Inter-Tel Technologies has agreed to plead guilty and to pay fines totalling $8.71m (£4.6m) on charges of bid rigging and wire fraud in connection with a program intended to connect schools and libraries to the internet.
The company, a subsidiary of telecommunications supplier Inter-Tel, was accused of submitting rigged bids to schools in Michigan and California as part of the US Federal Communications Commission's (FCC's) E-Rate programme, according to the US Department of Justice (DOJ).
The E-Rate programme has been under fire in the US Congress this year due to allegations of widespread waste and abuse, and the Inter-Tel guilty plea was the third related to E-Rate announced by the DOJ since late May.
Inter-Tel was charged with one count of allocating contracts and submitting rigged bids for E-Rate projects at the two school districts, in a two-count felony charge unsealed in US District Court in San Francisco, according to the DOJ.
Inter-Tel also was charged with one count of wire fraud and aiding and abetting by willfully entering into a scheme to defraud the E-Rate programme in San Francisco by inflating bids, agreeing to submit false and fraudulent documents to hide the planned installation of ineligible items, and submitting false and fraudulent documents to defeat inquiry into the legitimacy of the funding request.
Inter-Tel's negotiated resolution in the case, if approved by the court, would require the company to pay $1.71m in criminal fines and $7m in restitution and civil settlement. The plea hearing and sentencing for Inter-Tel is scheduled for next week.
Fraud and waste in the E-Rate programme, with 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 E-Rate programme and agreed to pay $20.6m in fines and restitution. Earlier this year, SBC Communications agreed to return $8.8m to the FCC after equipment was not installed in Chicago schools.
Grant Gross writes for IDG News Service