Dallas school district settles E-Rate fraud case

The Dallas Independent School District in Texas has agreed to settle charges that it violated the U.S. False Claims Act in connection with the U.S. government's E-Rate program, which subsidizes Internet connections for schools and libraries in poor areas, the U.S. Department of Justice said Friday.

The school district, with officials accused of awarding E-Rate contracts using noncompetitive bids and accepting bribes, will drop its requests for more than US$150 million in federal funding and will pay $750,000, under the terms of the settlement, the DOJ said.

The U.S. Attorney's Office for the Northern District of Texas had alleged that the school district provided false information to the E-Rate program by engaging in noncompetitive bidding practices for E-Rate contracts. School district officials also improperly received gratuities from technology vendors, including trips, meals, golfing and the free use of a yacht, the DOJ alleged.

The school district's former chief technology officer, Ruben Bohuchot, was convicted in July on bribery charges related to E-Rate contracts.

The E-Rate program, created by the U.S. Congress in the Telecommunications Act of 1996, allows schools to apply for funds to pay for networking hardware and monthly Internet service fees. The program is run by the U.S. Federal Communications Commission.

"The E-Rate Program provides critical support to the poorest schools in the nation, providing them with Internet access and wiring," Tony West, assistant attorney general for the DOJ's Civil Division, said in a statement. "Working with our partners at the FCC Office of the Inspector General, the Department of Justice is committed to ensuring that this important program, which benefits our neediest children, not be misused."

The settlement announced Friday is part of an ongoing federal investigation of fraud and anti-competitive conduct in the E-Rate program.

The IDG News Service is a Network World affiliate.