Former Telco Exec Convicted of E-Rate Fraud

A former Texas telecom executive faces up to a maximum of 140 years in prison and a $250,000 fine following his conviction Friday for defrauding the federal E-Rate program that supports Internet connections and equipment for schools and libraries.

Rafael G. Adame, who founded and ran ATE Telecom Solutions, was convicted of submitting fraudulent applications for payment on behalf of ATE to the Federal Communications Commission’s (FCC) Universal Service Administrative Company (USAC).

According to the Department of Justice (DoJ), Adame submitted fraudulent invoices for payment to the Schools and Libraries Division of USAC from December 2001 to May 2003 resulting in false payments of $106,514.

ATE Solutions provided computer-related goods and services through the E-Rate program to various school districts, including Weslaco Independent School District in South Texas. The company’s illegal invoices contained false customer bill dates and false reimbursement amounts.

The DoJ has charged 14 individuals and 12 companies throughout the United States with E-Rate fraud. Including Adame, six companies and five 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. Adame faces up to 20 years for seven counts of wire fraud.

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.

The FCC and the House Energy and Commerce Committee have also launched their own probes.

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