US supplier Inter-Tel Technologies has agreed to plead
guilty and pay fines totalling $8.7m (£4.5m) on charges of bid
rigging and wire fraud in connection with a project to connect US
schools and libraries to the internet.
The company, a subsidiary of telco Inter-Tel, was accused of
submitting rigged bids to schools in Michigan and California as
part of the US government's E-Rate programme.
Inter-Tel was also charged with wire fraud and aiding and
abetting by willfully entering into a scheme to defraud the
programme by inflating bids, agreeing to submit false and
fraudulent documents to hide the planned installation of ineligible
items, and submitting false and fraudulent documents.
Inter-Tel said yesterday that it was pleased to have reached a
settlement. The settlement will cost it $9.5m, including
uncompensated E-Rate work, accounts receivable forgiveness, and
legal fees and other expenses, according to Inter-Tel.
If approved by the court, the negotiated settlement will require
the company to pay $1.71m in criminal fines and $7m in restitution
and civil settlement.
"While the employees directly involved with the matters in
question are no longer associated with Inter-Tel in any form, we
take full responsibility for their actions," said Inter-Tel
chairman and chief executive Steven Mihaylo. "We have begun to
implement and will expand to a more rigorous compliance programme,
including review of current and future government contracts. We
will not tolerate any conduct that causes anyone to question the
integrity of our company."
Fraud and waste in the E-Rate programme, which has an annual
budget of $2.25bn, has been the subject of several hearings in the
US Congress this year. In May, NEC-Business Network Solutions
pleaded guilty to defrauding the programme and agreed to pay $20.6m
in fines and restitution. Earlier this year, SBC Communications
agreed to return $8.8m to the government after equipment was not
installed in Chicago schools.
Grant Gross writes for IDG News Service