AT&T Missouri Settles E-Rate Fraud Lawsuit

AT&T Missouri has agreed to pay the U.S. government $1.4 million as part of a settlement of a civil lawsuit alleging that the company violated the False Claims Act in connection with the federal E-Rate program, which provides money to help schools and libraries in poor areas connect to the Internet.

The U.S. Department of Justice alleged that AT&T Missouri provided false information to the E-Rate program and violated the program's requirements by engaging in noncompetitive bidding practices. The DOJ also alleged that AT&T Missouri employees colluded with officials in the Kansas City, Missouri, School District to award contracts to the company and to extend contracts in violation of E-Rate rules. AT&T Missouri also provided meals and other incentives to school district employees, the DOJ alleged.

The DOJ has settled a lawsuit with the school district.

The allegations came from a False Claims Act lawsuit filed in Missouri federal court by American Fiber Systems, which submitted an unsuccessful bid to the Kansas City School District. The False Claims Act allows private parties to bring fraud claims on behalf of the U.S. government and share in the proceeds of any recovery. American Fiber Systems' share of the settlement will be $195,000.

"The E-Rate program provides critical support for Internet access to the most under-served schools in the nation," Tony West, assistant attorney general for the DOJ's Civil Division, said in a statement.

AT&T, in a statement, said it does not admit wrongdoing in the Kansas City case. The company has been participating in E-Rate since 1998, the statement said.

"We are proud of the work we do to keep our nation's schools and libraries connected under the program and are committed to helping ensure that all eligible K-12 schools and public libraries have affordable access to advanced telecommunications services," the statement said. "This lawsuit involved the factors used to award an E-Rate funded contract to AT&T. There was no finding that AT&T violated any laws, rules or regulations."

The DOJ has an ongoing investigation into fraud and waste involving the E-Rate program, administered by the U.S. Federal Communications Commission. Several companies and individuals have been found guilty or settled charges related to the program.

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