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FCC and Department of Justice Investigate E-rate Fraud

In early February, the Federal Communications Commission and United States Department of Justice have issued criminal sentences and debarments in separate E-rate fraud cases.

Former Owner of Technology Company Sentenced in E-rate Fraud Case

On February 9, 2012, a federal judge sentenced Ms. Gloria Harper to 30 months in prison and $40 million in fines and restitution. Ms. Harper engaged in anti-competitive behavior including fraud and bidding rigging for her E-rate related projects that spanned four states: Arkansas, Florida, Illinois, and Louisiana.

The DoJ reported:

  • Ms. Harper, former co-owner of Global Networking Technologies and former owner of Computer Training Associates, acting on behalf of these companies as well as on her own behalf, participated in the conspiracy beginning on or about December 2001 through September 2005. Harper conspired to provide bribes and kickbacks to school officials and employees responsible for the procurement of Internet access services at certain schools in Arkansas, Florida, Illinois and Louisiana. The department said that in return, those individuals ceded control of the E-Rate competitive bidding process to Harper and a co-conspirator, ultimately allowing them to ensure E-Rate contracts at these schools were awarded to their companies.

On February 6, 2012, USAC notified Eagle School District (AR) and Xavier University Preparatory School (LA) that they would be denied FY 2007 requests tied to Ms. Harper. Each applicant was denied approximately $22,000.

In explaining the FY 2007 denials, USAC stated:

  • Based on the June 16, 2008 Plea Agreement in U.S. v. Tyrone Pipkin, Gloria Harper, Global Networking Technology, Inc., and Computer Training & Associates, Inc., USAC is denying the funding requests for services to be provided by Global Networking Technology, Inc. (GNT). In the Plea Agreement, the parties agreed to give up the right to seek reimbursement from USAC for services provided for E-Rate projects and release any associated claims. Furthermore, Ms. Harper and Mr. Pipkin, both individually and through any business entity, agreed to cease performing any work related to contracts that are funded through the E-rate program, participating in any activities associated with or related to the E-rate program, and seeking or receiving any funding from the E-Rate for a period of three years starting on June 16, 2008, the date of the plea agreement. (Mr. Pipkin and Ms. Harper were the sole owners of GNT.) USAC has determined that since the parties were barred from performing services for and receiving reimbursement for these FY 2007 (July 1, 2007 to June 30, 2008) funding requests, the requests must be denied as a result of the plea agreement.

Former Michigan Technology Company Owner Debarred

On February 14th, 2012, the FCC Enforcement Bureau notified Mr. Jeremy Sheets that he will be debarred from participating in the E-rate program for a three year period. According to the Debarment Order, Mr. Sheets’ fraudulent activities cost the E-rate program nearly $70,000. The debarment resulted from the guilty plea the U.S. Department of Justice reported on January 25, 2011.

More information about suspensions and debarments in the E-rate program may be found on USAC’s website.

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