United States Attorney's Office District of Connecticut
Press Release

MAN WHO PARTICIPATED IN FEDERAL E-RATE PROGRAM FRAUD SCHEME SENTENCED TO 21 MONTHS IN FEDERAL PRISON

Kevin J. O’Connor, United States Attorney for the District of Connecticut, announced that THOMAS J. KENNEDY, III, 49, of Spring Hill, Florida, formerly of Monroe, Connecticut, was sentenced today by Chief United States District Judge Robert N. Chatigny in Hartford to 21 months of imprisonment, followed by three years of supervised release, the first nine months of which KENNEDY must serve confined to his home with electronic monitoring, for his participation in a scheme to defraud Southwestern Bell Communications (“SBC”) and the Federal Communications Commission (“FCC”) in connection with the E-Rate program.  Judge Chatigny also ordered KENNEDY to pay restitution in the amount of $485,202, a fine in the amount of $10,000, and the costs of his electronic monitoring.  On August 24, 2007, KENNEDY waived his right to indictment and pleaded guilty to one count of mail fraud and one count of subscribing a false tax return.

The federal E-Rate program provides funding to qualifying school districts nationwide to upgrade their internet access capabilities.  To fund the program, the FCC mandates that telecommunication companies throughout the country add surcharges to the bills of their customers, that, after collected, are forwarded to the FCC.  Applications by school districts are reviewed and awards to school districts are made by Universal Services Administrative Company (“USAC”), the FCC designated administrator of the program.

In Connecticut, the Hartford, New London, New Haven and Bridgeport school districts received E-Rate funding.  Each school district selected SBC/Southern New England Telephone (“SNET”) as the prime contractor to perform its internet upgrades.

In the years 2001 through 2004, KENNEDY was an account manager for a company that had a partnership arrangement with SBC in the area of information technology.  KENNEDY and three SBC employees, including SBC account managers Richard E. Brown and Keith J, Madeiros, decided that engineers would be hired for certain E-Rate funded school district projects, the costs for which would be billed first to SBC/SNET, and later an SBC/SNET subcontractor.  KENNEDY arranged for the hiring of engineers, and also arranged for the billings to SBC/SNET and to the subcontractor for their services.  However, those billings, which SBC/SNET paid and then invoiced to the FCC, were inflated by more than $500,000.  That money was split primarily among KENNEDY, Brown and Madeiros, with KENNEDY receiving $249,525 and Brown and Madeiros receiving $78,136 and $129,571, respectively.

Brown and Madeiros each pleaded guilty in February 2007 to charges related to their involvement in this fraud scheme.  On August 29, 2007, Brown was sentenced to 27 months of imprisonment and six months of home confinement.  On December 7, 2007, Madeiros was sentenced to nine months of imprisonment and three months of home confinement.

The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation Division.  The case is being prosecuted by Assistant United States Attorney Calvin B. Kurimai.

CONTACT:

U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722
thomas.carson@usdoj.gov