Indiana settles E-Rate fraud charges

State pays $8.3 million to settle accusations of defrauding program designed to bridge digital divide.

In an ongoing nationwide investigation into fraud regarding the federal government's E-Rate program, the Justice Dept. has charged Indiana and its Intelenet Commission with making false statements and claims. The state and the commission and have agreed to pay nearly $8.3 million in a civil settlement, reports IDG News Service.

The E-Rate program is part of the Telecommunications Act of 1996 and operated by the U.S. Federal Communications Commission. Schools can apply for funding to provide Internet access to impoverished districts.

The Justice Department charged that the state of Indiana inflated prices for services, falsified invoices, disregarded the requirement that the schools and libraries make copayments for E-Rate services, and engaged in noncompetitive bidding practices.

Thus far, 13 people and 12 companies had been charged with fraud and anticompetitive conduct in the E-Rate program. Six companies and three individuals had either pleaded guilty or entered into civil settlements, and the defendants had agreed to pay criminal fines and restitution totaling more than $40 million. Two people have each been sentenced to serve six years in prison.

Some members of Congress have called for cutting or abolishing the E-Rate program, which is funded by a telephone tax.