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

AT&T Agrees to Pay the United States $2.9 Million
to Settle Allegations of Contracting Fraud

WASHINGTON -- AT&T Communications- East, Inc., a subsidiary of AT&T Corp., has agreed to pay the United States $2.9 million to settle claims that it defrauded the General Services Administration (GSA) from 1998 to 2001, the Justice Department announced today.

Todayís civil settlement resolves allegations that the company defrauded the United States by knowingly passing through to government customers, in violation of the terms of AT&Tís contract with GSA certain, costs and fees known as Presubscribed Interexchange Carrier Charges. The charges are a fee that long distance companies pay to local telephone companies to recover part of the costs of providing facilities that link each telephone customer to the telephone network.

The allegations arose from a lawsuit filed by relator John Russo. Under the whistleblower provisions of the False Claims Act, a federal law that allows private individuals to sue on behalf of the United States and receive a portion of the proceeds of a settlement or judgment awarded against a defendant.

The civil investigation and settlement were jointly handled by the Office of the United States Attorney for the Central District of California and the Civil Division of the Department of Justice, with assistance from GSA, and the U.S.Attorney's Office for the Southern District of California in San Diego.

The action is entitled United States ex rel. JA Russo Associates, Inc. v. AT&T Corporation, Civil No. 04-1142-DOC (FMOx)(C.D. Cal.).