Sprint is winding up in the courtroom after federal agencies claimed that the carrier inflated prices of wiretapping services and overcharged the government by millions of dollars.
As reported by Wired, a lawsuit (.PDF) brought against the Kansas-based company alleges that Sprint inflated charges by almost 60 percent between 1 January 2007 and 31 July 2010, which resulted in overcharges of $21 million.
The lawsuit, using the basis of the False Claims Act, seeks to recoup these losses and damages. The Obama Administration claims that Sprint submitted "false claims" to agencies including the FBI, U.S. Marshals Service (USMS), Bureau of Alcohol, Tobacco and Firearms (ATF), and Immigration and Customs Enforcement (ICE), by including "unallowable" costs in their charges for carrying out court-ordered wiretaps.
The False Claims act can be brought forward against individuals and parties that knowingly present false or fraudulent claims for payment and approval of services. Those found guilty can be liable for a civic penalty of between $5,000 and $10,000 per claim, plus "three times the amount of damages which the Government sustains because of the act of that person."
The U.S. carrier, like others in the country, must comply with the Communications Assistance in Law Enforcement Act of 1994, in which telecommunications firms have to provide wiretapping services when ordered by a court. However, carriers are allowed to charge agencies "reasonable expenses" for these services -- but this does not include modifying “equipment, facilities or services” in order to comply with wiretap orders.
San Francisco U.S. Attorney Melinda Haag said that Sprint's overcharging, which apparently went undetected as the carrier did not provide a breakdown in agency invoices, "caused a significant loss to the government’s limited resources."
Sprint spokesman John Taylor told the publication:
"Under the law, the government is required to reimburse Sprint for its reasonable costs incurred when assisting law enforcement agencies with electronic surveillance. The invoices Sprint has submitted to the government fully comply with the law. We have fully cooperated with this investigation and intend to defend this matter vigorously."
According to the U.S. courts and their 2012 wiretap report, the number of federal and state wiretaps increased 24 percent from 2011, comprising of 1,354 authorized by federal judges and 2,041 by state judges. The number of wiretap requests approved by federal judges increased 71 percent in 2012, and the number approved by state judges rose 5 percent. Two requests were denied in 2012. Applications in California, New York, and Nevada accounted for 69 percent of all applications approved by state judges.