Indiana Pays $8.3M E-Rate Program Fines

Indiana and its Intelenet Commission have agreed to pay nearly US$8.3 million in a civil settlement on charges of making false statements and claims to the E-Rate program, which helps poor schools and libraries connect to the Internet, the U.S. Department of Justice (DoJ) announced late Tuesday.

The state charged inflated prices for services provided to Indiana schools and libraries, falsified invoices, disregarded the requirement that the schools and libraries make copayments for E-Rate services and engaged in noncompetitive bidding practices, the DoJ said.

Tuesday’s settlement is the latest in a long string of fines or criminal convictions related to the E-Rate program, created by Congress in the Telecommunications Act of 1996 and operated by the U.S. Federal Communications Commission.

Before Tuesday’s settlement, 13 people and 12 companies had been charged as part of the DoJ’s ongoing antitrust investigation into fraud and anticompetitive conduct in the E-Rate program. Six companies and three individuals had either pleaded guilty or entered into civil settlements, and the defendants had agreed to pay criminal fines and restitution totaling more than $40 million. Two people have been sentenced to serve six years each in prison.

In April, a former technology coordinator at a school district in South Carolina was indicted on charges that she used her position to funnel E-Rate money to a company she owned. In May, a former assistant superintendent at a Michigan school and his wife were arrested on similar charges.

In May 2004, NEC-Business Network Solutions pleaded guilty to E-Rate-related charges and agreed to pay $20.6 million in fines and restitution.

Several members of Congress have advocated cutting or ending the E-Rate program, funded by a tax on telephone services. Under the program, schools apply for money for cabling and Internet backbone equipment and for monthly Internet service fees.

-Grant Gross, IDG News Service (Washington Bureau)

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