Feds Charge Former Telecom Exec With E-Rate Fraud

A former South Texas telecom executive is facing nine counts of wire fraud for allegedly bilking the federal E-Rate program for schools and libraries out of more than $140,000.

A McAllen, Tex., grand jury indicted Rafael G. Adame Wednesday for submitting fraudulent invoices to the Universal Service Administrative Company (USAC), which administers the E-rate fund for the Federal Communications Commission (FCC).

Adame owned and operated ATE Tel, a vendor that provided computer-related goods and services through the E-Rate program to the Weslaco Independent School District in South Texas.

According to the Department of Justice (DoJ), Adame fabricated data and false amounts on the invoices, some for work that was not actually done. By accepting wire transfer payments from USAC, Adame is accused of wire fraud.

“Committing fraud upon the E-Rate program harms underprivileged school districts,” Assistant Attorney General Thomas O. Barnett said in a statement. “The Antitrust Division will continue to vigorously pursue those who cheat the competitive process and take money away from this federal program.”

Including Adame, 14 individuals and 12 companies have been charged as part of the Antitrust Division’s ongoing investigation into fraud and anti-competitive conduct in the E-Rate program. Six companies and three individuals have either pleaded guilty, agreed to plead guilty or have entered civil settlements.

The 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.

Since its inception as part of the 1996 Telecommunications Act, allegations of fraud and corruption have plagued the E-Rate fund. The E-Rate subsidy was added to telephone bills in 1997 under the Clinton administration and has often been dubbed the “Gore tax” for former Vice President Al Gore’s enthusiastic support.

In addition to the ongoing DoJ investigation, both the FCC and the House Energy and Commerce Committee have launched their own probes.

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