Department of Justice Seal Department of Justice
TUESDAY, JUNE 27, 2006
(202) 514-2007
TDD (202) 514-1888

State of Indiana & ITS Intelenet Commission Agree to Pay U.S. over $8.2 Million to Settle False Claims Involving E-Rate Program

WASHINGTON – The state of Indiana and the Intelenet Commission, an entity controlled by the state of Indiana, have agreed to pay the United States nearly $8.3 million as a civil settlement relating to allegations of making false claims and false statements in connection with the Federal Communication Commission's (FCC) E-Rate program, the Department of Justice and the U.S. Attorney's Office for the Southern District of Indiana announced today.

The E-Rate program, created by Congress in the Telecommunications Act of 1996, provides funding for needy schools and libraries to connect to and utilize the Internet. Under the E-Rate program, which is funded by monies collected from telephone users, schools apply for monies to provide cabling, Internet backbone equipment (i.e., servers, PBX and switches), and to pay for monthly connectivity service fees. The FCC oversees the E-Rate program.

The United States contended that Intelenet and the state of Indiana provided false information to the E-Rate program and otherwise violated the program’s requirements, including charging inflated prices for services provided to Indiana schools and libraries, falsifying invoices, disregarding the requirement that the schools and libraries make co-payments for the expenses charged to the E-Rate program for the services, and engaging in non-competitive bidding practices. Intelenet and the state of Indiana cooperated with the government’s investigation.

“The E-Rate Program makes federally mandated funds available to the poorest schools in the nation for Internet access and wiring,” said Peter D. Keisler, Assistant Attorney General for the Civil Division. “False claims to this very important federal program will not be tolerated.”

The resolution announced today resulted from an ongoing federal investigation of fraud and anti-competitive conduct in the E-Rate program in Indiana. The investigation is being conducted jointly by the U.S. Department of Justice's Civil Division, the U.S. Attorney's Office for the Southern District of Indiana, and the FCC Office of the Inspector General.