Investigation Documents

The FCC issued a notice of apparent liability for forfeiture and order initiating removal proceeding on May 10, 2024, proposing a penalty of over $8 million against K20 Wireless and Krandon Wenger for apparently willfully and repeatedly violating FCC rules relating to the ACP and the federal wire fraud statute. The FCC also found K20 and Wenger are, for legal purposes, one and the same entity, and are jointly and severally liable for the proposed penalty.

In June 2024, the FCC Enforcement Bureau settled with PayG resolving an investigation into whether the company failed to pay USF Contributions, Telecommunications Relay Services (TRS), and North American Numbering Plan (NANP) fees fully on time. In 2021, after trying to work with the carrier for two years, USAC referred PayG to the FCC’s Enforcement Bureau due to multiple failures to comply with USAC’s requests to provide documentation supporting the carrier’s FCC Form 499-A Annual Worksheet filings.

As part of the settlement, PayG admits that actions under PayG’s prior ownership violated the FCC rules. They also agreed to added scrutiny and will pay a $1,000,000 civil penalty. PayG must appoint a Compliance Officer, who will oversee rule compliance, update operating procedures, create a compliance manual, and implement a training program. Finally, the company must report to the FCC quarterly on their progress and compliance with the agreement.

In July 2024, the FCC Enforcement Bureau issued an order against K20 Wireless LLC and Krandon Wenger barring them from the Affordable Connectivity Program (ACP) and participation in any successor program. The FCC released an NAL and Order alleging that K20 and Wenger engaged in serious, willful misconduct in violation of multiple ACP rules, including transferring ACP subscribers using false information, including changing subscriber addresses located in non-Tribal areas to false locations in Tribal lands such as empty lots, restaurants, and office buildings; (ii) improperly claimed Tribal lands ACP reimbursement for such subscribers for whom K20 did not and could not confirm eligibility; (iii) falsely certified that the Company was in compliance with all ACP rules when it submitted reimbursement requests to USAC; (iv) transmitted, via interstate wires, certified reimbursement requests containing false information; and (v) failed to respond to the Bureau’s Letter of Inquiry. At the FCC’s direction, USAC had already locked out all agents associated with K20 from NLAD in April 2023. Finally, this order directs USAC to continue to reject disbursements from K20 Wireless.

The FCC Enforcement Bureau settled with Alaska Communications Systems Holdings, Inc. (ACS) for a total settlement value of $6,298,526. ACS will repay the USF $5.2M and receive a $1M credit for withdrawing claims on FRNs between October 2015 – September 2018. ACS also agreed to implement enhanced compliance measures in connection with their participation in the Rural Health Care program.

A USAC audit in 2017 found that ACS was not using any of the FCC- approved methods for determining rural rates. Instead, ACS developed pricing scenarios and models so that they would get a sufficient business return for each opportunity. Additionally, ACS provided Internet Access as part of their services in the RHC Telecom program, even though that services are ineligible in that program. Finally, ACS was unable to provide any written policies and procedures to document their compliance or knowledge of FCC program rules about rural rates and competitive bidding.

On October 15, 2024, Issa Asad, 51, of Southwest Ranches, Fla., and Q Link Wireless LLC, of Dania Beach, Fla., pleaded guilty to conspiring to defraud and commit offenses against the United States in connection with a years-long scheme to steal over $100 million from the Lifeline program. Beginning as early as 2012 and continuing through at least 2021, Q Link, directed by Asad, its CEO, cheated the Lifeline program by making repeated false claims for reimbursement, taking and retaining Lifeline funds that it was not entitled to receive, providing false information about its Lifeline customers, and deceiving the FCC.

The Pennsylvania based Armstrong Group has agreed to pay $6.5 million to resolve allegations that it violated the False Claims Act by knowingly violating FCC rules and submitting improper costs to inflate the High Cost subsidies it received from the USF.

The United States alleged that, between 2008 and 2023, five incumbent local exchange carriers (ILEC) owned by Armstrong Group failed to comply with FCC regulations that governed what costs they were allowed to report for purposes of claiming subsidy payments from the government, and as a result these companies received greater subsidy payments than those to which they were entitled. At the same time as the civil settlement, the Armstrong Group has entered into a robust corporate compliance agreement with the FCC, requiring Armstrong to adopt concrete changes in the company’s internal controls and implement comprehensive oversight and monitoring mechanisms.

On June 6, 2023, Charles A. “Chuck” Jones, 52, and Mark J. Whitaker, 51, both of Murray, Kentucky, have been convicted of federal crimes and sentenced for a decade long scheme to defraud the Federal Communications Commission’s (FCC) E-Rate program.

On May 11, 2023, GCI Communications Corp. (GCI), located in Anchorage, Alaska, agreed to pay $40,242,546 to resolve allegations that it violated the False Claims Act by knowingly inflating its prices and violating Federal Communications Commission (FCC) competitive bidding regulations in connection with GCI’s participation in the FCC’s Rural Health Care program.

On February 28, 2023, Damian Williams, the United States Attorney for the Southern District of New York, announced the sentencing of all seven defendants who previously pled guilty to defrauding the federal E-Rate program, in connection with E-Rate funds provided to private religious schools in Rockland County, New York.

On April 4, 2022, TracFone Wireless Inc. (TracFone) agreed to pay $13.4 million as part of a civil settlement to resolve allegations that TracFone violated the False Claims Act by signing up more than 175,000 ineligible customers in connection with the Lifeline program.

On November 3, 2020, Concept Schools, NFP, agreed to pay $4.5 million as part of a civil settlement to resolve allegations that it violated the False Claims Act by engaging in non-competitive bidding practices in connection with the E-Rate program.

On January 30, 2020, a Dallas charter school CEO was sentenced to more than seven years in federal prison for her role in a corruption scandal following an investigation by the FBI Dallas Field Office.