Feds Nab E-Rate Fraudsters
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A Houston-based networking company agreed Friday to pay more than $4.6 million in fines and restitution to settle E-Rate fraud charges.
The settlement is latest in a series of decisions related to the E-Rate, a Federal Communications Commission (FCC)-controlled federal fund that awards monies for Internet networking infrastructure, communications equipment and monthly connectivity service fees to schools apply for.
According to the one-count wire fraud charge, NextiraOne, a subsidiary of Platinum Equity LLC, defrauded the program and the Oglala Nation Educational Coalition (ONEC) member schools through a number of illegal practices.
The Department of Justice said NextiraOne inflated equipment prices, submitted false and fraudulent invoices for payment and failed to deliver equipment and services originally billed to the E-Rate program.
"These fraudulent schemes rob funds used to assist the neediest schools and libraries across the country," Thomas O. Barnett, assistant attorney general in charge of the Department of Justice's (DoJ) Antitrust Division, said in a statement.
NextiraOne will pay a $1.9 million criminal fine and a civil settlement requires the company to forfeit more than $2.6 million in reimbursement for uncompensated work previously performed at other school districts.
The wire fraud charge carries a maximum penalty of a $500,000 fine and restitution to the victims of the crime. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
"The outcome speaks for itself. We hope that this result gives pause to those who would attempt to defraud the E-Rate program, [and those] who are stealing monies from innocent and needy victims, our children," Kent Nilsson, the inspector general of the FCC, said.
Including NextiraOne, 11 individuals and 10 companies have been charged as part of the DoJ's ongoing investigation into fraud and anticompetitive conduct in the E-Rate program.
Six companies and three individuals have either pleaded guilty or have entered civil settlements. Those defendants have agreed to pay criminal fines and restitution totaling more than $40 million.
Two of the individuals have each been sentenced to serve six years in prison.