Feds Nab E-Rate Fraudsters

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.