Former School Official Sentenced on E-Rate Fraud Charges

A former assistant superintendent at a Michigan school district has been sentenced to serve 46 months in jail for a scheme to defraud a U.S. government program providing Internet connections to schools and libraries in poor areas.

Douglas Benit, formerly one of the top officials at Ecorse Public Schools near Detroit, was also sentenced Thursday to pay more than US$1.3 million in restitution, the U.S. Department of Justice said. He pleaded guilty in November to one count each of mail fraud and bank fraud in U.S. District Court for the Eastern District of Michigan.

Benit and his wife, Mary Ann Elam Benit, were indicted by a grand jury in May 2006. Mrs. Benit is scheduled to be sentenced Friday.

Douglas Benit, who oversaw new construction in the school district, was accused of steering contracts to Coral Technology, a company he secretly owned. The funds came from the federal E-Rate program, from school district general funds and from district construction bonds, the DOJ said. Benit defrauded the school district and E-Rate program out of $7.3 million, according to previously published reports.

In addition, the Benits received a $200,000 line of credit from Minnesota-based TCF National Bank through documentation that "vastly overstated and misrepresented" their personal and corporate assets and income, the DOJ said.

"The children of the Ecorse Public School District as well as countless others around the nation rely on the federal E-Rate program to provide funding for internet access, telecommunication services, and computer and communication networks," Scott Hammond, acting assistant attorney general in charge of the DOJ's Antitrust Division, said in a statement. "Douglas Benit exploited his position as a trusted school official and lined his own pockets with money that should have gone to these deserving children."

The E-Rate program subsidizes the deployment of Internet access and telecommunications services, as well as internal computer and communications networks, to economically disadvantaged schools and libraries. The program was created by Congress in the Telecommunications Act of 1996 and is administered by Universal Service Administrative Co., a nonprofit corporation, under the auspices of the U.S. Federal Communications Commission.

An ongoing investigation at the DOJ has resulted in seven companies and 18 people having plead guilty, been convicted or entering civil settlements. These defendants have agreed to pay or have been sentenced to pay criminal fines and restitution of more than $40 million. Including Benit, 12 people have been sentenced to service time in jail.

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