Kentucky Man Pleads Guilty to Concealing Decade-Long E-Rate Wire Fraud Scheme
Memphis, TN – Mark J. Whitaker, 49, has pleaded guilty to misprision of wire fraud. U.S. Attorney D. Michael Dunavant announced the guilty plea today.
According to information presented in court, from 2004 until August 13, 2014, Whitaker actively concealed a scheme directed by his co-defendant, Charles "Chuck" Jones, to defraud the federal E-Rate Program. The E-Rate Program is a Federal Communications Commission program that distributes money to schools and libraries for internet access, telecommunication services, and related equipment. There are specific rules and regulations that govern schools’ and vendors’ participation in that program, which include requiring vendors to certify that no kickbacks have been paid to participating schools or their agents, and requiring vendors to certify that participating schools have been invoiced for their share of the contracted-for services and equipment.
Whitaker helped manage two of Jones' companies: Integrated Computer Solutions ("ICS") and Technology Associates. Those companies participated as E-Rate Program vendors for several public school districts in Tennessee and Missouri. Whitaker's job was to submit false certifications to the E-Rate Program at Jones’ direction.
Those certifications falsely stated that Jones' companies had complied with the E-Rate Program’s rules and regulations, including: (1) falsely certifying that the schools had been invoiced for their required E-Rate Program "co-pay"; and (2) falsely certifying that Jones' companies had not paid any kickbacks to the schools or their agents.
Whitaker submitted those false certifications despite knowing that Jones paid the schools’ consultant, "A.J.," bribes and gave A.J. valuable gifts while A.J. worked with and for the schools in Crockett County, Tennessee and Missouri. He also knew that Technology Associates and ICS did not bill the Missouri schools for their full required co-pays. Despite that knowledge, Whitaker did not report the fraud to the E-Rate Program
or to law enforcement. If the E-Rate Program had known that the schools were not being invoiced for their correct co-pays and that Jones was paying kickbacks to A.J., the program would not have paid ICS and Technology Associates.
According to the Superseding Indictment, the E-Rate Program allegedly paid Jones and his companies approximately $6.9 million as a result of the fraud. Wire fraud and conspiracy charges against Chuck Jones are still pending.
Sentencing for Whitaker is scheduled for July 23, 2020, before U.S. District Court Judge Mark S. Norris, where Whitaker faces a maximum of 3 years imprisonment, 1 year supervised release and a fine of $250,000.
U.S. Attorney D. Michael Dunavant said, "Protection of federal grant programs that provide needed services and equipment to our schools in West Tennessee is a top priority of this office. When dishonest offenders conspire to defraud these programs for their own selfish gain and unjust enrichment, they not only steal tax dollars, but also hurt local schools in the process. We will continue to work with our federal partners to root out and expose such fraud against the government, to hold offenders accountable, and to recover ill-gotten gains."
This case was investigated by the Federal Communications Commission - Office of Inspector General, and the Federal Bureau of Investigation.
Assistant U.S. Attorneys Tony Arvin and Murre Foster are prosecuting this case on behalf of the government.