzales left open the possibility of criminal prosecutions against FBI agents or lawyers who misused their PATRIOT Act powers.
UPDATE (June 14, 2007): An audit has discovered that the above-reported 26 violations were the tip of the iceberg. 10% of National Security Letters have been reviewed, and the total number of violations is now over 1,000.
UPDATE (March 7, 2008): This year's audit has shown that the NSL abuses continued through 2006 and that the FBI underreported to Congress the number of NSLs by more than 4,600.
UPDATE (January 20, 2010): Yet further evidence of FBI abuses in collecting telephone records has been uncovered.