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Judge Rejects Inter-Tel E-rate Plea Agreement

Inter-Tel Technologies, Inc., a subsidiary of Inter-Tel Inc., has agreed to plead guilty and pay a total of $8.7 million in a criminal fine, civil settlement and restitution relating to charges involving bid rigging and wire fraud in the E-rate program.

However, in an unusual twist, the U.S. federal judge overseeing the case refused to accept the settlement Dec. 8, citing the "egregious facts" in the case. U.S. District Judge Charles Breyer instead set a hearing for January 5 in the matter.

The Justice Department's Antitrust Division had brought a two-count felony charge, accusing Inter-Tel of allocating contracts and submitting rigged bids for E-rate projects at two school districts in Michigan and California. The company was also charged with one count of wire fraud and aiding and abetting by willfully entering into a scheme to defraud the program in San Francisco by inflating bids, agreeing to submit false and fraudulent documents to hide the planned installation of ineligible items, and "submitting false and fraudulent documents to defeat inquiry into the legitimacy of the funding request."

"This conduct deprived the E-rate program of fair and competitive prices, caused the program to pay for unnecessary, inappropriate and ineligible items, and, as a result, prevented the program from funding projects at other schools that should have received funding," said R. Hewitt Pate, assistant attorney general in charge of the Antitrust Division.

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