NJ Businessmen Sentenced to Jail for E-Rate Fraud

The former co-owners of a New Jersey computer services provider each have been sentenced to 27 months in prison on charges of conspiracy to defraud a U.S. government program designed to bring Internet access to schools and libraries in poor areas, the U.S. Department of Justice announced.

Benjamin Rowner and Jay H. Soled, former owners of DeltaNet, were also each sentenced to pay US$271,716 in restitution to the Universal Service Administrative Co. (USAC), which administers the E-Rate program for the U.S. Federal Communications Commission. The two, sentenced Thursday, each pleaded guilty on July 10, 2008, in U.S. District Court for the Northern District of Illinois to one count of criminal conspiracy.

Rowner and Soled, working with Leonard Douglas LaDuron, conspired to defraud the E-Rate program by submitting false and misleading statements and concealing material facts from USAC, the DOJ said. The conspiracy, which ran from 1999 to 2003, affected at least 13 schools across the country, the DOJ said.

LaDuron, former owner of Serious ISP, Myco Technologies and Elephantine, pleaded guilty in Kansas City on June 29 to one count of conspiracy to defraud the E-Rate program and one count of making a false statement to the U.S. Department of Housing and Urban Development. LaDuron was sentenced on Dec. 16 to serve 57 months in jail and to pay $238,607 in restitution.

LaDuron's mother, Mary Jo LaDuron, fraudulently represented herself as an independent consultant for school districts, and steered E-Rate contracts to companies owned by her son, Rowner and Soled, the DOJ alleged. Mary Jo LaDuron plead guilty to making false statements in July.

The length of time between when the defendants entered pleas and were sentenced likely owed to logistical issues and court scheduling, a DOJ spokeswoman said.

E-Rate, a program begun with the Telecommunications Act of 1996, provides funding to school districts and libraries in poor areas. Schools can receive money for cable, Internet backbone equipment and for monthly Internet and telephone service fees. Depending on the financial needs of schools, the program pay 10 to 90 percent of the cost of the covered services.

U.S. lawmakers have repeatedly raised concerns about fraud and waste at the E-Rate program over the last several years.

To comment on this article and other PCWorld content, visit our Facebook page or our Twitter feed.
Shop Tech Products at Amazon