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Tech Firm Owner Pleads Guilty to E-Rate Conspiracy

The former owner of an Illinois technology firm has pleaded guilty to providing bribes and kickbacks to school districts in exchange for networking contracts that were part of a U.S. government program designed to bring Internet services to schools and libraries in poor areas.

Tyrone Pipkin, a former co-owner of Global Networking Technologies in Illinois, pleaded guilty Monday in U.S. District Court for the Eastern District of Louisiana to participating in a conspiracy to defraud the U.S. Federal Communication Commission's E-Rate program, the U.S. Department of Justice said.

Pipkin, acting on behalf of his own company and Computer Training Associates, told schools that if they chose one of the two companies for E-Rate contracts, their matching fees required by the FCC would be waived, according to court documents. Pipkin and a co-owner at Global Networking Technologies also offered bribes to school officials and employees if they circumvented the required competitive bidding process required in the E-Rate program in favor of one of the two companies, the court documents said.

Pipkin also submitted E-Rate applications to the FCC containing forged signatures of school employees, according to court documents.

Another person involved in the conspiracy wrote bribe checks to employees at three Louisiana schools during 2004, court documents said. The three checks totalled US$28,500, with one employee at St. Augustine High School in Louisiana receiving $20,000, court documents said.

Pipkin and the co-conspirators participated in the fraud from about December 2001 to September 2005, the DOJ said in a press release. The fraud affected 13 schools in Louisiana, Arkansas and Illinois, the DOJ said.

Pipkin and the co-owner at Global Networking Technologies received E-Rate payments of nearly $2.6 million between January 2003 and September 2005, court documents said.

The E-Rate program was created by the U.S. Congress in the Telecommunications Act of 1996. Depending on the financial needs of the applicant schools and libraries, the program pays 20 percent to 90 percent of the cost for Internet access and telecommunications services, as well as internal computer and communications networks.

An ongoing DOJ investigation into E-Rate fraud has led to seven companies and 22 people either pleading guilty, being convicted at trial or entering into civil settlements, the DOJ said. The companies and people have been sentenced to pay more than $40 million in fines and restitution. Courts have sentenced 15 people to serve jail time.

Pipkin is charged with conspiracy, which carries a maximum penalty of five years in prison and a $250,000 fine, although the fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either amount is greater than the statutory maximum.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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