Please ensure Javascript is enabled for purposes of website accessibility

Six Corporations and Five Individuals Indicted in Connection with E-rate Schemes

A federal grand jury in San Francisco April 7 returned a 22-count indictment against six companies and five individuals on charges of fraud, collusion, aiding and abetting, and conspiracy in connection with E-rate projects at schools in seven states—Arkansas, California, Michigan, New York, Pennsylvania, South Carolina and Wisconsin, the U.S. Department of Justice announced.

The companies and individuals involved were:


  • Video Network Communications of Portsmouth, N.H;
  • Howe Electric Inc. of Fresno, CA;
  • Sema4 Inc. of San Juan Capistrano, CA;
  • Digital Connect Communications, of San Juan Capistrano, CA;
  • Expedition Networks, Ltd., North Hills, CA;
  • ADJ Consultants Inc. (ADJ), Temecula, CA;
  • Judy Green, Temecula, CA, former sales representative for VNCI and co-owner of ADJ;
  • Allan Green, Temecula, CA, co-owner of ADJ;
  • George Marchelos, Saratoga, CA, former sales representative for VNCI;
  • Steven Newton, San Juan Capistrano, CA, former vice president of Premio Computer Inc.;
  • Earl Nelson, Sonora, CA, former branch manager for Inter-Tel Technologies, Inc.

    Certain of the defendants were charged with wire fraud and aiding and abetting by entering into schemes to defraud the Federal Communications Commission and the Universal Service Administrative Company on E-rate projects at 11 school districts in the five states between November 1998 and at least sometime in November 2003.

    Other counts involved aiding and abetting separate conspiracies to rig bids and allocate projects at districts in the same states. The indictment charged that the co-conspirators discussed prospective bids for the projects; agreed who would be the lead contractor on the project and who would participate as sub-contractors, and submitted fraudulent and non-competitive bids. These defendants were also charged with engaging with Judy Green and Marchelos to get them to eliminate and disqualify bids from non-conspirators in exchange for paying a fee to Judy Green and VNCI and installing VNCI’s equipment.

    “This alleged nationwide fraud scheme deprived underprivileged schools from a valuable Internet access program and much needed funding,” said U.S. Attorney Kevin V. Ryan. “This indictment sends a strong signal that defrauding federal programs and thereby jeopardizing future funding opportunities for schools will lead to criminal charges.”

    According to the indictment, the wire fraud counts alleged that the charged defendants defrauded the program by hiding the cost of equipment and fees not covered by the E-rate program in the cost of covered equipment and that they made misrepresentations to the program administrator that related to the matching funds that the schools were supposed to have in order to apply for program funds.

    Marchelos and Green were subpoenaed to appear at a July 22, 2004, hearing on the E-rate program conducted by the House Energy and Commerce subcommittee on oversight and investigations. On that occasion, they both asserted their Fifth Amendment rights not to testify.

    In August 2003, Duane Maynard, who was employed by Howe Electric, entered a plea bargain in what was then described as a bid-rigging scheme involving the West Fresno Elementary School District in California. Maynard has subsequently been debarred from participating in the program.

    Meanwhile, Inter-Tel Technologies was convicted in January on charges related to management of projects for the San Francisco Unified School District; the FCC has begun proceedings that would prohibit the company from participating in the E-rate program as a service provider.

    In a separate episode, two Pakistanis were sentenced to jail late last year in connection with fraud and money-laundering schemes involving the Noah’s Ark Preparatory School and St. Anthony Elementary School in Milwaukee, and Nuestra America Charter School, formerly located in Chicago.

    The full text of the Justice Department announcement in the most recent indictments is available at A list of companies and individuals that have been suspended or debarred from the program is available at

    question icon

    We’re here to help!

    Our mission is to provide high-quality consulting and support services for the needs of E-rate program participants. We consult with applicants to help them understand, effectively utilize, and maintain compliance with E-rate rules and regulations. We help prepare and submit paperwork, and interact with program administrators on our clients’ behalf.

    Request a Consultation