Inter-Tel Technologies has agreed to plead guilty and to pay fines totaling $8.71 million on charges of bid rigging and wire fraud in connection with a program intended to connect schools and libraries to the Internet.
The company, a subsidiary of telecommunications vendor Inter-Tel Inc., was accused of submitting rigged bids to schools in Michigan and California as part of the Federal Communications Commission’s E-Rate program, according to the U.S. Department of Justice.
The E-Rate program has been under fire in Congress this year due to allegations of widespread waste and abuse, and the Inter-Tel guilty plea was the third related to E-Rate announced by the Justice Department since late May.
Inter-Tel was charged with one count of allocating contracts and submitting rigged bids for E-Rate projects at the two school districts, in a two-count felony charge unsealed Wednesday in U.S. District Court in San Francisco, according to the Justice Department.
Inter-Tel also was charged with one count of wire fraud and aiding and abetting by willfully entering into a scheme to defraud the E-Rate program in San Francisco by inflating bids, agreeing to submit false and fraudulent documents to hide the planned installation of ineligible items, and submitting false and fraudulent documents to defeat inquiry into the legitimacy of the funding request.
A spokesman for Inter-Tel, based in Tempe, Ariz., didn’t immediately return a phone call seeking comment.
Inter-Tel’s negotiated resolution in the case, if approved by the court, would require the company to pay $1.71 million in criminal fines and $7 million in restitution and civil settlement. The plea hearing and sentencing for Inter-Tel is scheduled for late Wednesday.
Fraud and waste in the E-Rate program, with an annual budget of $2.25 billion, has been the subject of several hearings in Congress this year. In May, NEC-Business Network Solutions pleaded guilty to defrauding the E-Rate program and agreed to pay $20.6 million in fines and restitution. Earlier this year, SBC Communications agreed to return $8.8 million to the FCC after equipment was not installed in Chicago schools.
